/raid1/www/Hosts/bankrupt/TCR_Public/041216.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, December 16, 2004, Vol. 8, No. 277
Headlines
ADELPHIA COMMS: Wants to Assign Security Business Pacts to Innova
ALEPH MANAGEMENT: Judge Raslavich Dismisses Bankruptcy Case
AMES DEPARTMENT: Plan Administrator to be Appointed under Plan
ATA AIRLINES: Committee Wants to Retain Lytle Soule as Counsel
BANC OF AMERICA: Moody's Junks Class N & O Mortgage Certificates
BEAR STEARNS: S&P Places Low-B Ratings on Four Certificate Classes
BOSTON LIGHT: Fitch Assigns 'BB-' Rating to Reference Assets
CARDIMA(R): Nasdaq Gives More Time to Comply with Requirement
CHAPCO CARTON: Court Confirms Sale of Assets to American Family
CO-OPERATORS GENERAL: S&P Upgrades Preferred Stock Rating to BB
COMDISCO HOLDING: Posts $23 Million Net Earnings for FY 2004
COMDISCO: Court OKs Settlement with Shared Investment Plan Lenders
CSFB MORTGAGE: Moody's Places Ba2 Rating on Class C-B-4 Certs.
DATATEC SYSTEMS: Case Summary & 20 Largest Unsecured Creditors
FEDERAL-MOGUL: Owens-Illinois Balks at Plan's Treatment of Claims
FIBERMARK INC: Files Amended Joint Plan of Reorganization
GATEWAY EIGHT: Gets Interim Okay to Use Lender's Cash Collateral
GATEWAY EIGHT: Wants to Retain Winograd Shine as Special Counsel
GATX FINANCIAL: Fitch Puts Low-B Rating on $2.8 Billion Debt
HILB ROGAL: Moody's Places Ba3 Rating on Senior Secured Facility
HOLLINGER CANADIAN: Will Distribute Cash Dividends to Unitholders
HOLLINGER PARTICIPATION: Moody's Withdraws Rating on Trust Notes
HOME PRODUCTS: Wants to Voluntarily Delist Common Stock
IESI CORP: Moody's Withdraws B3 Rating on $150M Sr. Sub. Notes
INERGY LP: Moody's Rates $400M Senior Unsecured Notes at B1
INTEGRATED HEALTH: Gets Court Nod to Make $20,000,000 Distribution
INTERMET CORP: Discloses Plans to Close 2 Sturtevant Racine Plants
JESSUP CELLARS: Case Summary & 15 Largest Unsecured Creditors
KAISER ALUMINUM: Asks Court to Okay Third Old Republic Stipulation
KING PHARMACEUTICALS: S&P Puts Ratings on CreditWatch Developing
KMART CORP: Supreme Court Won't Review Critical Vendor Orders
LIONEL CORP: Wants Access to $60 Million of DIP Financing
LNR PROPERTY: Fitch Downgrades Sr. Subordinated Debt to 'B-'
MAGIC LANTERN: Raises $1.2 Million from Equity & Debt Financing
MCI INC: Moody's Assigns B2 Ratings to $13.6B Sr. Unsecured Notes
MED GEN: Settles $2.4 Million Judgment with Global Healthcare
MERIDIAN AUTOMOTIVE: S&P Revises Outlook on Ratings to Negative
MERRILL LYNCH: Fitch Upgrades Series 2001-S1 Class B-2 to 'A'
METRON TECH: Liquidating Assets After Applied Materials Spin-Off
MICROTEC ENTERPRISES: Asks Court to Extend CCAA Protection
MIRANT CORP: Court Approves Claim Estimation Procedures
MOONEY AEROSPACE: Bankruptcy Court Confirms Plan of Reorganization
NORTEL NETWORKS: Reports $2.3 Billion Revenues for Third Quarter
NORTEL NETWORKS: Declares Preferred Stock Dividends
NORTH ATLANTIC: S&P Downgrades Corporate Credit Rating to B
NRG ENERGY: S&P Junks Proposed $400M Convertible Preferred Stock
ORIGEN MANUFACTURED: S&P Pares Ratings on Class D Certs. to B-
OVERSEAS SHIPHOLDING: S&P Puts Ratings on CreditWatch Negative
OWENS CORNING: Asks Court to Approve Mt. Mckinley Settlement
PARMALAT USA: Farmland Wants to Settle with GE Capital & Committee
PILLOWTEX CORP: Fireman's Fund Gets Stay Lifted to Pursue Action
PNC MORTGAGE: S&P Affirms Low-B Ratings on Six Certificate Classes
POLYMER RESEARCH: Committee Taps Bernard S. Feldman as Counsel
POLYMER RESEARCH: U.S. Trustee Picks 5-Member Creditors Committee
RELIANT ENERGY: Fitch Holds B Ratings Amid Technical Default Fears
RESIDENTIAL ACCREDIT: Fitch Puts BB+ Rating on 1998-QS3 Class B-2
RUSSELL CORP: S&P Places Ratings on CreditWatch Negative
SALEM COMMS: Moody's Upgrades Sr. Sub. Notes' Rating to B2
SAN LUIS HILLS: Case Summary & 20 Largest Unsecured Creditors
SIRVA WORLDWIDE: Moody's Assigns Ba3 Rating to $490M Term Loan
SOLA INTERNATIONAL: S&P Places Ratings on CreditWatch Developing
SONIC AUTOMOTIVE: S&P Revises Outlook on Ratings to Negative
SPHERIS INC: Moody's Junks $125 Million Senior Subordinated Notes
SPIEGEL INC: Wants Court to Approve MBIA & BNY Claims Settlement
STANADYNE CORP: S&P Rates Proposed $55M Sr. Discount Notes at B-
STRUCTURED ENHANCED: Fitch Rates Reference Assets at 'BB-'
TECHNICAL OLYMPIC: Moody's Puts B2 Rating on $200M Sr. Sub. Notes
TECHNICAL OLYMPIC: Fitch Rates $200 Million Senior Notes at B-
TRANSCONTINENTAL GAS: S&P Assigns B+ Rating to $75M Senior Notes
UNITED AIRLINES: Wants to Enter Into Verizon Omnibus License Pact
VALLEY REGIONAL: Moody's Withdraws Ba3 Bond Rating After Refund
VERMEER FUNDING: Fitch Rates $12.6 Mil. Preference Shares at BB-
W.R. GRACE: Asks Bankruptcy Court to Estimate Asbestos Liability
WELLS FARGO: S&P Assigns Low-B Ratings to 79 Issue Classes
WORLDCOM INC: Savvis Wants Court to Okay $405K Admin. Claim Fee
YUKOS OIL: Files Voluntary Chapter 11 Petition in S.D. Texas
YUKOS OIL COMPANY: Case Summary & 20 Largest Unsecured Creditors
*********
ADELPHIA COMMS: Wants to Assign Security Business Pacts to Innova
-----------------------------------------------------------------
To facilitate and effect the sale of Starpoint and its three
subsidiaries, Cable Sentry Corporation, Coral Security, Inc., and
Westview Security, Inc., Adelphia Communications Corporation want
to assume, assign and sell to Innova Security Solutions, LLC, or
to the successful bidder certain assumed agreements:
* the Bulk and Commercial Agreements;
* the Customer Agreements;
* the Customer Agreements;
* the Real Property Agreements;
* the Vendor Agreements; and
* the Third-Party Monitoring Agreements.
