/raid1/www/Hosts/bankrupt/TCR_Public/041020.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, October 20, 2004, Vol. 8, No. 228
Headlines
AAMES FINANCIAL: Sets Record Date for Cash Dividends on Sr. Stock
ACCERIS COMMUNICATIONS: Secures $5 Million of New Financing
ADVANCED MICRO: Moody's Places B3 Rating on $600M Sr. Unsec. Notes
ALEPH MANAGEMENT: Case Summary & 20 Largest Unsecured Creditors
AMERICAN GENERAL: Fitch Slices Class B-2's Ratings to C from CCC
APPLAUSE LLC: Sells Tradename to Russ Berrie for $7.6 Million
BALLY TOTAL: Moody's Withdraws H&T's Ratings After Paring to Ba1
BETHLEHEM STEEL: Northern Border Holds Allowed $5 Million Claim
BLOCKBUSTER INC: Stock Options Now Trade on the Pacific Exchange
BOOK4GOLF.COM: Completes 3 for 1 Reverse Split Pursuant to Plan
BOYDS COLLECTION: Restructures Sales Operations & Saves $3 Million
CATHOLIC CHURCH: Davenport May File Chapter 11 Petition This Week
CATHOLIC CHURCH: Tucson Wants Sec. 345(b) Requirements Waived
CLAD-TEX METALS INC: Case Summary & 20 Largest Unsecured Creditors
COLE NATIONAL: Launches Cash Tender Offer for $150 Million Notes
CONSUMERS ENERGY: Mich. PUC Rate Orders Won't Affect BB Rating
COVANTA ENERGY: Financial Projections Underpinning Lake II Plan
COVENTRY HEALTH: Moody's Reviewing Ba1 Ratings & May Downgrade
CSFB MORTGAGE: S&P Places Low-B Ratings on Six Certificate Classes
DEVINGTON ASSOCIATES: Case Summary & Largest Unsecured Creditors
DEVLIEG BULLARD: Hires Mesirow Financial as Investment Banker
DIRECTV: Minority Shareholder Commences $1 Billion Fraud Lawsuit
EAGLE FAMILY: Weak Performance Prompts S&P to Slice Ratings
ELANTIC TELECOM: Can Continue Hiring Ordinary Course Professionals
ENDURANCE SPECIALTY: Gets Canadian License & Opens Toronto Branch
ENRON CORP: Court Gives Conditional Nod on Bammel Settlement Pact
ENRON CORP: Wants Court Nod on 102 Claim Settlement Pacts
FELCOR LODGING: Calls for Redemption of $40 Million Senior Notes
FITNESS GALLERY: List of Debtor's 26 Largest Unsecured Creditors
FLINTKOTE CO.: Creditors Must File Proofs of Claims by Jan. 31
FLOWSERVE CORP: R. Guiltinan to Resign as Chief Accounting Officer
FOSTER WHEELER: Elects Stephanie Hanbury-Brown as Director
GENERAL ROOFING: Court Confirms Joint Plan of Reorganization
GMAC COMMERCIAL: S&P Affirms BB+ Rating on Class F Certificates
GOLF TRAINING: Trustee Gets $15K Bid from BBG for Unissued Shares
GREENWICH CAPITAL: Moody's Junks Class B-2 Certificates
HANGER ORTHOPEDIC: To Webcast 3rd Quarter Earnings on Oct. 28
HEALTH & NUTRITION: Voluntary Chapter 11 Case Summary
HENLYS GROUP: Completes Restructuring After Creditors Compromised
HOLLINGER INCORPORATED: Kroll Lindquist Withdraws as Inspector
HOLLINGER INCORPORATED: Reports US$14.72 Million Cash Holdings
HOLLINGER: Financial Statements Still Not Filed Amidst Reviews
HOLLINGER INT'L: Board Approves its Compensation Program
HOLLINGER INT'L: Files Amended RICO Suit Against Hollinger, et al.
HOLLYWOOD CASINO: HCS Inks Agreement for Eldorado Acquisition
IDEAL ACCENTS: Sees Asset Sales or Merger Deal on the Horizon
INTEGRATED HEALTH: Inks Unisys Pact Resolving Adversary Proceeding
INTERNATIONAL COAL: Moody's Assigns B2 Ratings to Debts
JAZZ GOLF: Appoints Harry T. Ethans to Board of Directors
JEAN COUTU: Posts $22.3 Mil. 2004-2005 First Quarter Net Earnings
JOHN Q. HAMMONS: Barcelo Acquisition Cues S&P to Watch B Ratings
KEYSTONE HISTORIC: List of 2 Largest Unsecured Creditors
KMART CORPORATION: Hires Aylwin Lewis as New President and CEO
KMART CORP: James Gooch Replaces R. Noechel as VP & Controller
LEVITZ HOME: Moody's Assigns B3 Rating to Senior Secured Notes
MERIT STUDIOS: Files Amended Chapter 11 Plan of Reorganization
MIIX INSURANCE: New Jersey Insurance Commissioner Takes Control
MIRANT CORP: Unsecured Creditors' Meeting in New York on Nov. 1
MOLECULAR DIAGNOSTICS: Inks Accumed Tech. Settlement with MonoGen
MONSOUR MEDICAL CENTER: Voluntary Chapter 11 Case Summary
NIAGARA FALLS: Moody's Assigns Ba1 Ratings to Serial Bonds
NORTHROP GRUMMAN: Appoints Frank Flores VP of Integrated Sys. Unit
NORTHWESTERN STEEL: SEC Says No Way to Sale of Un-Issued Shares
OMNOVA SOLUTIONS: Weak Profitability Cues S&P to Cut Rating to B+
PALCAN POWER: Sells Fuel Cells to One of China's Largest Oil Cos.
PETRACOM MEDIA: Textron Ready to Credit Bid Claim Under New Plan
POTLATCH CORPORATION: Posts $24.2 Mil. 2004 Third Quarter Earnings
RCN CORP: Asks Court Okay to Obtain Renewal D&O Insurance Coverage
REDDY ICE: Moody's Junks Proposed $100 Mil. Senior Discount Notes
REDDY ICE: S&P Rates Proposed $100 Mil. Senior Discount Notes B-
RELIANCE GROUP: Plan Confirmation Hearing Until Further Notice
RITE AID: Moody's Junks $1.5B Senior & $250M Convertible Notes
RIVERSIDE FOREST: Interfor Has Until Friday to Match Tolko's Bid
SIX FLAGS: Fixes Nov. 1 as Record Date for PIERS Dividend Payment
SOLECTRON: Completes Microtechnology Sale to Francisco Partners
SOLECTRON CORPORATION: Appoints Matti Virtanen EMEA President
STAR GAS: Needs Lenders' Support to Avoid Bankruptcy Filing
STAR GAS: Expected Earnings Decline Spurs Fitch to Pare Ratings
STAR GAS: Default Expectations Prompt Moody's to Junk Ratings
TECNET INC: Trustee Wants to Sell Enhanced Global Convergence
US AIRWAYS: Will Restructure Flight Schedules Starting Feb. 2005
US AIRWAYS: Gets Court Nod to Assume Five Trust Fund Agreements
VINCENNES STEEL: Case Summary & 20 Largest Unsecured Creditors
WACHOVIA BANK: S&P Assigns Low-B Ratings to Eight Cert. Classes
WORLD ACCESS: Emerges from Bankruptcy After Three Years
WORLDCOM INC: Intelsat Holds Allowed $5,426,291 Unsecured Claim
* Ex-WorldCom Counsel Joins Chadbourne & Parke's Telecom Practice
* Eduardo Mestre Joins Evercore Partners as Vice Chairman
* Sheppard Mullin Adds John Gustafsson to New York Office
* Upcoming Meetings, Conferences and Seminars
*********
AAMES FINANCIAL: Sets Record Date for Cash Dividends on Sr. Stock
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Aames Financial Corporation (OTCBB:AMSF) set a record date of
October 28, 2004, for a cash dividend to be declared and paid on
its:
-- Series B convertible preferred stock,
-- Series C convertible preferred stock, and
-- Series D convertible preferred stock
in connection with Aames Financial's proposed reorganization into
a real estate investment trust. Aames Financial is required under
the terms of the reorganization to pay in cash all accrued and
unpaid dividends on outstanding preferred stock prior to
consummating the reorganization.
The amount of the cash dividend payable on the preferred stock
will be calculated based upon the dividend rate on the stated
value of each series of preferred stock accrued from Oct. 1, 2004,
through the consummation date of the reorganization. Therefore,
at a later date, Aames Financial will provide the per share amount
of any cash dividends declared by the board of directors to be
paid to holders of preferred stock prior to consummating the
reorganization.
In connection with the proposed reorganization, Aames Financial
and Aames Investment filed a registration statement on Form S-4,
including the proxy statement/prospectus constituting a part
thereof, with the U.S. Securities and Exchange Commission. The
proxy statement/prospectus was mailed to stockholders of record on
October 5, 2004. The proxy statement/prospectus and other
documents are available free of charge at the SEC's website --
http://www.sec.gov/-- and by directing a request to:
John F. Madden, Jr.
Secretary
Aames Financial Corporation
350 South Grand Avenue, 43rd Floor
Los Angeles, California 90071
-- or emailing --
Aames Financial's Investor Relations
Department at: info@aamescorp.com
Participants in Solicitation
Aames Financial, Aames Investment, their respective directors, and
certain of their respective executive officers may be considered
participants in the solicitation of proxies in connection with the
proposed reorganization. You may find information relating to
their interests, including security holdings or otherwise, in the
proxy statement/prospectus sent to stockholders in connection with
the reorganization.
At June 30, 2004, Aames Financial, a 50 year old national subprime
mortgage lender, operated 99 retail branches, including the
National Loan Centers, and five regional wholesale operations
centers throughout the United States.
* * *
As reported in the Troubled Company Reporter on April 1, 2004,
Fitch Ratings upgraded Aames Financial Corp's. subordinated debt
due 2006 to 'CCC' from 'CC'. Concurrent with this action, Fitch
has withdrawn the company's senior debt rating of 'CCC' as the
company has repaid its senior debt. The Rating Outlook is Stable.
ACCERIS COMMUNICATIONS: Secures $5 Million of New Financing
-----------------------------------------------------------
Acceris Communications Inc. (OTCBB:ACRS) issued $5 million in
subordinated secured convertible debentures with a three year
term, convertible at the option of the holder at any time for
$0.88 per share. In conjunction with the transaction, one million
detachable warrants were granted with various exercise prices from
$1.00 to $1.20 per share. The transaction was made with an
investment fund that specializes in providing financing to
growing, small-cap companies.
The instrument accrues interest at WSJ Prime Rate plus 3%, and may
be adjusted downward under circumstances related to the trading
value of Acceris stock. Principal repayments under the instrument
are amortized on a 1/33 basis per month, commencing ninety days
following the date of closing. These payments may be made in cash
or in shares of Acceris, subject to certain conditions.
Kelly Murumets, President of Acceris Communications, stated, "We
believe this transaction is positive for the Company and our
shareholders. This transaction improves the working capital of
the Company and will enable Acceris to execute its strategic plan
and pursue opportunities in developing its Voice over Internet
Protocol technologies and communications offerings."
About Acceris
Acceris Communications is a broad based communications company
serving residential, small and medium-sized business and large
enterprise customers in the United States. A facilities-based
carrier, it provides a range of products including local dial tone
and 1+ domestic and international long distance voice services, as
well as fully managed and fully integrated data and enhanced
services. Acceris offers its communications products and services
both directly and through a network of independent agents,
primarily via multi-level marketing and commercial agent programs.
Acceris also offers a proven network convergence solution for
voice and data in Voice over Internet Protocol communications
technology and holds two foundational patents in the VoIP space.
For further information, visit Acceris' website at
http://www.acceris.com/
As of June 30, 2004, Acceris Communications' stockholders' deficit
widened to $51,672,000, compared to a $42,953,000 at
December 31, 2004.
ADVANCED MICRO: Moody's Places B3 Rating on $600M Sr. Unsec. Notes
------------------------------------------------------------------
Moody's Investors Service confirmed the ratings of Advanced Micro
Devices, Inc., senior implied rating of B2, and assigned a B3
rating to the pending $600 million senior unsecured eight year
note, the proceeds of which will be used to prepay secured debt
maturities due in 2005 and 2006. This concludes a review
commenced May 2003.
The confirmation reflects:
(i) expectations that Advanced Micro will continue:
-- its good execution in broadening the end market
capabilities and profitability of its microprocessor
business; and
-- maintaining profitability in its flash operations;
(ii) a meaningful level of business risk persists, deriving
from intense microprocessor product and price competition
from its much larger competitor, Intel Corporation;
(iii) significant capital expenditure requirements and
execution risk to consistently transition to new
technology nodes and manufacturing capabilities for both
microprocessors and flash memory; and
(iv) the limited ability to generate free cash flow after
investment requirements.
The ratings outlook is stable.
Ratings confirmed include:
* Senior implied rating - B2
* Senior secured shelf registration -- (P) B2
* Senior unsecured debt -- B3
* Senior unsecured shelf registration -- (P) B3
* Subordinated shelf registration -- (P) Caa1
* Preferred stock shelf registration -- (P) Caa2
Moody's said the ratings incorporate the expectation that Advanced
Micro will continue to successfully develop and introduce
microprocessors that allows Advanced Micro to increasingly target
not just its traditional desktop market but also the server and
mobile markets, areas where historically it has largely been
absent. To the extent that Advanced Micro is able to further
penetrate these newer markets, the resultant mix should lead to
richer average selling prices and improved profitability, provided
Advanced Micro's manufacturing efficiencies continue.
Since introducing its Opteron microprocessor family in early 2003
and subsequently, versions of its Athlon microprocessors, Advanced
Micro has further expanded its customer base and notably improved
microprocessor revenues ($673 million or 54% of total revenues in
the third quarter just ended) while segment operating profit has
transitioned from losses to a 13% margin in the most recent
quarter.
The company's flash operations, conducted through a 60%/40% joint
venture with its long time partner Fujitsu Limited, continue to
improve from an operational and product perspective, although end
demand volatility and inherently strong price competition for this
commodity-like product will, in Moody's opinion, limit
profitability while still exposing the company to periodic
depressed segment results. Segment operating profitability has
been positive in each of the last three quarters, including a weak
third quarter recently ended that felt the impact of pricing
pressure and a pause in demand as the channel absorbed inventory.
Over the near term, Moody's expects continued modest
profitability.
Intermediate term risks in the flash segment include the potential
for additional supply to come on stream as more competitors
transition to smaller process technology nodes, which could
outstrip what is likely to remain strong growth in bit demand. An
additional challenge over the intermediate term is that another
version of flash technology, called NAND, could overtake the
traditional NOR market.
NAND, which is less expensive and writes data more quickly than
conventional NOR flash, is about two thirds the size of NOR, but
it is growing faster and, as conventional NOR end markets such as
cell phones take on some functionality of NAND market products
such as digital still cameras, AMD will likely need to transition
its capabilities. Currently, Advanced Micro's flash operations
are focused on NOR technology, however it believes that its
Mirrorbit technology can also be applied to NAND applications.
Moody's will continue to monitor this technology risk and Advanced
Micro's ability to compete against not just traditional flash
memory participants, but also against DRAM manufacturers whose
processes and scale can allow them to be competitive in the NAND
market.
Subject to successfully issuing the planned $600 million eight
year, senior unsecured notes, the proceeds of which will be used
to prepay secured debt maturing in 2005 and 2006, Advanced Micro
will have very manageable debt maturity profile through 2007, when
its $403 million senior convertible debt, which is deeply in the
money, matures. Additionally, liquidity will be enhanced by the
pending transaction since repayment of the existing secured bank
debt will release approximately $200 million that had been
restricted by terms of the bank agreement. Overall Advanced
Micro's cash balances approximated $1.2 billion at September 2004,
a level consistent with the last several quarters.
In addition to a significant business risk profile, against which
Advanced Micro has been executing well over the past year,
constraints to its credit rating include its relatively elevated
level of financial leverage ($2 billion of debt and a 44% debt to
book capitalization) and its very limited ability to repay debt
from free cash flow. Cash flow from operations less capital
expenditures currently approximate break even as compared to
negative for much of the company's history over the last decade.
A key driver to potential upwards rating pressure will be the
extent to which management can continue to execute on its product
roadmap and generate and sustain free cash flow from operations.
In this regard, capital expenditures ($1.1 billion for the latest
twelve months ended September 2004) are likely to remain
significant as Advanced Micro continues to build out its 300mm fab
in Dresden, Germany. While some elements of capital expenditures
are discretionary, the company must continue to invest in
performance enhancing and cost minimizing processes and
technologies in order to remain competitive over the intermediate
to longer term. Potential downward ratings pressure would derive
from a product introduction delays, manufacturing misexectuin,
pricing pressures that cannot be comprehended by manufacturing
cost reductions, and the reduced ability to internally fund
investment requirements or reduction in financial flexibility.
Advanced Micro Devices, Inc., headquartered in Sunnyvale,
California, designs and manufactures microprocessors, flash
memory, and other semiconductors products.
ALEPH MANAGEMENT: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: Aleph Management Systems, Inc.
716 Germantown Pike
Lafayette Hill, Pennsylvania 19444
Bankruptcy Case No.: 04-33939
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Anderson Travel, Inc. 04-33943
Anderson Transportation Group, Inc. 04-33945
Lehigh Valley Transit Company, Inc. 04-33946
Coker's Handi-Van, Inc. 04-33948
Danbeth Medical Supply, Inc. 04-33950
Greater Jackonville Transportation Company 04-33952
Metro Care, Inc. 04-33953
Metro Mobility, Inc. 04-33954
Triage, Inc. 04-33956
Tristar Enterprises, Inc. 04-33959
Van Go, Inc. 04-33960
Type of Business: The Company provides ground transportation
services on a contractual basis. The areas of
business are paratransit, charter, bus, and
school bus transportation. The Company also
provides financial and risk management services
to various companies.
Chapter 11 Petition Date: October 15, 2004
Court: Eastern District of Pennsylvania (Philadelphia)
Judge: Stephen Raslavich
Debtor's Counsel: Alan I. Moldoff, Esq.
Adelman Lavine Gold and Levin
Four Penn Center, Suite 900
Philadelphia, Pennsylvania 19103-2808
Tel: (215) 568-7515
Total Assets Total Debts
------------ -----------
Aleph Management Systems, Inc. $10M to $50M $50M to $100M
Anderson Travel, Inc. $10M to $50M $50M to $100M
Anderson Transportation Group, Inc. $10M to $50M $50M to $100M
Lehigh Valley Transit Company, Inc. $10M to $50M $50M to $100M
Coker's Handi-Van, Inc. $10M to $50M $50M to $100M
Danbeth Medical Supply, Inc. $10M to $50M $50M to $100M
Greater Jackonville Transportation
Company $10M to $50M $50M to $100M
Metro Care, Inc. $10M to $50M $50M to $100M
Metro Mobility, Inc. $10M to $50M $50M to $100M
Triage, Inc. $10M to $50M $50M to $100M
Tristar Enterprises, Inc. $10M to $50M $50M to $100M
Van Go, Inc. $10M to $50M $50M to $100M
Consolidated list of the Debtors' 20 largest unsecured creditors:
Entity Claim Amount
------ ------------
Baldinger Insurance Services $220,912
Sunoco $189,503
Madison Capital $133,443
Mears Motot - Patsi 5 Vehicles $81,026
Taylor Oil Company $79,584
Keystone Health 812064 $48,669
Chester Transmissions $43,689
Wilmington Economic $43,520
Kaz Tire Center $41,504
Universal Service Agency, Inc. $37,335
City of Philadelphia $34,801
J.A.J. Auto Distributors, Inc. $30,790
HOP Fleet Fueling $30,615
Ralph Pappas $23,949
Metro Care Insurance Escrow $23,333
United Independent Union $19,998
C&C Capital, LLC $18,534
Tony DePaul and Sons $17,911
Portview Properties $16,956
Chapman Ford $16,706
AMERICAN GENERAL: Fitch Slices Class B-2's Ratings to C from CCC
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Fitch Ratings made these ratings actions on notes issued by
American General CBO 1998-1, Ltd./(Delaware) Corp., which closed
Nov. 5, 1998:
-- affirmed the ratings of two classes of notes,
-- upgraded the ratings of two classes of notes, and
-- downgraded the rating of one class of notes
The rating actions are effective immediately.
The ratings on these notes have been upgraded:
-- $4,000,000 class A-3A notes to 'A' from 'A-';
-- $15,000,000 class A-3B notes to 'A' from 'A-'.
The rating on these notes has been downgraded:
-- $25,000,000 class B-2 notes to 'C' from 'CCC'.
The ratings on these notes have been affirmed:
-- $147,574,500 class A-2 notes 'AAA';
-- $50,000,000 class B-1 notes 'B-'.
American General is a collateralized bond obligation managed by
AIG Global Investment Corp. The collateral of American General is
composed of high yield bonds invested in corporate bonds and non-
emerging markets corporate debt. Payments are made semi-annually
in June and December and the reinvestment period ended in
June 2003. Included in this review, Fitch discussed the current
state of the portfolio with the asset manager and its portfolio
management strategy.
According to the October 2, 2004 trustee report, the portfolio
includes $20.20 million (9.28%) in defaulted assets. The deal
also contains $85.74 million (39.41%) assets rated 'CCC+' or below
excluding defaults. The class A overcollateralization test is
passing at 133.5% with a trigger of 120% and the class B OC test
is failing at 91.3% with a trigger of 104%. This transaction is
currently in an event of default due to the failure to maintain
the class B OC test at an amount at least equal to 90% of the OC
trigger. This event has not been cured by a change of asset
manager and the trading ability of the current asset manager has
been limited. Given that the class A-1 notes have been paid in
full at the last payment date, the credit enhancement of the class
A-2 and A-3 notes have improved and any principal proceeds will be
used to redeem the notes sequentially.
The ratings of the class A-2 and A-3 notes address the likelihood
that investors will receive full and timely payments of interest,
as per the governing documents, as well as the stated balance of
principal by the stated maturity date.
The rating of the class B-1 notes addresses the likelihood that
investors will receive ultimate and compensating interest
payments, as per the governing documents, as well as the stated
balance of principal by the stated maturity date. The rating of
the class B-2 notes addresses the likelihood that investors will
receive ultimate payment of the stated balance of principal by the
stated maturity date.
Fitch will continue to monitor American General closely to ensure
accurate ratings.
APPLAUSE LLC: Sells Tradename to Russ Berrie for $7.6 Million
-------------------------------------------------------------
The former Woodland Hills-based Applause, LLC reported the sale of
its tradename "Applause" and related tradenames to Russ Berrie and
Company, Inc. (NYSE: RUS), the winning bidder in an auction
conducted as part of Applause's chapter 11 reorganization.
Last August, Russ Berrie agreed to pay $4,000,000 in cash for
Applause and related trademarks. Due to Applause's recent entry
in chapter 11 bankruptcy, the sale was re-structured as a
bankruptcy court auction that resulted in a bidding war with a New
York investment fund taking the deal from its original price to
the winning bid of $7,550,000. The sale is expected to close by
October 26.
The sale represents a major coupe for Applause in its
reorganization under chapter 11 bankruptcy protection. The deal
is expected to pave the way for a successful restructuring of the
Company.
"This fits well within our plan to turnaround the Company, focus
on our other valuable assets and grow our business again under a
more efficient cost structure," said David Socha, Manager of
Applause. Mr. Socha has been Manager of the Company since August
of 2004 after the death of his uncle, former Applause CEO and
industry legend, Bob Solomon. "This was also Bob's desire and I
am sure he would have been pleased with the result and where we
are headed," said Socha.
The Company intends to operate going forward under one of its
other brands, Dream Pets, while the Company will continue to
manufacture and sell plush toys and other gift items under its
other successful brands, including R. Dakin & Co. and Josef. The
sale process was managed by Applause's professional team including
the corporate law firm of Casale Alliance, LLP and restructuring
law firm of Peitzman, Weg & Kempinsky LLP.
About Applause, LLC
Since 1966, Applause has been a leader in the gift and plush toy
industry as a distributor and licensee. Specializing in the
design, manufacturing and international distribution of
collectibles and gift items, Applause has developed name-brand
products for all ages. The Applause business lines and brands
include other well-known names in the gift/plush business,
including its proprietary Dream Pets(TM) and R. Dakin & Co.(TM)
brands.
BALLY TOTAL: Moody's Withdraws H&T's Ratings After Paring to Ba1
----------------------------------------------------------------
Moody's has downgraded the ratings on $100 million, H & T Master
Floating Rate Accounts Receivable-Backed Variable Funding
Certificates, Series 2001-1, from Baa2 to Ba1.
In addition, following the issuance of million new five-year term
loan facility totaling $175 million to refinance existing debt on
October 14,2004, including its present $100 million securitization
facility, Moody's rating on $100 million, H & T Master Floating
Rate Accounts Receivable-Backed Variable Funding Certificates,
Series 2001-1, will be withdrawn.
This concludes the review announced on August 19, 2004 and follows
the downgrade by Moody's on September 30, 2004 of Bally Total
Fitness Holding Corporation's senior implied rating to B3 and the
corresponding senior subordinated rating to Caa2, with a stable
rating outlook. Moody's rating action on Bally reflected
significant leverage, limited free cash flow, competitive
pressures, resulting in growth challenges and membership
attrition. As a result of this downgrade the $100 million, H & T
Master Floating Rate Accounts Receivable-Backed Variable Funding
Certificates, Series 2001-1 transaction hit an early amortization
trigger.
Moody's downgraded the ratings of the H & T Master Floating Rate
Accounts Receivable-Backed Variable Funding Certificates, Series
2001-1 due to concerns about potential future performance of the
trust receivables pool. The future performance of the receivables
will be closely related to the continued operations of its current
level of health clubs. The current performance of the receivables
in the trust is in line with expectations.
The complete rating action is:
* $100 million, H & T Master Floating Rate Accounts Receivable-
Backed Variable Funding Certificates, Series 2001-1,
downgraded from Baa2 to Ba1 and will be withdrawn.
Issuer and Servicer
Bally is the largest and only national operator of health clubs in
the US. It has over 440 clubs in major metropolitan areas in 29
states, Canada, Asia and the Caribbean. Moody's currently rates
Bally a long-term senior implied rating of B3.
The Certificates were issued pursuant to an Amended and Restated
Pooling and Servicing Agreement dated as of December 16, 1996, as
amended by the Series 2001-1 Supplement dated as of November 30,
2001, among H & T Receivables Funding Corporation, as Transferor,
Bally Total Fitness Corporation, as Servicer and JP Morgan Chase
Bank, as Back-up Servicer and Trustee.
BETHLEHEM STEEL: Northern Border Holds Allowed $5 Million Claim
---------------------------------------------------------------
On October 15, 2003, Northern Border Pipeline Company filed claim
No. 12065 for $8,474,426 arising in connection with the Bethlehem
Steel Corporation's rejection of the Northern Border Pipeline
Company U.S. Shippers Service Agreement, dated November 8, 2000,
by and between Northern Border and the Debtors.
Under the Debtors' confirmed Plan and Liquidating Trust
Agreement, dated as of December 31, 2003, the Bethlehem Steel
Corporation Liquidating Trust was created to, among other things,
take any and all actions that the Liquidating Trustee deems
necessary for the continuation, protection and maximization of the
Liquidation Trust Assets.
The Liquidating Trust and Northern Border have reached an
agreement regarding the reduction of the Northern Border Claim.
In a Court-approved stipulation, the parties agree that the
Northern Border Claim will be allowed as a general unsecured claim
for $5,084,656. Northern Border will not assert any other claim
against the Debtors or their estates.
Headquartered in Bethlehem, Pennsylvania, Bethlehem Steel
Corporation -- http://www.bethlehemsteel.com/-- was the second-
largest integrated steelmaker in the United States, manufacturing
and selling a wide variety of steel mill products including hot-
rolled, cold-rolled and coated sheets, tin mill products, carbon
and alloy plates, rail, specialty blooms, carbon and alloy bars
and large diameter pipe.
Bethlehem Steel Corporation filed for chapter 11 protection on
October 15, 2001 (Bankr. S.D.N.Y. Case No. 01-15288). Jeffrey L.
Tanenbaum, Esq., and George A. Davis, Esq., at WEIL, GOTSHAL &
MANGES LLP, represent the Debtors in their restructuring, the
centerpiece of which was a sale of substantially all of the
steelmaker's assets to International Steel Group. When the
Debtors filed for protection from their creditors, they listed
$4,266,200,000 in total assets and $4,420,000,000 in liabilities.
Bethlehem obtained confirmation of a chapter 11 plan on October
22, 2003, which took effect on Dec. 31, 2003. (Bethlehem
Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
BLOCKBUSTER INC: Stock Options Now Trade on the Pacific Exchange
----------------------------------------------------------------
The Pacific Exchange begins trading options on Blockbuster, Inc.
-- Class B (PCX: BBI) (PCX: BBIb) starting yesterday,
October 19, 2004.
Blockbuster options will trade on the January expiration cycle
with exercise limits set at 3,150,000 shares.
Lead Market Maker Catherine Clay of Timber Hill, LLC, will trade
this issue.
Blockbuster, Inc., is a leading provider of in-home movies and
game entertainment with approximately 8,900 stores though out the
Americas, Europe, Asia, and Australia. Total revenues for fiscal
year 2003 were approximately $5.9 billion.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2004,
Fitch Ratings expects to assign a 'B+' rating to Blockbuster
Inc.'s proposed $300 million unsecured subordinated notes due
2012. Fitch's also affirms the 'BB' rating on Blockbuster's
senior secured bank facility. The Rating Outlook is Stable.
BOOK4GOLF.COM: Completes 3 for 1 Reverse Split Pursuant to Plan
---------------------------------------------------------------
B-FOR-G Capital, Inc., formerly known as 3663701 Canada Inc., or
Book4Golf.com Corporation, reported that, effective Oct. 14, 2004,
it completed its recently approved plan of arrangement.
Completion of the plan of arrangement included a consolidation of
the Corporation's common shares on a three-for-one basis and the
creation of a new class of non-voting preferred shares. Following
the consolidation, the Corporation had 16,721,383 common shares
issued and outstanding. In due course, shareholders will be
provided with a letter of transmittal to facilitate the exchange
of their current share certificates for certificates representing
the consolidated common shares.
As reported in the Troubled Company Reporter on June 2, 2004,
3663701 Canada Inc., formerly Book4Golf.com Corporation, received
final Court and shareholder approval of its plan of arrangement.
Shareholders also approved a change of name of the Corporation to
B-for-G Capital Inc.
The Corporation also completed a debenture financing, raising a
total of $800,000. This issuance of debentures convertible into
either Common Shares (as to $273,890) or Class A Preferred Shares
(as to $526,110) had previously been approved by the shareholders
of the Corporation at a Special Meeting of the Shareholders held
on May 28, 2004. The proceeds of this financing were used to pay
liabilities of the Corporation, including debts incurred in the
course of a restructuring and bankruptcy proposal.
In conjunction with the $800,000 debenture financing, all steps
necessary to complete the Corporation's proposal in bankruptcy
were taken and a Certificate of Full Performance was filed with
the Superintendent in Bankruptcy and the Court on Oct. 15, 2004.
Effective yesterday, David V. Richards and Donald R. Leitch
consented to act as directors of the Corporation, as elected by
the shareholders of the Corporation on May 28, 2004.
The Corporation's shares remain suspended from trading on the NEX
board of the TSX Venture Exchange.
BOYDS COLLECTION: Restructures Sales Operations & Saves $3 Million
------------------------------------------------------------------
The Boyds Collection, Ltd. (NYSE: FOB) reported a restructuring of
its sales operation. This is in keeping with the company's
previously announced commitment to implement changes in its
product and distribution strategies, to improve Boyds' ability
both to serve its existing collector base and to expand product
and brand awareness among new customers by ensuring the company
provides outstanding service to its broad network of retailers
while most efficiently managing its cost structure. The
restructuring is expected to generate $3 million in net annualized
cost savings.
Under the restructuring plan, the company is eliminating 73 field
sales positions and strengthening its customer service and
telemarketing capabilities through the addition of 35 resources in
a partnership with Taction(TM), a leading professional inbound and
outbound customer call center with state-of-the-art capabilities.
Jan L. Murley, Chief Executive Officer, said, "The restructuring
we are announcing will support Boyds' strategy of providing our
customers with the right products, in the right places at the
right price, as well as our objective of best aligning our overall
cost structure with market demand. The changes to our sales
organization are the result of a thorough examination of our
existing sales practices that we undertook to allow Boyds to adopt
the most efficient and effective approach going forward. I am
confident that our new sales structure represents the right
allocation of resources and will allow our National Account Group
to continue to focus on driving business through the expanding
channels we have created in this past year, while allowing our
field sales team to expand their capabilities and services to grow
our field focused accounts."
The restructuring will create a charge of approximately $0.5 M in
the fourth quarter of 2004, which will be more than offset in the
quarter by the savings that will be realized.
About The Boyds Collection
The Boyds Collection, Ltd. is a leading designer and manufacturer
of unique, whimsical and "Folksy With Attitude(SM)" gifts and
collectibles, known for their high quality and affordable pricing.
The Company sells its products through a large network of
retailers, as well as at Boyds Bear Country(TM) in Gettysburg,
Pennsylvania -- http://www.boydsbearcountry.com/-- "the world's
most humungous teddy bear store." Founded in 1979, the Company
was acquired by Kohlberg Kravis Roberts & Co. in 1998 and is
traded on the NYSE under the symbol FOB. Information about Boyds
can be found at http://www.boydsstuff.com/
* * *
As reported in the Troubled Company Reporter on Aug. 30, 2004,
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.
CATHOLIC CHURCH: Davenport May File Chapter 11 Petition This Week
-----------------------------------------------------------------
Thomas Geyer at the Quad-City Times reports that Bishop William E.
Franklin of the Catholic Diocese of Davenport said the Diocese is
prepared to file for chapter 11 protection later this week if
claimants in sex abuse lawsuits against the diocese do not accept
a settlement or if the local court insists that a trial currently
scheduled to begin on Nov. 1 goes forward. The Diocese and its
insurer are attempting to craft a settlement outside of bankruptcy
court and has asked that the trial scheduled to begin Nov. 1 be
delayed by four months. A hearing on that motion for a
continuance is set for Wed., Oct. 20.
Plaintiffs Respond
"There are a right and a wrong in this," Craig A. Levien, Esq., at
Betty, Neuman & McMahon, representing plaintiffs, told Mr. Geyer
Saturday. "The church is now blaming the victims, who have dealt
all their lives with the emotional scars of being abused by a
priest at age 10 or 12. They were alone for so long, until a few
brave souls had the strength and courage to come forward and show
them they were not alone.
"Now, the church needs to have the strength and courage to deal
with these people properly," he said.
Insurance Issues
Mr Geyer reports that the Diocese is attempting to identify
insurance coverage, but because the claims go back 30 to 50 years,
it's difficult. The diocese has assembled information to identify
coverage for claims from 1969 to the present. The search
continues for coverage before 1969, a Diocesan official said, but
proof of coverage questions have arisen.
The Chapter 11 Rationale
Bishop Franklin has said that filing for Chapter 11 Reorganization
(Bankruptcy) may be the only way to fairly compensate all victims
of abuse if the negotiation process fails. A Chapter 11 Bankruptcy
could also allow the Diocese to continue its good works and
programs in serving the 100,000+ Catholics of the Diocese.
"It is important to understand that Chapter 11 Bankruptcy does not
shield assets from the just claims of creditors. Chapter 11
Bankruptcy does provide victims, known and unknown at the time of
filing bankruptcy, equal and fair access to the assets of the
Bankruptcy Estate within the timeframe established by the
Bankruptcy Court," wrote in an Oct. 6, 2004, memo. "Assets of the
Bankruptcy Estate would be used to pay the creditors of the
Diocese in a fair and equitable manner. In the Diocese's case,
the creditors are principally those with valid claims of sexual
abuse. The Bankruptcy Court would administer each of these claims.