Section 365(a) of the Bankruptcy Code provides that a debtor-in-
possession, subject to the approval of the U.S. Bankruptcy Court
for the Southern District of New York, may assume or reject
any executory contracts or unexpired leases.
Pursuant to Section 365(a), the ACOM Debtors seek the Court's
authority to assume, assign and sell to Innova or to the
Successful Bidder the Assumed Agreements effective upon the
Closing Date.
Section 365(b)(1) requires that the Debtors cure, or provide
adequate assurance that they will promptly cure, any outstanding
defaults under the Assumed Agreements in connection with the
assumption and assignment to Innova or to the Successful Bidder.
Paul V. Shalhoub, Esq., at Willkie Farr & Gallagher, in New York,
assures the Court that the Debtors will compute the appropriate
cure amount for each Assumed Agreement and list the Cure Amounts
in a notice of assignment and assumption that will be sent to
each non-debtor counterparty to the Assumed Agreements.
To facilitate the assumption and assignment of the Assumed
Agreements, the Debtors ask the Court to find all anti-assignment
provisions of the Assumed Agreements unenforceable under Section
365(f) of the Bankruptcy Code. Despite any anti-assignment
language in an Assumed Agreement, the Debtors seek the Court's
permission to assign and sell the Assumed Agreement, provided
that the Security Business Debtors first assume the Assumed
Agreement and then provide adequate assurance of future
performance by Innova or the Successful Bidder.
ALEPH MANAGEMENT: Judge Raslavich Dismisses Bankruptcy Case
-----------------------------------------------------------
The Honorable Stephen Raslavich of the U.S. Bankruptcy Court for
the Eastern District of Pennsylvania dismissed the bankruptcy case
filed by Aleph Management Systems, Inc., and its debtor-affiliates
on December 10. 2004.
The Court based its decision on the facts cited by General
Electric Capital Corporation, one of the Debtors' senior secured
creditors, when it filed a motion to appoint a Chapter 11 Trustee:
a) the Debtors have been in continuous default of their loan
obligations to General Electric under the leadership of
Brian Somerman, President and sole Shareholder and Barry
Budilow, Chief Restructuring Officer;
b) investigations concluded that Mr. Somerman has used the
resources of the Debtors to pay personal tax obligations,
improperly commingled assets and engaged in improper intra-
corporate transfer of assets and diversion of funds to other
companies that he and Mr. Budilow control without the
consent of General Electric;
c) Mr. Somerman and Mr. Budilow, in behalf of the Debtors, have
repeatedly provided grossly inaccurate financial projections
and business plans that were not reflective of the actual
financial status of the Debtors to prevent General
Electric from exercising its rights as a secured creditor
and primary lender; and
d) the Debtors' businesses is grossly mismanaged by:
(i) failing to remit over $5 million in employee
withholding taxes for the years 2002 and 2003, and
failing to meet payroll obligations;
(ii) concealing tax liens filings and assessments, and
family loans and transfers, which threatens the
stability and value of General Electric's cash
collateral,
The Court also entered an order on October 18, 2004, directing the
Debtors to file their Schedules of Assets and Liabilities,
Statement of Financial Affairs, Corporate Resolution, and a
Mailing Matrix by November 1, 2004, threatening to dismiss the
cases. The Debtors didn't file the required documents.
The Court concludes that these facts demonstrate causes to dismiss
the Debtors' bankruptcy case and orders the Debtors' principals to
make funds available for the payment of all applicable payroll
taxes and directs those amounts be remitted to the appropriate
taxing authorities.
Headquartered in Lafayette Hill, Pennsylvania, Aleph Management
Systems, Inc. provides ground transportation services on a
contractual basis. Its areas of business are paratransit, charter,
bus, and school bus transportation, and it also provides financial
and risk management services to various companies. The Company and
its debtor-affiliates filed for chapter 11 protection on October
15, 2004 (Bankr. E.D. Pa. Case No. 04-33939). The Court dismissed
the case on December 10, 2004. Alan I. Moldoff, Esq., and Gary D.
Bressler, Esq., at Adelman Levine Gold & Levin, represented the
Debtors. When the Company filed for chapter 11 protection, it
listed estimated assets of $10 million to $50 million and
estimated debts of $50 million to $100 million.
AMES DEPARTMENT: Plan Administrator to be Appointed under Plan
--------------------------------------------------------------
Rolando de Aguiar, President and Chief Wind Down Officer of Ames
Department Stores, Inc., relates that the order confirming the
Debtors' Chapter 11 Plan will name a Plan Administrator to
implement the terms of the Chapter 11 Plan.
The Plan Administrator will act for Ames and its subsidiaries in a
fiduciary capacity as applicable to a board of directors, subject
to certain provisions. As the fiduciary of Ames, the Plan
Administrator, which is the sole shareholder of the Debtor
subsidiaries, will have the power to appoint officers and
directors of Ames' Debtor subsidiaries in accordance with their
articles of incorporation and bylaws. It is the intent of the
Plan Administrator to appoint himself as the sole officer and
director of the Debtor subsidiaries.
The Plan Administrator will be entitled to reasonable compensation
in an amount consistent with that of similar functionaries in
similar types of bankruptcy cases. In the event the Plan
Administrator dies, is terminated, or resigns for any reason, the
Official Committee of Unsecured Creditors will designate a
successor. The Plan Administrator will be required to disclose
his or her connections, if any, with the Debtors, their creditors,
any other party-in-interest, and the U.S. Trustee.
Duties and Powers
The duties and powers of the Plan Administrator will include all
powers necessary to implement the Plan and administrate and
liquidate the assets of Ames, and, indirectly the Debtor
subsidiaries, including:
(a) The Plan Administrator may exercise all power and
authority that may be or could have been exercised,
commence all proceedings that may be or could have been
commenced, and take all actions that may be or could have
been taken by an officer, director, or stockholder of Ames
with like effect as if authorized, exercised, and taken by
unanimous action of the officers, directors, and
stockholders, including amendment of the certificate of
incorporation and bylaws of the Debtors and the
dissolution of any Debtor.
(b) The Plan Administrator may object to, seek to subordinate,
compromise, or settle any or all Claims against any of the
Debtors.
(c) The Plan Administrator will liquidate and convert, or
cause to be liquidated and converted, to Cash the Debtors'
assets, make timely distributions, administer the winding
up of the Debtors' affairs, including, but not limited to,
causing the dissolution of the Debtors and closing the
Chapter 11 Cases, and not unduly prolong the duration of
the Chapter 11 Cases. In so doing, the Plan Administrator
will exercise its reasonable business judgment in
liquidating the Debtors' assets to maximize recoveries.
The liquidation of the assets may be accomplished either
through the sale of the Debtors' assets or through the
prosecution, compromise and settlement, abandonment, or
dismissal of any or all Claims, Causes of Action, or
Avoidance Actions, or otherwise.
(d) The Plan Administrator may abandon, or cause to be
abandoned, in any commercially reasonable manner,
including abandonment or donation to a charitable
organization of its choice, any assets if it concludes
they are of no benefit to the Debtors' estates.
(e) The Plan Administrator may pursue, or cause to be pursued,
the Debtors' Causes of Action and Avoidance Actions. The
Plan Administrator will have the discretion to elect
whether or not to pursue any and all of the Debtors'
Causes of Action and Avoidance Actions and whether and
when to compromise, settle, abandon, dismiss, or otherwise
dispose of any the Causes of Action and Avoidance Actions,
as the Plan Administrator may determine is in the best
interests of holders of Claims against and Equity
Interests in the Debtors, and the Plan Administrator will
have no liability to any of the Debtors, their estates,
their creditors, the Committee, its members, or any other
party for the outcome of its decisions in this regard,
except for gross negligence or willful misconduct.
(f) The Plan Administrator may retain professionals to assist
it in performing its duties under the Plan.
(g) The Plan Administrator will maintain the Debtors' books
and records, maintain accounts, make distributions, and
take other actions consistent with the Plan and the
implementation.
(h) The Plan Administrator may enter, or cause to be entered,
into any agreement or execute any document required by or
consistent with the Plan and perform all the Debtors'
obligations.
(i) The right and power to invest any of the Debtors' Cash,
including cash proceeds from the liquidation of any of the
Debtors' assets and the realization or disposition of any
Causes of Action and Avoidance Actions, and any income
earned by the Debtors will be limited to the right and
power to invest the Cash in United States Treasury Bills,
interest-bearing certificates of deposit, tax exempt
securities, or investments permitted by Section 345 of the
Bankruptcy Code or otherwise authorized by the Bankruptcy
Court, using prudent efforts to enhance the rates of
interest earned on the Cash without inordinate credit risk
or interest rate risk; provided, however, the Plan
Administrator may expend the Debtors' Cash to effectuate
the provisions of the Plan.
(j) The Plan Administrator will have the powers of
administration regarding all the Debtors' tax obligations,
including filing of returns. The Plan Administrator will:
-- endeavor to complete and file within 90 days after the
dissolution of the Debtors, the Debtors' final federal,
state, and local tax returns;
-- request, if necessary, an expedited determination of
any unpaid tax liability of the Debtors or their
estates under Section 505(b) of the Bankruptcy Code for
all taxable periods of the Debtors ending after the
Petition Date through the liquidation of the Debtors as
determined under applicable tax laws; and
-- represent the interest and account of the Debtors or
their estates before any taxing authority in all
matters, including any action, suit, proceeding, or
audit.
(l) The Plan Administrator may incur any reasonable and
necessary expenses in connection with the performance of
its duties under the Plan.
(k) The Plan Administrator may take all other actions not
inconsistent with the provisions of the Plan which the
Plan Administrator deems reasonably necessary or desirable
with respect to administering the Plan.