It is believed that the majority of the claims would be settled as
part of the bankruptcy process, but the victims would still have
an option to litigate their claims if they chose to do so. No one
victim would receive preferential treatment."
"Compensation levels should not be based on a 'first-come, first-
served' basis. The Diocese wants to fairly compensate all victims
-- not just the first ones to come forward," Bishop Franklin
stresses.
What Davenport's Chapter 11 Plan Might Look Like
If bankruptcy becomes necessary -- and we hope it does not -- here
are some things Bishop Franklin says people should know:
1. The Diocese will remain in operation.
2. As part of a plan to be presented to the bankruptcy court,
the Diocese would scale down its operations.
3. St. Vincent's Center, an asset of the Diocese, may be sold
and the Diocese would move its headquarters.
4. The assets of the Diocese would be submitted to the court
as part of a plan of distribution over a period of years.
5. Because the parishes are separate corporations, we believe
that they are not assets of the Diocese and should not be
taken in the bankruptcy.
The Diocese of Davenport provides updates via its Web site at
http://www.davenportdiocese.org/
The Roman Catholic Church of the Diocese of Tucson filed for
chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on
September 20, 2004, and delivered a plan of reorganization to the
Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye,
Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson
Diocese. The Archdiocese of Portland in Oregon filed for chapter
11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq. and William N. Stiles, Esq. of Sussman
Shank LLP represent the Portland Archdiocese in its restructuring
efforts. Portland's Schedules of Assets and Liabilities filed
with the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities.
CATHOLIC CHURCH: Tucson Wants Sec. 345(b) Requirements Waived
-------------------------------------------------------------
Section 345(a) of the Bankruptcy Code provides that funds of a
bankruptcy estate may be invested or deposited so as to "yield the
maximum reasonable net return . . . taking into account the safety
of such deposit or investment."
With respect to entities that hold deposits and investments of
estate fiends that are not "insured or guaranteed by the United
States or by a department, agency, or instrumentality of the
United States or backed by the full faith and credit of the
United States," Section 345(b) requires that the trustee or
debtor-in-possession require the posting of a bond by the entity.
However, the Bankruptcy Court may waive this requirement for
cause.
Susan G. Boswell, Esq., at Quarles & Brady Streich Lang LLP, in
Tucson, Arizona, relates that the Diocese of Tucson's Existing
Accounts are maintained at federally insured depositary
institutions approved by the U.S. Trustee for Region 14, which
includes the District of Arizona. Substantially all of the cash
in the Diocese's investment accounts earns at least money-market
rates of interest, and the investment accounts invest in
instruments that are highly rated and safe in accordance with the
Investment Guidelines.
The Diocese believes that the continued investment of its cash
consistent with current practices will provide the protection
required by Section 345(b) without the need for a corporate
surety, and the cost to the Diocese of a bond from a surety might
well consume much of the gain derived from the Diocese's
investments.
Accordingly, the Diocese asks Judge Marlar to waive the
requirements of Section 345(b).
The Roman Catholic Church of the Diocese of Tucson filed for
chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on
September 20, 2004, and delivered a plan of reorganization to the
Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye,
Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson
Diocese.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq. and William N. Stiles, Esq. of Sussman
Shank LLP represent the Portland Archdiocese in its restructuring
efforts. Portland's Schedules of Assets and Liabilities filed
with the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities. (Catholic
Church Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CLAD-TEX METALS INC: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Clad-Tex Metals, Inc.
191 South Kelm Street, #104
Pottstown, Pennsylvania 19464
Bankruptcy Case No.: 04-33915
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Mid-Atlantic Metal Services, Inc. 04-33918
Frank R. Messick 04-33927
Type of Business: The Company is a major distributor and
fabricator in the aluminum and steel industry
serving both national and international
customers. Products include mill finish and
painted aluminum and steel in a wide array of
stock and custom colors, gauges, and
substrates. See http://www.cladtex.com/
Chapter 11 Petition Date: October 15, 2004
Court: Eastern District of Pennsylvania (Philadelphia)
Judge: Stephen Raslavich
Debtor's Counsel: Albert A. Ciardi, III, Esq.
Janssen Keenan & Ciardi, P.C.
One Commerce Square
2005 Market Street, Suite 2050
Philadelphia, Pennsylvania 19103
Tel: (215) 599-7281
Fax: (215) 665-8887
and
Michael G. Louis, Esq.
MacElree Harvey Ltd.
17 West Miner Street
PO Box 660
West Chester, Pennsylvania 19381-0660
Tel: (610) 840-0228
Total Assets Total Debts
------------ -----------
Clad-Tex Metals, Inc. $0 to $50,000 $1M to $10M
Mid-Atlantic Metal Services, Inc. $1M to $10M $1M to $10M
Frank R. Messick $1M to $10M $1M to $10M
Clad-Tex Metals, Inc.'s 20 largest unsecured creditors:
Entity Claim Amount
------ ------------
MGIP $3,403,891
PO Box 2650 U.S. 50 West
Clarksburg, West Virginia 26302-2650
Midwest Metals Corporation $699,771
13051 Forest Centre Court
Louisville, Kentucky 40223
Centria $479,588
1005 Beaver-Grade Road
Moon Township, Pennsylvania 15108-2944
Frank Messick $197,866
Harvard Steel Service Center $194,606
Nationwide Transport Services Inc. $118,195
Galex Inc. $114,743
Jack Holland $100,000
c/o Valley Forge Consulting
David Kane $95,000
Titan Steel Corporation $80,000
Pottstown Industrial Complex $75,207
Walt Zimmerman $70,000
Presto Tape $64,781
Dynamic $63,069
Lebanon Valley Brokerage $53,695
Lynn-Hudd Steel Corporation $53,132
Camden Yards $47,251
ALCOA Cladding Systems $46,182
D.G. March $44,556
L.G. Weaver Trucking $43,737
COLE NATIONAL: Launches Cash Tender Offer for $150 Million Notes
----------------------------------------------------------------
Cole National Group, Inc., commenced a cash tender offer and
consent solicitation for any and all of the $150,000,000
outstanding principal amount of its 8-7/8% Senior Subordinated
Notes due 2012. The consents are being solicited to eliminate
substantially all of the restrictive and reporting covenants,
certain events of default and certain other provisions contained
in the indenture governing the 2012 Notes.
In connection with the previously announced merger of Cole
National Corporation, Cole's direct parent, with Colorado
Acquisition Corp., a wholly owned subsidiary of Luxottica Group
S.p.A., Cole commenced a required cash offer to repurchase any and
all of the 2012 Notes pursuant to the "change of control"
provisions in the indenture governing the 2012 Notes.
The tender offer, the consent solicitation and the change of
control offer are being made pursuant to an Offer to Purchase and
Consent Solicitation Statement and the related Consent and Letter
of Transmittal dated Oct. 18, 2004. The tender offer and change
of control offer are scheduled to expire at 5:00 p.m., New York
City time, on Nov. 16, 2004, unless extended or earlier
terminated.
Noteholders who tender their Notes in the tender offer and consent
to the proposed amendments will receive a consent payment of
$20.00 per $1,000 principal amount of Notes if they provide their
consents on or prior to 5:00 p.m., New York City time, on
October 29, 2004, unless extended. The tender consideration to be
paid for each $1,000 principal amount of Notes validly tendered
and accepted for payment pursuant to the Offer will be an amount
equal to the present value on the Price Determination Date, for
the Notes of $1,044.38 per $1,000 principal amount of the Notes
(the redemption price payable for the Notes on May 15, 2007, the
first date on which the Notes are redeemable, discounted on the
basis of a yield to the Earliest Redemption Date equal to:
(a) the sum of the yield to maturity on the 3.125% U.S.
Treasury Note due May 15, 2007, as determined by Goldman,
Sachs & Co. and ABN AMRO Incorporated, as dealer managers
and solicitation agents, in accordance with standard
market practice, based on the bid side price for such
Reference Security as of 2:00 p.m., New York City time, on
the second business day immediately preceding the Consent
Time, as displayed on the Bloomberg Government Pricing
Monitor on Page "PX5", plus
(b) a fixed spread of 1.00% (100 basis points), minus the
consent payment.
Holders who validly tender their Notes will also be paid accrued
and unpaid interest up to, but not including, the date of payment
for the Notes.
The change of control consideration to be paid for the 2012 Notes
that are tendered in the change of control offer will be 101% of
the aggregate principal amount of such Notes, plus accrued and
unpaid interest, if any, from the last interest payment to, but
not including, the settlement date.
Cole's obligations to accept for purchase and to pay for 2012
Notes in the tender offer is conditioned on, among other things,
the receipt of consents to the proposed amendments from the
holders of at least a majority of the aggregate principal amount
of outstanding 2012 Notes and the execution of a supplemental
indenture to the indenture governing the 2012 Notes giving effect
to the proposed amendments.
This announcement is not an offer to purchase, a solicitation of
an offer to purchase or a solicitation of consent with respect to
any securities. The tender offer, the consent solicitation and the
change of control offer are being made solely by the Offer to
Purchase and Consent Solicitation Statement dated October 18,
2004.
Cole said intends to redeem all of the $125,000,000 outstanding
principal amount of its 8-5/8% Senior Subordinated Notes due 2007
at the redemption price of 101.4375 percent pursuant to the terms
of the 2007 Notes' indenture. Cole also intends to include a
change of control offer as required by the 2007 Notes' indenture.
On October 4, 2004, Luxottica Group S.p.A., through its indirect
wholly owned subsidiary, Colorado Acquisition Corp., indirectly
acquired all of the outstanding common stock of Cole National
Group, Inc. by virtue of the consummation of a merger of Colorado
Acquisition Corp. with and into Cole National Corporation, the
direct parent of Cole National Group, Inc.
About Cole National
Cole National Corporation, (NYSE:CNJ) is a worldwide $1 billion
company and a leader in the vision care and personalized gift
business with more than 2,900 locations.
Cole National is Cole Vision and Things Remembered and has a 21%
interest in Pearle Europe, one of the largest optical retailers in
Europe. HAL Holding N.V., a Dutch investment company, is the
majority shareholder of Pearle Europe.
* * *
As reported in the Troubled Company Reporter on Oct. 13, 2004,
Standard & Poor's Ratings Services withdrew its ratings on Cole
National Group Inc., including its 'BB-' corporate credit rating.
These ratings were placed on CreditWatch with developing
implications April 19, 2004, following the announcement that the
company received an unsolicited acquisition offer by an
unaffiliated party to acquire Cole National Corp., the parent
company.
Following the completion of Cole National's acquisition by
Luxottica S.p.A., Standard & Poor's has been unable to obtain
adequate financial and operating information based on the new
ownership structure to rate Cole National's debt. Therefore, the
ratings have been withdrawn.
CONSUMERS ENERGY: Mich. PUC Rate Orders Won't Affect BB Rating
--------------------------------------------------------------
The final orders recently issued by the Michigan Public Service
Commission on three rate proceedings for Consumers Energy Co. will
not have a near-term affect on the 'BB' senior unsecured rating or
Stable Outlook, according to Fitch Ratings. Consumers is the
primary subsidiary of CMS Energy (CMS, senior unsecured rated
'B+', Stable Outlook by Fitch).
On October 14, 2004, the Commission issued final orders on
Consumers':
* gas rate case,
* environmental securitization filing, and
* gas depreciation filing.
The Commission authorized a gas rate increase of $58.1 million,
compared with the company's request of approximately $139 million.
Fitch's internal projections incorporated a rate increase of
$19 million, the amount granted in the interim increase. The rate
increase is conditional upon Consumers and parent CMS agreeing to
achieve a common equity level of at least $2.3 billion by the end
of 2005. Fitch estimates that current equity at Consumers is
approximately $1.9 billion following the recent $150 million
equity infusion by CMS in September of this year. This amount
should increase to approximately $2.1 billion taking into account
CMS' recent equity issuance, which is expected to generate
$220 million in proceeds. For Consumers to meet the $2.3 billion
equity level, the company will either have to reduce the level of
distributions to CMS or, more likely, receive an equity infusion
from CMS. While CMS has not made any public announcement as to
how it intends to fund the additional required equity, Fitch views
the amount required to be a manageable number. The Commission
indicated that if the mandated $2.3 billion equity level has not
been achieved as planned, the commission could order a refund of
the rate increase and change the order.
In an unrelated matter, the Commission rejected Consumers'
proposal to amend the financing order related to the issuance of
$550 million of transition bonds to recover environmental
compliance costs. In the original order, the Commission
authorized the recovery of a surcharge related to the recovery of
the environmental compliance cost only from those Consumers
customers who elected to receive generation service from
Consumers. Since the surcharge would need to be amended
periodically to adjust for actual recovery of the compliance
costs, this could lead to a situation of an ever-escalating
surcharge for the remaining customers. Such a structure was
viewed as nonfinanceable. Consumers had applied to the Commission
for an amendment to the original financing order to allow recovery
of the surcharge from all distribution customers. Notwithstanding
the Commission refusal to amend its financing order, under
restructuring legislation in Michigan, Consumers is able to
recover these costs and alternatives are available, such as a 10D4
filing, which would allow for recovery of investment over five
years, or via a traditional rate proceeding.
Finally, the Commission rejected Consumers' request to decrease
its depreciation expense. This will result in an increase in the
utility's depreciation level by about $34 million; however, this
should not affect cash flows.
Consumers, the primary subsidiary of CMS Energy, is a combination
electric and natural gas utility that serves more than 3.3 million
customers in Michigan's Lower Peninsula.
COVANTA ENERGY: Financial Projections Underpinning Lake II Plan
---------------------------------------------------------------
Debtor Covanta Lake II, Inc., successor by way of merger to
Covanta Lake, Inc., will bring its Disclosure Statement to the
United States Bankruptcy Court for the Southern District of New
York for approval on October 20, 2004, at 2:00 p.m. At the
hearing, Judge Blackshear will review whether the Disclosure
Statement contains adequate information as required by Section
1125 of the Bankruptcy Code to enable a hypothetical creditor to
make an informed decision whether to vote to accept or reject
Covanta Lake II's Plan.
To demonstrate the feasibility of its Plan of Reorganization,
Covanta Lake II prepared financial projections through
December 31, 2007.
Covanta Lake II, Inc.
Projected Financial Results
For the Years ended December 31, 2004 to 2007
(In Thousands)
Pre-Emergence Post-Emergence
------------- -----------------------
2004 2005 2006 2007
------------- ----- ----- -----
Total Revenues (A) $15,781 $17,351 $15,409 $14,463
Plant Operating
Expenses (B) 9,091 7,999 8,244 7,934
Plant General &
Administrative
Expenses (C) 1,186 530 36 37
------- ------- ------- -------
Total Plant EBITDA 5,504 8,823 7,130 6,492
Depreciation &
Amortization 1,144 2,143 2,110 2,068
Debt Service Charges, Net 3,384 3,063 2,793 2,501
------- ------- ------- -------
Total Earnings Before
Corporate Support
and Taxes $977 $3,617 $2,227 $1,923
======= ======= ======= =======
Total Plant EBITDA $5,504 $8,823 $7,130 $6,492
Adjustments:
Less: Non-Cash
Accretion Revenue (D) (3,652) (3,690) (3,695) (3,670)
Less: Non-Cash Debt
Service Revenue (E) (3,320) (3,067) (2,797) (2,505)
Less: Other
Non-Cash Revenue (F) (826) - - -
Add: Non-Cash
Bad Debt Expense (G) 2,640 - - -
Less: Other Plant
Operating Expenses (H) (713) - - -
Add: Capital
Contribution from
Danielson Holdings (I) 175 - - -
Less: Capital Expenditures (285) (350) (100) (100)
------- ------- ------- -------
Cash Available for
Corporate Support
and Taxes ($477) $1,715 $537 $217
======= ======= ======= =======
Notes to Projected Financial Results:
(A) Total Revenues include Lake County payments of $2.9
million in 2005 and $0.9 million in 2006, as part of a
Settlement Agreement;
(B) 2004 Plant operating expenses include a $2.6 million non-
cash bad debt expense related to disputed charges with the
County;
(C) Plant general and administrative expenses include $1.2
million and $0.5 million in legal expenses for 2004 and
2005. No extraordinary legal expenses are forecasted in
2006 as the Reorganizing Debtor does not expect to incur
any additional bankruptcy-related charges or legal charges
with respect to past disputes with the County.
Additionally, plant general and administrative expenses
exclude $1 million in annual corporate support charges;
(D) For accounting purposes, the Reorganizing Debtor records
non-cash accretion revenue on a straight-line basis.
Actual debt service principal payments, which are not
impacted by the non-cash accretion revenue, are made
directly from the County to the Indenture Trustee;
(E) For accounting purposes, the Reorganizing Debtor records
non-cash debt service revenue, which represent the
interest component of debt service payments as prescribed
under the Loan Agreement. Actual debt service interest
payments, which are not impacted by the non-cash accretion
revenue, are made directly from the County to the
Indenture Trustee;
(F) Other non-cash revenue include $0.4 million in revenues
under dispute by the County under the Service Agreement,
$0.3 million in Supplemental Waste Revenues, which are
pledged by the Reorganizing Debtor and held by the
Indenture Trustee and $0.1 million in working capital
timing differences;
(G) The Reorganizing Debtor experienced a $2.6 million non-
cash bad debt charge in 2004, relating to disputed charges
with the County with respect to the existing Service
Agreement;
(H) The Reorganizing Debtor invoiced the County for certain
plant operating charges under the Service Agreement which
were disputed by Lake County. These charges have been
paid for by the Reorganizing Debtor, however,
reimbursement is not expected from the County; and
(I) In 2004, Danielson Holdings made a one-time payment of
$175,000 to acquire 25% of the equity in the Reorganizing
Debtor, as part of the Covanta Energy Corporation
Chapter 11 bankruptcy proceeding.
According to Covanta Lake II President Anthony J. Orlando, the
Projections indicate that the Reorganizing Debtor should have
sufficient cash flow to fund its operations. Accordingly, the
Reorganizing Debtor believes that the Plan satisfies the
feasibility requirement of Section 1129(a)(11) of the Bankruptcy
Code.
Mr. Orlando cautions that no representations can be made as to the
accuracy of the Projections or as to the Reorganized Debtor's
ability to achieve the projected results. Many of the assumptions
on which the Projections are based are subject to uncertainties
outside the Reorganized Debtor's control. Some assumptions
inevitably will not materialize, and events and circumstances
occurring after the date on which the Projections were prepared
may be different from those assumed or may be unanticipated, and
may adversely affect the Reorganized Debtor's financial results.
Therefore, the actual results may vary from the projected results
and the variations may be material and adverse.
The projections were not prepared with a view toward compliance
with the guidelines established by the American Institute of
Certified Public Accountants, the practices recognized to be in
accordance with Generally Accepted Accounting principles, or the
rules and regulations of the Securities and Exchange Commission
regarding projections. Furthermore, the Reorganizing Debtor's
independent accountants have not audited the projections.
The key assumptions to the Projected Financial Results from 2004
to 2007 are:
* The Reorganizing Debtor will emerge from Chapter 11
reorganization on December 31, 2004;
* The existing Service Agreement will be effective through
December 31, 2004, and deemed to be terminated as of that
date;
* The 2004 forecast consists of actual results for eight
months, January through August, plus forecasted results for
the remaining four months, September through December, of
2004;
* As of December 31, 2004, the termination of the Service
Agreement will result in the termination of the Gregg
Contract;
* The terms of the Waste Disposal Agreement will be effective
from January 1, 2005, through July 1, 2014;
* The Reorganizing Debtor will have access to the $1 million
DIP facility, which will help fund the cash flow
requirements in 2004. Any expected borrowings under the DIP
will be satisfied in accordance with the Plan;
* As part of the Settlement Agreement, the County will make a
$2.1 million payment to the Reorganizing Debtor on
January 1, 2005. Additionally, the County will make two
$850,000 payments, one on June 30, 2005, and one on June 30,
2006. The settlement payments will be utilized by the
Reorganizing Debtor to support its Plan disbursements and
ongoing operations;
* The Projections assume that corporate support obligations
will be paid to Covanta Energy to the extent there is cash
available in the Reorganizing Debtor. Any unpaid corporate
support obligations will be recorded by the Reorganizing
Debtor as an intercompany payable to Covanta Energy. The
figures included in the Projections do not include the $1
million in annual corporate support charges;
* Corporate support charges, which are allocated charges from
Covanta Energy to the Reorganizing Debtor, include,
corporate salaries and benefits, management services,
intellectual property, technical personnel and support,
treasury and cash management systems, short-term liquidity,
insurance, special waste services, legal, risk management,
human resources, tax, environmental compliance and other
corporate support areas;
* Effective January 1, 2005, and in conjunction with the Waste
Disposal Agreement, Covanta Energy will execute a Guaranty
and Agreement to "directly, unconditionally, irrevocably and
absolutely guarantee the full and punctual performance by
the Company of all the Company's obligations under the WDA
in accordance with its terms and conditions." The aggregate
amount of the Guaranty will not exceed $10 million; and
* Pass Through Costs, as defined under the WDA, are paid by
the Reorganizing Debtor and reimbursed by the County. The
Pass Through Costs are not reflected in the Projections.
Headquartered in Fairfield, New Jersey, Covanta Energy Corporation
-- http://www.covantaenergy.com/-- is a publicly traded holding
company whose subsidiaries develop, own or operate power
generation facilities and water and wastewater facilities in the
United States and abroad.
Covanta Energy filed for Chapter 11 protection on April 1, 2002
(Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and
James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from its creditors, they listed
$3,280,378,000 in assets and $3,031,462,000 in liabilities.
On March 10, 2004, Covanta Energy Corporation and its core
subsidiaries emerged from chapter 11 as a wholly owned subsidiary
of Danielson Holding Corporation. Some of Covanta's non-core
subsidiaries have liquidated under separate chapter 11 plans.
(Covanta Bankruptcy News, Issue No. 67; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
COVENTRY HEALTH: Moody's Reviewing Ba1 Ratings & May Downgrade
--------------------------------------------------------------
Moody's Investors Service placed Coventry Health Care, Inc.'s
ratings (senior unsecured rating Ba1) under review for possible
downgrade following the announcement this week of its agreement to
acquire First Health Group Corp. for approximately $1.8 billion.
Moody's stated that the nature and structure of the acquisition
appears to be inconsistent with certain key assumptions underlying
the current rating.
The combination of Coventry Health Care and First Health Group
would create a national health benefits platform for Coventry to
serve its local, national and governmental clients beyond the
15 markets in which it currently operates. The acquisition also
provides Coventry with the capability to target opportunities in
health insurance and administrative services from small group to
national and governmental accounts nationwide.
In prior public commentary Moody's has indicated that the Ba1
rating assumes the company would not operate at a level greater
than a 20% debt to capital ratio or engage in a significant debt
financed acquisition. The recent announcement calls into question
these key rating assumptions.
Moody's stated that the review will focus on:
(i) the financial dynamics of the transaction,
(ii) factoring in management's tolerance for financial
leverage,
(iii) its appetite for future acquisitions, and
(iv) the company's near term financial plans for de-
leveraging.
In addition, the review will consider several non-financial
aspects of the transaction, namely integration challenges, the
resulting Coventry management changes and the strategic
implications for Coventry, including its long term vision to
expand business by using this acquisition to develop a national
presence.
Ratings placed under review for possible downgrade:
-- Coventry Health Care, Inc.:
* senior implied debt rating of Ba1;
* senior unsecured debt rating of Ba1;
* Long-term issuer rating of Ba1.
Coventry Health Care, Inc. headquartered in Bethesda, Maryland
reported total membership of 2.4 million as of September 30, 2004.
The company reported net income of $245 million on revenues of
approximately $4 billion for the nine months ending
September 30, 2004.
First Health, headquartered in Downers Grove, Illinois, is a full
service national health benefits services company serving the
group health, workers' compensation and state public program
markets. First Health generated revenues of $890.9 million in
2003.
CSFB MORTGAGE: S&P Places Low-B Ratings on Six Certificate Classes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to Credit Suisse First Boston Mortgage Securities Corp.'s
$1.138 billion commercial mortgage pass-through certificates
2004-C4.
The preliminary ratings are based on information as of
October 18, 2004. Subsequent information may result in the
assignment of final ratings that differ from the preliminary
ratings.
The preliminary ratings reflect:
(1) the credit support provided by the subordinate classes of
certificates,
(2) the liquidity provided by the trustee,
(3) the economics of the underlying loans, and
(4) the geographic and property type diversity of the loans.
Classes A-1, A-2, A-3, A-4, A-5, A-6, A-1-A, A-J, B, and C are
currently being offered publicly.
Standard & Poor's analysis determined that, on a weighted average
basis, the conduit (not including co-op loans) portion of the pool
has:
* a debt service coverage -- DSC -- of 1.47x,
* a beginning LTV of 92.3%, and
* an ending LTV of 82.0%.
The residential cooperative portion of the pool (14.2% of the pool
balance) has:
* a beginning LTV of 26.3%, and
* an ending LTV of 22.1%.
Overall, the collateral pool has:
* a DSC of 2.14x,
* a beginning LTV of 83.3%, and
* an ending LTV of 73.8%.
A copy of Standard & Poor's complete presale report for this
transaction can be found on RatingsDirect, Standard & Poor's Web-
based credit analysis system, at http://www.ratingsdirect.com/
The presale can also be found on the Standard & Poor's Web site at
http://www.standardandpoors.com/ Select Credit Ratings, and then
find the article under Presale Credit Reports.
Preliminary Ratings Assigned
Credit Suisse First Boston Mortgage Securities Corp. 2004-C4
Class Rating Amount ($)
----- ------ ----------
A-1 AAA 32,626,000
A-2 AAA 161,607,000
A-3 AAA 33,994,000
A-4 AAA 105,155,000
A-5 AAA 24,031,000
A-6 AAA 267,162,000
A-1-A AAA 285,886,000
A-J AAA 78,243,000
B AA 39,832,000
C A 25,607,000
D A- 9,958,000
E BBB+ 12,804,000
F BBB 8,535,000
G BBB- 14,226,000
H BB+ 2,845,000
J BB 4,268,000
K BB- 5,691,000
L B+ 4,267,000
M B 2,846,000
N B- 4,267,000
O N.R. 14,226,748
A-X* AAA 1,138,076,748**
A-SP* AAA N/A
A-Y* AAA 150,433,781**
* Interest-only class
** Notional amount
N.R. - Not rated
N/A - Not applicable
DEVINGTON ASSOCIATES: Case Summary & Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Devington Associates, Ltd.
P.O. Box 80154
Indianapolis, Indiana 46280
Bankruptcy Case No.: 04-18494
Chapter 11 Petition Date: October 5, 2004
Court: Southern District of Indiana (Indianapolis)
Judge: Basil H. Lorch
Debtor's Counsel: Edward B. Hopper, II, Esq.
Stewart & Irwin PC
251 East Ohio Street, Suite 1100
Indianapolis, IN 46204
Tel: 317-639-5454
Total Assets: $13,206
Total Debts: $4,986,335
Debtor's 14 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Equitable Life Assurance $2,560,971
Society
c/o CapMark Services
245 Peachtree Center Ave.
NE, #1800
Atlanta, GA 30303
UDAG $820,810
City of Indianapolis
200 E. Washington St.
Ste. 2222
Indianapolis, IN 46204
DFP, Inc. $708,376
P.O. Box 80154
Indianapolis, IN 46280
Marion County Auditor P4011800, P4019092, $403,339
841 City County Building P4011399, P4011907
200 E. Washington St.
Indianapolis, IN 46204
City of Indianapolis $188,133
Bank One $145,009
Union Planters Bank $120,876
LISC Indianapolis Ford $29,329
English Excavating Install New Storm $6,000
Sewer
GSF Safeway, LLC Cleaning Supplies $1,397
Trinity Executive Service Security $1,029
Nightwatch TL, Inc. Mobile Patrols $851
Traffic Sign, Inc. Signage for property $190
The Linder Company Repair Leasing Sign $25
DEVLIEG BULLARD: Hires Mesirow Financial as Investment Banker
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave
DeVlieg Bullard II, Inc., permission to retain Mesirow Financial,
Inc., as its investment banker.
Mesirow Financial worked for the Debtor since March 22, 2004, in a
strategic effort to sell certain of the Debtor's operating assets
on a going concern basis. The Firm is therefore familiar with the
Debtor's business and operations and with potential sale
transactions for the Debtor's assets.
Mesirow Financial will:
a) assist the Debtor in analyzing and evaluating its
business, operations, and financial position;
b) prepare an offering memorandum describing the Debtor, its
historical performance and prospects (including existing
contracts, marketing and sales, labor force and
management, and anticipated financial results of the
Debtor);
c) work with the Debtor in developing a list of suitable
potential buyers who will be contacted on a discreet and
confidential basis after approval by the Debtor;
d) assist the Debtor in the preparation and implementation of
a marketing plan;
e) assist the Debtor in coordinating the data room and with
potential purchasers due diligence investigations;
f) assist the Debtor in evaluating proposals which are
received from potential purchasers;
g) assist the Debtor in structuring and negotiating the
proposed sale of its assets; and
h) meet with the Debtor's Board of Directors to discuss the
proposed sale of its assets and its financial
implications;
Mr. Jeffrey A. Golman, Vice-Chairman at Mesirow Financial,
discloses that the Debtor paid a $50,000 retainer.
Mr. Golman reports that for every successful sale of the Debtor's
assets, business and equity securities, Mesirow Financial will
bill the Debtor a success fee of 2.5% of the aggregate amount
received by Debtor for a completed sale.
Mr. Golman adds that the Firm will also charge the Debtor a
minimum aggregate success fee of $400,000 that is payable upon
closing of a sale. If the sale only involves the Debtor's Tooling
Systems Division, the minimum aggregate success fee will be
$200,000.
Mesirow Financial does not have any interest adverse to the Debtor
or its estate.
Headquartered in Machesney Park, Illinois, DeVlieg Bullard II,
Inc. -- http://www.devliegbullard.com/-- provides a comprehensive
portfolio of proprietary machine tools, aftermarket replacement
parts, field service and premium workholding products. The
Company filed for chapter 11 protection on July 21, 2004 (Bankr.
D. Del. Case No. 04-12097). James E. Huggett, Esq., at Flaster
Greenberg, represents the Company in its restructuring efforts.
When the Debtor filed for protection from its creditors, it
estimated debts and assets of over $10 million.
DIRECTV: Minority Shareholder Commences $1 Billion Fraud Lawsuit
----------------------------------------------------------------
Darlene Investments LLC, a significant minority shareholder in
DirecTV Latin America, today filed a lawsuit against News
Corporation (NYSE: NWS), DirecTV Group, Inc. (NYSE: DTV) and their
affiliates for fraud and violation of fiduciary, contractual and
other duties in connection with recently announced transactions in
Latin America.
Darlene is seeking to enjoin DirecTV and DirecTV Latin America
from implementing the recently announced transactions that seek to
reorganize and combine DirecTV Latin America with News Corp.
affiliates Innova S. de R.L. de C.V., Sky Brasil Servicos Ltda.
and Sky Multi-Country Partners. The lawsuit is also seeking more
than $1 billion in damages for fraud committed by News Corp. and
DirecTV prior to the transactions. The suit was filed in the
Circuit Court of the 11th Judicial Circuit in and for Miami-Dade
County, Florida.
The suit alleges that, following a long history of self-dealing
transactions that improperly benefited DirecTV and repeatedly
threatened DirecTV Latin America's prospects and viability, News
Corp. and DirecTV agreed to these Sky transactions in total
disregard for the interests of Darlene in order to be released
from covenants not to compete in Latin America that News Corp. had
previously signed with the Sky entities. News Corp. breached these
covenants when it acquired its controlling interest in DirecTV in
late 2003.
The suit also charges that the proposed transactions between
DirecTV and Sky are designed primarily to deliver improper
benefits to News Corp. and its partners by grossly undervaluing
the assets of DirecTV Latin America. News Corp. is a major
investor in Sky Latin America and is the largest investor in
DirecTV.
The suit charges that News Corp. and DirecTV purposely misled the
US Bankruptcy Court and Darlene with respect to their future
commitment to the success of DirecTV Latin America. Specifically,
the allegations explain that DirecTV presented the Sky
transactions to the DirecTV Board of Directors Audit Committee in
January 2004 --before DirecTV Latin America's emergence from
bankruptcy -- but concealed this fact from Darlene. The suit
alleges that while News Corp.'s current subsidiaries were telling
a U.S. Bankruptcy Court and Darlene that they would grow and
enhance DirecTV Latin America, News Corp., DirecTV and DirecTV's
Audit Committee knew exactly the opposite was true. The suit
asserts that in fact the defendants were planning a transaction
designed to deliver vast benefits to News Corp. and its partners
while inflicting critical harm to DirecTV Latin America and
Darlene.
The lawsuit contains specific allegations concerning the
significant benefits to be delivered under the proposed
transactions to Grupo Televisa, Globo and other Sky partners in
exchange for not enforcing News Corp.'s covenants not to compete.
In each case, Darlene asserts that the proposed transactions
improperly cause DirecTV Latin America to subsidize these benefits
by shifting value to News Corp. and its partners, and that News
Corp. sacrificed the interests of DirecTV Latin America in order
to enrich itself and escape the consequences of its covenants not
to compete.
Darlene's complaint references independent financial reports
available to DirecTV that support its allegations. Multiple
financial analyses performed by external advisors including
Lazard, Morgan Stanley, Alix Partners, Citigroup and a DirecTV
bankruptcy debt-equity valuation, as well as a valuation performed
by DirecTV itself, valued DirecTV Latin America at over
$1 billion, while the transactions agreed to with Sky and
affiliates reflect a valuation of approximately $217 million.
Defendants
The DirecTV Group, DirecTV Latin American Holdings, Inc., DirecTV
International Holdings, Inc., The News Corporation Ltd., Sky
Multi-Country Partners, Innova S. de R.L. de C.V., Globo
Comunicacoes e Participacoes, S.A., and Grupo Televisa, S.A.
About Darlene Investments LLC
Darlene Investments LLC is a limited liability company that holds
a preferred 14.1% interest in DirecTV Latin America.
DIRECTV is the nation's leading digital multichannel television
service provider with more than 12.6 million customers. DIRECTV
and the Cyclone Design logo are registered trademarks of DIRECTV,
Inc., a unit of The DIRECTV Group, Inc. (NYSE:DTV). The DIRECTV
Group is a world-leading provider of digital multichannel
television entertainment, broadband satellite networks and
services, and global video and data broadcasting. The DIRECTV
Group is 34 percent owned by Fox Entertainment Group, which is
approximately 82 percent owned by News Corporation Ltd. Visit
DIRECTV at http://www.directv.com/
Headquartered in Fort Lauderdale, Florida, DirecTV Latin America,
LLC -- http://www.directvla.com/-- is the leading direct-to-home
satellite television service in Latin America and the Caribbean.
Currently the service reaches more than 1.5 million customers in
the region, in a total of 28 markets. DIRECTV is currently
available in: Argentina, Brazil, Chile, Colombia, Costa Rica,
Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua,
Panama, Puerto Rico, Trinidad & Tobago, Uruguay, Venezuela and
several Caribbean island nations. DIRECTV Latin America, LLC is a
multinational company owned by DIRECTV Latin America Holdings, a
subsidiary of Hughes Electronics Corporation; Darlene Investments,
LLC, an affiliate of the Cisneros Group of Companies, and Grupo
Clarin. DIRECTV Latin America has offices in Buenos Aires,
Argentina; Sao Paulo, Brazil; Cali, Colombia; Mexico City, Mexico;
Carolina, Puerto Rico; Fort Lauderdale, USA and Caracas,
Venezuela.
The Company filed for chapter 11 protection on March 18, 2003
(Bankr. Del. Case No.: 03-10805 (PJW)). The Company emerged from
bankruptcy on February 24, 2004.