Indemnification of Plan Administrator
The Plan Administrator and its agents and professionals will not
be liable for actions taken or omitted in its capacity as, or on
behalf of, the Plan Administrator, except those acts arising out
of its or their own willful misconduct, gross negligence, bad
faith, self-dealing, breach of fiduciary duty, or ultra vires
acts. Each will be entitled to indemnification and reimbursement
for fees and expenses in defending any and all of its actions or
inactions in its capacity as, or on behalf of, the Plan
Administrator, except for any actions or inactions involving
willful misconduct, gross negligence, bad faith, self-dealing,
breach of fiduciary duty, or ultra vires acts.
Any indemnification claim of the Plan Administrator will be
satisfied from the funds reserved by the Debtors to fund the
administration of the Plan and the Chapter 11 Cases on and after
the Effective Date. However, the Plan Administrator will return
any portion of the funds used to defend any action in which the
Plan Administrator is found to have acted with gross negligence or
willful misconduct. The Plan Administrator will be entitled to
rely, in good faith, on the advice of its retained professionals.
Termination of Duties
The duties of the Plan Administrator will terminate:
(a) after the Debtors have been dissolved;
(b) all assets held or controlled by the Plan Administrator
have been distributed in accordance with the terms of the
Plan; and
(c) upon material completion of all other duties and functions
set forth in the Plan, but in no event later than three
years after the Effective Date, unless extended by order
of the Bankruptcy Court.
Ames Department Stores filed for chapter 11 protection on
August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert
Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and
Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil,
Gotshal & Manges LLP represent the Debtors in their restructuring
efforts. When the Company filed for protection from their
creditors, they listed $1,901,573,000 in assets and $1,558,410,000
in liabilities. (AMES Bankruptcy News, Issue No. 61; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ATA AIRLINES: Committee Wants to Retain Lytle Soule as Counsel
--------------------------------------------------------------
Pursuant to Sections 328 and 1103 of the Bankruptcy Code, the
Official Committee of Unsecured Creditors seeks the United States
Bankruptcy Court for the Southern District of Indiana's authority
to retain Lytle Soule & Curlee as bankruptcy counsel.
According to David Cotton, co-chair of the Committee, the
Committee selected Lytle Soule because it has considerable
experience in representing airlines in Chapter 11 reorganization
cases and other debt restructurings, including United Air Lines
Inc., and Continental Airlines, Inc.
Lytle Soule will:
(a) examine title and record status of aircraft, aircraft
engines, aircraft propellers and spare parts locations;
(b) review and analyze bills of sale, applications,
affidavits and instruments to be filed and recorded with
the Federal Aviation Administration Aircraft Registry;
(c) assist with the filing of instruments with the FAA; and
(d) issue opinions with respect to aircraft title and
registration encumbrances of record with the FAA with
respect to aircraft, aircraft engines, aircraft propellers
and spare parts locations, the recordability of
instruments filed with the FAA and the perfection of
instruments filed with the FAA.
Lytle Soule will be compensated in accordance with its customary
hourly rates:
Billing Category Range
---------------- ------------
Members $200 to $250
Associates $130 to $150
Paraprofessionals $100 to $135
The Firm will also be reimbursed for out-of-pocket expenses.
Patricia J. Hanson, Esq., shareholder at Lytle Soule, attests that
the Firm is "disinterested" and does not hold or represent any
interest adverse to the Committee, ATA Airlines and its debtor-
affiliates, the Debtors' estates or their creditors in matters
upon which it is to be engaged.
Ms. Hanson discloses that Lytle Soule may have in the past
represented or currently represents and may in the future
represent other entities not currently known to the Firm who may
be creditors of the Debtors, in matters wholly unrelated to the
Chapter 11 cases of the Debtors. However, Ms. Hanson assures, to
the extent that Lytle Soule discovers any such information, it
will promptly disclose the information to the Court, the United
States Trustee and all appropriate parties by supplemental
affidavit.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.
(ATA Airlines Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
BANC OF AMERICA: Moody's Junks Class N & O Mortgage Certificates
----------------------------------------------------------------
Moody's Investors Service affirmed the ratings of twelve classes
and downgraded the ratings of five classes of Banc of America
Commercial Mortgage Inc., Commercial Mortgage Pass-Through
Certificates, Series 2001-1 as follows:
* Class A-1, $112,887,863, Fixed, affirmed at Aaa
* Class A-2, $527,811,659, Fixed, affirmed at Aaa
* Class A-2F, $50,000,000, Floating, affirmed at Aaa
* Class X, Notional, affirmed at Aaa
* Class B, $35,576,642, Fixed, affirmed at Aa2
* Class C, $21,345,985, Fixed, affirmed at A1
* Class D, $18,974,209, Fixed, affirmed at A2
* Class E, $9,487,105, Fixed, affirmed at A3
* Class F, $9,487,105, Fixed, affirmed at Baa1
* Class G, $18,974,209 Fixed, affirmed at Baa2
* Class H, $14,230,657, Fixed, affirmed at Baa3
* Class J, $13,281,946, Fixed, affirmed at Ba1
* Class K, $23,480,584, Fixed, downgraded to B1 from Ba2
* Class L, $2,134,598, Fixed, downgraded to B2 from Ba3
* Class M, $5,538,842, Fixed, downgraded to B3 from B1
* Class N, $6,788,329, Fixed, downgraded to Caa2 from B2
* Class O, $5,883,218, Fixed, downgraded to Ca from B3
As of the November 15, 2004 distribution date, the transaction's
aggregate balance has decreased by approximately 6.1% to
$890.8 million from $948.1 million at securitization. The
Certificates are collateralized by 177 mortgage loans secured by
commercial and multifamily properties. The pool includes one
shadow rated loan, representing 9.8% of the pool, and a conduit
component, representing 90.2% of the pool. The conduit loans
range in size from less than 1.0% to 3.7% of the pool, with the
top 10 conduit loans representing 22.3% of the pool. Five loans
have been liquidated from the pool resulting in aggregate realized
losses of approximately $8.6 million.
Eleven loans, representing 7.0% of the pool, are in special
servicing. Four of these loans are to related borrowers,
including the RCA-Royal St. Moritz Apartments Loan ($20.5 million
- 2.3%), the RCA-Regency Arms Loan ($11.1 million - 1.2%), the
RCA-Lexington Apartments Loan ($9.4 million - 1.0%) and the
RCA-Royal Phoenician Apartments Loan ($9.0 million - 1.0%).
Moody's has estimated aggregate losses of approximately
$11.6 million for all of the specially serviced loans.
Moody's was provided with year-end 2003 borrower financials for
93.0% of the pool's performing loans. Moody's loan to value ratio
-- LTV -- for the conduit pool, excluding the three REO loans, is
91.4%, compared to 87.4% at securitization. The downgrade of
Classes K through O is due to realized and expected losses from
specially serviced loans and LTV dispersion. Based on Moody's
analysis, 25.5% of the conduit pool has a LTV greater than 100.0%,
compared to 4.1% at securitization. Three of the top ten loans
are watchlisted by the master servicer including the sixth largest
loan -- Tally Plaza, the eight largest loan -- Northwest-Hidden
Valley and the ninth largest loan -- Keswick Village Apartments.
The fifth largest loan -- RCA-Royal St. Moritz Apartments, is in
special servicing.
The shadow rated loan is the 315 Park Avenue Loan ($87.2 million -
9.8%), which is secured by a 320,000 square foot Class B office
building located in the Midtown South market of New York City.
The largest tenant is Credit Suisse First Boston (Moody's senior
unsecured rating Aa3), which currently occupies 73.7% of the net
rentable area (lease expiration April 30, 1917). The building is
currently 88.0% occupied, compared to 100.0% at securitization.
The decline in occupancy is caused by the bankruptcy of Vanguarde
Media, which vacated 45,963 square feet in 2002. CSFB is
obligated to lease the space formerly occupied by Vanguarde in
January 2010. Moody's current shadow rating is Baa3, the same as
at securitization.
The top three conduit loans represent 9.1% of the pool. The
largest conduit loan is the 701 Gateway Loan ($32.8 million -
3.7%), which is secured by a 170,000 square foot office building
located in South San Francisco, California. The property was
100.0% leased as of June 2004, compared to 98.0% at
securitization. The largest tenants are Actuate Corporation
(44.0%; expiration 2008) and HealthPlan of San Mateo (17.0%;
expiration 2006). Although the property's net income has been
stable since securitization, the market rent has declined
significantly. The property's in-place rents average $28.95 per
square foot, compared to the current market rent of $21.00 per
square foot. Moody's anticipates that the property's cash flow
might decline going forward as current leases expire and new
leases are executed at market rents. Moody's LTV is 90.6%,
compared to 87.5% at securitization.
The second largest conduit loan is the One Lake Park Office
Building Loan ($24.7 million - 2.8%), which is secured by a
192,000 square foot office building located in Richardson, Texas.
The property was 100.0% leased as of June 2004, the same as at
securitization. The two largest tenants are Lennox Industries,
Inc. (65.0%; expiration 2024) and Philips Semiconductor (12.0%;
expiration April 2007). The property's net income has been stable
since securitization; however market rent has declined
significantly. The property's in-place rents average $23.00 per
square foot, compared to the current market rent of $16.40 per
square foot. Moody's expects that the property's cash flow might
decline going forward as current leases expire and new leases are
executed at current market rents. Moody's LTV is 99.7%, the same
as at securitization.
The third largest conduit loan is the PSC Holding Corp. Office
Building Loan ($23.4 million - 2.6%), which is secured by a
328,900 square foot office building and a 26,000 square foot
free-standing conference center. The property is located in
Scottsdale, Arizona and is 100.0% leased to PCS Health Systems
(November 2021 expiration). Moody's LTV is 74.2%, compared to
77.9% at securitization.
The pool collateral is a mix of:
* office (37.5%),
* multifamily (34.5%),
* industrial and self storage (14.4%),
* retail (9.3%), and
* hotel (4.3%).
The collateral properties are located in 34 states plus the
District of Columbia. The top five state concentrations are:
* California (17.6%),
* Texas (11.6%),
* New York (11.6%),
* Washington (6.7%), and
* Georgia (6.1%).
All of the loans are fixed rate.
BEAR STEARNS: S&P Places Low-B Ratings on Four Certificate Classes
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on six
classes of certificates from Bear Stearns Commercial Mortgage
Securities Inc.'s commercial mortgage pass-through certificates
series 2000-WF1. Concurrently, the ratings on seven other classes
from the same transaction are affirmed.
The raised and affirmed ratings reflect adequate credit support
levels and the solid operating performance across much of the loan
pool. Additionally, all of the loans are current, none are in
special servicing, and the watchlist is relatively small compared
to other deals of this vintage.
As of Nov. 15, 2004, the trust collateral consisted of 175 loans
with an aggregate outstanding principal balance of $756.0 million,
down from 181 loans amounting to $888.3 million at issuance. The
master servicer, Wells Fargo Bank N.A., provided 2003 financial
performance data for 91.1% of the pool. Based on this
information, Standard & Poor's calculated a weighted-average net
cash flow debt service coverage -- DSC -- of 1.73x, up from 1.59x
at issuance.