EAGLE FAMILY: Weak Performance Prompts S&P to Slice Ratings
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on privately owned niche dry-grocery food products producer
and distributor Eagle Family Foods Inc. to 'B-' from 'B', as well
as its subordinated debt rating to 'CCC' from 'CCC+'. The outlook
is stable.
Standard & Poor's estimates that Eagle had about $186 million of
total debt and $167 million of 10% pay-in-kind preferred stock
outstanding at July 3, 2004.
"The downgrade reflects our heightened concerns regarding Eagles'
weakened operating performance and financial condition for the
fiscal year ended July 3, 2004. Credit measures have eroded due
to increases in marketing and advertising activities to expand its
Hispanic market presence and support its dessert kit product
launch," said Standard & Poor's credit analyst Alison Birch.
For the 53 weeks ended July 3, 2004, EBITDA margins fell to about
17% from 21% in fiscal 2003. Eagle is highly leveraged and its
credit measures are weak. In addition, there is about $167
million of redeemable preferred stock at the company's parent,
Eagle Family Foods Holdings Inc., held by the financial sponsors
GE Investment Private Placement Partners II and Warburg, Pincus
Ventures L.P. These securities are subject to mandatory
redemption in the event of a liquidity event (such as the closing
of a public offering, the sale of the company, or a change of
control), and they represent a potential growing liability on the
company's balance sheet.
ELANTIC TELECOM: Can Continue Hiring Ordinary Course Professionals
------------------------------------------------------------------
The Honorable Douglas O. Tice Jr., of the U.S. Bankruptcy Court
for the Eastern District of Virginia gave Elantic Telecom, Inc.,
permission to continue to retain, employ and pay professionals it
turns to in the ordinary course of its business without bringing
formal employment applications to the Court.
In the Debtor's day-to-day operation of its business, management
regularly calls on certain professionals, including attorneys and
consultants, for assistance in carrying out their assigned
responsibilities and operation of the business.
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 apply separately for approval
of its employment and compensation. The Debtor explains that the
uninterrupted services of its Ordinary Course Professionals are
vital to its ability to reorganize.
The Debtor assures the Court that:
a) no Ordinary Course Professionals will be paid in excess of
$25,000 per month over any consecutive four-month period
without prior authorization from the Court; and
b) every four months, the Debtor will file a statement to the
Court and the U.S. Trustee that contains information of:
(i) the name of the Ordinary Course Professional,
(ii) the aggregate amounts paid as compensation for
services rendered and reimbursement of expenses, and
(iii) the general description of the services rendered by
each Ordinary Course Professional.
Headquartered in Richmond, Virginia, Elantic Telecom, Inc.
-- http://www.elantictelecom.com/-- provides wholesale fiber
bandwidth and carrier services to long-distance, international
wireless carriers and competitive local exchange carriers across
its fiber optic network. The Company filed for chapter 11
protection (Bankr. E.D. Va. Case No. 04-36897) on July 19, 2004.
When the Debtor filed for protection from its creditors, it listed
$19,844,000 in assets and $24,372,000 in liabilities.
ENDURANCE SPECIALTY: Gets Canadian License & Opens Toronto Branch
-----------------------------------------------------------------
Endurance Reinsurance Corporation of America, a wholly owned U.S.
subsidiary of Endurance Specialty Holdings Ltd. (NYSE:ENH), opened
a branch office in Toronto, Canada. The Canadian branch has been
licensed by the Office of the Superintendent of Financial
Institutions, and will begin operations immediately.
The Canadian branch office will initially focus on treaty
reinsurance business for Canadian cedants, with a primary focus on
property treaty. The office will build on existing core business
developed through a renewal rights transaction completed in April
of 2003 between Endurance Re and Hartford Fire Insurance Company.
Expanding Endurance's Global Platform
The launch of the Canadian branch is a part of Endurance Specialty
Holdings' continued strategy to expand its presence in the global
insurance and reinsurance markets. Endurance Re's Canadian branch
will pursue an underwriting strategy based on quality risk
selection, prudent pricing discipline and responsive client
service.
"Consistent with the approach taken toward all of our businesses,
our Canadian branch will take a technical and analytical approach
to business while practicing disciplined underwriting. To this
end, we have appointed a Chief Agent who has extensive knowledge
of the Canadian insurance and reinsurance markets, and is also
very well-respected in the industry," commented William Jewett,
President of Endurance Re.
Canadian Branch to be Led by Mike Rende
Assigned the role of Chief Agent in Canada, Mr. Rende has 30 years
Canadian reinsurance experience. "Our team is looking forward to
spearheading Endurance Re's expansion into Canada. Our
disciplined approach to the market and our focus on client
service, together with our financial strength, should serve our
Canadian brokers and client companies extremely well," said Mr.
Rende.
About Endurance Specialty Holdings
Endurance Specialty Holdings Ltd. is a global provider of property
and casualty insurance and reinsurance. Through its operating
subsidiaries, Endurance currently writes property per risk treaty
reinsurance, property catastrophe reinsurance, casualty treaty
reinsurance, property individual risks, casualty individual risks,
and other specialty lines. Endurance's operating subsidiaries
have been assigned a group rating of A (Excellent) from A.M. Best,
A2 by Moody's and A- from Standard & Poor's. For more information
about Endurance, please visit http://www.endurance.bm/
* * *
As reported in the Troubled Company Reporter on June 18, 2004,
Standard & Poor's Ratings Services assigned its 'BBB' counterparty
credit rating to Endurance Specialty Holdings Ltd. and its
preliminary 'BBB' senior debt, 'BBB-' subordinated debt, and 'BB+'
preferred stock ratings to the company's $1.8 billion universal
shelf registration.
"The ratings on Endurance are based on its strong competitive
position, which is supported by a diversified business platform,"
noted Standard & Poor's credit analyst Damien Magarelli. "In
addition, Endurance maintains strong capital adequacy and strong
operating performance." Offsetting these positive factors are
concerns about Endurance's exposure to catastrophes and minimal
reinsurance protections. Endurance also is a relatively new
operation, and management has not been tested through difficult
market cycles.
ENRON CORP: Court Gives Conditional Nod on Bammel Settlement Pact
-----------------------------------------------------------------
Martin A. Sosland, Esq., at Weil, Gotshal & Manges, LLP, in New
York, relates that the Bammel Storage Reservoir, located outside
of downtown Houston, Texas, is one of the largest underground
reservoir storage in North America. The storage facility is
comprised of about 7,000 acres and has a capacity of around 118
billion cubic feet of natural gas. Three transactions comprise
the Bammel Structure:
1. Bammel Gas Trust Transaction (December 1997)
Pursuant to this transaction, Houston Pipe Line Company, LP,
and HPL Resources Company, LP, (a) sold approximately 80
billion cubic feet of natural gas -- the Storage Gas -- to
the Bammel Gas Trust for $232,000,000 and (b) received from
Bammel Gas Trust the right to use the Storage Gas, which
right was subsequently transferred on May 31, 2001 to Debtor
BAM Leaseco.
2. ENA Asset Holdings Transaction (November 1999)
Enron and Houston Pipe Line formed HPL Asset Holdings, LP,
now known as ENA Asset Holdings. Houston Pipe Line
contributed the Bammel Storage Reservoir and other Prime
Lease Assets in consideration for a 99.89% limited
partnership interest and a 0.01% general partnership interest
in ENA Asset Holdings. Enron indirectly contributed
$1,000,000 for a 0.1% limited partnership interest in ENA
Asset Holdings. Contemporaneously, ENA Asset Holdings leased
back the Prime Lease Assets to Houston Pipe Line for an
18-year term, which lease rights were subsequently
transferred to BAM Leaseco on May 31, 2001 for an extended
term through May 31, 2031, with a right to renew for an
additional 20-year period.
Subsequently, Houston Pipe Line (a) contributed its general
partnership interest in ENA Asset Holdings to Blue Heron I,
LLC, and then contributed its interest in Blue Heron I, LLC,
to the Whitewing structure, and (b) contributed its limited
partnership interest in ENA Asset Holdings to Whitewing
Associates, LP, in exchange for a limited partnership interest
in Whitewing Associates, LP.
3. Project Triple Lutz (May 31, 2001)
Through a series of transactions and for an upfront payment
of approximately $728,700,000, including $274,000,000 of
prepaid lease payments:
(a) Enron sold the stock of Houston Pipe Line and HPLR to AEP
Energy Services Gas Holding Company;
(b) Houston Pipe Line obtained (1) a 30-year Sublease
Agreement, with an option to renew for an additional
20-year period, covering the Prime Lease Assets and
the Sublease Owned Assets, which were owned by BAM
Leaseco, and (2) a Right to Use Agreement covering
about 65.5 billion cubic feet of cushion gas;
(c) Houston Pipe Line repurchased 25 billion cubic feet of
Storage Gas from Bammel Gas Trust; and
(d) Houston Pipe Line obtained a Purchase Option Agreement
covering the Prime Lease Assets, the Sublease Owned
Assets and 65.5 billion cubic feet of natural gas covered
by the Right to Use Agreement.
The Bammel Agreements
In connection with the Bammel Structure, the Debtors entered into
these contracts and leases:
(1) that certain Purchase and Sale Agreement, dated as of
December 27, 2000, by and between AEP Gas Holdings and
Enron, pursuant to which, among other things, AEP Gas
Holdings acquired, directly or indirectly, all of the
common stock of Houston Pipe Line and HPL Resources in a
transaction that closed on or about May 31, 2001;
(2) that certain Joinder and Participation Agreement, dated as
of December 27, 2000, by and among Enron, AEP Gas Holdings
and AEP Resources, Inc., and that certain Buyer Parent
Guaranty, dated as of May 31, 2001, by American Electric
in favor of Enron;
(3) that certain Lease Agreement, effective November 10, 1999,
by and between ENA Asset Holdings and BAM Leaseco,
pursuant to which BAM Leaseco leased the Prime Lease
Assets from ENA Asset Holdings -- the Prime Lease Assets
include the Bammel Storage Reservoir and certain other
real property, pipelines, meters and other equipment;
(4) that certain Sublease Agreement, effective May 31, 2001,
between Houston Pipe Line and BAM Leaseco, pursuant to
which Houston Pipe Line leased the Sublease Owned Assets
and subleased the Prime Lease Assets for an initial 30-
year term, which term could be extended, at Houston Pipe
Line's option, for an additional 20 years;
(5) that certain Consent and Acknowledgement, dated as of
May 31, 2001, by and among BAM Leaseco, ENA Asset Holdings
and Houston Pipe Line -- the Leased Facilities Consent;
(6) that certain Consent and Acknowledgement, dated as of
May 30, 2001, by and among Enron, ENA, BAM Leaseco, ENA
Asset Holdings, BofA, the Trustee, Houston Pipe Line and
HPL Resources -- the Cushion Gas Consent;
(7) that certain Right to Use Agreement, effective May 31,
2001, by and between Houston Pipe Line and BAM Leaseco,
pursuant to which, in conjunction with the Cushion Gas
Consent, Houston Pipe Line acquired the right to use
approximately 65.5 bcf of natural gas then being used as
"cushion gas" necessary for the operations of the Bammel
Storage Reservoir, which gas included 10.5 bcf of natural
gas owned by BAM Leaseco;
(8) that certain Assurances and Indemnity Agreement, dated as
of May 31, 2001, by Enron in favor of AEP Gas Holdings,
Houston Pipe Line, and LODISCO, LLC, pursuant to which
Enron guaranteed, among other things, performance by ENA,
BAM Leaseco, and ENA Asset Holdings of their obligations
under each of the Sublease, the Right to Use Agreement,
the Leased Facilities Consent, the Cushion Gas Consent,
and other agreements entered into in connection with the
transactions contemplated by the Purchase Agreement;
(9) that certain Purchase Option Agreement, dated as of
May 31, 2001, by and among BAM Leaseco, Houston Pipe Line
and ENA Asset Holdings; and
(10) that certain Software License and Services Agreement dated
as of November 16, 2001, by and between Enron and AEP
Energy Services, Inc. -- the POPS Software License
Agreement.
In connection with these bankruptcy cases, AEP Gas Holdings and
Houston Pipe Line filed five proofs of claim against one or more
of the Debtors, which claims assert contingent and unliquidated
claims relating to the Bammel Agreements that may exceed
$1,000,000,000. In addition, on November 21, 2003, AEP Gas
Holdings, Houston Pipe Line and HPL Resources initiated an
adversary proceeding against certain of the Debtors seeking
declaratory judgment and other protection relating to the rights
and obligations of each under certain of the Bammel Agreements
and relating to the Debtors' ability to reject certain of the
Bammel Agreements under Section 365 of the Bankruptcy Code.
Pursuant to the Bank of America Settlement on February 23, 2004,
BAM Leaseco filed a notice of rejection for the Right to Use
Agreement and a notice of rejection for the Purchase Option
Agreement. On March 8, 2004, certain of the AEP Parties filed
objections to the Right to Use Rejection.
The Settlement Agreement
Mr. Sosland reports that the parties want to compromise and
settle all issues regarding the Bammel Agreements to which they
are a party. After an extensive arm's-length and good faith
negotiations and discussions, the parties agree on these
settlement terms:
A. Conveyance of Acquired Assets by the Debtors
At Closing, in consideration of the release by the AEP
Parties of certain of their claims against the Debtors, the
payment of the Settlement Payment and the amendment of the
Adversary Proceeding to withdraw all claims asserted in the
Adversary Proceeding other than those relating to the Right
to Use Agreement, each of the Debtors will assign, transfer,
convey and deliver to the AEP Designees, free and clear of
all interests, all Liens other than Permitted Exceptions and
all Liabilities other than the Assumed Liabilities, all of
the Debtors' current and future legal, equitable and
beneficial right, title and interest in and to:
(a) the Prime Lease Assets;
(b) the Sublease Owned Assets;
(c) 10.5 billion cubic feet of natural gas owned by BAM
Leaseco located in the Bammel Storage Reservoir;
(d) all right, title and interest in and to the Assumed
Contracts;
(e) the Enron Tag-Along Rights;
(f) the Equipment Records;
(g) the Facility Records;
(h) the Real Property Interests; and
(i) the Other Assets.
B. Settlement Payment
At the Closing, the AEP Parties will cause $115,000,000 to be
paid by wire transfer in immediately available funds to
accounts designated in writing by Enron.
C. Excluded and Assumed Liabilities
Effective as of and upon the Closing, (a) the AEP Designees
will assume at the Closing only the Assumed Liabilities and
none of the AEP Parties or the AEP Designees will assume any
other liability relating to or in connection with the
Acquired Assets or the Debtors, and (b) the AEP Designees
will own all of the Acquired Assets free and clear of all
interests, Liens and Liabilities, other than the Permitted
Exceptions and Assumed Liabilities.
D. Treatment of Executory Contracts
For purposes of the Settlement Agreement only, the Parties
agree to treat the Prime Lease, the Sublease, the Leased
Facilities Consent, the Cushion Gas Consent and the POPS
Software License Agreement as executory contracts or
unexpired leases under Section 365. No Party waives, or will
be deemed to have waived, any rights, defenses or positions
it has asserted or might in the future assert in connection
with any contract, agreement, claim, matter or entity outside
the scope of the Settlement Agreement.
E. Assumption and Assignment of Assumed Contracts
Effective as of and upon the Closing, the Debtors will assume
the Prime Lease, the Sublease, and the Leased Facilities
Consent. The Parties agree that no cure payments or
assurances of future performance are required pursuant to
Section 365 or otherwise in connection with the assumption
and assignment of the Assumed Contracts. Effective as of and
upon the Closing, all of ENA Asset Holdings' current and
future legal, equitable and beneficial right, title and
interest in and to the Prime Lease and the Leased Facilities
Consent will be assigned to an AEP Designee and all of BAM
Leaseco's current and future legal, equitable and beneficial
right, title and interest in and to the Prime Lease, the
Sublease and the Leased Facilities Consent will be assigned
to an AEP Designee.
F. Rejection of POPS Software License Agreement; New POPS
Software License Agreement
Promptly after the Closing, Enron will file a notice to
reject the POPS Software Agreement in accordance with the
provisions of Section 365. The Parties agree that upon the
rejection of the POPS Software Agreement, each Party that is
a party thereto will be relieved of any obligation to those
other Parties that are party thereto to make any payments,
including payment on any prepetition or postpetition claim
for damages, under that rejected agreement or to otherwise
perform under that agreement for the benefit of any other
Party. The POPS Software Agreement will be deemed
terminated upon rejection. Effective upon the Closing, Enron
and Enron Net Works LLC will enter into a new perpetual,
non-exclusive, royalty-free license relating to the POPS
Software with HPL.
G. Termination of Certain Bammel Agreements
Effective as of and upon the Closing, the Purchase Agreement,
the Enron Guaranty and each of the Buyer Parent Guaranties
and each of the Ancillary Purchase Agreements will be deemed
terminated with respect to the Parties and each Party that is
a party thereto will be relieved of any obligation to such
other Parties as are a party thereto to make any payments,
including payment on any prepetition or postpetition claim
for damages, under those terminated agreements or to otherwise
perform under those agreements for the benefit of any other
Party. The Debtors agree that none of the Bammel Agreements
will be rejected or deemed rejected under the Plan or pursuant
to any order confirming the Plan.
H. Treatment of the Right to Use Agreement
BAM Leaseco has filed a notice of rejection in the Bankruptcy
Cases seeking to reject the Right to Use Agreement pursuant
to Section 365. The Debtors acknowledge that the AEP Parties
have objected to the Right to Use Rejection and that the AEP
Parties have asserted, among other things, that, if the
Bankruptcy Court determines that BAM Leaseco is entitled to
reject the Right to Use Agreement, the Right to Use Agreement
should be treated as a non-residential real property lease
under which Houston Pipe Line has the rights afforded by
Section 365(h)(1)(A)(ii) of the Bankruptcy Code. The Parties
agree that the issues raised or anticipated by the Right to
Use Agreement will be adjudicated in accordance with the
Stipulation. The Parties further agree that, in the event
that the Right to Use Agreement is rejected, the AEP Parties
covenant, promise and agree that they will not file, bring,
or assert any claim against any Debtor with respect to
rejection damages.
I. Treatment of the Cushion Gas Consent
Effective as of and upon the Closing, the Cushion Gas Consent
will be assumed by each of the Debtors that is a party
thereto. The Parties agree that no cure payments or
assurances of future performance are required pursuant to
Section 365 or otherwise in connection with the assumption
of the Cushion Gas Consent. The AEP Parties covenant,
promise and agree that, from and after the Closing, they will
not file, bring, or assert any lawsuit, claim, complaint, or
judicial administrative or other proceeding against any
Debtor with respect to any claim against or Liability of any
Debtor under the Cushion Gas Consent. The Parties expressly
acknowledge and agree that the AEP Parties have not released
or discharged any claims against Bank of America or the
Trustee under the Cushion Gas Consent, any other agreement,
Applicable Law or otherwise.
J. Mutual Releases
Except as agreed, the Trading and Other Claims, any
contractual relationship between the Parties which is
unrelated to the Bammel Agreements, the Ancillary Purchase
Agreements or the Acquired Assets, or any Liabilities arising
out of or relating to Titles I and IV of the Employee
Retirement Benefit Security Act, as amended:
(a) each of the Enron Releasors will fully and finally
release, acquit and forever discharge each of the AEP
Parties and the AEP Release Affiliates from any an all
past, present, and future claims, defaults, demands,
obligations, Liabilities, actions, causes of action,
rights or damages, relating to (i) the Bammel Agreements,
the Ancillary Purchase Agreements and the transactions
related thereto or the ownership, operation or
maintenance of any of the Acquired Assets, (ii) the
Excluded Liabilities, (iii) the Designated Properties,
or (iv) any action or inaction occurring from the
beginning of time through and including the Closing Date;
and
(b) each of the AEP Releasors will fully and finally release,
acquit and forever discharge each of the Enron Releasors
from any and all past, present, and future claims,
defaults, demands, obligations, liabilities, actions,
causes of action and rights or damages, relating or
attributable to (i) the Bammel Agreements, the Ancillary
Purchase Agreements and the transactions related thereto
or the ownership, operation or maintenance of any of the
Acquired Assets, (ii) any contractual obligations arising
after the Closing Date under the Assumed Contracts, (iii)
the Designated Properties, or (iv) any action or inaction
occurring from the beginning of time through and
including the Closing Date.
K. Tax Indemnity for Pre-Acquisition Tax Claims
Subject to certain limitations, the Federal Tax
Indemnification Claim and the State Tax Indemnification
Claims will be allowed as Class 4 or Class 185 claims, as
applicable, under the Plan and the Liquidated Federal Tax
Indemnification Claim and the Liquidated State Tax
Indemnification Claims will be entitled to distributions as
allowed Class 4 or Class 185 claims under the Plan as though
the claims had been liquidated as of the Effective Date of
the Plan. Enron's indemnification obligations under the
Settlement Agreement will arise upon Enron's receipt of
documentation evidencing that the claims qualify as a
Liquidated Federal Tax Indemnification Claim or a Liquidated
State Tax Indemnification Claim, as applicable. AEP Gas
Holdings agrees to furnish documentation in support of any
Federal Tax Indemnification Claim or State Tax
Indemnification Claims to those third parties as may be
reasonably requested by Enron.
Pursuant to Sections 105, 363, 365 and 1146 of the Bankruptcy
Code and Rules 6004, 6006 and 9019 of the Federal Rules of
Bankruptcy Procedure, the Debtors ask the Court to approve the
Settlement Agreement and the contemplated transactions.
According to Mr. Sosland, the Settlement is fair and reasonable
for these reasons:
(i) Since numerous and complex issues relate to the Bammel
Structure, absent the settlement, the Debtors believe
that extensive judicial intervention would be required
to resolve the issues, and it is uncertain which of the
parties would emerge with a favorable and successful
resolution of its claim. A litigation could be costly,
time-consuming and distracting to management and
employees alike;
(ii) The Debtors are unaware of any liens, claims or
encumbrances asserted against the Acquired Assets;
(iii) The terms of the Settlement Agreement were negotiated at
arm's length and in good faith;
(iv) The parties agree that no cure payments or assurances of
future performance are required with respect to the
assumption and assignment of certain agreements; and
(v) The proceeds of the sale will be segregated pending
consent from the Creditors Committee or further Court
order and are expected to fund distributions under the
Plan. Thus, the proceeds should be exempt from transfer,
stamp and similar taxes.
* * *
Judge Gonzalez grants Enron Corporation and its debtor-affiliates'
request except as to the assumption of the Cushion Gas Consent.
The Debtors have withdrawn that portion of their request.
The Cushion Gas Consent has not been, is not and will not be
assumed provided that the Cushion Gas Consent has not been and
will not be rejected or terminated by the confirmation or
consummation of the Debtors' Chapter 11 Plan or any other Court
order. Therefore, the parties' rights and obligations under the
Cushion Gas Consent is not to be altered, terminated, or
released.
Judge Gonzalez conditions the approval of the mutual release
provisions of the Settlement Agreement in that the releases will
not affect the parties' rights to adjudicate the rejection of the
Right to Use Agreement.
Judge Gonzalez excludes the Enron Tag-Along Rights from the
Acquired Assets in the Settlement Agreement. The Enron Tag-Along
Rights are not being purchased by the AEP Parties or the AEP
Designees.
Moreover, the Court requires the BofA Entities, when withdrawing
any natural gas contained in the Bammel Storage Reservoir that
any of them claim the Bammel Gas Trust owns or in which any of
them claims a security interest, to provide Houston Pipe Line
Company LP, at least 20 days' written notice of a demand to
withdraw the natural gas from the Bammel Storage Reservoir or a
demand to deliver the natural gas to another location. The
notice requirement also applies to any request to attach,
segregate or sequester any natural gas, or any other request for
an injunction or order that would have the effect of prohibiting
or impairing any withdrawal of natural gas by Houston Pipe.
During any Notice Period, the AEP Parties will operate the Bammel
Storage Reservoir, including withdrawals and injections of
natural gas, in the ordinary course of business consistent with
past practice. The AEP Parties will provide the BofA Entities
with a statement certifying the amount of natural gas located in
the Bammel Storage Reservoir on the date the Withdrawal Notice is
given within two business days of the date of the Withdrawal
Notice.
Furthermore, Judge Gonzalez makes it clear that:
(a) Nothing will release, discharge or otherwise adversely
affect with the obligations owed by the Debtors and by the
BofA Entities under the BofA Settlement Agreement,
including but not limited to, and subject in all respects
to the terms of the BofA Settlement Agreement;
(b) Nothing will adversely affect the rights, claims,
interests or defenses of any of the BofA Entities arising
under or relating to the Cushion Gas Consent, the Bammel
Agreements or any of the Operative Documents or under
applicable law relating to up to 55 bcf of natural gas
stored in the Bammel Storage Reservoir, provided that
those rights do not include any title to, ownership of, or
security interest in any Acquired Asset;
(c) The BofA Entities will retain and preserve the rights,
claims, and defenses arising out of any of the
transactions comprising the Bammel Structure, that they
may have against any of the AEP Parties in the AEP
Parties' own capacity, and not as a purported successor to
or assignee of any Movant or other current Affiliate of
Enron, provided that those rights will not be based on;
* any claim of title to, ownership of, or security
interest in any Acquired Asset; or
* any claim that an AEP Party assumed a Liability owed
by any Debtor or other current Enron Corp. affiliate,
to any BofA Entity in connection with the acquisition
of the Acquired Assets;
(d) Nothing will adversely affect the right of any BofA
Entities to preserve, protect and enforce their rights,
claims, and defenses;
(e) The BofA Settlement Agreement did not create any right or
interest in the Acquired Assets in favor of the BofA
Entities;
(f) The Settlement Agreement and the BofA Settlement Agreement
have been independently approved by the Court and neither
of the Agreements alters the rights, obligations or duties
of any of the parties arising under the other agreement;
(g) Nothing in the Settlement Agreement creates any new right
or interest in the Acquired Assets in favor of any of the
BofA Entities; and
(h) The Debtors' sale of the Acquired Assets does not conflict
with or violate the BofA Settlement Agreement.
Headquartered in Houston, Texas, Enron Corporation is in the midst
of restructuring various businesses for distribution as ongoing
companies to its creditors and liquidating its remaining
operations. Before the company agreed to be acquired, controversy
over accounting procedures had caused Enron's stock price and
credit rating to drop sharply. The Company filed for chapter 11
protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-
16033). Judge Gonzalez confirmed the Company's Modified Fifth
Amended Plan on July 15, 2004, and numerous appeals followed.
Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil,
Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts. (Enron Bankruptcy News, Issue No. 127;
Bankruptcy Creditors' Service, Inc., 15/945-7000)
ENRON CORP: Wants Court Nod on 102 Claim Settlement Pacts
---------------------------------------------------------
Enron Corporation and its debtor-affiliates seek the Court's
authority to enter into agreements to compromise and settle 102
claims.
Specifically, the Agreements will:
(a) reduce the aggregate amount of 31 Claims from $797,448,757
to $776,907,527, and allow them in their reduced amounts;
(b) reclassify and allow as unsecured claims, 13 claims
aggregating $6,626,691;
(c) reclassify and allow The City of New York's Claim No.
23312 as a $116,605 priority claim, and a $5,384 unsecured
claim;
(d) reclassify and allow The City of New York's Claim No.
23060 as a $77,506 priority claim, and a $13,278 unsecured
claim;
(e) reclassify and allow against the correct Debtor, five
claims aggregating $624,989;
(f) reduce eight claims aggregating $43,919,565, to
$13,923,697, and allow them as unsecured claims at their
reduced amounts;
(g) change the amount of 30 claims aggregating $50,391,320 to
$50,733,813, and allow them as changed;
(h) reclassify and allow as unsecured, three claims
aggregating $143,380;
(i) reclassify against the correct Debtor seven claims
aggregating $6,364,863 and allow them at the reduced
amount of $3,813,172;
(j) reclassify and allow as unsecured, two claims aggregating
$13,457,228 and correct the Debtor against which the
claims are to be allowed; and
(k) reduce Seimens Business Services, Inc.'s Claim No. 18349
from $284,958 to $282,136, reclassify it as an unsecured
claim and allow it at its reduced amount.
Melanie Gray, Esq., at Weil, Gotshal & Manges, LLP, in New York,
asserts if the Agreements are not approved and the claims are not
formally modified and allowed pursuant to the Debtors' request,
certain claimants will either receive a distribution greater than
they are otherwise entitled to receive, or a distribution from
the wrong Debtor's estate.
Headquartered in Houston, Texas, Enron Corporation is in the midst
of restructuring various businesses for distribution as ongoing
companies to its creditors and liquidating its remaining
operations. Before the company agreed to be acquired, controversy
over accounting procedures had caused Enron's stock price and
credit rating to drop sharply. The Company filed for chapter 11
protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-
16033). Judge Gonzalez confirmed the Company's Modified Fifth
Amended Plan on July 15, 2004, and numerous appeals followed.
Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil,
Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts. (Enron Bankruptcy News, Issue No. 127;
Bankruptcy Creditors' Service, Inc., 15/945-7000)
FELCOR LODGING: Calls for Redemption of $40 Million Senior Notes
----------------------------------------------------------------
FelCor Lodging Trust Incorporated (NYSE: FCH), and its subsidiary
FelCor Lodging Limited Partnership said FelCor LP is calling for
redemption, on Nov. 17, 2004, $40 million in aggregate principal
amount of its outstanding 9.5% Senior Notes due 2008 (Cusip No.
31430Q AG 2), which currently bear interest at a rate of 10% per
annum, at a redemption price of $1,047.50 per $1,000 principal
amount, as determined in accordance with the indenture governing
the 9.5% Senior Notes, plus any accrued and unpaid interest to the
date of redemption. SunTrust Bank, as trustee, in accordance with
the indenture governing the 9.5% Senior Notes due 2008, will
notify holders of the 9.5% Senior Notes of the call for
redemption. Following the redemption, the remaining outstanding
principal amount of the 9.5% Senior Notes due 2008 will be
approximately $56 million.
On Oct. 14, 2004, FelCor completed the sale of the Harvey Hotel in
Irving, Texas to the Procaccianti Group. This makes six hotels
FelCor has sold since June 30, 2004, resulting in gross proceeds
of approximately $70 million.
FelCor is the nation's second largest hotel real estate investment
trust and the nation's largest owner of full service, all-suite
hotels. FelCor's consolidated portfolio is comprised of
143 hotels, located in 32 states and Canada. FelCor owns 69 full
service, all-suite hotels, and is the largest owner of Embassy
Suites Hotels and Doubletree Guest Suites hotels. FelCor's
portfolio also includes 65 hotels in the upscale and full service
segments. FelCor has a current market capitalization of
approximately $3.0 billion. Additional information can be found
on FelCor's Web site at http://www.felcor.com/
* * *
As reported in the Troubled Company Reporter on Aug. 20, 2004,
Standard & Poor's Ratings Services assigned its 'CCC' rating to
FelCor Lodging Trust, Inc.'s planned $50 million add-on to the
$107 million series A cumulative convertible preferred stock.
These securities will be a draw down from the company's shelf
registration. Proceeds will be used by FelCor Lodging L.P. (sole
general partner and owner of more than 95% of its partnership
interest is FelCor Lodging Trust) to redeem a portion of its 9.5%
senior notes due 2008.
At the same time, Standard & Poor's affirmed its ratings on FelCor
Lodging Trust and FelCor Lodging, L.P., including its 'B'
corporate credit ratings. The outlook is stable. Approximately
$1.9 billion in debt was outstanding on June 30, 2004.
FITNESS GALLERY: List of Debtor's 26 Largest Unsecured Creditors
----------------------------------------------------------------
Fitness Gallery, Inc. released a list of its 26 Largest Unsecured
Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
True Fitness Technology Inc. Vendor $1,281,725
P.O. Box 8803
O Fallon, MO 63366
Task Industries, Inc. Vendor $354,546
1325 E. Franklin Ave.
Pormona, CA 91766
Schwinn Cycling & Fitness Vendor $134,724
Jay Jahangirl/Sherwin Invest. Lessor $80,000
Kattler Int'l, Inc. Vendor $71,308
Denver Advertising Agency Advertising $57,055
3740 DeKalb Technology Lessor $55,386
SBC Smart Yellow Pages Advertising $53,168
Viacom Outdoor Systems Advertising $51,331
George & Linda Kitts Loan $50,000
Bell South Advertising Advertising $47,582
Ivanko Vendor $43,443
QwestDex Advertising $37,637
Mountain Vista LLC Lessor $34,979
Intelbell, Inc. Vendor $32,151
Humane Manufacturing Vendor $29,638
All Signs Inc. Vendor $28,002
Coyotes Hockey LLC Advertising $28,000
American Express Credit Card $27,000
Dex Media East LLC Advertising $25,194
Atlanta Journal Constitution Advertising $22,580
Arizona Republic Advertising $21,000
Valleywide Printing Advertising $18,079
The Chronicle Advertising $18,964
Dex Media West LLC Advertising $16,002
Gammage & Burnham Attorney $15,348
Headquartered in Phoenix, Arizona, Fitness Gallery, Inc. --
http://www.fitnessgallery.com/-- is a supplier of residential and
commercial fitness equipment and service. The Company filed for
chapter 11 protection (Bankr. D. Ariz. Case No. 04-17746) on
October 8, 2004. Michael Woolfenden, Esq., in Phoenix, Arizona,
represents the Company in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed both
estimated assets and debts of more than $1 Million.
FLINTKOTE CO.: Creditors Must File Proofs of Claims by Jan. 31
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware set
January 31, 2005, as the deadline for all creditors asserting
general claims and owed money by Flintkote Company and its debtor-
affiliate, Flintkote Mines Limited to file a proof of claim.
The general claims include Indirect Asbestos Claims, but
exclude Asbestos-Related Personal Injury Claims, arising prior
to April 30, 2004.
Creditors must file their proofs of claims on or before the
January 31 Claims Bar Date, and those forms must be delivered to
the Debtors' claims agent:
The Garden City Group, Inc.
105 Maxess Road
Melville, New York 11747
Headquartered in San Francisco, California, The Flintkote Company
is engaged in the business of manufacturing, processing and
distributing building materials. The Company filed for chapter 11
protection on April 30, 2004 (Bankr. Del. Case No. 04-11300).
James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G.
McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub
P.C., represent the Debtor in their restructuring efforts. When
the Company filed for protection from its creditors, it estimated
debts and assets of more than $100 million.
FLOWSERVE CORP: R. Guiltinan to Resign as Chief Accounting Officer
------------------------------------------------------------------
Flowserve Corp. (NYSE:FLS) said Richard J. Guiltinan, its vice
president and chief accounting officer, notified the Company of
his plans to leave the company. Mr. Guiltinan said that he
intends to work closely with Mark J. Blinn, who was named vice
president and chief financial officer last week, on an orderly
transition.
"We thank Dick for his service this year and his willingness to
work closely with Mark on the transition," said C. Scott Greer,
chairman, president and chief executive officer.
On Aug. 9, 2004, Flowserve notified the Securities and Exchange
Commission on its inability to file its Form 10-Q for the quarter
ended June 30, 2004, on time because the financial statements and
related information for inclusion in its quarterly report wasn't
finalized yet. The Company said the delinquency was due to the
restatement of its financial results for the nine months ended
Sept. 30, 2003 and the full years 2002, 2001 and 2000.
Flowserve Corp. is one of the world's leading providers of fluid
motion and control products and services. Operating in
56 countries, the company produces engineered and industrial
pumps, seals and valves as well as a range of related flow
management services.
* * *
As reported in the Troubled Company Reporter on May 27, 2004,
Flowserve Corp. (NYSE:FLS) announced that it received a Wells
Notice from the staff of the Securities and Exchange Commission
related to an ongoing informal inquiry by the Commission. This
matter was previously discussed in the company's Form 10-K for
2003.
According to the notice, the staff is considering recommending
that the Commission seek a cease-and-desist order, in conjunction
with civil penalties, against the company, its chief executive
officer and its director of investor relations, relating to
whether the company violated Regulation FD in reaffirming earnings
guidance in an informal conversation with an analyst on
Nov. 19, 2002. The company has in the past informed the staff of
the Commission that it believes that this reaffirmation was
inadvertent and timely disclosed after its discovery through a
Form 8-K furnished on Nov. 21, 2002.
The staff's recommendation, if ultimately made, will suggest that
the Commission claim that the company and the individuals violated
the disclosure requirements of Section 13(a) of the Securities
Exchange Act of 1934 and Regulation FD. The company and the
individuals plan to submit a written statement to the Commission
setting forth their positions on the staff's proposed action in
response to the Wells Notice.
FOSTER WHEELER: Elects Stephanie Hanbury-Brown as Director
----------------------------------------------------------
Stephanie Hanbury-Brown has been elected to Foster Wheeler Ltd.'s
(OTCBB:FWLRF) board of directors.
"We look forward to working with Stephanie and to benefiting from
her considerable skills and knowledge," said Raymond J.
Milchovich, chairman, president and CEO.
Ms. Hanbury-Brown recently founded Golden Seeds LLC, an investment
and advisory firm. She previously held positions of increasing
responsibility with J.P. Morgan. Those positions included serving
as J.P. Morgan's head of eCommerce, as the Chief Operating Officer
of its Global Equities division, as the head of its International
Private Client Group, and as the head of its Futures and Options
Group. Prior to joining J.P. Morgan, Ms. Hanbury-Brown worked with
Rouse Woodstock in London and Sydney, and with Lane & Lane
Solicitors in Sydney. She holds a B.A. from the University of
Sydney.
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. The Company's pro-forma financial
statements contained in the Prospectus detailing its recent
successful equity-for-debt exchange projects a $400 million
reduction in total debt and a concomitant increase in shareholder
equity.
* * *
As reported in the Troubled Company Reporter on Oct. 18, 2004,
Foster Wheeler announced the resignation of Harry P. Rekas from
the company's board of directors effective Oct. 14, 2004, due to
personal reasons. The report came days after the company
announced on Oct. 1, the election of Mr. Rekas as one of its
directors. In the same Oct. 1 announcement, the Company reported
the resignations of John Clancey, Martha Clark Goss, and John
Stuart from the board.
GENERAL ROOFING: Court Confirms Joint Plan of Reorganization
------------------------------------------------------------
The Honorable Harlin DeWayne Hale of the U.S. Bankruptcy Court for
the Northern District of Texas, Dallas Division, confirmed the
First Amended Joint Plan of Reorganization filed by General
Roofing Services, Inc., and its debtor-affiliates.
The Court determined that the Joint Plan satisfies the applicable
provisions of the Bankruptcy Code. The entry of the confirmation
order will completely discharge all claims of any nature against
the Debtors.
The Plan substantially consolidates all of the Debtors for
purposes of voting, payments and distributions.
On the Effective Date, the Senior Lender Secured Claim and Senior
Lenders' Secured Deficiency Claim will be allowed in the amounts
agreed to by the Debtors and the Lenders.
The Debtors' existing equity securities will be cancelled and New
General Roofing will become the sole owner of all the new equity
of the other Debtors.
The Court further grants the Reorganized Debtors authority to
enter into an exit financing credit agreement with Spring Street
Partners-II, LLC and GR Investment Holdings, LLC.
The Court is convinced that the Reorganized Debtors after settling
all claims:
* will be solvent;
* will have assets having a fair saleable value in
excess of the amount required to pay their probable
liability on their existing debts as such debts
become absolute and mature;
* will have access to adequate capital for the conduct
of their business; and
* will have the ability to pay their debts from time to
time incurred as such debts mature.
The Plan delivers a 10.5% cash distribution to all general
unsecured creditors in full satisfaction of their claims on the
later of the Effective Date. In the event a Claim is Disputed,
the Distribution Date is extended to three days after that
Disputed Claim becomes an Allowed Claim.
The Plan was filed on August 24, 2004, and Judge Hale entered his
order confirming the plan on Friday, October 1, 2004. The Debtor
says it's set to exit bankruptcy by late October.
"We truly appreciate all the strong support of our Plan of
Reorganization by our creditors, investors and lenders," stated
Bartley E. Roggensack, Jr., President and CEO. "Everyone has been
cooperative during our reorganization process. We are grateful to
our vendors/suppliers, customers and employees for their continued
support during this challenging time for our company."
"Although we are emerging from Chapter 11 reorganization, the
action we are taking to restructure the Company will continue at a
rapid pace," Roggensack continued. "This includes a disciplined
effort to strengthen generalRoofing's operational and financial
performance. By focusing our attention on providing more efficient
service to multi-site customers as well as providing cost-
effective total new roof and re-roof solutions, generalRoofing
will continue to lead the industry with its quality of service and
safety. We have developed and are in the process of implementing
the business model to operate in a leaner and more efficient
manner."
Headquartered in Fort Lauderdale, Florida, General Roofing
Services, Inc. -- http://www.generalroofing.com/-- offers
complete commercial roofing services, including new roof
installation, inspection, maintenance, repair, restoration and
replacement. The Companies filed for chapter 11 protection on May
3, 2004 (Bankr. N.D. Tex. Case Nos. 04-35113 through 04-35170).
Charles R. Gibbs, Esq., Keith Miles Aurzada, Esq., and Randell J.
Gartin, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represent
the Debtors in their restructuring efforts. When the Debtor filed
for protection from its creditors, it listed more than $100
million in estimated assets and more than $50 million in estimated
debts.
GMAC COMMERCIAL: S&P Affirms BB+ Rating on Class F Certificates
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on four
classes of GMAC Commercial Mortgage Securities Inc.'s commercial
mortgage pass-through certificates from series 1998-C2.
Concurrently, ratings are affirmed on four other classes from the
same transaction.
The raised and affirmed ratings reflect credit enhancement levels
that provide adequate support through various stress scenarios.
As of the September 15, 2004 remittance report, the collateral
pool consisted of 371 loans with an aggregate principal balance of
$2.1 billion, down from 404 loans totaling $2.5 billion at
issuance. The master servicer, GMAC Commercial Mortgage Corp.,
provided Dec. 31, 2003 net cash flow debt service coverage -- DSC
-- figures for 82% of the pool. Based on this information,
Standard & Poor's calculated a weighted average DSC of 1.70x, up
slightly from 1.65x at issuance.
To date, the trust experienced seven losses totaling
$10.2 million and three appraisal reduction amounts -- ARAs --
totaling $11.4 million are in effect. Defeased loans account for
$144.8 million (7% of the pool) and all of the loans in the pool
are current with the exception of five loans ($34.1 million, 2%),
which are all more than 90 days delinquent.
The top 10 loans have an aggregate outstanding balance of
$679.7 million (32%), excluding the defeased fifth-largest loan.
The weighted average DSC for the top 10 loans has increased to
2.07x, up slightly from 2.01x at issuance. The increased DSC
occurred despite a decline in the performance of the third-largest
loan. Standard & Poor's reviewed property inspections provided by
GMAC Commercial for all of the assets underlying the top 10 loans
and all were characterized as "excellent" or "good."
According to the special servicer, also GMAC Commercial, there are
seven specially serviced loans ($38.6 million, 2%), all of which
have balances less than 1% of the aggregate pool. All five of the
more-than-90-days delinquent loans as of the remittance date are
specially serviced by GMAC Commercial.
The largest loan ($16.9 million) is secured by a multifamily
property in West Des Moines, Iowa. The loan was recently
reinstated, and GMAC Commercial is monitoring the loan for payment
before returning it to master servicing. An ARA of $1.4 million
is in effect; however, no losses are currently anticipated.
The second- and third-largest loans ($12.1 million cumulative) in
special servicing are retail properties more than 90 days
delinquent and located outside of Buffalo, New York. Both loans,
totaling $9.9 million, have ARAs in effect and are undergoing note
sales. Substantial losses are expected on both loans upon
disposition.
The remaining four loans ($9.5 million) with the special servicer
are experiencing occupancy or delinquency issues, including the
remaining two loans that are more than 90 days delinquent. None
are anticipated to be resolved soon and moderate losses are
expected on the loans.
GMAC Commercial's watchlist consists of 96 loans with an aggregate
outstanding balance of $549.1 million (26%).
The third-largest loan ($103.3 million, 5%) is on the watchlist
due to poor performance at the six Doubletree hotels located
throughout the Midwest and West that secure the loan. As of
March 31, 2004, the occupancy and DSC were 64% and 0.95x,
respectively.
Over the past three years, the properties have experienced stable
occupancies, with a declining DSC as a result of declining room
revenue, which, in turn, is a result of competition at several of
the hotels and because of the overall poor performance of lodging
properties nationally. The properties received ratings of
"excellent" or "good." Standard & Poor's revalued the portfolio of
hotels as part of its analysis.
The seventh-largest loan ($41.6 million, 2%) is secured by a 600-
unit multifamily property located outside Detroit, Michigan. The
loan is on GMAC Commercial's watchlist due to a June 30, 2004 DSC
of 1.08x. The property's performance has declined due, in part,
to competition and to an increase in homeownership nationally,
both of which have caused the borrower to offer concessions at the
property. The property received an inspection rating of "good" as
of March 3, 2004.
The remaining loans on the watchlist appear due to low
occupancies, DSC, or upcoming lease expirations and were stressed
accordingly. The trust collateral is located across 45 states
with only California (16%) accounting for more than 10% of the
pool balance. Property concentrations greater than 10% of the
pool balance are found in:
* retail (31%),
* multifamily (22%), and
* office (16%) property types.
Standard & Poor's stressed various loans with credit issues as
part of its pool analysis. The resultant credit enhancement
levels support the revised ratings.
Ratings Raised
GMAC Commercial Mortgage Securities Inc.
Commercial mortgage pass-thru certs series 1998-C2
Rating
Class To From Credit enhancement (%)
----- -- ---- ----------------------
B AAA AA+ 26.22
C AAA A+ 20.88
D A- BBB+ 13.17
E BBB+ BBB- 11.39
Ratings Affirmed
GMAC Commercial Mortgage Securities Inc.
Commercial mortgage pass-thru certs series 1998-C2
Class Rating Credit enhancement (%)
----- ------ ----------------------
A-1 AAA 32.16
A-2 AAA 32.16
F BB+ 7.24
X AAA N/A
N/A - Not applicable
GOLF TRAINING: Trustee Gets $15K Bid from BBG for Unissued Shares
-----------------------------------------------------------------
Paul H. Anderson, Jr., Esq., the Chapter 7 Trustee overseeing the
liquidation of Golf Training Systems, Inc., received a $15,000
cash offer from BBG, Inc., for all authorized but un-issued shares
of stock in the Golf Training Systems, Inc.
The Trustee says he is not in possession of the Debtor's corporate
records relating to the Unissued Stock Interests. BBG, Inc., and
its representatives understand and agree that the sale will be as
is, where is. In its Form 10-Q filed on May 12, 1998, Golf
Training reported that it was authorized to issue 10,000,000
shares of common stock and 3,933,104 were outstanding at March 31,
1998.
The Trustee asks the U.S. Bankruptcy Court for the Northern
District of Georgia for authority to do the deal. The Honorable
Mary Grace Diehl will convene a hearing at 11:00 a.m. on Nov. 4,
2004, to consider the Trustee's request. An Order entered October
5, 2004, reopened the Debtor's chapter 7 case, allowed the Trustee
to defer payment of the applicable filing fee until there are
sufficient funds on hand in the estate to pay the fee, and
reinstated Mr. Anderson as the Chapter 7 Trustee.
BBG, Inc., can be reached at:
BBG, Inc.
Attn: Mike Clarke, President
8665 West Flamingo, Suite 2000
Las Vegas, NV 89107
Records from the Secretary of State for the State of Nevada show
that BBG, Inc.'s (Corporation File Number C5552-2000) was
incorporated on February 29, 2000, and its charter was
subsequently revoked. The Secretary of State's records show that
the corporation's President and Treasurer is or was:
Bill Badi Gammoh
1001 E. Imperial Highway
La Habra, CA 90631
and its Secretary is or was:
Bruce S. Weiner
1001 E. Imperial Highway
La Habra, CA 90631
A Yellow Pages Internet site reports that a strip club called the
Pelican Theater is located at 1001 E. Imperial Highway in La
Hambra. A telephone call to (714) 447-3222 reveals that an adult
entertainment facility operates at that address, and the
establishment changed its name recently from the Pelican Theater
to Taboo Theater.
The Chapter 7 Trustee can be reached at:
Paul H. Anderson, Esq.
One Georgia Center, Suite 850
600 W. Peachtree Street, N.W.
Atlanta, GA 30308-3603
Telephone (404) 892-9899
John Richards Lee, Esq., and Angela D. Dodd, Esq., in the Chicago
office of the United States Securities and Exchange Commission are
currently attempting to block a similar sale of un-issued shares
in Northwestern Steel and Wire Co., to IMA Advisors, Inc., for
$20,000. The SEC successfully blocked a sale of un-issued shares
in Ultra Motorcycle Company to Mark E. Rice and IMA Advisors in
June 2004. The SEC argues that un-issued shares in a debtor are
not property of the estate pursuant to 11 U.S.C. Sec. 541 and
can't be sold pursuant to 11 U.S.C. Sec. 363. "A corporation's
power to issue stock in itself to others is neither property of
the corporation nor an interest in property but rather is an
essential attribute of the legal entity known as a corporation,"
Ms. Dodd explains. Moreover, the SEC argues, this type of a
transaction violates public policy because it amounts to
trafficking in public shells and that's contrary to public policy.
Golf Training Systems, Inc. (OTC BB: GTSX), based in Duluth,
Georgia, filed for chapter 11 protection on August 11, 1998
(Bankr. N.D. Ga. Case No. 98-75390). The Company attempted to
restructure under Chapter 11, but was unable to generate
sufficient sales. Extensive layoffs and cutbacks were unsuccessful
in changing the profitability of the operation enough to manage
the total debt and overhead requirement. On December 17, 1998,
all of the company's assets, with the exception of certain
contractual assets, were sold at the bankruptcy auction and the
Chapter 11 was converted to a Chapter 7 liquidation proceeding.
Golf Training Systems developed and marketed golf learning and
training products like the Coach, the Glove, the Computer Coach
and the Right Link.
GREENWICH CAPITAL: Moody's Junks Class B-2 Certificates
-------------------------------------------------------
Moody's Investors Service downgraded two subordinate certificates
of Greenwich's 1995-BA1 manufactured housing securitization. The
senior and mezzanine certificates are not affected as the credit
enhancement, which consists of subordination, excess spread and
interest subordination, is sufficient to support the ratings. The
rating action concludes Moody's rating review, which began on
August 27, 2004.
The current review is prompted by the weaker-than expected
performance of the pool. Delinquencies and repossessions have
exceeded original expectations, leading to higher than expected
cumulative losses. As of the August 31, 2004 remittance report,
cumulative losses and cumulative repossessions were 11.63% and
17.87% respectively, with approximately 24.5% of the pool balance
outstanding. Because interest payments are subordinated to
principal payments for all classes, the class B certificates have
realized significant interest shortfalls.
Similar to other manufactured housing securitizations, the
deteriorating performance is primarily due to manufactured housing
sector problems, such as high unemployment levels in the
manufacturing sector where many of these borrowers are employed
and high loss severities due to lack of demand for used
repossessed units. This has placed increased pressure on the
industry, further magnifying repossessions and loss severities.
The complete rating action is:
Issuer: Greenwich Capital Acceptance, Inc., Series 1995-BA1
* 7.40% Class B-1 Certificates, downgraded from Baa2 to Ba3
* 9.00% Class B-2 Certificates, downgraded from Ba2 to Ca
The loans were originated by BankAmerica Housing Services and
Security Pacific Financial Services of California, Inc. The loans
are currently being serviced by GreenPoint Credit LLC. GreenPoint
Credit LLC is a wholly owned subsidiary of North Fork Bancorp.,
Inc.
HANGER ORTHOPEDIC: To Webcast 3rd Quarter Earnings on Oct. 28
-------------------------------------------------------------
Hanger Orthopedic Group, Inc. (NYSE: HGR - News) plans to report
its results of operations for the third quarter ended
September 30, 2004, on Wednesday, October 27, 2004.
The quarterly conference call is scheduled to begin at 9:00 a.m.,
EDT, on Thursday, Oct. 28, 2004. Those wishing to participate
should call 1-800-374-1855. In addition, a rebroadcast will be
made available online following the conference call at
http://www.hanger.com/To listen to the rebroadcast, please go to
the website to download and install the necessary audio software.
Hanger Orthopedic Group, Inc., headquartered in Bethesda,
Maryland, is the world's premier provider of orthotic and
prosthetic patient-care services. Hanger is the market leader in
the United States, owning and operating 614 patient-care centers
in 44 states and the District of Columbia, with 3,385 employees
including 1,016 practitioners. Hanger is organized into four
business segments. The two key operating units are patient-care
which consists of nationwide orthotic and prosthetic practice
centers and distribution which consists of distribution centers
managing the supply chain of orthotic and prosthetic componentry
to Hanger and third party patient-care centers. The third is
Linkia which is first and only managed care organization for the
orthotics and prosthetics industry. The fourth segment is
Innovative Neutronics which introduces emerging neuromuscular
technologies developed through independent research in a
collaborative effort with industry suppliers worldwide.
* * *
As reported in the Troubled Company Reporter on Sept. 3, 2004,
Moody's Investors Service downgraded the ratings of Hanger
Orthopedic Group, Inc., and changed the outlook to negative.
Moody's downgraded the company's ratings as a result of the
continued deterioration in performance. The particularly weak
results for the second quarter ended June 30, 2004 caused the
company to violate the total leverage covenant under its bank
credit facilities. The company has obtained a waiver and is in
the process of amending the credit facilities. The one notch
downgrade on all the ratings assumes Hanger will be successful in
negotiating the amendment. These ratings were affected:
* $100 Million Revolver due 2007 -- downgraded to B2 from B1;
* $150 Million Term Loan B due 2009 -- downgraded to B2 from
B1;
* $200 Million 10.375% Senior Notes due 2009 -- downgraded to
B3 from B2;
* $53 Million (accreted value) 7% Redeemable Preferred Stock
due 2010 -- downgraded to Caa2 from Caa1;
* Senior Implied Rating -- downgraded to B2 from B1;
* Senior Unsecured Issuer Rating -- downgraded to Caa1 from B3;
The outlook for the company is negative.
HEALTH & NUTRITION: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Health & Nutrition Systems International, Inc.
3750 Investment Lane #5
West Palm Beach, Florida 33404
Bankruptcy Case No.: 04-34761
Type of Business: The Debtor develops and markets weight
management products in over 25,000 health, food
and drug store locations.
See http://www.hnsglobal.com/
Chapter 11 Petition Date: October 15, 2004
Court: Southern District of Florida (Palm Beach)
Judge: Paul G. Hyman, Jr.
Debtor's Counsel: Arthur J. Spector, Esq.
Berger Singerman
350 East Las Olas Blvd #1000
Fort Lauderdale, FL 33301
Tel: 954-713-7511
Total Assets as of June 30, 2004: $1,182,382
Total Debts as of June 30, 2004: $2,196,129
HENLYS GROUP: Completes Restructuring After Creditors Compromised
-----------------------------------------------------------------
Henlys Group plc reported that, following discussions with its
lending banks and other principal creditors, a restructuring of
the Group has been completed.
This restructuring preserves Blue Bird Corporation, the Group's
principal operating business in North America, and creates the
opportunity to enhance its operating performance.
Henlys' financial creditors have compromised debts which, it is
estimated would have exceeded US$690 million on insolvency. In
return those creditors have assumed ownership of Blue Bird through
a newly incorporated US company, Peach County Holdings Inc.
Following the restructuring, the common stock of Peach is owned
42.5 per cent by Volvo Group and 42.5 per cent by members of the
Henlys' banking syndicate, with the balance held by Blue Bird
management and the trustee of the Henlys Group pension scheme.
Peach assumed responsibility for part of the Group's debts and
US$303 million has been converted into equity. Peach amended and
restated term loans and revolving credit facilities of
$215 million. In addition, Volvo Bussar AB has acquired 100%
indirect ownership of Pr,vost Car Inc., previously held through a
50/50 joint venture between Henlys and Volvo Bussar AB. Following
the restructuring, Peach has sufficient headroom under its new
facilities to meet its anticipated working capital requirements.
Although the future of the US business has been secured, with the
resulting benefit to employees and trade creditors, regrettably it
has proved impossible to obtain any value for the holders of
Henlys' ordinary shares. Following the restructuring, Henlys no
longer has any operating businesses or material assets and it is
likely therefore that it will be placed into liquidation as soon
as possible.
The Company is sending a circular to shareholders providing
information on the restructuring and describing the events that
have led the Board to conclude that in the circumstances there was
no viable alternative to the implementation of the restructuring.
Details of an extraordinary general meeting, which has been
convened as required by section 142 of the Companies Act 1985,
will also be provided in the circular.
Henlys Group plc is the leading bus and coach manufacturer in
North America. Through Blue Bird Corporation, Pr,vost Car and
Nova Bus it produces a comprehensive range of vehicles including
luxury touring coaches, school buses, city buses and coach shells
for prestige motorhomes.
HOLLINGER INCORPORATED: Kroll Lindquist Withdraws as Inspector
--------------------------------------------------------------
As reported in the Troubled Company Reporter on Oct. 18, 2004,
Hollinger, Inc., reported that Mr. Justice Colin L. Campbell of
the Ontario Superior Court of Justice has signed an Order
appointing Kroll Lindquist Avey, Inc., as an inspector pursuant to
Section 0229(1) of the Canada Business Corporations Act to conduct
an investigation of certain of the affairs of Hollinger, as
requested by Catalyst Fund General Partner I Inc., a shareholder
of Hollinger. The parties have agreed that, until certain
potential conflicts of interest issues involving Kroll are
resolved, Kroll will not commence any inspection activities.
Kroll Lindquist, however, informed Hollinger that it must withdraw
from its appointment as inspector. A new inspector will be
appointed by the Court.
Hollinger's principal asset is its approximately 68.0% voting and
18.2% equity interest in Hollinger International. Hollinger
International is an international newspaper publisher with
English-language newspapers in the United States and Israel. Its
assets include the Chicago Sun-Times and a large number of
community newspapers in the Chicago area, The Jerusalem Post and
The International Jerusalem Post in Israel, a portfolio of new
media investments and a variety of other assets.
* * *
As reported in the Troubled Company Reporter on August 31, 2004,as
a result of the delay in the filing of Hollinger's 2003 Form 20-F
(which would include its 2003 audited annual financial statements)
with the United States Securities and Exchange Commission by
June 30, 2004, Hollinger is not in compliance with its obligation
to deliver to relevant parties its filings under the indenture
governing its senior secured notes due 2011. $78 million principal
amount of Notes are outstanding under the Indenture. On
August 19, 2004, Hollinger received a Notice of Event of Default
from the trustee under the Indenture notifying Hollinger that an
event of default has occurred under the Indenture. As a result,
pursuant to the terms of the Indenture, the trustee under the
Indenture or the holders of at least 25 percent of the outstanding
principal amount of the Notes will have the right to accelerate
the maturity of the Notes.
Approximately US$5 million in interest on the Notes was due on
September 1, 2004. Hollinger has deposited the full amount of the
interest payment with the trustee under the Indenture and
noteholders will receive their interest payment in a timely
manner.
There was in excess of $267.4 million aggregate collateral
securing the $78 million principal amount of the Notes
outstanding.
Hollinger also received notice from staff of the Midwest Regional
Office of the U.S. Securities and Exchange Commission that they
intend to recommend to the Commission that it authorize civil
injunctive proceedings against Hollinger for certain alleged
violations of the U.S. Securities Exchange Act of 1934 and the
Rules thereunder. The notice includes an offer to Hollinger to
make a "Wells Submission", which Hollinger will be making, setting
forth the reasons why it believes the injunctive action should not
be brought. A similar notice has been sent to some of Hollinger's
directors and officers.
HOLLINGER INCORPORATED: Reports US$14.72 Million Cash Holdings
--------------------------------------------------------------
As of the close of business on October 15, 2004, Hollinger Inc.
and its subsidiaries (other than Hollinger International and its
subsidiaries) had approximately US$14.72 million of cash or cash
equivalents on hand.
Hollinger owned, directly or indirectly, 792,560 shares of Class A
Common Stock and 14,990,000 shares of Class B Common Stock of
Hollinger International. Based on the October 15, 2004 closing
price of the shares of Class A Common Stock of Hollinger
International on the New York Stock Exchange of US$17.50, the
market value of Hollinger's direct and indirect holdings in
Hollinger International was US$276,194,800.
All of Hollinger's direct and indirect interest in the shares of
Class A Common Stock of Hollinger International are being held in
escrow with a licensed trust company in support of future
retractions of its Series II Preference Shares and all of
Hollinger's direct and indirect interest in the shares of Class B
Common Stock of Hollinger International are pledged as security in
connection with Hollinger's outstanding 11.875% Senior Secured
Notes due 2011 and 11.875% Second Priority Secured Notes due 2011.
In addition, Hollinger has previously deposited with the trustee
under the indenture governing the Senior Notes approximately
US$10.5 million in cash as collateral in support of the Senior
Notes (which cash collateral is also now collateral in support of
the Second Priority Notes, subject to being applied to satisfy
future interest payment obligations on the outstanding Senior
Notes as permitted by the recent amendments to the Senior
Indenture). Consequently, there is currently in excess of
US$272.8 million aggregate collateral securing the US$78 million
principal amount of the Senior Notes outstanding and the
US$15 million principal amount of the Second Priority Notes
outstanding.
Hollinger's principal asset is its approximately 68.0% voting and
18.2% equity interest in Hollinger International. Hollinger
International is an international newspaper publisher with
English-language newspapers in the United States and Israel. Its
assets include the Chicago Sun-Times and a large number of
community newspapers in the Chicago area, The Jerusalem Post and
The International Jerusalem Post in Israel, a portfolio of new
media investments and a variety of other assets.
* * *
As reported in the Troubled Company Reporter on August 31, 2004,as
a result of the delay in the filing of Hollinger's 2003 Form 20-F
(which would include its 2003 audited annual financial statements)
with the United States Securities and Exchange Commission by
June 30, 2004, Hollinger is not in compliance with its obligation
to deliver to relevant parties its filings under the indenture
governing its senior secured notes due 2011. $78 million principal
amount of Notes are outstanding under the Indenture. On
August 19, 2004, Hollinger received a Notice of Event of Default
from the trustee under the Indenture notifying Hollinger that an
event of default has occurred under the Indenture. As a result,
pursuant to the terms of the Indenture, the trustee under the
Indenture or the holders of at least 25 percent of the outstanding
principal amount of the Notes will have the right to accelerate
the maturity of the Notes.
Approximately US$5 million in interest on the Notes was due on
September 1, 2004. Hollinger has deposited the full amount of the
interest payment with the trustee under the Indenture and
noteholders will receive their interest payment in a timely
manner.
There was in excess of $267.4 million aggregate collateral
securing the $78 million principal amount of the Notes
outstanding.
Hollinger also received notice from staff of the Midwest Regional
Office of the U.S. Securities and Exchange Commission that they
intend to recommend to the Commission that it authorize civil
injunctive proceedings against Hollinger for certain alleged
violations of the U.S. Securities Exchange Act of 1934 and the
Rules thereunder. The notice includes an offer to Hollinger to
make a "Wells Submission", which Hollinger will be making, setting
forth the reasons why it believes the injunctive action should not
be brought. A similar notice has been sent to some of Hollinger's
directors and officers.
HOLLINGER: Financial Statements Still Not Filed Amidst Reviews
--------------------------------------------------------------
Hollinger International Inc. previously announced on July 20, 2004
that it did not anticipate that it would be in a position to file
its interim financial statements (and related MD&A) for the six-
month period ended June 30, 2004 by the filing date required by
applicable Canadian securities legislation, since it was not
expected that the report of the Special Committee of the board of
directors of the Company, established to investigate allegations
raised by certain of the Company's shareholders, would be
available sufficiently in advance of that time. The Company
confirms that those interim financial statements (and related
MD&A) have not been so filed.
More Time Needed to Review Special Committee Report
The report of the Special Committee was filed with the U.S.
District Court for the Northern District of Illinois on
August 30, 2004. The Company continues to believe that it needs
additional time to review the report of the Special Committee and
to assess, together with the auditors of the Company, its impact,
if any, on the results of operations of the Company before the
Company can complete and file the financial statements (and
related MD&As) and the AIF in question. The Company currently
expects to be able to complete its financial statements (and
related MD&As) for its fiscal year ended December 31, 2003 within
the next several weeks, and shortly thereafter to complete its
interim financial statements for the fiscal quarters ended March
31 and June 30, 2004. Appropriate filings will then be made on
Forms 10-K, 10-Q and 8-K with the U.S. Securities and Exchange
Commission and in Canada.
Telegraph Sale Proceeds Still Not Distributed
The Company reports that its Corporate Review Committee intends to
review and consider the Company's financial statements for the
year ended December 31, 2003 and the first two quarters of fiscal
2004 and pro forma financial information after giving effect to
the Company's sale of the Company's Telegraph Group, before making
a final determination as to the distribution of sale proceeds
(after the recent payment of the Company's outstanding
indebtedness) to the Company's stockholders. Such distribution
could take the form of a self tender offer or special dividend.
The Company expects that action on this matter will be taken
shortly after the financial information described above is filed
with the SEC.
Circulation Overstatement Spotted in Audit
On October 5, 2004, the Company announced the results of the
internal review conducted by the audit committee of the board of
directors into practices that resulted in the overstatement of
circulation figures for the Chicago Sun-Times newspaper over the
past several years as well as some other publications. As a
result of the review, the Company updated certain previously
reported circulation numbers and reported a pre-tax charge of
approximately $24 million in the year 2003 and approximately
$3 million for the first quarter of 2004 to cover the estimated
cost of resolving advertiser claims related to the reduced
circulation numbers. The Company issued letters to advertisers
and insert advertisers of the Chicago Sun-Times newspaper
regarding the results of the internal review and the process for
reimbursements to be made to them. The audit committee's review
determined that the circulation inflation practices of the Chicago
Sun-Times were instigated and implemented by the newspaper's
former management. The officers who were responsible for these
practices are no longer employed by the Company. The Company has
also taken disciplinary action against certain other employees and
implemented procedures to help ensure that circulation
overstatements do not occur in the future. The audit committee
also determined that certain circulation inflation practices were
employed by the Company's the Daily Southtown, the Star and the
Jerusalem Post newspapers. These practices have been discontinued
at these papers and it is expected that the impact of the
overstatement practices at these three newspapers will not have a
material impact on the Company.
HOLLINGER INT'L: Board Approves its Compensation Program
--------------------------------------------------------
Hollinger International Inc. board of directors of the Company
approved changes to the Company's Board Compensation Program,
effective from July 1, 2004, in accordance with the recommendation
of the Board's Compensation Committee. The revised Board
Compensation Program applies only to non-executive directors in
their capacity as members of the Board and various committees of
the Board. The purpose of the revisions to the Compensation
Program is to rationalize the approach to director compensation.
The revisions are not expected to have a material impact on the
aggregate fees paid to directors, although the individual impact
on each director will vary depending upon the committees on which
they serve, the frequency of meetings and whether the director is
a committee chair.
Hollinger International Inc. is a newspaper publisher with
English-language newspapers in North America, Israel and Canada.
Its assets include The Chicago Sun-Times and a large number of
community newspapers in the Chicago area, The Jerusalem Post and
The International Jerusalem Post in Israel, several local
newspapers in Canada, a portfolio of new media investments, and a
variety of other assets.
* * *
As reported in the Troubled Company Reporter on August 6, 2004,
Moody's Investors Service changed the rating outlook on Hollinger
International Publishing, Inc., to positive from stable and has
withdrawn other ratings. Details of this rating action are:
Ratings withdrawn:
* $45 million Senior Secured Revolving Credit Facility, due
2008 -- Ba2
* $210 million Term Loan "B", due 2009 -- Ba2
* $300 million of 9% Senior Unsecured Notes, due 2010 -- B2
Ratings confirmed:
* Senior Implied rating -- Ba3
* Issuer rating -- B2
The outlook is changed to positive.
HOLLINGER INT'L: Files Amended RICO Suit Against Hollinger, et al.
------------------------------------------------------------------
Hollinger International Inc. confirmed that a federal judge in the
U.S. District Court for the Northern District of Illinois
dismissed, on technical grounds, its federal racketeering and
state law breach of fiduciary duty claims against Hollinger Inc.,
Conrad Black, David Radler and others. In dismissing the RICO
claims, the court noted that it was not making any determination
as to the validity of the allegations of fraudulent actions
underlying those claims and stated that the Company has the right
to pursue its state law breach of fiduciary duty claims.
The Court granted the Company permissions to file a Second Amended
Complaint by October 25, 2004. The Second Amended Complaint will
assert all the same breach of fiduciary duty claims against
Hollinger Inc., Conrad Black, David Radler, Ravelston, Barbara
Amiel Black, John Boultbee and Daniel Colson as had been in the
previous Amended Complaint filed May 7, 2004, but will eliminate
as defendants Bradford Publishing Company and The Horizon
Companies. The Second Amended Complaint will also add several
additional claims. Those additional claims are described in the
Special Committee's report filed with the Court on Aug. 30, 2004.
In addition, the Company announced that it intends to appeal the
dismissal of the Company's claims under RICO.
Gordon A. Paris, Interim Chairman, President and Chief Executive
Officer of the Company and Chairman of the Special Committee said,
"In the interest of the Company and its shareholders, the Special
Committee is vigorously pursuing its breach of fiduciary duty
claims against the defendants. The Special Committee will
continue to seek full redress for the enormous damage the
defendants caused to the Company. The Court's decision ...
reaffirmed the Company's right to continue pursuing the case filed
on its behalf by the Special Committee in Illinois federal court".
Hollinger International Inc. is a newspaper publisher with
English-language newspapers in North America, Israel and Canada.
Its assets include The Chicago Sun-Times and a large number of
community newspapers in the Chicago area, The Jerusalem Post and
The International Jerusalem Post in Israel, several local
newspapers in Canada, a portfolio of new media investments, and a
variety of other assets.
* * *
As reported in the Troubled Company Reporter on August 6, 2004,
Moody's Investors Service changed the rating outlook on Hollinger
International Publishing, Inc., to positive from stable and has
withdrawn other ratings. Details of this rating action are:
Ratings withdrawn:
* $45 million Senior Secured Revolving Credit Facility, due
2008 -- Ba2
* $210 million Term Loan "B", due 2009 -- Ba2
* $300 million of 9% Senior Unsecured Notes, due 2010 -- B2
Ratings confirmed:
* Senior Implied rating -- Ba3
* Issuer rating -- B2
The outlook is changed to positive.
HOLLYWOOD CASINO: HCS Inks Agreement for Eldorado Acquisition
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HCS I, Inc., the managing general partner of Hollywood Casino
Shreveport, reported that HCS entered into an Investment Agreement
with Eldorado Resorts LLC and certain of its affiliates providing
for the acquisition of the Company by Eldorado. This Agreement is
the definitive documentation contemplated by the agreement between
Eldorado and HCS reported in the Troubled Company Reporter on
September 1, 2004.
The Agreement also contemplates a financial restructuring of HCS
that will significantly reduce outstanding secured debt
obligations and annual cash interest payments, while rationalizing
its capital structure.
Under the proposed restructuring, holders of the Company's
existing secured notes are to receive $140 million of new first
mortgage notes, $20 million of PIK Preferred Equity Securities, a
25% non-voting equity interest in the reorganized company, and
cash in an amount to be determined, in exchange for existing
secured notes in the principal face amount of $189 million plus
accrued interest.
The Company intends to effectuate the sale and related financial
restructuring transaction through a Chapter 11 bankruptcy
reorganization. The Agreement remains subject to filing with and
approval by the Bankruptcy Court, Louisiana Gaming Control Board
approval and certain other conditions.