The top 10 loans secured by real estate have an aggregate
outstanding balance of $220.6 million (29.2%) and reported a 2003
weighted average DSC of 1.84x, up from 1.68x at issuance. These
figures exclude the International Airport Center loan, which has a
balance of $18.5 million and has been defeased. Standard & Poor's
reviewed recent property inspection reports provided by the master
servicer for the top 10 loans, and all of the collateral
properties were characterized as "excellent" or "good." None of
the top 10 loans are in special servicing or on the master
servicer's watchlist. The fourth-largest loan, which has a
balance of $18.9 million and is secured by three movie-theatre
properties is due to mature Feb. 1, 2005. This loan reported a
2003 DSC of 2.08x and is 100.0% occupied by tenants under
long-term lease obligations. The trust has experienced four
losses to date amounting to $5.0 million (0.6%).
Wells Fargo's watchlist consists of 11 loans with an aggregate
outstanding balance of $44.3 million (5.9%). These loans are on
the watchlist primarily because of DSC issues. None of the loans
on the watchlist have a balance in excess of $10.0 million and
only three of the loans have a balance in excess of $5.0 million.
The trust collateral is located across 31 states with more than
50.0% of the outstanding balance concentrated in California
(37.3%), Texas (10.9%), and New York (7.3%). Property
concentrations are found in office (22.7%), retail (22.5%), and
multifamily (15.7%) assets.
Standard & Poor's stressed the loans on the watchlist and other
loans for which recent financial data is still unavailable in its
analysis. The resulting credit enhancement levels adequately
support the raised and affirmed ratings.
Ratings Raised
Bear Stearns Commercial Mortgage Securities Inc.
Commercial mortgage pass-through certs series 2000-WF1
Rating
Class To From Credit Enhancement
----- -- ---- ------------------
B AAA AA 18.0%
C AA- A 13.3%
D A+ A- 12.2%
E BBB+ BBB 8.6%
F BBB BBB- 7.5%
G BB+ BB 5.4%
Ratings Affirmed
Bear Stearns Commercial Mortgage Securities Inc.
Commercial mortgage pass-through certs series 2000-WF1
Class Rating Credit Enhancement
----- ------ ------------------
A-1 AAA 22.2%
A-2 AAA 22.2%
H BB- 3.6%
I B+ 2.8%
J B 2.0%
K CCC 0.9%
X AAA -
BOSTON LIGHT: Fitch Assigns 'BB-' Rating to Reference Assets
------------------------------------------------------------
Fitch Ratings affirms the ratings of Boston Light Structured
Enhanced Return Vehicle Trust:
-- $13,000,000 class A-1 notes 'A';
-- $25,666,000 class A-2 notes 'A';
-- $4,667,000 class B-1 notes 'BBB';
-- $20,000,000 class B-2 notes 'BBB'.
Boston Light SERVES is a synthetic collateralized loan obligation
-- CLO -- that provides investors with leveraged exposure to a
diversified portfolio of high-yield loans. The transaction
utilizes a total rate of return swap between the SERVES trust and
Bank of America, N.A., to obtain the leveraged exposure. The
reference asset portfolio is managed by Sankaty Advisors, LLC.
Fitch has reviewed the credit quality of the individual assets
comprising the portfolio. Boston Light SERVES has experienced
little credit migration since it was reviewed in September 2003.
The composition of the portfolio has improved as overall market
conditions strengthened. The weighted average spread on the
reference assets is 2.70%, the weighted average rating factor --
WARF -- is 48.3 ('BB-'), the leverage factor is 5.82 times, and
the weighted average market value is slightly above par.
The rating addresses the timely payment of interest and the
ultimate return of principal, but does not address the payment of
additional interest to the notes.
As a result of this analysis, Fitch has determined that the
current ratings assigned to the notes still reflects the current
risk to noteholders.
Fitch will continue to monitor and review this transaction for
future rating adjustments. Additional deal information and
historical data is available on the Fitch Ratings web site at
http://www.fitchratings.com/
CARDIMA(R): Nasdaq Gives More Time to Comply with Requirement
-------------------------------------------------------------
Cardima(R), Inc. (Nasdaq SC:CRDM), developer of the REVELATION(R)
Tx, REVELATION(R) T-Flex and REVELATION(R) Helix microcatheter
systems for the treatment of atrial fibrillation -- AF, has
received written notice from Nasdaq that Nasdaq's Staff had
determined to grant the Company an extension to regain compliance
with Nasdaq Marketplace Rule 4310(c)(2)(B), which requires that
the Company maintain stockholders' equity of not less than
$2,500,000 unless it meets certain other listing criteria, on the
terms described below. The Company believes that it has regained
compliance with the stockholders' equity requirement for continued
Nasdaq listing as provided in the Rule, based on the proceeds from
the Company's private placement completed on November 24, 2004,
and the associated increase in the Company's stockholders' equity.
In its notice, Nasdaq indicated that it would continue to monitor
the Company's ongoing compliance with Nasdaq's stockholders'
equity requirement and, if at the time of the Company's next
periodic report the Company does not evidence compliance, that the
Company may be subject to delisting. The Company believes it will
comply with the stockholders' equity requirement as of
December 31, 2004, the close of its next periodic reporting
period. The continued listing of the Company's common stock on
Nasdaq after that date will depend on the Company's continued
compliance with all of Nasdaq's listing requirements.
Nasdaq's December 13, 2004, notice indicated that the terms of
Nasdaq's extension were as follows: On or before
December 17, 2004, the Company must furnish with the Securities
and Exchange Commission and Nasdaq a report on Form 8-K evidencing
compliance with the Rule by disclosing
(i) the original deficiency letter from Staff dated
November 17, 2004,
(ii) a description of the completed transaction or event that
enabled the Company to satisfy the stockholders' equity
requirement for continued listing,
(iii) an affirmative statement that, as of the date of the
report the Company believed that it had regained
compliance with the stockholders' equity requirement
based upon the completed transaction or event, and
(iv) a disclosure stating that Nasdaq would continue to
monitor the Company's ongoing compliance with the
stockholders' equity requirement and, if at the time of
the Company's next periodic report the Company does not
evidence compliance, that the Company may be subject to
delisting.