The Company expects the sale and restructuring process to have
minimal impact on its day-to-day operations and that its
significant cash on hand will continue to be sufficient to timely
fulfill ordinary course obligations to employees, customers and
trade vendors in full as they come due, pending completion of the
transaction. The Agreement contemplates payment of such
obligations in the ordinary course both during and after the
restructuring process.
About Eldorado Resorts
Eldorado Resorts LLC owns and operates the Eldorado Hotel & Casino
in Reno, Nevada, and is a joint venture partner with Mandalay
Resort Group in the Silver Legacy Resort Casino, also located in
Reno. The Eldorado Hotel & Casino, had net operating revenues of
$133,000,000 in 2003, has over 84,000 square feet of gaming space,
including over 1,800 slot machines and approximately 75 table
games, 817 guest rooms, 12,000 square feet of convention space and
is renowned for its eight restaurants. The Silver Legacy Resort
Casino had 2003 net operating revenues of $152,000,000. The Silver
Legacy has over 87,000 square feet of gaming space, including over
2,000 slot machines and 80 table games, 1,170 guest rooms, 90,000
square feet of exhibit and convention space, and operates six
distinctive restaurants.
Headquartered in Shreveport, Louisiana, Hollywood Casino
Shreveport operates a casino hotel and resort featuring riverboat
gambling. Its creditors filed an involuntary chapter 11
protection on September 10, 2004 (Bankr. W.D. La. Case No.
04-13259). Robert W. Raley, Esq. at 290 Benton Road Spur, Bossier
City, LA 71111 and Timothy W. Wilhite, Esq. at Downer, Hammond &
Wilhite, L.L.C. represent the petitioners in their involuntary
petition against the Debtor. The Company owed $34,958,113 to the
petitioners.
IDEAL ACCENTS: Sees Asset Sales or Merger Deal on the Horizon
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Ideal Accents, Inc. (OTCBB:IACEE) filed a voluntary petition to
reorganize under Chapter 11 of the United States Bankruptcy Code
in the United States Bankruptcy Court for the Southern District of
New York due to its inability to secure needed financing.
Ideal manages, and will continue to manage, its properties and
operate its business as a "debtor-in-possession" under the
jurisdiction of the Bankruptcy Court and in accordance with the
applicable provisions of the Bankruptcy Code.
In its amended Form 10-Q for the quarterly period ended
June 30, 2004, filed with the Securities and Exchange Commission
on Oct. 13, 2004, the Company said, "the re-organization plan will
possibly include the liquidation of assets, the divesting of
certain subsidiaries, and a merger with a merger-partner."
The Company's auditors included a "going concern" qualification in
their latest report. Rotenberg & Co., LLP, in Rochester, New
York, observed that Ideal incurred a net loss of $555,306 for the
six months ended June 30, 2004, and has incurred substantial
losses for each of the past two years. The Company's operating
losses, and the fact that current liabilities exceed current
assets by $1,437,453 and total liabilities exceed total assets by
$2,439,155, raise substantial doubt about Ideal Accent's ability
to continue as a going concern, the Auditors said.
"The existence of the 'going concern' qualification in our
auditor's report will make it more difficult for us to obtain
additional financing and to implement any business acquisition.
Our Chapter 11 Filing will make it even more so difficult to
obtain financing to continue as a going concern," the Company
said.
Headquartered in Ferndale, Michigan, Ideal Accents, Inc., sells
and installs a wide range of automotive aftermarket accessories
primarily to new vehicle dealers in South Eastern Michigan and
Toronto, Ontario, Canada. The Company filed for chapter 11
protection on Oct. 13, 2004 (Bankr. S.D.N.Y. Case No. 04-16632).
Schuyler G. Carroll, Esq., at Arent Fox PLLC, represents the
Debtor in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed $60,000 in total assets
and $4,208,571 in total debts.
INTEGRATED HEALTH: Inks Unisys Pact Resolving Adversary Proceeding
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On January 30, 2002, IHS Liquidating, LLC, as successor to the
IHS Debtors, filed a complaint against Unisys Corporation to
recover preferential and fraudulent conveyances made to Unisys for
a minimum of $821,274, plus interest from and after the date of
the Transfers. In response, Unisys asserted, among other things,
the new value and ordinary course of business affirmative
defenses.
Unisys also asserts an unsecured claim for $3,043,976 against the
IHS Debtors.
After an exchange of information and documentation regarding the
Transfers and Unisys' defenses to its avoidability, the parties
agree to resolve the Adversary Proceeding and the Unisys Claim
consensually to avoid the costs and uncertainties of litigation.
Unisys will pay $112,500 to IHS Liquidating after which, the
parties will execute mutual releases. IHS Liquidating will
dismiss the Adversary Proceeding.
If Unisys fails to timely pay the Settlement Amount, it will be
obligated to pay IHS Liquidating 10% interest per annum, accruing
daily from the date the Settlement Amount became due until the
payment is actually received by IHS Liquidating.
IHS Liquidating contends that the resolution of the Adversary
Proceeding will enable it to receive substantially all of the
relief which it could have reasonably expected to receive from
prosecuting the Adversary Proceeding.
Headquartered in Owings Mills, Maryland, Integrated Health
Services, Inc. -- http://www.ihs-inc.com/-- IHS operates local
and regional networks that provide post-acute care from 1,500
locations in 47 states. The Company filed for chapter 11
protection on February 2, 2000 (Bankr. Del. Case No. 00-00389).
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP,
represent the Debtors in their restructuring efforts. On
September 30, 1999, the Debtors listed $3,595,614,000 in
consolidated assets and $4,123,876,000 in consolidated debts.
(Integrated Health Bankruptcy News, Issue No. 83; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
INTERNATIONAL COAL: Moody's Assigns B2 Ratings to Debts
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Moody's Investors Service assigned a B2 rating to each of
International Coal Group's:
* proposed $50 million five-year secured revolving credit
facility,
* $40 million six-year secured synthetic letter of credit
facility, and
* $155 million six-year secured Term Loan B.
The rating outlook is stable.
The B2 senior implied rating considers:
(i) International Coal's recent formation and small size,
(ii) the significant portion of old mining equipment and the
high capital expenditure program to be undertaken for
purposes of replacing overworked and leased equipment,
and
(iii) the company's relatively low percentage of committed coal
contracts and their short duration.
The ratings also take into account:
(i) anticipated cost pressures at International Coal's
Appalachian mines,
(ii) relatively high geologic, operating and environmental
risks, and
(iii) the company's intention to grow by acquisitions.
The ratings also reflect:
(i) anticipated stable long-term demand for coal,
(ii) current high prices for steam coal,
(iii) relatively low financial leverage,
(iv) reasonable cost position, and
(v) a low level of pension, black lung, OPEB and reclamation
obligations relative to its coal mining peers.
This is the first time that Moody's has rated the debt of
International Coal Group.
These ratings were assigned:
* B2 to the $50 million five-year revolving credit facility,
* B2 to the $40 million six-year synthetic letter of credit
facility,
* B2 to the $155 million six-year Term Loan B,
* B2 senior implied rating, and
* Caa1 senior unsecured issuer rating.
The stable outlook reflects:
(i) International Coal's 664 million ton reserve base of good
quality,
(ii) high Btu steam coal,
(iii) the diversity derived from its five mining complexes,
which comprise 13 mines, and
(iv) its union free status, which should help to constrain
operating costs.
The rating could be raised if International Coal:
(i) demonstrates the ability to generate consistent operating
income,
(ii) consistently permits and develops existing reserves
sufficient to grow production levels, and
(iii) successfully completes its aggressive capital expenditure
program, which totals $213 million over the next 3 years,
approximately 50 percent of which is for equipment
replacement, and which the company anticipates will lower
operating costs by $2.40 per ton.
The rating could be lowered if:
(i) the company is unable to contain its costs and incurs
operating losses, or
(ii) the capital structure and debt service coverage ratios
suffer due to greater than anticipated capital
expenditures or debt-financed acquisitions.
International Coal was formed to acquire certain assets of Horizon
Natural Resources in a public auction as part of the completion of
Horizon's bankruptcy case. WL Ross & Co. LLC and a group of
Horizon's second lien holders, along with Massey Energy and
Lexington Coal Company, won the auction by bidding $300 million in
cash and credit bidding second lien secured notes with a face
value of $482 million. Massey and Lexington's contribution
totaled $14.5 million for specified assets that will not be part
of International Coal.
International Coal's ownership group is now led by WL Ross and
comprises:
* WL Ross Recovery Fund II (10.4%); and
* other ex-second lien secured note holders including:
-- Varde partners (15%),
-- Contrarian Capital (14.7%),
-- Stark Event Trading (14.6%), and
-- Greenlight Capital (4.5%).
WL Ross is a private equity firm specializing in restructurings.
Proceeds of Term Loan B plus $4 million of revolver borrowings
were used to fund a portion of the $300 million cash purchase
price, with the balance contributed by sponsor equity.
International Coal operates three surface and two underground
coal-mining complexes in Central Appalachia (Kentucky and West
Virginia), and Illinois. Of its 11.7 million ton annual
production, approximately 82% comes from the Central Appalachian
region and approximately 70% is derived from surface mines, which
typically have better geologic and operating conditions than
underground mines, but also typically have greater environmental
issues.
Moody's notes, however, that the surface mines are all in
operation and therefore do not face the myriad of permitting
issues associated with new surface mines. The Central Appalachian
mines produce generally good quality coal (sulfur content of 1 to
1.5 %) with Btu's per pound generally in the 12,000 to 12,500
range, resulting in all production being sold as steam coal.
Sales are primarily to investment grade eastern electric utilities
but are highly concentrated, with the top three and five customers
accounting for 48% and 59% of total sales, respectively. Given
the history of ICG as part of Horizon and its associated
bankruptcies, it is not surprising that capital expenditures have
been limited and the companies equipment is old, costly to
operate, and has a significant leased component. As a result,
International Coal is about to undertake an ambitious and
expensive equipment replacement program which, through both lease
rental reductions (from approximately $16.5 million per year to
$1.1 million per year by 2008) and reductions in repair and
maintenance costs, is designed to reduce operating costs by
$2.40 per ton by 2008. International Coal also owns ICG-ADDCAR,
which designs and manufactures the ADDCAR Highwall Mining System,
which extracts coal from highwalls and open pits. The ADDCAR
systems are sold, leased and operated by ICG-ADDCAR on a contract
basis. Annual revenues and EBITDA for this business are
approximately $25 million and $3 million respectively.
Spot coal prices have risen significantly over the past 12 months,
to historically high levels from which ICG and other coal industry
participants are currently benefiting. While the fundamentals for
the near term coal price outlook are positive, risk of a sudden
reversal remains present. Additionally, Moody's believes there
has been a systemic change in the coal industry cost structure,
particularly in the east, where employee and material costs,
including steel, explosives, and energy, have continued to rise.
Generally, costs in the east have risen at least 25% over the past
three years, making it difficult for industry participants to
fully capitalize on the run-up in coal prices.
International Coal's total debt to EBITDA, pro forma for full year
2004 EBITDA of $74.4 million and $160 million of million of debt,
is 2.2x. Pro forma EBITDA to interest is 6.8x. Adjusting debt for
equipment and facility lease rentals ($16 million in 2004) using a
multiple of 8X, and for "other" liabilities, including reclamation
($28.1 million), workers compensation ($8.7) and other employee
liabilities ($11.4 million), increases the ratio of pro forma
"adjusted" debt to EBITDAR to 3.72x, a level still favorable to
most other coal industry companies.
Moody's notes that the level of operating lease rentals is
expected to reduce considerably over the next few years as leased
equipment is replaced with owned equipment. The company has a
relatively low level of "other" obligations as most of its
properties were acquired without the assumption of legacy
obligations, coupled with the fact that all of its mines are
union-free.
Over the course of the next 12 to 15 months the company may have
sufficient cash flow to fund its interest expense, cash taxes,
capex, and changes in working capital, with room under its
revolver to supplement cash flow, if necessary. However, given
the high level of capex forecast in 2005 ($94.6 million), the
revolver may be needed if the company realizes lower than
anticipated pricing for its uncommitted coal sales, or has higher
than anticipated costs or lower than anticipated production.
Moody's notes that the company is contemplating an IPO in 2005,
the proceeds of which it is anticipated would be used, in part, to
reduce debt. The company should have room under its financial
covenants over the course of the next 12 to 15 months.
International Coal has approximately $38 million available under
its $50 million revolver, with drawings of $4 million and issued
letters of credit of $8 million. The company's $40 million
synthetic L/C facility is fully utilized. Outstanding L/C's
principally support reclamation ($28 million) and workers
compensation ($9 million) obligations. International Coal has
room under its revolver to issue approximately $12 million of
L/C's to meet additional bonding requirements, which are
anticipated to be nominal over the next year. Outstanding surety
bonds total approximately $56.1 million, $28 million of which are
supported by L/C's.
International Coal Group, based in Ashland, Kentucky, is engaged
in the mining and marketing of steam coal.
JAZZ GOLF: Appoints Harry T. Ethans to Board of Directors
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Mr. Robert Lavery, Chairman of the Board of Jazz Golf Equipment
Inc. reported the appointment of Harry T. Ethans as a Director of
the Board.
Mr. Ethans brings tremendous experience in strategic and business
planning, financing techniques and optimal capital structure
planning and execution. He also provides strategic direction and
acquisition advice to several Winnipeg-based family owned
companies through his firm, Matlock Enterprises Inc. Prior to
that, Mr. Ethans was employed at CanWest Global Communications
Corp. where he most recently held the title of Senior Vice
President of Media Integration and led the due diligence effort
regarding the purchase of the majority of Canadian newspaper
titles from Hollinger International.
William E. Watchorn has resigned as a member of the Board of
Directors of Jazz in favour of Mr. Ethans. Mr. Watchorn is
President and Chief Executive Officer of ENSIS Growth Fund Inc.
ENSIS Growth Fund remains a significant shareholder of Jazz Golf
Equipment Inc. and is very supportive of the appointment of Mr.
Ethans to the Board.
Jazz Golf designs and manufactures golf clubs and other related
products, which are marketed primarily through golf pro shops and
golf specialty retailers throughout Canada. Jazz Golf common
shares are listed on the TSX Venture Exchange (JZZ.A).
As of May 31, 2004, the stockholder deficit widens to $6,649,696
from a deficit of $5,775,998 at May 31, 2003.
JEAN COUTU: Posts $22.3 Mil. 2004-2005 First Quarter Net Earnings
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The Jean Coutu Group (PJC) Inc. reported its first quarter
2004-2005 financial results. These results include one month of
operations of Eckerd drugstores, a transaction that closed on
July 31, 2004.
Highlights
-- The first quarter results reflect the operations of Eckerd
drugstores for one month.
-- PJC has changed the dates of its financial year and quarter
ends to comply with the National Retail Federation 4-5-4
merchandising calendar that ends on the 28th of August 2004.
-- PJC has changed its reporting currency from Canadian dollars
to US dollars to reflect the fact that most of the Company's
activities will be carried out in US dollars following the
acquisition of Eckerd drugstores.
-- The Eckerd integration plan is progressing well and first
quarter results are satisfactory.
"The Jean Coutu Group took a significant step during the quarter
with a strategic growth initiative. The closing of the Eckerd
acquisition positions the Group among the North American leaders
in our industry," said Fran?ois J. Coutu, President and Chief
Executive Officer of the Jean Coutu Group. "The first quarter
results of our Canadian and American operations were satisfactory.
We completed the first month of operations of the Eckerd
drugstores and are proceeding with the integration plan. Certain
factors such as non-recurring acquisition and integration expenses
affected operating income. Many integration initiatives have
already been implemented and our plan is on track. Over the
coming months, we will continue to execute our plan in order to
capture all synergies to maximize the business potential that this
acquisition represents for the Jean Coutu Group."
Net Earnings
For the first quarter of the 2004-2005 fiscal year, PJC posted net
earnings of $22.3 million ($0.09 per share), a decrease of 29.2%
over the net earnings of $31.5 million ($0.14 per share) for the
first quarter of the previous fiscal year. The Eckerd transaction
closed on July 31, 2004. The transaction gave rise to an increase
in amortization charges of $16.2 million and an $11.8 million
increase in interest on long-term debt during the quarter. These
items combined with certain non-recurring expenses related to the
integration of Eckerd affected earnings before income taxes.
Revenues
The revenues of PJC's Canadian operations for the first quarter
reached $312.7 million compared with $275.5 million for the first
quarter of the 2003-2004 fiscal year, an increase of $37.2 million
or 13.5%.
The American operations generated revenues of $1.024 billion, an
increase of $581.8 million or 131.5% over the first quarter of the
previous fiscal year. The substantial increase is as a result of
the additional revenue of the Eckerd drugstore operations.
Retail Sales
The Jean Coutu Group's Canadian franchise network recorded retail
sales of $482.1 million, an increase of 6.9%. The American
corporate pharmacy network posted retail sales of $1.023 billion,
up 133.2% when compared with the same quarter of the 2003-2004
fiscal year.
In terms of comparable stores, the Canadian network's retail sales
were up 6.1%. In the United States, also in terms of comparable
stores, retail sales rose by 2.2% compared with the same quarter
last year. These figures reflect year-over-year comparable store
sales; therefore the recently acquired Eckerd drugstores are not
included in this measure.
EBITDA
Earnings before interest, income taxes, depreciation and
amortization amounted to $62.2 million against $60.1 million for
the corresponding quarter last year.
The Eckerd Acquisition
As previously mentioned, PJC completed the acquisition of 1,549
outlets of the Eckerd drugstore chain during the quarter. The
purchase price plus other items amounted to $2.519 billion.
In order to finance the acquisition and for other capital needs,
the following credit facilities were put in place:
-- Secured first rank five-and seven-year credit facilities in
the amount of $1.7 billion.
-- Unsecured eight- and ten-year senior notes in the amount of
$1.2 billion.
-- Total use of secured and unsecured credit facilities and
other debt amounted to $2.588 billion at August 28, 2004.
-- As of August 28, 2004, the Company had $101.6 million of
cash and had access to an unused $350 million five-year
secured revolving credit facility.
During the first quarter of 2004-2005, the Company issued
33,350,000 subordinate voting shares at a price of C$17.45 per
share for net proceeds of C$565.9 million or US$425.6 million.
Outlook
The Company continues to operate its Canadian PJC network and U.S.
Brooks network with a focus on sales growth, network renovation,
relocation and expansion projects and operating efficiency.
The Company is proceeding with the integration of the acquired
Eckerd drugstores, with a focus on capturing all synergies to
maximize the business potential of the transaction. The Eckerd
integration plan focuses on three areas:
-- Reduction of support functions
Efforts are being made to optimize supply chain efficiency,
along with enhancing head and field office productivity.
-- Operational improvements
The Company plans to reduce inventory shrink, optimize
marketing revenues and expenses, increase store labour
efficiency and eliminate non-productive contracts.
-- Growth initiatives
Efforts are being made to improve merchandising mix, improve
customer service, expand private label offerings and improve
pricing.
Management's focus is on the integration of the Eckerd drugstores
and improving their performance while growing the Company's other
networks.
Presentation of Financial Statements
On August 20, 2004, the Board of Directors of PJC modified the
Company's year-end in order to conform it to the National Retail
Federation's 4-5-4 merchandising calendar. Effective this fiscal
year, the Company will disclose its financial results on the basis
of four even quarters ending on the Saturday of the thirteenth
week, respectively ending on August 28, 2004, November 27, 2004,
February 26, 2005 and May 28, 2005 for the current year. As
previously announced, PJC changed its reporting currency to US
dollars to reflect the fact that most of its activities will be
carried out in US dollars following the acquisition of Eckerd.
The disclosure of our financial statements in US dollars will
ensure they more accurately reflect the Company's true operating
results and financial position.
Dividend
The Board of Directors of the Jean Coutu Group wishes to inform
its shareholders that it has declared a quarterly dividend of
$0.03 per share. This dividend is payable on November 18, 2004 to
all holders of Class A Subordinate Voting shares and holders of
Class B shares listed in the Company's shareholders ledger as of
November 4, 2004.
The Jean Coutu Group (PJC) Inc. is the fourth largest drugstore
chain in North America and the second largest in both the eastern
United States and Canada. The Company and its combined network of
2,209 corporate and affiliated drugstores (under the banners of
Eckerd, Brooks, PJC Jean Coutu, PJC Clinique and PJC Sant, Beaut,)
employ more than 59,600 people.
The Jean Coutu Group's United States operations employ over 45,600
persons and comprise 1,888 corporate owned stores located in 18
states of the Northeastern, mid-Atlantic and Southeastern United
States. The Jean Coutu Group's Canadian operations and the
drugstores affiliated to its network employ over 14,000 people and
comprise 321 PJC Jean Coutu franchised stores in Quebec, New
Brunswick and Ontario.
* * *
As reported in the Troubled Company Reporter on July 21, 2004,
Standard & Poor's Ratings Services rated Jean Coutu Group Inc.'s
US$250 million senior unsecured notes 'B'. The new notes will
replace a like amount of the company's initially proposed
US$1.2 billion senior subordinated notes, to be reduced to
US$950 million. The 'BB' bank loan ratings and the '1' recovery
rating indicate that lenders can expect full recovery of principal
in the event of a default. The outlook is negative.
JOHN Q. HAMMONS: Barcelo Acquisition Cues S&P to Watch B Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B' corporate credit
and senior secured debt ratings on Springfield, Missouri-based
hotel owner and operator John Q. Hammons L.P. on CreditWatch with
developing implications. The CreditWatch listing follows the
proposed acquisition of John Q. Hammons Hotels Inc. by Barcelo
Crestline Corp., a hotel management and leasing company that is
based in Spain. JQH Inc., a publicly traded company, is the sole
general partner of JQH LP and exercises control over all
partnership decisions.
Barcelo Crestline offered to pay $13 per share for all of the
Class A common stock of JQH Inc., for a total price of
$64 million. The transaction is expected to be implemented
through a cash merger and to be completed in January 2005. Mr.
John Q. Hammons, the majority shareholder of JQH Inc. with about
77% of the voting power, entered into an agreement with Barcelo
Crestline to support the proposed acquisition and to exchange all
of his other equity interests in JQH LP and JQH Inc. for a
preferred equity interest in the acquiring company.
"In resolving the CreditWatch listing, we will monitor
developments associated with the transaction, including whether
the $499 million in outstanding 8.875% first mortgage notes due
2012, which were jointly issued by JQH LP and John Q. Hammons
Hotels Finance Corporation III, will remain outstanding," said
Standard & Poor's credit analyst Sherry Cai. Holders have the
right to require the issuers to repurchase all or any part of that
holder's notes pursuant to a change of control offer. In the
event that a material amount of these notes remain outstanding,
the CreditWatch listing will be resolved following Standard &
Poor's review of the credit profile of the acquiring company
KEYSTONE HISTORIC: List of 2 Largest Unsecured Creditors
---------------------------------------------------------
Keystone Historic Partnership released a list of its 2 Largest
Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
City Of Reading Value of Security: $2,700,000
c/O Mark H. Yoder, Esq. $500,000
Treeview Corporation Center
Suite 100, 2 Meridian Building
Wyomissing, Pennsylvania 19610
Brian R. Schlappich Inc. $80,000
451 Kenny Drive
Sinking Spring, Pennsylvania 19608
Headquartered in Sinking Spring, Pennsylvania, Keystone Historic
Partnership filed for chapter 11 protection (Bankr. E.D. Pa. Case
No. 04-24143) on August 5, 2004. John A. DiGiamberardino, Esq.,
at Case & DiGiamberardino, P.C., represents the Company in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated assets of $500,000 to $1 million and
debts of over $1 million.
KMART CORPORATION: Hires Aylwin Lewis as New President and CEO
--------------------------------------------------------------
Kmart Holding Corporation (Nasdaq: KMRT) reported the appointment
of Aylwin Lewis as President and Chief Executive Officer,
effective immediately. Mr. Lewis will also join the Kmart Board
of Directors. Mr. Lewis joins Kmart from YUM! Brands, Inc., where
he was President, Chief Multi-Branding and Operating Officer.
Aylwin Lewis is a 13-year veteran of YUM! Brands, and has been in
the restaurant industry for 26 years, beginning his career as a
Restaurant General Manager and rising through the ranks to his
most recent position at YUM!, the world's largest restaurant
company with over $8 billion in annual revenue. Mr. Lewis has
been responsible for executing YUM!'s global operating platform,
multi-branding expansion, and Restaurant Information Systems. He
was also responsible for the operation of 2600 multi-branded
restaurants and the company's 1,250 Long John Silver's and 900 A&W
All-American Food restaurants.
Edward S. Lampert, Chairman of Kmart, said, "We are excited to
have Aylwin Lewis join us as our President and CEO. He brings a
strong record of successful operating performance. Under his
leadership, we expect that Kmart will build further on its
financial strength to become a truly great company."
Mr. Lampert added, "Aylwin Lewis brings to Kmart a wealth of
retail operating experience, a track record of personal and
corporate success, tremendous people skills and a strong work
ethic and commitment to excellence. He is the ideal leader and
agent of change for Kmart at this time, and we are pleased that he
has embraced this challenge with his characteristic passion.
Along with the other members of the Board, I welcome the
opportunity to work in partnership with Aylwin to lead Kmart in
the next exciting phase of our company's development. "
Mr. Lewis said, "I am very enthusiastic about working with Eddie
Lampert and the Board of Directors to drive the operating
excellence and cultural change that are the hallmarks of great
companies. Kmart has made considerable strides under the
leadership of Julian Day and the Board. I am joining an
organization with a strong executive team, financial stability,
and increasing profitability. I look forward to working with the
company's management team and all of Kmart's associates to build
on that success."
Julian Day, who served as Kmart's President and CEO since
January 2003, will remain on the Board of Directors and assist
Aylwin Lewis in the transition. Mr. Day said, "I am proud to have
led the outstanding team which has accomplished so much at Kmart.
As I relinquish my executive responsibilities at the company, I am
confident that we have established the strong foundation that will
allow Aylwin to focus on the goal of achieving operational
excellence in all aspects of our business. Our company is very
fortunate to have attracted such an outstanding executive, and I
look forward to his success."
Mr. Lampert added, "Julian Day has successfully led Kmart to its
current position of financial strength and profitability,
assembled a strong management team, instilled a culture of
financial discipline, and, most importantly, presided over a very
significant increase in shareholder value. The Board of Directors
appreciates Julian Day's contribution to our company's
development, and we look forward to continuing to work with him on
the Board at Kmart."
Aylwin Lewis Biography
Mr. Lewis' first job after college was as District Manager of
Operations for Jack in the Box, a chain owned by Foodmaker Inc.,
covering a district in Texas. He advanced in a variety of food
retail positions, including those with KFC and Pizza Hut, where he
was named Chief Operating Officer in 1996.
Following the spin-off of PepsiCo's Restaurant Division as Tricon
Global Restaurants Inc., Mr. Lewis served as Chief Operating
Officer of Pizza Hut, and ultimately was put in a new position at
Tricon as Executive Vice President of Operations and New Business
Development. In June of 2002, Tricon Global Restaurants changed
its name to YUM! Brands once it acquired the Long John Silver's
and A&W All-American Food restaurant chains. These two new brands
were purchased to place more than one brand under a single roof,
called "multi-branding." In January 2003, Mr. Lewis was promoted
to President, Chief Multi-Branding and Operating Officer at YUM!
Brands.
Reporting to Mr. Lewis at YUM! Brands were the Multi-branding
operations team, the President of Long John Silver's and A&W All-
American Food, and the Chief Operating Officers of KFC, Pizza Hut
and Taco Bell, who dually reported to the Presidents of their
respective brands. Also reporting to Lewis were the heads of
Quality Assurance, Engineering and Restaurant Information
Systems. Mr. Lewis is a member of the Board of Directors of
Halliburton Company and The Walt Disney Company.
Mr. Lewis received dual bachelor degrees from the University of
Houston in both Business Management and English Literature and an
MBA from the University of Houston.
Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART
Holding Corporation) -- http://www.bluelight.com/-- is the
nation's second largest discount retailer and the third largest
merchandise retailer. Kmart Corporation currently operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam. The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474). Kmart emerged from chapter 11 protection on May 6,
2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts. The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection.
KMART CORP: James Gooch Replaces R. Noechel as VP & Controller
--------------------------------------------------------------
On September 29, 2004, Richard J. Noechel left the position of
Vice President, Controller of Kmart Holding Corporation to pursue
other career opportunities. According to James D. Donlon, III,
Senior Vice President, Chief Financial Officer for Kmart, Mr.
Noechel's resignation was not the result of any disagreement with
Kmart or its current management on any matter relating to its
operations, policies or practices.
James F. Gooch assumes the position of Vice President, Controller,
effective as of September 29, 2004. Mr. Gooch, 37, was formerly
Kmart's Vice President, Treasurer, Financial Planning & Analysis,
a position he held from March 2003 to September 2004. Mr. Gooch
has been with Kmart since 1996. He previously served as:
-- Vice President, Financial Planning & Analysis from March
2002 to March 2003;
-- Divisional Vice President, Financial Planning & Analysis
from November 2001 to March 2002;
-- Assistant Treasurer from April to November 2001,
-- Divisional Vice President, Merchandise Finance from April
1999 to November 2001; and
-- Director, Merchandise Finance from September 1996 to April
1999.
There have been no transactions during the last two years, or
proposed transactions, to which Kmart was or is to be a party, in
which Mr. Gooch had or is to have a direct or indirect material
interest.
Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART
Holding Corporation) -- http://www.bluelight.com/-- is the
nation's second largest discount retailer and the third largest
merchandise retailer. Kmart Corporation currently operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam. The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474). Kmart emerged from chapter 11 protection on May 6,
2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts. The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection. (Kmart Bankruptcy News, Issue No. 82; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
LEVITZ HOME: Moody's Assigns B3 Rating to Senior Secured Notes
--------------------------------------------------------------
Moody's Investors Service assigned first-time ratings to Levitz
Home Furnishings, Inc.:
-- the senior secured notes rated B3,
-- a senior implied rating of B3 and a
-- senior unsecured issuer rating of Caa2.
The ratings outlook is stable.
The ratings reflect:
(i) the benefits that the company derives from its well
established brand names,
(ii) its leading market position in its key markets, and
(iii) its operating scale.
These strengths are tempered by:
(i) the competitive and fragmented nature of the furniture
retailing market,
(ii) the seasonality of the company's earnings and cash flow,
and
(iii) the company's leveraged balance sheet and modest cash
flow generation.
Moody's assigned these ratings to Levitz Home Furnishings, Inc.:
* $130 million senior secured notes due 2011, B3;
* Senior implied rating, B3;
* Senior unsecured issuer rating, Caa2.
Levitz was formed in 2001 through the combination of the Levitz
and Seaman's furniture retailing chains. Resurgence Asset
Management, L.L.C., which owns 84% of Levitz, acquired Seaman's
out of bankruptcy in 1992 and Levitz out of bankruptcy in 2001.
Levitz is undertaking a refinancing transaction with proceeds of
the new senior secured notes to be used to repay much of the
company's existing indebtedness. Concurrent with the notes
offering, Resurgence will convert $40.5 million of sponsor notes
into a new issue of Levitz preferred stock. The company's
existing debt will decrease by about $40 million as a result of
this transaction. The company will have no debt outstanding on a
pro forma basis as of June 30 under its new $60 million revolving
credit facility. Moody's does not rate the company's revolver.
The ratings reflect:
(i) the highly competitive and fragmented nature of the
residential furniture retailing industry;
(ii) the dependence of furniture sales on the general health
of the economy as well as housing starts; and
(iii) the deferrable nature of furniture purchases.
Ratings also reflect:
(i) the company's recent modest decline in same store sales
and strong seasonality of sales with a high dependence on
holiday weekend sales;
(ii) the vast majority of the company's earnings are in the
third (ended December) and fourth (ended March) fiscal
quarters and
(iii) virtually all of the company's free cash flow comes in
the fourth fiscal quarter.
The ratings furthermore reflect the relatively recent integration
of the Seaman's and Levitz operations. Significant cost savings
are contracted for but have not yet been realized in the company's
actual financial results. These significant savings are reflected
in the company's pro forma financials although there is a risk
that the timing and magnitude of the savings actually realized
might not be as projected.
The ratings are supported by:
(i) the company's well know Levitz and Seaman's brand names;
(ii) its leading market position in its core New York, San
Francisco and Los Angeles markets;
(iii) its broad product line at a variety of price points;
(iv) its long-standing and highly diverse vendor
relationships; and
(v) reliance on replacement sales for 80% of sales.
The company has significant scale in its core markets that allows
it to leverage key cost components such as advertising, promotion
and distribution costs. Barriers to entry are also relatively
high due to high advertising and promotion costs and high shipping
costs for long distances.
The stable ratings outlook reflects the company's recent
refinancing transaction, which will reduce the amount of the
company's debt and interest costs and eliminate debt amortization
payments. It also reflects the expectation that the furniture
retailing sector should continue to improve as the economy
recovers as well as the benefit of the historical one to two year
lag relationship between housing starts and furniture sales.
Levitz is highly levered with modest interest coverage and cash
flow metrics. For the projected fiscal year ended March 2005, pro
forma adjusted debt (adjusted for rental expense capitalized at
8x)/ pro forma EBITDAR is estimated at 5.9x and EBIT interest
coverage is estimated at 1.16x. The company projects free cash
flow/total debt to be approximately 3.6% for fiscal 2005.
The company's liquidity is adequate. Free cash flow generation
has historically been weak due to low EBIT margins and high
interest expenses. Free cash flow generation is expected to
improve due to economic recovery, cost savings and lower interest
expense, but it is still expected to be modest. The company has
access to a $60 million asset-based (inventory and receivables)
revolving credit facility, which is expected to remain largely
undrawn. The company has no significant financial covenants or
debt amortization requirements.
Ratings could be upgraded if:
(i) the furniture retailing sector improves with the economy,
(ii) projected cost savings reflected in pro forma earnings
are achieved, and
(iii) the company does not increase its leverage materially for
acquisitions or recapitalizations.
Ratings could be upgraded if:
(i) the company's ratio of adjusted debt/ adjusted EBITDAR
falls to the 5.25-5.5x range, and
(ii) if free cash flow/ total debt approaches the 10% range.
Conversely, ratings could be downgraded if:
(i) the economy exhibits sluggishness,
(ii) significant cost savings are not realized, and
(iii) operating performance and cash flow generation
deteriorate moderately.
Ratings could fall if adjusted debt/adjusted EBITDAR increases to
the 6.25-6.5x range and if FCF/total debt remains in the low
single digits.
The issuer of the notes and the borrower under the revolver is
Levitz Home Furnishings, Inc., the parent holding company. The
secured notes, the majority of the company's debt, are rated at
the senior implied rating. The notes are secured with a second
priority lien on inventory and receivables (first lien to the
revolver) and a first lien on all other assets. Collateral
coverage of the notes appears to be good. The notes would have
precedence in bankruptcy to obligations at the operating company
level due to guarantees by all existing and future domestic
subsidiaries. The revolver is not rated by Moody's. The revolver
is undrawn at closing and is projected to remain essentially
undrawn. The senior unsecured issuer rating is rated two notches
below the rating of the secured notes.
Headquartered in Woodbury, New York, Levitz is a leading furniture
retailer, which operates under the Seaman's and Levitz brand
names. The company had revenues of $1,006 million for the latest
twelve months ended June 30, 2004.
MERIT STUDIOS: Files Amended Chapter 11 Plan of Reorganization
--------------------------------------------------------------
Merit Studios, Inc. (OTC: MRIT) filed an amended disclosure
statement and plan in its Chapter 11 bankruptcy proceedings and is
in the process of filing a second amendment to those documents.
Merit filed for protection under Chapter 11 in an effort to
eliminate approximately $1 million in debt and resume operations
in the field of entertainment.
Additionally, Merit is in the process of filing a Form 15 with the
Securities and Exchange Commission to de-register the company as a
reporting company.
Since September 2002, it has been the intent of management to
bring entertainment related assets, contracts and opportunities
into Merit through Peak Entertainment. Discovery of creditors and
the inability to reach negotiated resolution, resulted in Merit
filing for bankruptcy protection. It is currently unclear when
the current bankruptcy proceedings will be completed or if they
will be favorable to Merit, its creditors and its shareholders.
Because of the inherent uncertainty of the foregoing, management
cautions shareholders and prospective shareholders that ownership
in Merit's securities remains a highly speculative investment.
Merit Studios, Inc. (OTC: MRIT) licenses its compression and
encryption software to Internet content providers and for data
archiving. The Company is also seeking to offer services for data
compression and data archiving to customers worldwide.
MIIX INSURANCE: New Jersey Insurance Commissioner Takes Control
----------------------------------------------------------------
The Honorable Neil H. Shuster of the Superior Court of New Jersey,
Chancery Division, Mercer County, in Trenton, appointed Holly C.
Bakke, Commissioner of Banking and Insurance for the State of New
Jersey, as the Rehabilitator for MIIX Insurance Company. In
short, Ms. Bakke or her designee will run the business. The
Court's order does not stay payment of any claim or any pending
litigation. The Order prohibits filing any new action or new
claim directly against MIIX Insurance without Court permission.
The Order provides that The MIIX Group and New Jersey State
Medical Underwriters, Inc. will continue to provide administrative
services to MIIX Insurance pursuant to the current Management
Services Agreement until terminated by the Department after
appropriate notice.
A full-text copy of Judge Shuster's order is available at no
charge at:
http://www.nj.gov/dobi/acrobat/miix040928.pdf
All directors and officers of MIIX Insurance and of its two
subsidiaries, Lawrenceville Holdings, Inc. and MIIX Insurance
Company of New York, resigned from their positions, effective
September 28, 2004.
MIIX Insurance Company is a subsidiary of The MIIX Group,
Incorporated (OTC: MIIX). Headquartered in Lawrenceville, New
Jersey, The MIIX Group -- http://www.miix.com-- provides
management and claims administrative services to the medical
professional liability insurance industry, and a range of
consulting products to physician and healthcare providers. The
MIIX Group of Companies currently protects existing physician,
medical professional, and institutional insureds through its long-
term commitment to run-off insurance operations.
MIRANT CORP: Unsecured Creditors' Meeting in New York on Nov. 1
---------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
chapter 11 cases of Mirant Corporation, and its debtor-affiliates
and subsidiaries invites the Debtors' creditors to attend an
information meeting to discuss issues relating to Mirant's
reorganization. Pursuant to confidentiality orders of the
Bankruptcy Court and applicable law, the presentations will be
limited to publicly available information. Disclosure of the
public information will not result in any creditor becoming
restricted. The meeting will be in-person only and all
participants will be required to pre-register in accordance with
certain procedures. The details of the meeting are:
Date: Monday, November 1, 2004
Time: 12:30 P.M. EST - Registration
1:00 P.M. EST - Presentation
Location: New York City (details to be provided upon
pre-registration)
The presentation will include an overview of publicly available
information regarding:
(1) significant developments since the petition date,
(2) recent financial performance,
(3) current trends in the power markets, and
(4) issues relating to the Plan of Reorganization.
Following the presentation, the Committee will answer pre-selected
questions (questions should be forwarded to David Buchbinder at
Andrews Kurth LLP at the e-mail address provided below). William
Snyder, the Bankruptcy Court appointed Examiner, will be present
at the meeting.
To be admitted to the meeting, you must pre-register by providing
to the Committee's co-counsel documentation, to the Committee's
satisfaction, evidencing that you are a creditor of the Parent
Debtors. Holders of public debt securities issued by Mirant
Corporation must provide a current brokerage statement reflecting
ownership, or otherwise provide an affidavit, in form and
substance acceptable to the Committee, attesting to the ownership
of Mirant Corporation debt securities. Holders of claims against
the Parent Debtors, which are not securities, must provide a copy
of the proof of claim filed with respect to the claims or other
evidence of creditor status acceptable to the Committee, including
an affidavit attesting to your status as a creditor and
constituent of the Committee. Holders of bank debt claims must be
listed on the agent bank's records as lenders as of Oct. 29, 2004.
For pre-registration and location information, please contact the
Committee's co-counsel:
Andrews Kurth LLP
Attn: David Buchbinder, Legal Asst.
Phone: (212) 850-2838
dbuchbinder@akllp.com
If you do not pre-register, you will not be admitted to the
meeting. Identification and a business card will be required for
registration.
The Parent Debtors are:
Mirant Corporation
Mirant Americas Energy Marketing, LP
Mirant Americas, Inc.
Mint Farm Generation, LLC
Mirant Americas Development Capital, LLC
Mirant Americas Development, Inc.
Mirant Americas Energy Marketing Investments, Inc.
Mirant Americas Gas Marketing I, LLC
Mirant Americas Gas Marketing II, LLC
Mirant Americas Gas Marketing III, LLC
Mirant Americas Gas Marketing IV, LLC
Mirant Americas Gas Marketing V, LLC
Mirant Americas Gas Marketing VI, LLC
Mirant Americas Gas Marketing VII, LLC
Mirant Americas Gas Marketing IX, LLC
Mirant Americas Gas Marketing X, LLC
Mirant Americas Gas Marketing XI, LLC
Mirant Americas Gas Marketing XII, LLC
Mirant Americas Gas Marketing XIII, LLC
Mirant Americas Gas Marketing XIV, LLC
Mirant Americas Gas Marketing XV, LLC
Mirant Americas Procurement Inc.
Mirant Americas Production Company
Mirant Americas Retail Energy Marketing, LP
Mirant Capital Management, LLC
Mirant Capital, Inc.
Mirant Chalk Point Development, LLC
Mirant Danville, LLC
Mirant Dickerson Development, LLC
Mirant Fund 2001, LLC
Mirant Gastonia, LLC
Mirant Intellectual Asset Management And Marketing, LLC
Mirant Las Vegas, LLC
Mirant Michigan Investments, Inc
Mirant Peaker, LLC
Mirant Portage County, LLC
Mirant Potomac River, LLC
Mirant Services, LLC
Mirant Sugar Creek Holdings, Inc.
Mirant Sugar Creek Ventures, Inc.
Mirant Sugar Creek, LLC
Mirant Wichita Falls Investments, Inc.
Mirant Wichita Falls Management, Inc.
Mirant Wichita Falls, LP
Mirant Wyandotte, LLC
Mirant Zeeland, LLC
Shady Hills Power Company L.L.C.
West Georgia Generating Company, LLC
Mirant Americas Gas Marketing VIII, LLC
Mirant Ecoelectrica Investments I, Ltd
Puerto Rico Power Investments, Ltd.
Mirant Whightsville Management, Inc.
Mirant Whightsville Investments, Inc.
Wrightsville Power Facility, LLC
Wrightsville Development Funding, LLC
Mirant Americas Energy Capital, LP
Mirant Americas Energy Capital Assets, LLC
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. Mirant Corporation
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.
MOLECULAR DIAGNOSTICS: Inks Accumed Tech. Settlement with MonoGen
-----------------------------------------------------------------
Molecular Diagnostics, Inc. (OTCBB:MCDG) and its wholly owned
subsidiary, AccuMed International, Inc. collectively, based in
Chicago, Illinois, and Monogen, Inc., based in Vernon Hills,
Illinois, jointly reported the settlement of their dispute arising
from the "AccuMed/MonoGen License" by which AccuMed, in December
2000 granted to MonoGen a license to specific AccuMed related
technologies that may be used, in part, for early cancer
detection, diagnosis and monitoring. As part of the settlement,
AccuMed assigned to MonoGen all of the AccuMed patents, patent
applications, trade secrets, trademarks, copyrights and know-how
covering the subject AccuMed patents and technology, as well as
all applicable AccuMed equipment and spare parts.
Also, MonoGen granted to MDI Group a nonexclusive, royalty-bearing
license to AccuMed technology for use only with proprietary
products manufactured by MDI Group that use primarily fluorescent
probes for cervical or ovarian cancer screening, and MDI Group has
agreed to reimburse MonoGen for a portion of MonoGen' s patent
expenses. MonoGen retains exclusive rights in all other fields of
use and nonexclusive rights for such use with cervical or ovarian
cancer screening.
Denis O'Donnell, President of MDI Group, indicated that, "These
technologies hereby assigned to MonoGen are not used in the
Molecular Diagnostics CVX cervical screening system. MDI Group
obtained this license although such technology is not currently
used or plans to be used by MDI Group.
About MonoGen, Inc.
MonoGen is a privately held corporation focused on providing
products to automate anatomic and molecular pathology
laboratories, particularly the process of preparing and analyzing
cellular specimens. MonoGen's products have been designed not
only to improve automated Pap test preparation and analysis, but
also to serve as a unique platform for more sensitive and
effective tests for non-gynecological cancers. Relatively few
competitors exist in this market, with the largest being Cytyc
Corporation (Nasdaq: CYTC). MonoGen's intrinsic value is
protected by a broad-patent portfolio in microscope slide
preparation, molecular diagnostics and imaging and information
systems.
About Molecular Diagnostics, Inc.
Molecular Diagnostics develops cost-effective cancer screening
systems, which can be utilized in a laboratory or at the point-of-
care to assist in the early detection of cervical,
gastrointestinal and other cancers. The InPath System is being
developed to provide medical practitioners with a highly accurate,
low-cost cervical cancer screening system that can be integrated
into existing medical models or at the point-of-care. More
information is available at: http://www.Molecular-Dx.com/
At June 30, 2004, Molecular Diagnostics' balance sheet showed a
$4,121,000 stockholders' deficit, compared to a $8,549,000 deficit
at Dec. 31, 2003.
MONSOUR MEDICAL CENTER: Voluntary Chapter 11 Case Summary
---------------------------------------------------------
Debtor: Monsour Medical Center
70 Lincoln Highway East
Jeannette, Pennsylvania 15644
Bankruptcy Case No.: 04-33736
Type of Business: The Company operates a hospital.
Chapter 11 Petition Date: October 15, 2004
Court: Western District of Pennsylvania (Pittsburgh)
Judge: Bernard Markovitz
Debtor's Counsel: Robert O Lampl, Esq.
960 Penn Avenue, Suite 1200
Pittsburgh, Pennsylvania 15222
Tel: (412) 392-0330
Fax: (412) 392-0335
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 unsecured
creditors.
NIAGARA FALLS: Moody's Assigns Ba1 Ratings to Serial Bonds
----------------------------------------------------------
Moody's assigned a Ba1 rating with a positive outlook to the City
of Niagara Falls':
-- $13.2 million General Obligation Serial Bonds - 2004
Series A; and
-- $635,000 Federally Taxable Serial Bonds - 2004 Series B.
The Ba1 rating and assignment of the positive outlook affect
$29.1 million in outstanding parity debt, including the current
issue and net of economically defeased debt.
Series A proceeds will fund capital projects city-wide while
Series B, which is federally taxable, will fund the city's
obligation to the state retirement system related to several early
retirement incentives. The Ba1 rating reflects the city's limited
taxbase with low socio economic indices benefiting from renewed
but modest taxbase growth, high debt burden and adequate financial
position that is expected to be impacted by a lack of structural
balance in fiscal 2004.
The assignment of a positive outlook reflects expectation of
continued taxbase growth which will result in improved tax margin
as well as the 2003 spin-off of the city's water and sewer funds
into a stand-alone authority that is expected to improve the
city's debt profile once self-support of debt is demonstrated.
Moody's positive outlook also reflects the city's improved
liquidity position as cash represents 10% of revenues and Moody's
expectation that while fiscal 2004 is to end structurally
imbalanced, the fiscal 2005 budget is expected to include
conservative revenue and expenditure assumptions that will
facilitate a return to structural balance in 2005.
Moody's believes the city's $1.26 billion tax base is poised for
expansion in step with ongoing development in the downtown area,
which abuts the falls and the Canadian border. This expectation
is rooted in the December 31, 2002 opening of a Seneca-nation
casino and ongoing construction of a hotel adjacent to the current
site. As a result officials anticipate attendant taxable
development to reverse a trend of tax base declines-which was
evident in fiscal 2004 assessed valuation growth of 2.2%.
Management reports assessed valuation growth is again projected
for fiscal 2005. Job creation associated with pending development
initiatives is estimated at 4,500 and is expected to further
diversify the city's employment base as the traditional industrial
base continues to wane given the relocation of SGL Carbon, a
downsizing at E.I. DuPont and the bankruptcy filing of Carbon
Graphite.
The 2003 spin-off of the city's water and sewer department into an
autonomous water authority removed $250,000 of storm water
operating costs from the General Fund and facilitates the
continuation of PILOT revenue, generating a net recurring positive
impact. The authority also refunded $81.2 million in city debt.
While the debt issued by the authority to facilitate the
transaction ($105 million) is not legally debt of the city,
Moody's will remove it from the city's debt statement only once a
track record of self-support is established given the critical
city service provided by the authority. The Authority has
instituted rate increases and expects to meet coverage covenants
(1.15 times coverage by net revenues) as represented in their 2003
bond issuance. Fiscal 2004, however, is the authority's first
full year of operations and financial results are not yet
available. City debt burden, exclusive of refunded debt but
inclusive of authority debt, is well above average at 12.4% of
full value and will be reduced markedly (to 2.4%) once this debt
is deducted. Amortization of the city's $29.1 million in
outstanding general obligation debt is rapid at 69% in 10 years.
The city expects additional capital needs will be managed through
slot machine revenues-either on a pay-as-you-go basis or by
supporting additional debt service-- associated with the casino
(please see discussion below).
In fiscal 2004-2008 the city will benefit from receipt of 25% of
the state's 18% of net slot machine proceeds at the Seneca Nation
casino. Thereafter, the state's share will increase to 25%, of
which the city will continue to receive 25%. Moody's expects
these items, in addition to sales tax and HRU tax growth expected
to result over time from ongoing development, will enhance the
city's revenue stream over the medium term. The formula by which
this revenue is distributed, however, is not codified. In fiscal
2003 of the $9 million in revenue distributed locally,
$3.27 million was provided to the city. Management expects the
city's share will increase in fiscal 2004, however, State
officials have informally instructed the city to use casino slot
revenues for capital expenditures only. As the city's share of
revenue is not statutory, Moody's believes use of revenues for
non-capital purposes could impact the city's future revenue
allotments. Future clarification of the permissible uses of this
revenue-and the city's ability to direct revenues toward non-
capital purposes-could positively impact credit quality.
The city ended fiscal 2003 with a $4 million surplus, which
markedly augmented cash and year-end fund balance. Absent casino
revenue ($3.3 million), which the state has instructed the city to
expend for capital purposes, the surplus would have been $771,000.
A number of one-shot revenues totaling $4.6 million some budgeted
and some not, facilitated these results. Year-end 2003 General
Fund balance was a satisfactory $9.4 million or 13.1% of operating
revenues. Included in this fund balance is a reserve for long
term receivables ($1.6 million) and the set aside of casino
revenues ($3.3 million). Undesignated fund balance was a still
adequate $3.67 million (5% of General Fund revenues).
Moody's expects the city's fiscal 2004 budget will challenge
operations and the city's augmented balance sheet. The city's new
administration inherited a budget that over-estimated revenues and
underestimated expenditures. Management reports significant use
of fund balance in fiscal 2004 is likely despite efforts underway
to minimize losses. In a worst-case scenario, Moody's believes
the fiscal 2004 operating deficit could exceed undesignated fund
balance. However, the administration's proposed fiscal 2005
budget addresses many of the issues imbedded in the prior fiscal
years budget and could provide for a return to structural balance.
Moody's positive outlook reflects this expectation despite
outstanding union contracts not covered under the budget plan
given management's commitment to use reduction in force to offset
any impact of union settlement. It is important to note that the
proposed fiscal 2005 budget, which includes a 6.2% property tax
increase ($2.1 million in recurring new revenue) -the first tax
increase in four years-exhausts the city's legal taxing margin.
Ongoing expansion of assessed valuation, which drives the tax
margin formula, is expected to provide for additional margin -
albeit at a limited amount-in the near term.
Further supporting Moody's positive outlook is the city's markedly
improved liquidity position. External cash flow borrowing has not
been necessary since fiscal 2001. Fiscal 2003 ended with a strong
cash position of 10% of revenues-including casino cash which is
not legally restricted. Moody's expects cash position will remain
satisfactory-an important factor in today's assignment of a
positive outlook.
Key Statistics:
2000 Population: 55,593
2004 Full Valuation: $1.26 billion
Full Value Per Capita: $22,662
Direct Debt Burden: 10.7%
Fiscal 2003 General Fund balance: $9.4 million (13.1% of
General Fund revenues)
Per Capita Income as % of State: 67.2%
Median Family Income as % of State: 66.5%
Parity Debt Outstanding: $29.1 million,
including current issue
NORTHROP GRUMMAN: Appoints Frank Flores VP of Integrated Sys. Unit
------------------------------------------------------------------
Northrop Grumman Corporation's Integrated Systems sector reported
the appointment of Frank Flores as vice president, Engineering,
Logistics and Technology for its Air Combat Systems business area.
In this position he will lead an organization of more than 3,000
Integrated Systems employees located at company facilities in El
Segundo, Palmdale, and San Diego, California, as well as smaller
sites in Missouri, North Dakota, Oklahoma, and Utah. The
organization supports major programs such as:
* the RQ-4 Global Hawk unmanned reconnaissance system,
* the B-2 stealth bomber,
* the F-35 Joint Strike Fighter,
* the F/A-18 Super Hornet, and
* the Multi-Platform Radar Technology Insertion Program.
Flores joins Integrated Systems from Northrop Grumman's Space
Technology sector, where he served as director of the F-35
communications, navigation and identification program for the
sector's Radio Systems organization in San Diego. Previously, he
was director of engineering for Radio Systems, where he provided
engineering support to develop complex electronic systems for
aircraft and telecommunications applications.
Mr. Flores holds bachelor's and master's degrees in electrical
engineering from the University of Southern California.
As a member of the Society of Hispanic Professional Engineers,
Flores has been active in programs that bring Northrop Grumman
engineers into schools as tutors and mentors. He also has served
on the board of directors for the San Diego chapter of the United
Service Organizations -- USO.
Northrop Grumman Integrated Systems is a premier aerospace and
defense systems integration organization. Headquartered in El
Segundo, California, it designs, develops, produces and supports
integrated systems and subsystems optimized for use on networks.
For its government and civil customers worldwide, Integrated
Systems delivers best-value solutions, products and services that
support military and homeland defense missions in the areas of
intelligence, surveillance and reconnaissance; space access;
battle management command and control, and integrated strike
warfare.
* * *
As reported in the Troubled Company Reporter on Oct. 6, 2004,
Fitch Ratings affirmed the 'BBB' ratings on Northrop Grumman
Corporation's senior unsecured debt and bank facility. The 'BBB'
rating also applies to the senior unsecured debt of Northrop
Grumman's subsidiaries, including Litton Industries and Northrop
Grumman Space & Mission Systems Corporation (formerly TRW Inc.).
Fitch has raised the rating on Northrop Grumman's convertible
preferred stock to 'BBB-' from 'BB+'. The Rating Outlook has been
revised to Positive from Stable for all classes of debt.
Approximately $6 billion of securities is affected by these rating
actions.
NORTHWESTERN STEEL: SEC Says No Way to Sale of Un-Issued Shares
---------------------------------------------------------------
The United States Securities and Exchange Commission opposes
Chapter 7 Trustee's proposed sale of un-issued shares in
Northwestern Steel and Wire Co. to IMA Advisors, Inc.
As reported in the Troubled Company Reporter on Oct. 4, 2004,
Philip V. Martino, Esq., the Chapter 7 Trustee overseeing
Northwestern Steel's liquidation, received an unsolicited $20,000
cash offer from IMA to purchase all of the Debtors' authorized but
unissued shares of common stock.
The Commission tells the U.S. Bankruptcy Court for the Northern
District of Illinois that the transaction should not be approved
for two reasons:
(1) a corporation's authorized but unissued stock is not
property of the estate and, therefore, cannot be sold
under Section 363; and
(2) the proposed sale constitutes trafficking in a public
shell and is contrary to public policy.
The Commission's objection to the sale of unissued stock stems
from two overarching concerns:
(A) selling the stock through a Section 363 sale circumvents
state and federal securities law; and
(B) it appears that IMA is a securities law violator who is
amassing a portfolio of public shells.
Unissued Shares Aren't
Property of the Estate
The SEC tells the Bankruptcy Court that case law consistently
recognizes that a corporation's stock, whether issued or unissued,
is not property of its estate. See Decker v. Advantage Fund,
Ltd., 362 F.3d 593, 596 (9th Cir. 2004)(holding that the debtor's
pre-petition issuance of its preferred stock could not be avoided
under Section 548 because a corporation's unissued stock is not an
asset of the debtor); In re Mid-America Petroleum. Inc. 71 B.R.
140, 141-142 (Bankr. N.D. Tex. 1987)(holding that authorized but
unissued stock is not property of the estate and therefore is
outside the scope of Section 363); In re Trinity Gas Corp.. 242
B.R. 344, 352 (Bankr. N.D. Tex. 1999)(finding that the debtor does
not have a property interest in stock that it issues), aff'd, 2000
U.S. Dist. LEXIS 8940 (N.D. Tex., May 24, 2000); In re Paso del
Norte Oil Co.. 755 F.2d 421, 424 (5th Cir. 1985)(finding that a
corporate debtor has no property interest in shares of its stock
owned by shareholders); In re Panda Development Corp., Inc., 76
B.R. 199, 200 (Bankr. M.D. Fla. 1987)(finding that stock of a
corporate debtor is not property of the estate).
The Decker and Mid-America decisions make abundantly clear that
even the unissued stock of a corporation is not an interest of the
corporation but merely equity in the corporation itself. Decker,
362 F.3d at 596.
To appreciate why a corporation's stock is not an asset of its
estate, the SEC tells the Bankruptcy Court it must look to the
nature of a corporation. A corporation is a creation of state
law. A corporation does not and cannot own itself; instead it is
owned by others. The owners' collective interest in the
corporation is referred to as the corporation's equity. Shares of
stock are units of equity ownership. See generally Larry D.
Soderquist & A.A. Sommer, Jr., Understanding Corporation Law, pp.
89-90 (Practising Law Institute 1990). A corporation's articles
of incorporation state the number of shares of stock that the
corporation is authorized to issue. Typically, a corporation does
not issue the maximum number of authorized shares of stock at one
time. Shares of stock that are authorized but unissued are
referred to as "unissued stock." A corporation's power to issue
stock in itself to others is neither property of the corporation
nor an interest in property but rather is an essential attribute
of the legal entity known as a corporation.
While unissued stock is not an asset of the corporation, the SEC
continues, it can be used as a vehicle through which the
corporation may acquire capital. See Mid-America 71 B.R. at 141-
142; Decker, 362 F.3d at 596; In re Curry and Sorensen. Inc.. 57
B.R. 824, 829 (B.A.P. 9th Cir. 1986); In re ITS Corp., 2001 Bankr.
Lexis 2066 (Bankr. N.D. Cal. 2001), aff'd sub nom. Decker v.
Advantage Fund, Ltd., 362 F.3d 593 (9th Cir. 2004). In order to
issue stock to shareholders, corporations must comply with the
state and federal securities laws.
Since the Debtor's authorized but unissued stock is not property
of the estate, the Trustee cannot sell its right, title, and
interest in the unissued stock pursuant to Section 363 of the
Bankruptcy Code. Mid-America. 71 B.R. at 141 (holding that
because unissued stock is not an asset of a corporation it is not
property of the debtor's estate and therefore is outside the scope
of Section 363); In re Warfiled, 45 B.R. 434, 437 (Bankr. D. Md.
1984) (recognizing that since stock is not property of the estate
it could be used or sold under Section 363).
Although the Trustee cannot avail himself of Section 363 to sell
the estate's right, title, and interest in Northwestern's unissued
stock, he nevertheless may be able to sell the Debtor's unissued
stock under the operation of the securities laws. In order to
issue the common stock of a public company, the stock must either
be registered or exempt from registration under the federal
securities laws. For example, if the requirements of Regulation D
are met, the Trustee may be able to rely on a private placement
exemption. He cannot, however, circumvent the requirements of the
securities laws by proceeding under Section 363. As the Mid-
America court observed, a debtor can issue additional stock "so
long as the corporation receives fair value for the stock and
complies with its Articles of Incorporation and Bylaws as well as
with all applicable State and Federal securities laws." 71 B.R. at
141.
Trafficking in a Public Shell
is Contrary to Public Policy
There is no dispute that Northwestern is a public shell
corporation. It has no operations nor does it anticipate having
any operations. The Chapter 7 Trustee is in the process of
liquidating any remaining assets. That the Trustee has framed
this as a sale of the estate's right, title and interest, if any,
in all of the corporate shell's authorized but unissued stock does
not change the substance of this transaction: the purchase and
sale of a public corporate shell, the SEC says.
Sections 727(a)(l) and 1141(d)(3) of the Bankruptcy Code prohibit
liquidating corporations from receiving a discharge in bankruptcy.
These provisions were borne out of Congress' desire to prevent
trafficking in corporate shells. See hi re Fairchild Aircraft
Corp., 128 B.R. 976, 982 (Bankr. W.D. Tex. 1991); H.R. Rep. No.
595, 95th Cong., 1st Sess. 384, 418-419 (1977); S. Rep. No. 989,
95th Cong., 2d Sess. 98-99, 129-130 (1978).
One of the evils that Congress perceived in the purchase and sale
of corporate shells, and sought to address through Sections 727(a)
and 1141(d)(3), was the use of a public reporting shell to take a
private business public without providing the rigorous disclosure
demanded by the securities registration laws. See Section 5 of the
Securities Act of 1933, 15 U.S.C. Sec. 77e(a). The lack of
adequate financial and other information about the company in the
securities markets makes the company's stock susceptible to
manipulation. See generally Report of the Commission on Bankruptcy
Laws of the United States, H.R. Doc. No. 93-137, 93rd Cong., 1st
Sess. (1937), reprinted in Collier on Bankruptcy, Appendix Volume
B at App. Pt. 4-703 - 4-704 (15th rev. ed. 2000). Transactions
between shell corporations and thinly capitalized private
companies for which little public information is available, are
common vehicles for "pump and dump" scams. As the Commission has
explained, "[w]hen one person or group controls the flow of freely
tradable securities, this person or persons can have a much
greater ability to manipulate the stock's price than when the
securities are widely held. In a 'pump and dump' scheme, retail
interest is stimulated, and the price of the securities is
manipulated upward, at the behest or under the control of the
manipulators who control much of the stock." SEC Release No. 34-
41110, Publication or Submission of Quotation Without Specified
Information, 1999 LEXIS 409 at *169-170 (February 25, 1999). Even
though the Trustee's proposed sale would not affect a discharge of
Northwestern's corporate shell, it nevertheless would frustrate
Congress' clear intent to discourage trafficking in corporate
shells, in addition, the shell's broad shareholder base could be
used to create an instant market for inflated stock, the
Commission contends.
Mark Rice is a Bad Guy
In this case, the Commission tells the Bankruptcy Court, the
potential risk not merely imagined. The proposed purchaser of the
shell, Mark Rice, has already been enjoined from violating the
antifraud and registration provisions of the federal securities
laws. SEC v. Mark E. Rice. No. H:02CV00636 (U.S.D.C. S.D. Tex.
March 5, 2002). The Commission's complaint in that case alleges
that Mr. Rice carried out "pump and dump" schemes to manipulate
the stocks of four microcap companies by sending large numbers of
fraudulent "spam" e-mails touting the companies. According to
the complaint, Mr. Rice illegally sold restricted stock of three
of the four companies into the resulting inflated market for total
profits of approximately $900,367.
Moreover, Mr. Rice, through IMA, also attempted to purchase the
unissued stock in a California case, In re Ultra Motorcycle Co.,
Bankruptcy Case No. RS 01-18794 (Bankr. C.D. Cal.). The
Commission objected and the court denied the trustee's motion to
sell the un-issued stock. Given Mr. Rice's troubling history, the
Commission is concerned that he is amassing a portfolio of public
shells. The significant risk to public investors and the
securities markets posed by the potential misuse of the Debtor's
public corporate shell far outweighs any perceived benefit to be
derived by creditors of this estate, the Commission says.
IMA Advisors can be reached at:
IMA Advisors, Inc.
10777 Westheimer, Suite 1100
Houston, TX 77042
Telephone (713) 267-9367
Fax (240) 358-5913
Attention: Mark Rice, CEO
Mobile (713) 443-7688
E-mail: mmrice@msn.com
The Securities and Exchange Commission is represented in this
matter by:
John Richards Lee, Esq.
Angela D. Dodd, Esq.
175 West Jackson Boulevard, Suite 900
Chicago, Illinois 60604
Telephone (312) 353-7390
Fax (312) 353-7398
E-Mail: dodda@sec.gov
Northwestern Steel and Wire Corporation was a major mini-mill
producer of structural steel components and selected wire
products. The Company filed chapter 11 protection on
December 19, 2000 (Bankr. N.D. Ill. Case No. 00-74075) and
converted to a chapter 7 liquidation proceeding on July 12, 2002.
Phillip V. Martino, Esq., at Piper Rudnick LLP, serves as the
chapter 7 trustee and is represented by himself and Colleen E.
McManus, Esq., at Piper Rudnick. Janet E. Henderson, Esq., and
Kenneth P. Kansa, Esq., at Sidley Austin Brown & Wood represented
the Debtor in its chapter 11 proceeding before operations ceased,
the case was converted and the Chapter 7 Trustee was appointed.
OMNOVA SOLUTIONS: Weak Profitability Cues S&P to Cut Rating to B+
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on OMNOVA
Solutions Inc., including the corporate credit rating to 'B+' from
'BB-'. The downgrade reflects continued weak profitability as a
result of elevated raw material costs and the company's subpar
financial profile relative to ratings expectations. The outlook
is stable.
Fairlawn, Ohio-based OMNOVA Solutions, with about $700 million of
annual sales and approximately $185 million of outstanding debt,
manufactures emulsion polymers, decorative and functional
surfaces, such as commercial wall covering, and specialty
chemicals.
"The downgrade reflects concerns that lower than expected
operating results due to higher raw material costs, have further
delayed an improvement in the company's financial profile," said
Standard & Poor's credit analyst George Williams. In addition,
profitability and cash flow protection measures remain negatively
affected by continued weakness in key end markets due to economic
concerns.
Despite efforts to improve cash flow through better working
capital management, OMNOVA has not been able to improve its
financial profile in line with expectations at the previous
rating. However, Standard & Poor's notes that the company's
liquidity has held up reasonably well given the depth of operating
challenges, and expects the company to continue to reduce costs
and expenditures until business conditions improve and raw
material pressures moderate.
The ratings reflect:
-- the company's fair market positions and decent product
diversification, offset by
-- competitive markets,
-- exposure to volatile raw-material costs and economic cycles,
and
-- a very aggressive financial profile.
OMNOVA was created in October 1999 as a spin-off of GenCorp Inc.'s
polymer products businesses.
PALCAN POWER: Sells Fuel Cells to One of China's Largest Oil Cos.
-----------------------------------------------------------------
Palcan Power Systems Inc. (TSX-V:PC) sold its UPS and Fuel Cell
Stack to one of China's largest oil companies based in northwest
China.
The order for Palcan's 500 Watt UPS (uninterruptible power supply)
and its 2Kw Water-cooled Fuel Cell Stack will be assessed for
potential application along a 5,000 kilometer natural gas
pipeline. The Chinese oil company is seeking a viable technology
to power the pipeline's security monitoring systems and has chosen
Palcan's as a result of the quality of its products and the
reputation it has for fuel cell products.
As China industrializes, its energy needs are growing
dramatically. Until 1993, the country was a net crude oil
exporter but since then oil imports have increased sharply to over
75 million tons in 2000. As a result, China is seeking other
energy sources to meet its power demands.
Palcan believes that this initial application of its fuel cell
technology may potentially lead to future orders for this 5,000
km. pipeline and also for other applications throughout China, a
market, which Palcan has targeted for sales of its products.
Palcan is developing expansion plans to include a new facility in
China which will manufacture rare earth metal hydride hydrogen
fuel cell canisters to supply the growing hydrogen power market
throughout mainland China. This order for assessment units is
valued at US$21,552.
As part of the sales agreement, the name of the purchaser must be
kept confidential.
"We are very pleased with this initial order as it paves the way
for us to supply a significant number of Fuel Cell Stacks and UPS
modules to China. China is a focus for Palcan's exports and also
the location for our hydrogen canister manufacturing facility. It
is a natural for us to be supplying various companies within China
and I see tremendous opportunity here as this relationship
promises to raise our visibility as a premier supplier of fuel
cell technology to China," stated Dr. John Shen, Palcan's
President.
China is home to the world's largest wind power project set to
bring clean air and green energy to the 2008 Summer Olympics and
city residents coping with some of the worst air pollution in the
world. The World Bank reports China is the world's largest coal
consuming country and home to 16 of the world's 20 most polluted
cities with at least 400,000 people dieing each year from air
pollution-related illnesses. Palcan believes it can provide the
technology that China needs to address many of these serious
issues.
Palcan Power Systems Inc. develops and manufactures proton
exchange membrane fuel cell systems under 5 kilowatts and metal
hydride hydrogen storage products. The Company's proprietary and
patent pending technologies form the core of the PalPac(TM) Power
Products. A unique and integrated fuel cell power system aimed
directly at low output applications where batteries and smaller
internal combustion engines are the power source. These include
stationary, marine, military and portable power applications. The
Company's manufacturing, research and development facilities are
located in Burnaby, British Columbia and Jiaxing, China. The
Company trades on the TSX Venture Exchange under the symbol "PC".
At June 30, 2004, Palcan's stockholders' deficit widened to
$948,211 compared to a $936,693 deficit on December 31, 2003.
PETRACOM MEDIA: Textron Ready to Credit Bid Claim Under New Plan
----------------------------------------------------------------
On August 26, 2004, Petracom Media LLC, Petracom of Joplin LLC,
Petracom of Texarkana LLC, and Petracom of Show Low LLC filed
their Joint Amended Plan of Reorganization with the United States
Bankruptcy Court for the Middle District of Florida. That Plan
contemplated a stand-alone restructuring and new money coming into
the estate that would be used to pay off $7.6 million of secured
debt owed to Textron Financial Corp. A Plan confirmation hearing
was scheduled for Oct. 5, 2004, before the Honorable Alexander L.
Paskay in Tampa, but didn't go forward.
Terry Brennan at The Daily Deal, citing unnamed creditor attorneys
as his source, reports that Textron is now prepared to credit bid
its claim to buy Petracom. Sec. 363(k) of the Bankruptcy Code
allows a secured creditor to purchase his collateral from a
debtor's estate in exchange for a dollar-for-dollar reduction to
the amount of its secured claim.
Under the new Plan, Mr. Brennan reports, Textron will offer to buy
Petracom's 16 radio stations at a confirmation hearing on Oct. 29.
The new plan provides for a $500,000 gift from Textron to
unsecured creditors, returning a 6% to 7% dividend, Mr. Brennan
relates.
Jordi Guso, Esq., at Berger Singerman, P.A., and James McGinley,
Esq., at Edwards & Angell LLP, represent Textron Financial.
Headquartered in Lutz, Florida, Petracom Media, LLC, and its
debtor-affiliates, collectively operate 18 radio stations
representing a number of different program formats (i.e., talk,
country and western, pop, etc.). Petracom Media filed for chapter
11 protection on February 17, 2004 (Bankr. M.D. Fla. Case No.
04-02908). Petracom of Joplin, LLC, filed a separate chapter 11
petition on October 9, 2004 (Bankr. M.D. Fla. Case No. 03-20980).