The Company previously met terms (i), (ii), and (iii) through
earlier related filings on Form 8-K, dated November 17, 2004,
November 18, 2004 and November 24, 2004, respectively, with the
Securities and Exchange Commission, and the Company's related Form
8-K dated December 13, 2004, meets the disclosure requirement
included in term (iv) of the Nasdaq notice of December 13, 2004.
About Cardima
Cardima, Inc. has developed the REVELATION(R) Tx, REVELATION T-
Flex and REVELATION Helix linear ablation microcatheters, the
NAVIPORT deflectable guiding catheters, and the INTELLITEMP energy
management system for the minimally invasive treatment of atrial
fibrillation -- AF. The REVELATION Helix was developed for the
treatment of AF originating in the pulmonary veins of the heart.
The REVELATION Tx, REVELATION T-Flex and REVELATION Helix systems
and the INTELLITEMP have received CE Mark approval in Europe. The
Company has also developed a Surgical Ablation System, which
targets market application by cardiac surgeons to ablate cardiac
tissue during heart surgery using radio frequency -- RF -- energy.
CHAPCO CARTON: Court Confirms Sale of Assets to American Family
---------------------------------------------------------------
The Honorable Bruce W. Black of the U.S. Bankruptcy Court for the
Northern District of Illinois approved on December 2, 2004, the
sale of substantially all of the assets of Chapco Carton Company,
free and clear of liens, claims, encumbrances and interests, to
American Family Products, Inc. for approximately $9,811,200.
The Court's order also authorized the Debtor to assume and assign
to American Family the appropriate executory contracts and leases
included in the auctioned assets upon the closing of the sale. The
auctioned assets did not include the Excluded Assets of the Debtor
pursuant to the terms of the Asset Purchase Agreement.
On November 10, 2004, the Court approved the Debtor's motion for:
a) approving the sale process, bidding procedures, bid
protection, break- up fee and the form of the Asset Purchase
Agreement;
b) authority to sell its assets free and clear of liens,
claims, encumbrances and interests; and
c) authority to assume and assign the executory contracts and
unexpired leases for the assets to be sold.
The Court also authorized the Debtor to conduct a public auction
for the assets, which the Debtor conducted on December 1, 2004.
America Family emerged with the best offer and highest bid for the
auctioned assets as declared by the Court on the December 2, 2004,
sale hearing.
The Court also ordered the payment of a Break-Up Fee of $75,000 to
Lake Park Capital, LLC. The Debtor announced that Lake Park
qualified as a "stalking horse bidder" who made the Initial
Accepted Bid and was therefore entitled to receive the Bid
Protection and Break-Up Fee in accordance with the Court-approved
bidding procedures.
On December 15, 2004, the Debtor's asset sale to American Family
was considered closed pursuant to the terms of the Asset Purchase
Agreement.
Headquartered in Bolingbrook, Illinois, Chapco Carton Company
-- http://www.chapcocarton.com/-- manufactures, sells and
distributes folding cartons used for retail packaging in food,
candy, office supplies and automotive parts industries. Chapco
Carton filed for chapter 11 protection on July 13, 2004
(Bankr. N.D. Ill. Case No. 04-26000). Chad H. Gettleman, Esq., at
Adelman Gettleman & Merens, represents the Company in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $15,232,256 in assets and $19,220,379 in
liabilities.
CO-OPERATORS GENERAL: S&P Upgrades Preferred Stock Rating to BB
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term
counterparty credit and financial strength ratings on Guelph,
Ontario-based Co-operators General Insurance Co. to 'BBB' from
'BBB-'. At the same time, Standard & Poor's raised its long-term
Canadian national scale preferred stock rating on the company to
'P-3' from 'P-3 (Low)' and its long-term global scale preferred
stock rating to 'BB' from 'BB-'. The outlook is positive.
"The insurer financial strength rating on CGIC reflects its
position as one of Canada's larger property and casualty (P/C)
insurers; its strong ties to the co-operative/credit union system;
and its strong capitalization, asset quality, and liquidity," said
Standard & Poor's credit analyst Donald Chu.
Co-operators General's much improved operating performance is
attributed to the general improvement within the sector, and to
internal changes brought about by a new CEO and executive team
that took over in 2001. The company's customer relationship
management and multi-product strategy seems to be gaining
traction, as client satisfaction is at an all time high and
customer retention remains stable.
Co-operators General is viewed as a core subsidiary of The
Co-operators Group Ltd. The challenges facing the company include
the cyclical nature of this sector's operating performance, a very
competitive business environment, the commodity-like nature of Co-
operators General's products, and the consolidation occurring in
the insurance and financial services industry.
As a stock company whose ownership is primarily from within the
co-operative sector, Co-operators General does not have full
access to the equity capital markets. Co-operators General is not
under pressure, however, to declare any dividends to its
stakeholders because they are primarily from within the
co-operative sector, and thus internally generated cash can be
used to fund growth and strategic initiatives.
The positive outlook on Co-operators General reflects the
company's strong management team and Standard & Poor's expects the
company will continue to experience a fundamental improvement in
its operating performance and business franchise.
COMDISCO HOLDING: Posts $23 Million Net Earnings for FY 2004
------------------------------------------------------------
Comdisco Holding Company, Inc., (OTC:CDCO) reported financial
results for its fiscal year ended September 30, 2004. Comdisco
emerged from Chapter 11 on August 12, 2002. Under its Plan of
Reorganization, Comdisco's business purpose is limited to the
orderly runoff or sale of its remaining assets.