Harley E. Riedel, Esq. Stichter, Riedel, Blain & Prosser,
represents the Debtors. When the Company filed for protection
from its creditors, it estimated debts and assets in the $10 to
$50 million range.
POTLATCH CORPORATION: Posts $24.2 Mil. 2004 Third Quarter Earnings
------------------------------------------------------------------
Potlatch Corporation (NYSE:PCH) reported higher third quarter
earnings from continuing operations, compared with the prior
year's third quarter, due to improved results from the company's
Wood Products, Resource and Pulp and Paperboard operating
segments. The Consumer Products segment posted a loss for the
quarter, compared to modest earnings in the third quarter of 2003.
Overall results for the third quarter of 2004 included a pre-tax
gain of approximately $269.5 million, resulting from the September
sale of the company's three oriented strand board facilities and
related assets in Bemidji, Cook and Grand Rapids, Minnesota, to
Ainsworth Lumber Co. Ltd. The gain on sale, as well as the
operating results of the oriented strand board facilities for the
quarter and nine months ended September 30, 2004, are classified
as discontinued operations in the Statements of Operations. Prior
year results are also reclassified for comparability.
For the third quarter of 2004, the company reported earnings from
continuing operations of $24.2 million, compared to a loss from
continuing operations of $1.2 million for the same period in 2003.
Including discontinued operations, the company earned
$209.8 million for the third quarter of 2004, compared to net
earnings of $22.2 million for the third quarter of 2003. Net
sales from continuing operations for the third quarter of 2004
were $370.1 million, compared to $307.2 million recorded in the
third quarter of 2003.
Earnings from continuing operations for the first nine months of
2004 totaled $25.0 million. The loss from continuing operations
for the first nine months of 2003 was $6.4 million. Including
discontinued operations, net earnings for the first nine months of
2004 totaled $281.2 million, compared to net earnings of
$19.2 million for the first nine months of 2003. Net sales from
continuing operations for the first nine months of 2004 were
$1,029.9 million, compared with $895.4 million for 2003's first
nine months.
The Resource segment reported operating income of $30.2 million
for the third quarter of 2004, a $16.6 million increase over the
$13.6 million earned in the third quarter of 2003. A major
contributor to the favorable comparison to the prior year quarter
was increased land sales revenue, which totaled $12.0 million in
the third quarter of 2004, versus $3.1 million in the third
quarter of 2003. Land sales revenues include amounts received
from the sale of conservation easements on portions of the
company's Idaho timberlands, totaling $4.1 million for the third
quarter of 2004 and $0.5 million for the third quarter of 2003.
Higher sales prices for logs in Idaho also contributed
significantly to the positive results.
Operating income for the Wood Products segment was $26.4 million
for the third quarter of 2004, substantially higher than the
$5.6 million earned in the third quarter of 2003. Third quarter
2003 operating income is adjusted to reflect the classification of
oriented strand board operating results as discontinued
operations. "Favorable market conditions for wood products
continued during the third quarter of 2004," stated L. Pendleton
Siegel, Potlatch chairman and chief executive officer. "Selling
prices for lumber, plywood and particleboard were all higher
compared to the third quarter of 2003, although slightly below
levels seen in 2004's second quarter," Siegel added. He noted
that while prices remain at favorable levels, an expected seasonal
decline began in September. The higher selling prices compared to
last year's third quarter more than offset decreased shipments of
plywood and particleboard.
The Pulp and Paperboard segment reported operating income for
2004's third quarter of $12.2 million versus a loss of $3.3
million for the third quarter of 2003. Siegel noted "Higher
paperboard production at both of the segment's facilities resulted
in lower per unit costs that when combined with increased
shipments were responsible for the favorable comparison to the
third quarter of 2003. Paperboard prices have improved from the
beginning of 2004 to the point where they are slightly better than
2003 levels." Operating income for the third quarter of 2004
includes $3.0 million that was received from the bankruptcy
liquidation of Beloit Corporation. The entire amount was recorded
in income due to the write-off in 2001 of the entire claim.
The Consumer Products segment incurred an operating loss of
$5.0 million, compared to operating income of $0.1 million
recorded in the third quarter of 2003. "Markets for consumer
tissue products continue to be very competitive," Siegel remarked.
"Improvements in net selling prices over the third quarter of 2003
were more than offset by increased production costs," he said.
Siegel added that this year's addition of a new ultra towel
product to the segment's product mix enhanced the favorable price
comparison to the prior year's third quarter. The ultra towel is
manufactured at the company's new Las Vegas, Nevada, facility.
In addition to the $269.5 million pre-tax gain realized on the
sale, the oriented strand board facilities generated pre-tax
income of $37.3 million for the portion of the third quarter
during which they operated under Potlatch's ownership.
Potlatch is a mid-sized, integrated forester and manufacturer of
wood- and pulp-based products. The company owns and operates
about 1.5 million acres of timberland in Idaho, Arkansas, and
Minnesota. Its timberlands provide the majority of raw materials
for the company's wood products. Potlatch also makes pulp,
paperboard, and tissue and is a leading producer of retail
private-label tissue products.
* * *
As reported in the Troubled Company Reporter on Oct. 13, 2004,
Fitch Ratings removed Potlatch Corporation from Rating Watch
Evolving and affirmed the company's senior unsecured debt ratings
at 'BB+' and the senior subordinated ratings at 'BB'.
The Rating Outlook is revised to Stable.
RCN CORP: Asks Court Okay to Obtain Renewal D&O Insurance Coverage
------------------------------------------------------------------
In the ordinary course of their business, RCN Corporation and its
debtor-affiliates, like all major corporations, maintain
directors' and officers' liability insurance that provides certain
liability coverage with respect to the acts of the members of the
Debtors' boards of directors and their officers. The Debtors'
coverage is presently for $60 million and is provided by various
insurance providers.
The Debtors' current D&O Policies will expire on October 15,
2004, in accordance with their terms, unless the policies are
renewed. The D&O Policies are claims made policies, meaning that
the insurance covers only those claims actually made during the
policy periods. Thus, once the Debtors' current D&O Policies
expire, no further claims can be made under the policies,
regardless of whether the claims arose during the policy terms,
unless there is a renewal of the D&O Policies or an extension of
the reporting period.
In light of the upcoming expiration date, the Debtors, together
with their insurance brokers, Aon Financial Services Group and
Aon Risk Services, Inc., negotiated and obtained:
(a) renewal D&O liability coverage that would extend and
enhance their existing coverage from October 15, 2004,
through April 15, 2005;
(b) extended reporting coverage that would extend the period
for reporting claims for six years from the date of their
emergence from Chapter 11; and
(c) a pricing indication regarding post-emergence D&O
liability insurance for a 12-month period from the date of
their emergence from Chapter 11.
By negotiating all three types of coverage together as a single
package rather than individually, the Debtors were able to
achieve more favorable pricing and better terms and conditions
for the renewal and extended reporting policies and in connection
with the post-emergence policy.
The Debtors and their directors and officers that filed proofs of
claim in the Chapter 11 cases have agreed that the claims will be
withdrawn, or deemed withdrawn, as of the effective date of the
Debtors' Plan of Reorganization, provided that the Proposed
Coverage is procured as contemplated. Based on this mutual
agreement, the Official Committee of Unsecured Creditors, which
has been kept closely apprised of the procurement process, does
not oppose the purchase of extended coverage for the Debtors'
directors and officers.
Accordingly, the Debtors ask Judge Drain for permission to
purchase the Proposed Coverage and to pay the premiums associated
with the Proposed Coverage.
D. Jansing Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom,
LLP, in New York, informs the Court that the premium for the
renewal of the existing D&O Policy through the effective date of
the Debtors' Plan is estimated to be between $1,246,000 and
$1,261,000 for coverage of $60 million. The premium for the
extended reporting coverage is $2 million for a $22 million fresh
aggregate coverage for six years.
Mr. Baker contends that the premiums for the Proposed Coverage
are reasonable in light of the market rates for the policies and
the circumstances of the Debtors' case. The continued
participation of the Debtors' current officers and directors
remains critical to the Debtors' normal business operations and
successful reorganization. The remainder of the Debtors' cases
will requi7re difficult decisions on the part of their directors
and officers. Without the assurance that future litigation for
actions taken on behalf of the Debtors will be covered by D&O
policies, the Debtors' current directors and officers may seek to
avoid these necessary decisions or resign to avoid personal
responsibility. The continuation of D&O insurance is, therefore,
necessary to ensure that the Debtors' reorganization efforts are
successful.
The Debtors believe that the use of estate funds to purchase the
Proposed Coverage and pay the associated premiums is within the
ordinary course of business and does not require Court approval.
Nevertheless, the Debtors make this formal request out of an
abundance of caution and at the request of the insurance
carriers.
Headquartered in Princeton, New Jersey, RCN Corporation --
http://www.rcn.com/-- provides bundled Telecommunications
services. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on
May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman,
Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $1,486,782,000 in
assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy
News, Issue No. 13; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
REDDY ICE: Moody's Junks Proposed $100 Mil. Senior Discount Notes
-----------------------------------------------------------------
Moody's Investors Service assigned a Caa1 rating to the proposed
$100 million gross proceeds senior discount notes, due 2012,
issued by Reddy Ice Holdings, Inc., the ultimate parent holding
company of Reddy Ice Group, Inc. Moody's also affirmed the
companies' existing ratings pro-forma for the proposed
transactions. The ratings outlook remains stable.
Proceeds from the proposed issuance, along with cash on hand and
some borrowings under the existing secured revolver, are intended
to pay distributions to the investor group principally led by Bear
Stearns Merchant Banking and Trimaran Fund Management, L.L.C.
The dividend will be paid through the redemption of the
approximately $114 million preferred stock at Holdings, which is
held by the Sponsors, plus a straight dividend to common equity of
approximately $12 million. Additionally, proceeds will also pay
related fees and expenses. An amendment to the existing credit
facility is in process to allow for the proposed transactions.
Moody's took these ratings actions:
* Caa1 rating assigned to the proposed $100 million gross
proceeds senior discount notes, due 2012, issued by Holdings
* B3 rating affirmed existing 8-7/8% senior subordinated notes,
due 2011, at Reddy Ice
* B1 affirmed existing $215 million secured credit facility
consisting of a $35 million revolver and a $178 million term
loan
* B1 affirmed senior implied rating at Holdings
* Caa1 affirmed senior unsecured issuer rating (non-guaranteed
exposure at Holdings)
The ratings outlook remains stable.
The ratings affirmation reflects the continuation of solid
operating performance, which is resulting in good free cash flow
generation (free cash flow to total pro-forma debt is around 10%).
Despite challenges from unpredictable weather throughout the
company's peak selling season, profitability has been maintained
and there has been no material increase in financial leverage.
Moody's expects liquidity to be adequate throughout the near term,
as cash flow generated by operations should remain sufficient to
finance working capital and capital expenditures. Additionally,
the anticipated quarterly maintenance of cushion under existing
financial covenants should ensure access to the committed
$35 million revolver. Pro-forma for the proposed transaction,
there should be approximately $17 million available under the
revolver, net of roughly $6 million of advances plus $12 million
in outstanding letters of credit.
The ratings are constrained by the adverse effects of the sizable
de-capitalization occurring with the proposed transactions --
increased financial leverage. Pro-forma debt to EBIT is
approaching 8 times (approaching 5.5 times EBITDA). The ratings
reflect Moody's expectation that the reversal in the company's
debt reduction strategy is temporary (absent an exogenous event)
and that meaningful improvement in financial leverage is
anticipated in the intermediate term.
The stable ratings outlook reflects some tolerance for modest
fluctuations in credit statistics. Throughout the near term, the
company should continue to meet Moody's operating and financial
expectations, which allow for further modest acquisitions. The
ratings outlook could be changed to positive should the company's
consolidated financial profile continue to strengthen -- notably
with reduced financial leverage, enhanced margins, and bolstered
free cash flow through controlled working capital requirements and
capital reinvestment. Absent event risk, it would likely take
material and sustained deterioration in free cash flow generation
(and free cash flow relative to total consolidated debt) before
the ratings outlook would change to negative.
The Caa1 rating assigned to the proposed senior discount note at
Holdings, which is three notches below the B1 senior implied
rating, reflects the structural subordination to all the sizable
obligations at the operating company, Reddy Ice, and its
subsidiaries. The rating reflects the severity of loss in a
distress scenario, albeit deemed to likely be modest given our
current estimate of enterprise value, which affords some cushion
for deterioration. There is no required payment of cash interest
expense on the proposed note through 2008, and thereafter, cash
interest expense will be payable. There are no guarantees
supporting the note.
Headquartered in Dallas, Texas, Reddy Ice Holdings, Inc., and its
subsidiaries manufacture and distribute packaged ice in the United
States serving approximately 82,000 customer locations in
32 states and the District of Columbia under the Reddy Ice brand
name. The company is the largest of its kind in the United
States. Typical end markets include supermarkets, mass merchants,
and convenience stores. For the last twelve months ended
June 30, 2004, consolidated revenue was approximately
$260 million.
REDDY ICE: S&P Rates Proposed $100 Mil. Senior Discount Notes B-
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to Dallas, Texas-based Reddy Ice Holdings Inc., the
parent company of packaged-ice provider Reddy Ice Group Inc.
Standard & Poor's also assigned its 'B-' rating to Reddy Ice
Holdings Inc.'s proposed $100 million senior discount notes due
2012.
At the same time, Standard & Poor's affirmed its ratings on Reddy
Ice Group, including its 'B+' corporate credit rating and revised
its outlook to negative from stable due to increased consolidated
debt burden resulting from the proposed transaction, which
deviates from Standard & Poor's expectations of deleveraging in
fiscal 2004. At closing, the company will have approximately $437
million in debt.
For analytical purposes, Standard & Poor's views Reddy Ice
Holdings and Reddy Ice Group as one economic entity. The net
proceeds of the proposed issue will be used to repurchase all the
outstanding preferred stock at the parent company and pay a
dividend of $11.7 million to common equity shareholders. The new
ratings are based on preliminary terms and are subject to review
upon final documentation.
"The ratings on Reddy Ice Holdings and its operating subsidiary
Reddy Ice Group reflect its narrow product focus, its
participation in the highly fragmented and competitive packaged
ice industry, the seasonal nature of demand for its products, and
high debt levels," said Standard & Poor's credit analyst Paul
Blake.
RELIANCE GROUP: Plan Confirmation Hearing Until Further Notice
--------------------------------------------------------------
Judge Gonzalez adjourns the hearing to consider the confirmation
of the Official Unsecured Bank Committee's Second Amended Plan of
Reorganization for Reliance Financial Services Corporation. The
hearing was scheduled for today, October 20. A new hearing date
has not been set. Notice will be sent once a hearing date is
determined.
Headquartered in New York, New York, Reliance Group Holdings, Inc.
-- http://www.rgh.com/-- is a holding company that owns 100% of
Reliance Financial Services Corporation. Reliance Financial, in
turn, owns 100% of Reliance Insurance Company. The holding and
intermediate finance companies filed for chapter 11 protection on
June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing
$12,598,054,000 in assets and $12,877,472,000 in debts. The
insurance unit is being liquidated by the Insurance Commissioner
of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News,
Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000)
RITE AID: Moody's Junks $1.5B Senior & $250M Convertible Notes
--------------------------------------------------------------
Moody's Investors Service affirmed the Secured Notes and Unsecured
Notes of Rite Aid Corp. at B2 and Caa1, respectively.
The affirmation follows replacement of the prior $1.85 billion
bank loan with a new $1.4 billion bank facility and $400 million
Accounts Receivable Securitization. Relative to the prior bank
loan, the new debt is cheaper and provides greater flexibility in
debt prepayment.
These factors constrain the ratings:
(i) weak operations,
(ii) high financial leverage, and
(iii) limited availability of alternate liquidity compared to
its higher rated peers.
However, the progress at implementing a sustainable long-term
capital structure and Moody's confidence in achievement of the
revenue and cash flow objectives required to turn around the
company's performance benefit the ratings.
Ratings affirmed are:
-- $660 million 2nd-lien senior secured notes (comprised of 2
separate issues) at B2,
-- $1.5 billion of senior notes (comprised of 9 separate
issues) at Caa1,
-- $250 million of 4.75% convertible notes (2006) at Caa1,
-- Senior Implied Rating at B2, and the
-- Unsecured Issuer Rating at Caa1.
The rating on this debt is withdrawn:
-- $1.85 billion bank facility.
The Speculative Grade Liquidity rating is SGL-2. Moody's does not
rate the new $1.4 billion first-lien secured bank facility
(comprised of a $950 million Revolving Credit Facility and
$450 million Term Loan B).
The fundamental ratings incorporate Moody's expectation for
further improvement in operating performance as:
(1) debt protection measures remain weak on an absolute basis,
(2) store performance (namely, average unit volume and store-
level margin) is mediocre relative to the company's higher
rated peers of Walgreen (senior unsecured Aa3) and CVS
(senior unsecured A3), and
(3) prescription sales growth has lagged important competitors.
The historical inability to fund repair and maintenance capital
expenditures at the level of depreciation also adversely impacts
Moody's opinion of the company.
However, the fundamental ratings recognize the company's good
liquidity position and our opinion that operating momentum will
lead to further improvements in cash flow and debt protection
measures. The success at growing front-end sales, Rite Aid's
position as the third largest drug store chain and retailer of
about 6% of the prescription drugs dispensed in the U.S., and
potential scale advantages in purchasing, marketing, and
information technology also benefit Moody's perception of the
company.
The stable rating outlook considers Moody's opinion that sales
momentum will continue over the longer term and the company will
comfortably meet its medium-term obligations. Fundamental ratings
could be lowered if the position of Rite Aid decreases relative to
its traditional and non-traditional competitors, the company
cannot resume a normal capital expenditure program from
discretionary free cash flow, or rolling over maturing debts
becomes problematic. Upgrade of the fundamental ratings will
require material improvements in fixed charge coverage and
leverage as well as substantial progress at narrowing the
operating performance gap with industry peers.
The B2 rating on the senior secured notes (comprised of the
$300 million 9.5% secured notes (2011) and the $360 million 8.125%
secured notes (2010)) acknowledges the second-lien on virtually
all of the company's assets as well as the guarantees of the
company's operating subsidiaries. In the event of a hypothetical
default, the company's assets would first repay the secured first-
lien bank loan. Regardless, Moody's believes that fair market
collateral value exceeds the secured debt commitment.
The Caa1 rating on the senior unsecured notes (comprised of
$1.51 billion of 9 different rated senior note issues plus the
$250 million of 4.75% convertible notes) considers their
contractual and structural subordination to the secured debt. The
senior unsecured notes, issued at the holding company level
without guarantees from operating subsidiaries, are also
structurally subordinated to $820 million of vendor accounts
payable. Moody's observes that the company must redeem the
$171 million issue of 7 5/8% senior notes by April 2005 and the
$38 million issue of 6.0% senior notes by June 2005. As permitted
by the prior bank agreement, the company repurchased $65 million
of debt (face value) during the first half of Fiscal 2005. The
new bank loan permits the company to arrange additional debts and
to repurchase debt as long as revolving availability is greater
than $300 million
The company's operating and debt protection measures have
significantly improved over the past several years, but as of
August 28, 2004 lease adjusted leverage of about 6 times is still
high and fixed charge coverage of about 1 ½ times is still
low. Operating margin has improved to 2.8% in the first half of
Fiscal 2005 compared to 1.8% in the same period of 2004 as higher
average unit volumes in both the front-end (comparable store sales
of +3.5%) and pharmacy (comparable store sales of +3.8%) allow
better leveraging of fixed costs. EBITDA margin (adjusted for
one-time charges) improved to 4.5% from 3.7% in the same periods.
In Moody's opinion, capital investment must remain substantial
given that Rite Aid had underinvested in store remodels during the
past several years as evidenced by depreciation (currently about
$259 million) exceeding capital expenditures.
Rite Aid Corporation, with headquarters in Camp Hill,
Pennsylvania, is the third largest domestic drug store chain with
3370 stores in 28 states and the District of Columbia. Revenue
for the twelve months ending August 28, 2004 equaled
$16.9 billion.
RIVERSIDE FOREST: Interfor Has Until Friday to Match Tolko's Bid
----------------------------------------------------------------
The Board of Directors of Riverside Forest Products Limited
(TSX:RFP) determined that Tolko's proposed cash offer to purchase
all of Riverside's outstanding shares for $40 per share is a
"superior proposal" as defined in the pre-acquisition agreement
signed with International Forest Products on October 3, 2004.
This determination triggers a right for Interfor to match or
exceed Tolko's offer within five business days, or no later than
Friday, October 22, 2004. In the meantime, the Board has not
modified its previous recommendations to shareholders.
Stating that it had served its purpose in giving Riverside time to
maximize value for its shareholders, the Board also voted to
terminate Riverside's Shareholder Rights Plan.
Gordon W. Steele, Riverside Chairman, President and Chief
Executive Officer, said, "With Tolko now having come forward, we
will wait to see what Interfor does and will communicate further
with shareholders in due course. As has been the case from day
one, we will continue to be guided in this process by what is in
the best interests of all Riverside shareholders."
Riverside Forest Products Limited is the fourth largest lumber
producer in British Columbia with over 1.0 Bbf of annual capacity
and an annual allowable cut of 3.1 million cubic metres. The
Company is also the second largest plywood and veneer producer in
Canada.
* * *
As reported in the Troubled Company Reporter on Oct. 8, 2004,
Moody's Investors Service affirmed Riverside Forest Products
Limited's B2 senior unsecured rating and changed the outlook to
developing. The rating action follows the announcement that
Riverside has signed a definitive agreement with International
Forest Products Limited -- Interfor -- pursuant to which Interfor
will make an offer to acquire up to 100 percent, but a minimum of
51%, of Riverside. The offer is for $39 in cash and Interfor
Class A shares, to a maximum of $184 million in cash, or $35 in
cash and shares plus a Contingent Value Right to receive any U.S.
softwood duty refunds received by Riverside on or before
December 31, 2007. If successful, the transaction will close by
year-end.
As reported in the Troubled Company Reporter on August 27, 2004,
Standard & Poor's Ratings Services placed its 'B+' long-term
corporate credit and senior unsecured debt ratings on Kelowna,
B.C.-based Riverside Forest Products Ltd. on CreditWatch with
developing implications following the company's announcement that
it would reject an unsolicited takeover offer from privately held
Tolko Industries Ltd.
SIX FLAGS: Fixes Nov. 1 as Record Date for PIERS Dividend Payment
-----------------------------------------------------------------
Six Flags, Inc., (NYSE: PKS and PKSPrB) fixed Nov. 1, 2004, as the
record date for payment of a dividend for the quarter ending
November 15, 2004 to the holders of its Preferred Income Equity
Redeemable Shares, each such PIERS representing one one-hundredth
of a share of the Company's 7-1/4 % Convertible Preferred Stock.
Payment of the dividend, which will be paid 100 % in cash, will be
made on Nov. 15, 2004. The dividend will aggregate $.453125 per
PIERS.
Six Flags, Inc. is the world's largest regional theme park
company.
This release and prior releases are available on the KCSA Public
Relations Worldwide Web site at http://www.kcsa.com/
You may register to receive Six Flags' future press releases or to
download a complete Digital Investor Kit(TM) including press
releases, regulatory filings and corporate materials by clicking
on the "KCSA Interactive Platform" icon at http://www.kcsa.com/
* * *
As reported in the Troubled Company Reporter on Aug. 24, 2004,
Standard & Poor's Ratings Services lowered its ratings on theme
park operator Six Flags Inc., including its corporate credit
rating to 'B' from 'B+', and removed the ratings from CreditWatch,
where they were placed on July 19, 2004.
The rating outlook is negative. The Oklahoma City, Okla.-based
company's total debt and preferred stock as of June 30, 2004, was
$2.48 billion.
SOLECTRON: Completes Microtechnology Sale to Francisco Partners
---------------------------------------------------------------
Solectron Corporation (NYSE:SLR), completed the sale of its
Microtechnology business to Francisco Partners. Terms of the
transaction were not disclosed.
The Microtechnology business produces frequency control products
and hybrid microcircuits.
The transaction is part of Solectron's previously announced plan
to sell certain assets that are not central to the company's
future strategy.
Solectron Corporation -- http://www.solectron.com-- provides a
full range of worldwide manufacturing and integrated supply chain
services to the world's premier high-tech electronics companies.
Solectron's offerings include new-product design and introduction
services, materials management, product manufacturing, and product
warranty and end-of-life support. The company is based in
Milpitas, California, and had sales from continuing operations of
$11.64 billion in fiscal 2004.
* * *
As reported in the Troubled Company Reporter on Sept. 1, 2004,
Standard & Poor's Ratings Services assigned its 'B+' bank loan
rating and its '2' recovery rating to Milpitas, California-based
Solectron Corp.'s $500 million senior secured revolving credit
facility due 2007.
"The bank loan rating--which is rated the same as the company's
corporate credit rating--and the company's recovery rating reflect
Standard & Poor's expectation for substantial recovery of
principal (80%-100%) by lenders in the event of a default or
bankruptcy," said Standard & Poor's credit analyst Emile Courtney.
At the same time, Standard & Poor's affirmed Solectron's corporate
credit and other ratings. The outlook is positive.
SOLECTRON CORPORATION: Appoints Matti Virtanen EMEA President
-------------------------------------------------------------
Solectron Corporation (NYSE:SLR), appointed Matti Virtanen to the
newly created position of senior vice president and president of
Europe, the Middle East and Africa. He joined the company Oct. 4.
The appointment of Mr. Virtanen, who will serve as the company's
senior executive in the region, is part of an effort to strengthen
Solectron's business and overall presence in EMEA. He will lead
all customer-related activities for Solectron customers based in
EMEA, and he will coordinate efforts in the region to expand the
company's business and ensure customer satisfaction. Mr. Virtanen
reports to Marty Neese, executive vice president of Worldwide
Sales and Account Management.
Virtanen brings to Solectron a broad range of global experience
gained at Nokia, Hewlett-Packard and Compaq Corporation, where his
responsibilities included developing and executing international
go-to-market strategies, building senior-level customer
relationships, running both services and hardware businesses and
developing brand strategies. He has extensive international
experience gained through assignments in Europe, the United States
and in emerging markets.
"Matti will be a tremendous addition to our team in the region. He
is an experienced leader who will help us build relationships,
identify customer needs and satisfy those needs," Mr. Neese said.
"His appointment is a signal of our commitment to develop our
business with companies throughout Europe, the Middle East and
Africa."
Mr. Virtanen has more than 20 years with major electronics
companies. In the 1980s, he held sales management and marketing
roles with Nokia. From 1990 through 2002, Mr. Virtanen held
several positions at Compaq, including general management in
Finland, business development in Europe, as vice president of
worldwide distribution channels and as vice president and managing
director of Compaq Computer in Central Europe, the Middle East and
Africa.
He joined Hewlett-Packard through its acquisition of Compaq in
2002 and most recently was HP's vice president and managing
director of International Sales Europe. In that role, he was
responsible for HP business in more than 100 countries.
Mr. Virtanen, a native of Finland who lives in Germany, holds a
master of science degree in computer science, business management
and HVAC from the Helsinki University of Technology.
Solectron Corporation -- http://www.solectron.com-- provides a
full range of worldwide manufacturing and integrated supply chain
services to the world's premier high-tech electronics companies.
Solectron's offerings include new-product design and introduction
services, materials management, product manufacturing, and product
warranty and end-of-life support. The company is based in
Milpitas, California, and had sales from continuing operations of
$11.64 billion in fiscal 2004.
* * *
As reported in the Troubled Company Reporter on Sept. 01, 2004,
Standard & Poor's Ratings Services assigned its 'B+' bank loan
rating and its '2' recovery rating to Milpitas, California-based
Solectron Corp.'s $500 million senior secured revolving credit
facility due 2007.
"The bank loan rating--which is rated the same as the company's
corporate credit rating--and the company's recovery rating reflect
Standard & Poor's expectation for substantial recovery of
principal (80%-100%) by lenders in the event of a default or
bankruptcy," said Standard & Poor's credit analyst Emile Courtney.
At the same time, Standard & Poor's affirmed Solectron's corporate
credit and other ratings. The outlook is positive.
STAR GAS: Needs Lenders' Support to Avoid Bankruptcy Filing
-----------------------------------------------------------
Star Gas Partners, L.P. (NYSE:SGU) (NYSE:SGH), recently advised
its Petro heating oil division bank lenders of a substantial
expected decline in earnings for this division for the fiscal year
that ended on Sept. 30, 2004, and a further projected decline in
earnings for the fiscal year ending Sept. 30, 2005, which will not
permit Petro to meet the borrowing conditions under its working
capital line.
The source of the problem is a combination of:
(a) the inability to pass on the full impact of record heating
oil prices to customers, and
(b) the effects of unusually high customer attrition
principally related to its operational restructuring
undertaken in the past 18 months.
Petro is continuing to submit borrowing requests under its working
capital line. Star is in discussions with the lenders to modify
conditions and other terms necessary to assure that Petro will
have sufficient liquidity to operate through the winter. Star
anticipates that because of the requirements of Star's current and
potential lenders, it will not be permitted to make any
distributions on its Common Units. Star believes that with the
support of its existing lenders, which cannot yet be assured, it
can manage the extraordinary challenges arising from current
energy prices and other factors. However, without that support,
Star may be forced to seek interim financing on extremely
disadvantageous terms or even to seek to restructure its debts
under the protection of the bankruptcy courts.
Net Operating Performance
While the audit for fiscal 2004 is not yet complete, Star
anticipates that Petro's reported net income will be substantially
below Petro's reported net income for fiscal 2003 and Star
currently anticipates that Petro's net income for fiscal 2005 will
be lower than comparable fiscal 2004 net income.
Liquidity
Petro is entering the heating season, the period during which it
is most in need of working capital borrowings. This year, that
need has been exacerbated by the current record prices for home
heating oil - reaching $1.55 per gallon on Oct. 15, which is up
25% from one month earlier, 54% higher than June 30, 2004, and
almost 80% higher than one year earlier. This increase will
require Petro to borrow more than it has in prior years to
purchase heating oil.
Customer Service and Attrition
The continuing unprecedented rise in the price of heating oil has
adversely impacted Petro's margins and added to Petro's
difficulties in reducing customer attrition. Petro believes its
attrition rate had risen not only because of the rise in oil
prices but also because of operational problems. Prior to the
2004 winter heating season, Petro attempted to develop a
competitive advantage in customer service, and as part of that
effort, centralized its heating equipment service dispatch and
engaged a centralized call center to fulfill its telephone
requirements. The successful implementation of this initiative
took longer than Petro had anticipated, which adversely impacted
the customer base. In its Quarterly Report on Form 10-Q for the
quarter ended June 30, 2004, Star disclosed that it had "net
customer losses in both the home heating oil and propane segments.
The Partnership estimates that it had approximately 4% fewer
customers, after adjusting for acquisitions, at June 30, 2004 than
it had at June 30, 2003. Net customer losses are a result of
various factors including price, credit and service."
Star estimates that at the end of its fiscal year, customer
attrition was substantially in excess of that level.
While Star believes it has corrected the early inefficiencies
associated with its customer service, and that it has
significantly improved its responsiveness to customer needs, Star
expects that attrition will, at least to some extent, continue
into the 2004-2005 winter heating season. Star notes that even to
the extent that attrition can be halted, which Star believes will
be the case, the current reduced customer base will adversely
impact net income for fiscal 2005.
Petro's Credit Agreement
Petro's borrowing needs are currently provided pursuant to bank
credit facilities, including:
-- a $150 million working capital facility (of which $8.0
million was outstanding as of September 30, 2004);
-- a $35 million letter of credit facility ($34.5 million
outstanding as of September 30, 2004); and
-- a $50 million acquisition facility ($0 million outstanding
as of September 30, 2004).
Star is a guarantor of Petro's credit facilities. The Petro
facilities are secured on a pari passu basis with the holders of
Petro's senior notes by a security interest in substantially all
of Petro's accounts receivable inventories, operating facilities
and other assets of Petro.
On Oct. 13, 2004, Petro advised its bank lenders that it would not
be able to make the required representations included in the
borrowing certificate under its working capital line. In
addition, Petro notified its lenders that, for the quarter ending
Dec. 31, 2004 and for the foreseeable future thereafter, Petro
will be unlikely to satisfy the drawing condition that requires
that the consolidated funded debt of Star not exceed 5.00 times
its consolidated operating cash flow. Further, Petro advised the
lenders that Petro may not be able to maintain a zero balance
under the working capital facility (except for letter of credit
obligations) for 45 consecutive days from April 1, 2005 to
September 30, 2005, as required by Petro's covenants.
On Oct. 15, 2004, the bank lenders agreed to permit Petro to
request new working capital advances daily. In connection with
that understanding, the lenders requested that Star allow an
independent financial advisor, on behalf of the lenders, to review
Petro's operations and performance. There can be no assurance
that Petro and the lenders will reach agreement on a long term
amendment or waiver, or that discussions with other potential
sources of capital will be successful. The success of those
discussions may depend on, among other factors, successful
discussions with Petro's noteholders.
Petro Note Maturities
Under various privately placed debt indentures with institutional
noteholders (and approximately $2 million in public subordinated
debt), Petro's debt amortizations due in 2005 and 2006 are
$14.2 million and $68.6 million, respectively. Star believes that
a refinancing of the Note maturities is unlikely at this time.
Star is also in discussions with the institutional noteholders to
extend the maturities of the Notes, which are due in 2005 and
2006. The success of those discussions may depend on, among other
factors, successful discussions with the bank lenders. There can
be no assurance that the discussions with Noteholders will lead to
a deferred maturity schedule for the notes involved. Star is a
guarantor of Petro's senior notes.
Propane Division Debt
Star's propane division has separate bank credit facilities and
institutional note borrowings. The propane division's bank credit
facilities consist of a $25 million acquisition facility, a
$24 million parity debt facility and a $25 million working capital
facility. An aggregate of $2 million was outstanding on these
facilities as of Sept. 30, 2004. The propane division has
$96.3 million in first mortgage notes, which are secured on a pari
passu basis with the division's bank lenders by a security
interest in the assets of the propane division. Star has not
guaranteed the propane division's bank credit facilities or its
first mortgage notes. The propane division's working capital
facilities require as a condition of borrowing that the
consolidated funded debt of Star not exceed 5.0 times its
consolidated operating cash flow with respect to which Star
intends to seek a waiver.
Star Senior Notes. Star has $265 million in principal amount of
unsecured senior notes due February 13, 2013 at the parent company
level.
Engagement of a Financial Advisor
Star has retained Peter J. Solomon Company, LP an independent
investment banking firm, to advise Star on possible restructuring
alternatives and other strategic options.
Star Gas Partners, L.P., is a diversified home energy distributor
and services provider specializing in heating oil and propane.
The Partnership is the nation's largest retail distributor of home
heating oil and the nation's seventh largest retail propane
distributor. Additional information is available at
http://www.star-gas.com/
STAR GAS: Expected Earnings Decline Spurs Fitch to Pare Ratings
---------------------------------------------------------------
Star Gas Partners, L.P.'s outstanding $265 million principal
amount of 10.25% senior notes due 2013, co-issued with its special
purpose financing subsidiary Star Gas Finance Company, are
downgraded by Fitch Ratings to 'B-' from 'BB'. In addition, the
private placement senior secured ratings of its operating
subsidiaries, Petroleum Heat and Power Co. and Star Gas Propane,
L.P., are downgraded to 'B' and 'B+', respectively, from 'BBB-'.
Star Gas debt is structurally subordinated to approximately
$260 million of secured debt at Petro and Star Propane. All
ratings have been placed on Rating Watch Negative.
The rating action follows the announcement by the company that it
advised its Petro bank lenders that a substantial decline in
earnings for Petro was projected for the fiscal year ended
September 30, 2004 and a further projected decline in earnings for
the fiscal year ending September 30, 2005, which may not permit
Petro to meet the borrowing tests under its $150 million secured
working capital facility.
Petro notified its lenders that, for the quarter ending
December 31, 2004 and for the foreseeable future after that, it
would be unlikely to meet its 5.00 to 1.0 debt-to-cash flow test,
based on the consolidated Star Gas results, as well as being able
to maintain a zero balance under the facility for 45 days from
April 1, 2005 to September 30, 2005. To conserve cash, Star Gas
has suspended its common unit distribution, which totals $75
million annually.
Two problems identified in the company's press release were:
(1) the inability to pass on the full impact of record heating
oil prices to customers, and
(2) the effects of unusually high customer attrition
principally related to its operational restructuring
undertaken in the past 18 months.
Star Gas indicated it is in discussions with its bankers. On
October 15, 2004, bank lenders agreed to permit Petro to request
new working capital advances. Star Gas agreed to the request of
its lenders to allow an independent financial advisor to review
Petro's operations and performance. Without bank support Star Gas
and its operating subsidiaries may be forced to seek interim
financing on extremely disadvantageous terms or even seek to
restructure its debt under protection of the bankruptcy courts.
STAR GAS: Default Expectations Prompt Moody's to Junk Ratings
-------------------------------------------------------------
Moody's Investor Service downgraded the senior implied rating for
Star Gas Partners, L.P. to Caa1 from B1, and the senior unsecured
notes rating to Caa3 from B3, following the company's announcement
that its heating oil subsidiary, Petro Holdings, Inc. is not
expecting to meet certain requirements under its credit facility,
and thus will not be able to draw on its working capital facility.
As the company enters into its peak season of building working
capital, access to the revolver, especially in a historically high
heating oil price environment, is crucial to Petro's ability to do
business. While Star Gas continues to negotiate with the lenders
of Petro's credit facility to obtain sufficient liquidity, the
company has obtained a financial advisor and indicated that if it
cannot come to an agreement with the lenders on a long term
amendment, the company will look for alternative funding
strategies which may be very costly, and will also consider
restructuring its debt under bankruptcy protection.
Though Moody's does not rate the debt at Petro or at Star Gas
Propane, Moody's rate the senior unsecured notes at the MLP (Star
Gas Partners, L.P.) level, which is entirely dependent upon cash
flows from both Petro subsidiary and Star Gas Propane. With over
60% of the MLP's earnings and cash flows generated from Petro, and
the fact that the MLP guarantees the debt of Petro (though it does
not guarantee the note of Star Gas Propane) thus giving the Petro
lenders a claim on the MLP, Moody's believes there is a high
likelihood that the MLP notes could go into default too, pending a
resolution with the lenders.
The downgrade also reflects the suspension of distributions to the
common unit holders. While preserving the cash flow is beneficial
to debt holders, suspending the distribution eliminates access to
the common units market, which could have served as a potential
take-out source for the notes and other debt.
The ratings remain on review for further downgrade pending:
(i) the outcome of the negotiations with the lenders;
(ii) the results of the fiscal year-end audit; and
(iii) any other relevant information as it becomes available.
Moody's ratings for Star Gar Partners, L.P. are:
* Downgraded to Caa3 from B3 -- Star Gas' 10.25% senior
unsecured notes due 2013
* Downgraded to Caa1 from B1-- Star Gas' senior implied rating
On October 15, 2004, the company advised the lenders to Petro that
it expects to see declines in the earnings profile, which will not
permit Petro to borrow under the facility as early in the quarter
ending December 31, 2004. Petro is estimating that it will be
unable to meet the consolidated funded debt to consolidated cash
flow maximum level of 5.00 times test. Petro has three
facilities:
-- a $150 million working capital facility (approximately
$8.0 million outstanding as of September 30, 2004),
-- a $35 million letter of credit (L/C) facility with
approximately $34.5 million outstanding as of
September 30, 2004, and
-- a $50 million acquisition facility, with no outstandings as
of September 30, 2004.
These credit facilities are secured by the assets of Petro and are
pari passu with the holders of about $160 million of senior notes.
The reason for the earnings decline is reportedly due to continued
customer attrition, which appears to have worsened from its 4%
drop in the quarter ended June 30, 2004 compared to the same
period in 2003. The company believes the attrition is largely due
to pricing pressures in its core markets where it is unable to
pass along the rising costs of heating oil that is currently about
$1.55/gallon, approximately 25% higher than September. This
results in a margin squeeze, thus reducing profitability and cash
flow. Though Petro had endeavored to institute a revamped
customer service initiative, this effort did not appear to be
working and attrition continued to grow.
It appears that the propane subsidiary continues to perform as it
has, however, it has its own secured debt that it must service,
thus leaving leftover cash flows to be upstreamed to the MLP,
which because of its guarantee of the Petro debt, will be owed to
the creditors of Petro, leaving the MLP bond holders in a
substantially weakened position.
The notching of the MLP notes reflects the deep structural
subordination of the notes behind the secured debt at both Petro
and Star Gas propane and that the MLP guarantees the debt of
Petro.
Star Gas Partners, L.P. is headquartered in Stamford, Connecticut.
TECNET INC: Trustee Wants to Sell Enhanced Global Convergence
-------------------------------------------------------------
Scott M. Seidel, the Chapter 7 Trustee in Tecnet, Inc.'s
bankruptcy proceeding, asks the U.S. Bankruptcy Court for the
Northern District of Texas, Dallas Division, for permission to
sell the Debtor's interests in Enhanced Global Convergence
Services, Inc.
TecNet claims to own all of the equity in Enhanced Global
Convergence, a telecommunication provider in Wisconsin.
Global Convergence ceased to operate when TecNet's bankruptcy
proceedings converted to chapter 7. The company's assets include
real property, accounts receivables, claims and other property.
The Trustee believes that liquidation of Global Convergence will
greatly benefit TecNet and its creditors.
Headquartered in Garland, Texas, TecNet, Inc., provides
telecommunication services, filed for chapter 11 protection on
April 8, 2004 (Bankr. N.D. Tex. Case No. 04-34162) and its case
was converted to a chapter 7 liquidation proceeding on June 4,
2004. Scott M. Siedel serves as the chapter 7 Trustee. Mark A.
Weisbart, Esq., represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed estimated debts of over $10 million and
estimated debts of over $100 million.
US AIRWAYS: Will Restructure Flight Schedules Starting Feb. 2005
----------------------------------------------------------------
US Airways will significantly restructure its flight schedule
beginning Feb. 6, 2005, as the company continues implementing its
Transformation Plan.
"With our February schedule, we will lay the groundwork for a
complete overhaul of the US Airways business model, a design that
uniquely combines the best business practices of both legacy and
low-cost carriers," said B. Ben Baldanza, US Airways senior vice
president of marketing and planning. "Improved aircraft
utilization and changes to hub operations will allow us to operate
approximately 230 more daily flights, the equivalent of adding
27 mainline airplanes and 15 regional jets to our fleet at today's
utilization levels, without acquiring additional aircraft."
Key elements of the new schedule, which assumes a fleet of 281
mainline aircraft and 169 RJs:
* Significant changes at Philadelphia, where traditional
flight-connecting banks will be replaced by a "rolling"
structure;
* The addition of two new flight-connecting banks in
Charlotte, N.C., combined with significant capacity growth;
* The beginning of expanded operations to the Caribbean and
Latin America from Fort Lauderdale/Hollywood International
Airport, including four new destinations in the region added
to the US Airways network;
* The redefinition of Ronald Reagan Washington National
Airport, with new nonstop service to primary business
destinations, complemented by the replacement of many
turboprop flights with RJ service; and
* Increased productivity of aircraft and other assets closer
to low-cost carrier (LCC) standards, brought about by better
balancing the hub-and-spoke and point-to-point business
models.
Philadelphia
US Airways' hub in Philadelphia will continue to serve as a
primary connecting point in the Northeast and as a gateway to
Europe, the Caribbean, and Latin America. Total departures from
Philadelphia will increase to 495 each business day, or seven
percent more than the November 2004 schedule, and 32 percent more
than February 2004. Connecting arrival and departure banks also
will be replaced by a steady flow of flights throughout the day.
This is expected to relieve airfield delays and increase
operational efficiency. Further, two new destinations will be
added to the schedule, with 50-seat RJ flights to and from
Wilmington, North Carolina, and Washington Dulles International
Airport, operated by Mesa Airlines and PSA Airlines, respectively.
Charlotte
US Airways' largest hub will grow to 564 daily weekday departures
(from the current 495) and by two departure and arrival banks, an
increase of 100 daily flights as compared to the February 2004
schedule. Charlotte will continue as a modified hub-and-spoke
system to maximize revenue and profitability. The current
schedule includes eight flight-connecting banks.
Charlotte will continue to be US Airways' largest gateway to the
Caribbean and Latin America, and transatlantic service to
Frankfurt and London (Gatwick Airport) will continue as well.
Service from Charlotte to Sarasota will be seasonally upgraded to
Boeing 737 jets, replacing 50-and 70-seat RJs.
Ronald Reagan Washington National
New nonstop service will be added to six key business
destinations, including Atlanta, Cleveland, Detroit, and Chicago
(O'Hare) with four daily nonstop roundtrip flights each, as well
as Dallas/Fort Worth and Houston (George Bush Intercontinental),
with three daily nonstop roundtrip flights each. The new markets
will feature the 72-seat Embraer 170 Regional Jet on most flights.
Mainline jets will replace 50-seat RJ and 37-seat turboprop
service on selected flights from Washington to Albany, Buffalo,
Rochester and Syracuse, New York; Columbus, Ohio; Indianapolis;
Jacksonville, Florida; Manchester, New Hampishire; and Raleigh,
North Carolina, versus the February 2004 schedule. Departure
levels will be unchanged in Washington versus February 2004, with
seat capacity increasing by 40 percent to reflect the use of
larger RJs and mainline aircraft.
"US Airways is already the leading airline at Reagan National, and
with the new business markets and larger aircraft in our February
schedule, we significantly increase our scope of service," said
Baldanza. "The use of larger aircraft is consistent with the
stimulated demand environment created by the launch of GoFares in
the Washington market."
With the change, US Airways will provide nonstop service in 15 of
Washington's 20 largest markets.
Fort Lauderdale/Hollywood
As previously announced, US Airways will expand service in Fort
Lauderdale/Hollywood, Florida, on Feb. 13, 2005. Daily departures
will increase from 27 this fall to 54, with the introduction of
daily nonstop service to nine destinations in the Caribbean and
Latin America, as well as six new nonstop destinations in the U.S.
In February, US Airways will initiate service to:
-- Guatemala City, Guatemala;
-- Panama City, Panama;
-- Kingston, Jamaica; and
-- San Salvador, El Salvador,
all subject to foreign government approval.
US Airways will also introduce nonstop daily flights to Key West,
Fla., operated by PSA Airlines. Connections will be created in
Fort Lauderdale/Hollywood for passengers traveling from the
Northeast to points in Latin America and the Keys. US Airways'
new low GoFares are available on all nonstop flights to and from
Fort Lauderdale/Hollywood.
Pittsburgh
Pittsburgh continues to be an important part of the US Airways
network. US Airways expects to operate approximately 229 daily
departures to 67 destinations with the February schedule,
including 28 of the top 30 markets for local travelers. As
previously announced, a redesigned Pittsburgh schedule will take
effect on Nov. 7, 2004. Currently, minimal changes are planned to
the Pittsburgh schedule between November 2004 and February 2005.
Depending on final network and schedule decisions made by non-
owned affiliate carrier providers, the total departure count could
vary slightly.
Boston and New York LaGuardia
Capacity from Boston and New York will increase by 36 and 12
percent, respectively. Capacity growth occurs as larger RJs and
mainline equipment replace smaller, less efficient aircraft.
US Airways Shuttle
Shuttle flights currently operate hourly between New York
LaGuardia, Boston Logan and Washington Reagan National. Beginning
on Feb. 6, 2005, Shuttle flights between Washington and Boston
will depart 45 minutes after the hour, rather than on the hour or
half-hour. Shuttle service between New York and both Boston and
Washington will continue to operate hourly on the hour. The new
service pattern is another part of US Airways' overall plan to
ensure increased efficiency through better aircraft utilization
and airport staffing.
Transatlantic
US Airways will continue to offer nonstop service to its existing
11 destinations in Europe from its international gateways in
Philadelphia and Charlotte. Overall Atlantic capacity is expected
to remain unchanged in 2005.
Efficiency
The revised flight schedule will reduce aircraft turn times by 15
percent, in turn allowing mainline aircraft utilization to
increase by ten percent and US Airways Express utilization to
increase by five percent, versus February 2004. Mainline capacity
for US Airways will increase by seven percent in February 2005 as
compared to February 2004.
"Adoption of the Transformation Plan represents a turning point in
the history of US Airways," Baldanza said. "By changing our core
business model, US Airways will be better positioned to
successfully compete in an aggressive competitive environment
where declines in yields, growth of other low cost carriers, and
record high fuel prices are expected."
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for a $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts.
US AIRWAYS: Gets Court Nod to Assume Five Trust Fund Agreements
---------------------------------------------------------------
US Airways, Inc., and its debtor-affiliates and subsidiaries
established five special purpose trust funds to ensure payment of
amounts that are collected for the express benefit of third party
beneficiaries. These Special Purpose Trust Funds are not the
property of the Debtors' estates. The Debtors are required to
remit these sums to the ultimate beneficiaries, irrespective of
their Chapter 11 proceedings.
(1) Federal-Related Trust Fund Taxes and Charges Trust
Pursuant to a Trust Agreement dated as of May 15, 2002, between US
Airways, Inc., as grantor, and Merrill Lynch Trust Company, FSB, a
federally chartered savings bank, as trustee, a trust was
established to manage payments to the federal government for
federal income tax withholding and employment taxes. Brian P.
Leitch, Esq., at Arnold & Porter, in Denver, Colorado, explains
that the Debtors collect funds for deposit in the Special Purpose
Trust 1 for the benefit of the federal government for:
(a) federal payroll withholding taxes;
(b) federal Unemployment Tax Act taxes; and
(c) federal jet fuel taxes.
The Debtors transfer sufficient amounts to the Special Purpose
Trust 1 to cover the estimated related accruals. The Special
Purpose Trust 1 pays amounts due to the relevant authorities.
(2) State and Local Employment-Related Trust Fund Taxes
and Charges Trust
Pursuant to a Trust Agreement dated as of May 28, 2002, between US
Airways, as grantor, and Merrill Lynch, as trustee, the Special
Purpose Trust 2 was established to ensure that proper amounts were
paid to state and local authorities, agencies and other entities
connected with state and local income tax withholding, employment
taxes and similar taxes, charges and fees, including unemployment,
supplemental unemployment, and disability taxes, and workers'
compensation charges.
To ensure prompt payment, the Debtors maintain $5,700,000 in the
Special Purpose Trust 2. The Debtors pay State and Local
Employment-Related Trust Fund Taxes and Charges at staggered times
throughout the month. Generally, the Debtors pay the large
numbers of authorities directly rather than through the Special
Purpose Trust 2. However, if the Debtors fail to make the
required payments from their general assets, the Special Purpose
Trust 2 has funds held in escrow as assurance.
(3) Dormant Trust
The Debtors used to maintain a Special Purpose Trust 3. The Trust
is no longer in use and has a $0 balance. Nevertheless, the
Debtors want the Trust available for reactivation if it becomes
necessary and prudent to segregate the types of taxes and
charges that are processed through the other Special Purpose Trust
Funds.
(4) Non-Statutory Payroll Deductions Trust
Pursuant to a Trust Agreement dated as of June 21, 2002, between
US Airways, as grantor, and Merrill Lynch, as trustee, the Special
Purpose Trust 4 was established to ensure the payments to the
federal government or non-federal government administrators,
institutions, authorities, agencies, entities and third parties
for non-statutory employee payroll deductions. To ensure payment
of the Non-Statutory Payroll Deductions, the Debtors maintain a
$33,600,000 reserve in the Special Purpose Trust 4, which covers
related estimated monthly accruals. Typically, the Debtors pay
the Non-Statutory Payroll Deductions directly, rather than through
the Special Purpose Trust 4. However, if the Debtors fail to pay
the Non-Statutory Payroll Deductions from their general assets,
the Special Purpose Trust 4 holds funds in escrow to make the
payments.
(5) Federal Air Transportation Tax and Security Charges Trust
Pursuant to a Trust Agreement dated as of May 29, 2003, between US
Airways, as grantor, and Merrill Lynch, as trustee, the Special
Purpose Trust 5 was established to manage payment of:
(1) federal air transportation taxes;
(2) federal security and inspection charges;
(3) federal Animal and Plant Health Inspection Service of
the U.S. Department of Agriculture user fees;
(4) federal Immigration and Naturalization Service fees; and
(5) federal customs taxes.
The Special Purpose Trust 5 serves as a reserve to ensure payments
to administrators, institutions, authorities, agencies and
entities that receive Passenger Facilities Fees and Charges. The
Debtors transfer sufficient amounts to cover estimated accruals
for the Federal Air Transportation Tax and Security Charges to the
Special Purpose Trust 5. For ease of administration, the Debtors
pay the PFCs directly, rather than through the Special Purpose
Trust 5. However, to ensure the payment of the PFCs, the Debtors
sufficiently fund the Special Purpose Trust 5 to make necessary
payments. Therefore, the Debtors maintain a reserve within
Special Purpose Trust 5 in case the Debtors fail to pay the PFCs
from their general assets.
Debtors Need to Assume the Trust Agreements
Mr. Leitch informs Judge Mitchell that there are unperformed
continuing obligations for both the Debtors and Merrill Lynch.
For example, Merrill Lynch is obligated to manage and administer
the Special Purpose Trust Funds and the Debtors are obligated to
instruct Merrill Lynch on the proper disposition of funds held in
each Trust. The Special Purpose Trust Agreements each have a 20-
year term, with the earliest expiring in 2022. As a result, the
Special Purpose Trust Agreements constitute executory contracts.
Mr. Leitch warns that if the machinations that operate the Trusts
are disrupted and the Debtors fail to make the required payments
to the relevant third parties, the Debtors and their directors and
officers could be subject to fines, penalties and personal
liability.
Consequently, the Debtors sought and obtained the Court's
authority to assume the Special Purpose Trust Agreements and
continue funding the Special Purpose Trusts under Section 365 of
the Bankruptcy Code.
The Debtors will cure any defaults in the ordinary course of
business. The Debtors have provided adequate assurance of future
performance without requiring further action.
Judge Mitchell emphasizes that the assumption of the Trust
Agreements does not grant the Debtors authority to pay obligations
to the Pension Benefit Guaranty Corporation.
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for a $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue
No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000)
VINCENNES STEEL: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Vincennes Steel Corp.
2007 Oliphant Drive
Vincennes, Indiana 47591
Bankruptcy Case No.: 04-81947
Type of Business: The Debtor is a steel fabricator and erector.
Chapter 11 Petition Date: October 1, 2004
Court: Southern District of Indiana (Terre Haute)
Judge: Frank J. Otte
Debtor's Counsel: Gary Lynn Hostetler, Esq.
Hostetler & Kowalik, P.C.
101 West Ohio Street, Suite 2100
Indianapolis, IN 46204
Tel: 317-262-1001
Total Assets: $5,208,742
Total Debts: $2,938,106
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
CitiSteel USA Inc. Open Account $949,644
1499 Paysphere Circle
Chicago, IL 60674
ISG Burns Harbor Plate Open Account $562,307
P.O. Box 72095
Cleveland, OH 44192
Nucor-Yamato Steel Co. Open Account $171,273
Flexalloy, Inc. Open Account $87,426
CLR, Inc. Open Account $60,067
Bayou Steel Corporation Open Account $39,636
Tobias Insurance Agency Open Account $38,122
Indiana Oxygen Co. Open Account $20,240
RSI Logistics, Inc. Open Account $20,200
Structural Detailing Open Account $19,900
Solutions
North American Administators Open Account $15,518
Ace USA Open Account $15,058
Greentree Transport Co. Open Account $14,955
Carboline Company Open Account $14,367
CSX Transportation Open Account $12,799
Ervin Industries, Inc. Open Account $12,122
WHP Health Initiatives Open Account $11,166
Xerox Corporation Four year lease of $9,000
a Xerox copier
The A588 & A572 Steel Co. Open Account $7,669
Nelson Stud Welding, Inc. Open Account $6,836
WACHOVIA BANK: S&P Assigns Low-B Ratings to Eight Cert. Classes
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to Wachovia Bank Commercial Mortgage Trust's $1.2 billion
commercial mortgage pass-through certificates series 2004-C15.
The preliminary ratings are based on information as of
October 18, 2004. Subsequent information may result in the
assignment of final ratings that differ from the preliminary
ratings.
The preliminary ratings reflect:
(1) the credit support provided by the subordinate classes of
certificates,
(2) the liquidity provided by the trustee,
(3) the economics of the underlying loans, and
(4) the geographic and property type diversity of the loans.
Classes A-1, A-2, A-3, A-4 B, C, and D are currently being offered
publicly. Standard & Poor's analysis determined that, on a
weighted average basis, the pool has:
* a debt service coverage of 1.47,
* a beginning LTV of 90.2%, and
* an ending LTV of 79.5%.
A copy of Standard & Poor's complete presale report for this
transaction can be found on RatingsDirect, Standard & Poor's Web-
based credit analysis system, at http://www.ratingsdirect.com/
The presale can also be found on the Standard & Poor's Web site at
http://www.standardandpoors.com/ Select Credit Ratings, and then
find the article under Presale Credit Reports.
Preliminary Ratings Assigned
Wachovia Bank Commercial Mortgage Trust 2004-C15
Class Rating Amount ($)
----- ------ ----------
A-1 AAA 57,169,000
A-2 AAA 162,905,000
A-3 AAA 144,241,000
A-4 AAA 468,420,000
B AA 33,309,000
C AA- 14,482,000
D A 21,723,000
A-1A AAA 160,747,000
E A- 11,585,000
F BBB+ 14,482,000
G BBB 13,034,000
H BBB- 15,930,000
J BB+ 7,241,000
K BB 4,344,000
L BB- 4,344,000
M B+ 2,896,000
N B 2,896,000
O B- 2,896,000
P N.R. 15,935,899
175WJ B- 55,000,000
180ML B- 69,500,000
X-P* AAA 1,122,660,000**
X-C* AAA 1,158,579,899**
* Interest-only class
** Notional amount
N.R. - Not rated.
WORLD ACCESS: Emerges from Bankruptcy After Three Years
-------------------------------------------------------
The Honorable Susan Pierson Sonderby of the U.S. Bankruptcy Court
for the Northern District of Illinois, Eastern Division, confirmed
the Second Amended Joint Plan of Liquidation filed by World
Access, Inc., its debtor-affiliates and the Official Committee of
Unsecured Creditors on September 21, 2004.
Five parties-in-interest objected to the Joint Plan:
* Sprint Communications Company LP
* Texas Comptroller of Public Accounts
* United Technological Systems, Inc.
* United States Trustee
* State of Washington
These objections were withdrawn after reaching settlement
agreements with the Debtors.
Holders of WorldxChange Priority Claims who objected to treatment
of their claims will get full payment under the Joint Plan from
non-estate funds.
The Confirmed Joint Plan
The Joint Plan separately classifies and treats claims for each of
the Debtors. A full-text copy of the Joint Plan is available for
a fee at:
http://www.researcharchives.com/download?id=040812020022
Under the terms of the Joint Plan:
* administrative claims
* priority tax claim
* priority non-tax claims against all the Debtors except
WorldxChange
* secured claims against all the Debtors
will be paid in full on the Effective Date.
General Unsecured creditors will receive, without interest, a
ratable proportion of the available cash in the reorganized Debtor
after the Effective Date.
The Plan provides that:
* Securities Laws Claims, and
* Equity Interests
will not receive any distribution under the Plan.
Holders of Convertible Subordinated Notes and Guarantee Claims
will not receive any distribution under the Plan.
Priority non-tax claims will receive payment in accordance with
the terms agreed upon by the Realization Trustee and the holder.
Judge Sonderby has scheduled a Post-Confirmation hearing for
December 16, 2004, at 2:00 p.m. at 219 South Dearborn, Courtroom
642 in Chicago, Illinois.
Headquartered in Atlanta, Georgia, World Access, Inc. --
http://www.worldaccess.com/-- provides bundled voice, data and
Internet services to key regions of the world through its
redundant digital network. The Company and its affiliates filed
for chapter 11 protection on April 24, 2001 (Bankr. N.D. Ill. Case
Nos. 01-14633, 01-14635, 01-14637, 01-14642, 01-14643, 01-14645).
Daniel S. Dooley, Esq., at Jenner & Block LLC, J. Michael
Lambert, Esq., at Lambert Bonapfel Cifelli & Stokes and Kelly J.
Aran, Esq., at Kelly J. Aran represent the Debtors in their
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $1,629,800,000 in total assets and
$732,510,000 in total debts.
WORLDCOM INC: Intelsat Holds Allowed $5,426,291 Unsecured Claim
---------------------------------------------------------------
On March 9, 2004, the WorldCom, Inc. and its debtor-affiliates
notified Intelsat USA Sales Corporation that certain of the
Intelsat USA contracts would be terminated as of that date and the
remainder would be terminated as of March 22 and March 23, 2004.
On April 22, 2004, Intelsat filed Claim No. 38245 for rejection
damages arising from the Debtors' termination of the Intelsat USA
Contracts. On the same day, Intelsat contacted the Debtors and
sought an agreement to deem the Claim timely filed.
Intelsat subsequently amended Claim No. 38309 to correct the
calculation of damages.
In a stipulation approved by the Court, the parties agree that:
(a) Claim Nos. 38245 and 38309 will be deemed timely filed;
(b) Claim No. 38245 will be expunged as a subsequently amended
claim; and
(c) Claim No. 38309 will be allowed as a general unsecured
claim for $5,426,291, and classified as a Class 6 Claim
pursuant to the Plan.
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. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000)
* Ex-WorldCom Counsel Joins Chadbourne & Parke's Telecom Practice
-----------------------------------------------------------------
The international law firm of Chadbourne & Parke LLP said Michael
H. Salsbury, 54, previously executive vice president and general
counsel of MCI Communications Corp. and of WorldCom, Inc., has
been elected to the partnership. He will be based in the Firm's
Washington, D.C., office.
At MCI and WorldCom, Mr. Salsbury was responsible for a global
staff of more than 250 professionals and the companies'
commercial, regulatory, and government relations worldwide.
During his tenure, the companies saw significant developments,
including the passage of the first rewrite of the Telecom Act in
50 years, a joint venture and merger discussions with British
Telecom, and MCI's merger with WorldCom. His experience also
encompasses administrative litigation, competition law, and merger
review proceedings in the United States and in the European Union.
"Mike's sophisticated regulatory and policy competencies and the
depth of his knowledge about the telecommunications industry will
complement our telecommunications and corporate practices," said
Charles K. O'Neill, the Firm's managing partner. "We are
delighted by the broad range of telecom experience that Mike adds
as we build enhanced capabilities to service our clients both in
the United States and abroad. In addition, his experience
shepherding WorldCom through its Chapter 11 proceedings will
enhance our already vibrant bankruptcy practice, particularly with
regard to telecom restructurings."
"As the telecom industry continues to evolve, Mike's arrival
significantly enhances our ability to meet the needs of our
telecom clients," commented Dana Frix, co-chair of the Firm's
telecommunications and technology practice. "The breadth of
Mike's experience representing competitive telecom interests on
corporate, regulatory, and litigation matters is unparalleled in
the industry and provides him unique and valuable insights that
will help guide our clients during a period of dramatic change in
the telecom industry. Also, it is rare to find counsel in this
industry with Mike's experience with large institutional
transactions."
Mr. Salsbury was involved in MCI's (and then WorldCom's) legal
affairs for approximately 24 years. During that period, as both
outside counsel and as general counsel, he represented six CEOs on
issues ranging from civil and administrative litigation to complex
corporate transactions. Mr. Salsbury was lead counsel at MCI for
many significant transactions, including: a $2 billion investment
by MCI in News Corp.; a $4.2 billion investment in MCI by BT; the
$650 million sale of MCI's internet business to Cable & Wireless;
a $21 billion proposed BT-MCI merger; a planned global alliance
between MCI, BT, and Telefonica; and the $35 billion WorldCom-MCI
merger.
"One of the really impressive things we have found about Mike is
the sterling reputation he possesses with those who were in a
position to work with him over the years," said Mr. Frix. "We
always knew him to be one of the most prominent and respected
lawyers in the telecommunications industry, but it was truly
gratifying to reach out to others from MCI and elsewhere and hear
their regard for his abilities and character."
"I am thrilled to join the Firm's partnership," Mr. Salsbury said.
"Chadbourne & Parke offered me an opportunity to become part of an
energetic team, and the scope of the Firm's practice offers a wide
outlet to contribute during a time when we expect significant
consolidation within the domestic and foreign telecom sectors that
will fundamentally change the structure and operation of
communication services markets. I look forward to working with
co-chairs Dana Frix and Hwan Kim and expanding Chadbourne's
telecom and corporate practices by assisting with transactions as
these changes take place within the industry," Mr. Salsbury
stated.
Mr. Salsbury earned his J.D. and M.B.A. from the University of
Virginia.
About Chadbourne & Parke LLP
Chadbourne & Parke LLP, an international law firm headquartered in
New York City, provides a full range of legal services, including
mergers and acquisitions, securities, project finance, corporate
finance, energy, telecommunications, commercial and products
liability litigation, securities litigation and regulatory
enforcement, white collar defense, intellectual property,
antitrust, domestic and international tax, reinsurance and
insurance, environmental, real estate, bankruptcy and financial
restructuring, employment law and ERISA, trusts and estates and
government contract matters. The Firm has offices in New York,
Washington, D.C., Los Angeles, Houston, Moscow, Kyiv, Warsaw
(through a Polish partnership), Beijing and a multinational
partnership, Chadbourne & Parke, in London. For additional
information, visit http://www.chadbourne.com/
* Eduardo Mestre Joins Evercore Partners as Vice Chairman
---------------------------------------------------------
Eduardo Mestre is joining Evercore Partners' senior management
team and assuming responsibility for the firm's corporate advisory
practice. Formerly, Mr. Mestre served as Chairman of Investment
Banking at Citigroup, among numerous leadership positions he
filled during a notable twenty-seven year career there.
As Vice Chairman at Evercore, Mr. Mestre joins a distinctive cadre
of senior bankers. Within the past year, the firm also added
William A. Shutzer, previously a Managing Director in the Private
Equity Group at Lehman Brothers. Evercore is a private
partnership involved in mergers and acquisitions and restructuring
advisory services, and in private equity and venture capital
investments.
During his tenure as Head of Investment Banking at Citigroup, Mr.
Mestre led many of the business integration efforts that led to
the creation of Citigroup's corporate and investment bank,
including the combination of the investment banking businesses of
Salomon Brothers and Smith Barney and the creation of the dual
coverage model between Citibank and Solomon Smith Barney. These
combinations and business models are widely regarded as the most
successful of their kinds in the financial services industry.
Roger Altman, Chairman of Evercore, said, "Eduardo will add
significantly to our burgeoning capabilities in providing advisory
services to clients, as well as enhancing our firm's management
team. Eduardo is well known to us, not only for this
distinguished record and reputation, but also because many of us
have had opportunities to work directly with him over the years."
In his career, Mr. Mestre has represented numerous clients in the
communications, technology, aerospace, defense, media, and power
industries. His outside activities include serving as past
Chairman and a member of the executive committee on the Board of
WNYC, New York's public radio stations, and a member of the
executive committee of the Board of Cold Spring Harbor Laboratory,
one of the nation's leading cancer, genetics and neuroscience
research and educational institutions.
Prior to joining Salomon Brothers in 1977, he was an associate
with the law firm of Cleary, Gottlieb, Steen & Hamilton. Mr.
Mestre graduated summa cum laude and Phi Beta Kappa from Yale
University in 1970 with a B.A. degree in Economics and Political
Science and is a 1973 cum laude graduate of Harvard Law School.
* Sheppard Mullin Adds John Gustafsson to New York Office
---------------------------------------------------------
John Gustafsson has joined the New York office of Sheppard,
Mullin, Richter & Hampton LLP as a partner, specializing in
litigation matters. Mr. Gustafsson was most recently vice
president and general counsel with Honeywell International Inc.'s
Automation & Control Products business, and previously practiced
for over 10 years at Simpson Thacher & Bartlett in New York as a
litigator.
"We're very pleased to welcome an attorney of John's stature to
the New York office," said James J. McGuire, partner-in-charge of
the firm's New York office. "Seasoned litigators are critical in
order to properly serve clients and John adds to the firm's
already formidable business trial resources across the country."
Commented Mr. Gustafsson, "I am excited about resuming my private
practice with a premier firm and looking forward to building the
new office with Jim and the rest of the team."
Most recently as chief legal officer for Honeywell's $4 billion
global Automation & Control Products business and a member of its
leadership team, Mr. Gustafsson counseled leaders on strategic
matters, directed dispute resolution efforts and strategy, managed
relationships with outside counsel, and provided oversight for the
business' integrity and compliance program.
In addition to over six years as in-house counsel at Honeywell,
Mr. Gustafsson has extensive private practice experience in all
aspects of litigation across a broad spectrum of commercial cases,
including product liability, securities fraud, and insurance
coverage
Mr. Gustafsson graduated cum laude from Harvard Law School in 1987
and earned a bachelor's degree, magna cum laude, from Columbia
University in 1983.
About Sheppard, Mullin, Richter & Hampton LLP
Sheppard, Mullin, Richter & Hampton, LLP is a full service AmLaw
100 firm with more than 425 attorneys in nine offices located
throughout California and in New York and Washington, D.C. The
firm's California offices are located in Los Angeles, San
Francisco, Santa Barbara, Century City, Orange County, Del Mar
Heights and San Diego. Sheppard Mullin provides legal expertise
and counsel to U.S. and international clients in a wide range of
practice areas, including Antitrust, Corporate and Securities;
Entertainment and Media; Finance and Bankruptcy; Government
Contracts; Intellectual Property; Labor and Employment;
Litigation; Real Estate/Land Use; and Tax, Employee Benefits,
Trusts and Estate Planning. The firm was founded in 1927. For more
information, please visit http://www.sheppardmullin.com/
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
November 29-30, 2004
BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT
The Eleventh Annual Conference on Distressed Investing
Maximizing Profits in the Distressed Debt Market
The Plaza Hotel - New York City
Contact: 1-800-726-2524; 903-592-5168;
or dhenderson@renaissanceamerican.com
December 2-4, 2004
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, Arizona
Contact: 1-703-739-0800 or http://www.abiworld.org/
March 9-12, 2005
TURNAROUND MANAGEMENT ASSOCIATION
2005 Spring Conference
JW Marriott Desert Ridge, Phoenix, Arizona
Contact: 312-578-6900 or http://www.turnaround.org/
April 28- May 1, 2005
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriot, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org/
June 2-4, 2005
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting, Securities and Bankruptcy
Omni Hotel, San Francisco
Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/
July 14 -17, 2005
AMERICAN BANKRUPTCY INSTITUTE
Ocean Edge Resort, Brewster, Massachusetts
Contact: 1-703-739-0800 or http://www.abiworld.org/
July 27- 30, 2005
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Workshop
Kiawah Island Resort and Spa, Kiawah Island, S.C.
Contact: 1-703-739-0800 or http://www.abiworld.org/
October 19-23, 2005
TURNAROUND MANAGEMENT ASSOCIATION
2005 Annual Convention
Chicago Hilton & Towers, Chicago
Contact: 312-578-6900 or http://www.turnaround.org/
November 2-5, 2005
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
Seventy Eighth Annual Meeting
San Antonio, Texas
Contact: http://www.ncbj.org/
December 1-3, 2005
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Hyatt Grand Champions Resort, Indian Wells, Calif.
Contact: 1-703-739-0800 or http://www.abiworld.org/
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via e-mail
to conferences@bankrupt.com are encouraged.
*********
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, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo and Peter A. Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
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herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
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*** End of Transmission ***