For the fiscal year ended September 30, 2004, the company reported
net earnings of approximately $23 million, or $5.40 per common
share (basic and diluted). The per share results for Comdisco
Holding Company, Inc., are based on the 4.2 million shares of
common stock outstanding on average for the year ended
September 30, 2004.
For the year ended September 30, 2004, total revenue decreased by
64 percent to $108 million and net cash provided by operating
activities decreased by 91 percent to $134 million, compared to
the year ended September 30, 2003.
The company's total assets decreased by 47 percent to $198 million
as of September 30, 2004 from $373 million at September 30, 2003.
The $198 million of total assets as of September 30, 2004 included
$157 million of unrestricted cash.
As a result of bankruptcy restructuring transactions, adoption of
fresh-start reporting and multiple asset sales, Comdisco Holding
Company, Inc.'s financial results are not comparable to those of
its predecessor company, Comdisco, Inc.
Comdisco filed for chapter 11 protection on July 16, 2001 (Bankr.
N.D. Ill. Case No. 01-24795), and emerged from chapter 11
bankruptcy proceedings on August 12, 2002. The purpose of
reorganized Comdisco is to sell, collect or otherwise reduce to
money in an orderly manner the remaining assets of the
corporation. Pursuant to Comdisco's plan of reorganization and
restrictions contained in its certificate of incorporation,
Comdisco is specifically prohibited from engaging in any business
activities inconsistent with its limited business purpose.
Accordingly, within the next few years, it is anticipated that
Comdisco will have reduced all of its assets to cash and made
distributions of all available cash to holders of its common stock
and contingent distribution rights in the manner and priorities
set forth in the Plan. At that point, the company will cease
operations and no further distributions will be made. John Wm.
"Jack" Butler, Jr., Esq., Charles W. Mulaney, Esq., George N.
Panagakis, Esq., Gary P. Cullen, Esq., N. Lynn Heistand, Esq.,
Seth E. Jacobson, Esq., Andre LeDuc, Esq., Christina M. Tchen,
Esq., L. Byron Vance, III, Esq., Marian P. Wexler, Esq., and
Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher &
Flom, LLP, represented Comdisco before the Bankruptcy Court. Evan
D. Flaschen, Esq., and Anthony J. Smits, Esq., at Bingham Dana
LLP, served as Comdisco's International Counsel.
COMDISCO: Court OKs Settlement with Shared Investment Plan Lenders
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
approved a settlement between the Shared Investment Plan -- SIP
-- lenders and Comdisco of the SIP Guaranty Claim. The allowance
of the claim had been appealed by Comdisco and during a mediation
at the appellate level, Comdisco and the SIP lenders reached a
settlement. The general terms of the settlement provide for:
(1) an allowed claim of $133,000,000 that will be satisfied by
a cash payment of $126,350,000 (less $ 3,456,496.74 credit
for an interest swap setoff);
(2) assignment of the SIP notes and the related subrogation
rights to either Comdisco or the litigation trustee;
(3) mutual releases; and
(4) the SIP lenders waives these rights:
(i) to receive shares (and any dividends thereon) in
Comdisco, and
(ii) any right to receive future distributions from the
disputed claims reserve.
The settlement agreement must be closed by January 31, 2005 or the
SIP lenders, at their sole discretion, may terminate the
settlement agreement.
New Shared Investment Plan Relief
On December 13, 2004, Comdisco offered a new SIP relief proposal
to those SIP participants that had not accepted the SIP relief
previously offered by Comdisco. The new SIP relief is subject to
approval by the Bankruptcy Court and requires that the SIP
participants pay 20 percent of an adjusted amount (based on a
standardized formula) of their respective obligation under the SIP
notes. SIP participants with financial hardship may be eligible
for additional relief and Comdisco will engage a debt
reconciliation company to work with it and such SIP participants.
Subject to Comdisco's discretion, if less than 40% of the SIP
participants to whom the new SIP relief is proposed accept it,
then Comdisco will not be obligated to offer it to any SIP
participant or to seek Bankruptcy Court approval.
Comdisco filed for chapter 11 protection on July 16, 2001 (Bankr.
N.D. Ill. Case No. 01-24795), and emerged from chapter 11
bankruptcy proceedings on August 12, 2002. The purpose of
reorganized Comdisco is to sell, collect or otherwise reduce to
money in an orderly manner the remaining assets of the
corporation. Pursuant to Comdisco's plan of reorganization and
restrictions contained in its certificate of incorporation,
Comdisco is specifically prohibited from engaging in any business
activities inconsistent with its limited business purpose.
Accordingly, within the next few years, it is anticipated that
Comdisco will have reduced all of its assets to cash and made
distributions of all available cash to holders of its common stock
and contingent distribution rights in the manner and priorities
set forth in the Plan. At that point, the company will cease
operations and no further distributions will be made. John Wm.
"Jack" Butler, Jr., Esq., Charles W. Mulaney, Esq., George N.
Panagakis, Esq., Gary P. Cullen, Esq., N. Lynn Heistand, Esq.,
Seth E. Jacobson, Esq., Andre LeDuc, Esq., Christina M. Tchen,
Esq., L. Byron Vance, III, Esq., Marian P. Wexler, Esq., and
Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher &
Flom, LLP, represented Comdisco before the Bankruptcy Court. Evan
D. Flaschen, Esq., and Anthony J. Smits, Esq., at Bingham Dana
LLP, served as Comdisco's International Counsel.
CSFB MORTGAGE: Moody's Places Ba2 Rating on Class C-B-4 Certs.
--------------------------------------------------------------
Moody's Investors Service has assigned a Aaa rating to the senior
certificates issued by Credit Suisse First Boston Mortgage
Securities Corp. and ratings ranging from Aa2 to Ba2 to the
mezzanine and subordinate certificates in the deal.
The securitization is backed by adjustable-rate, fully amortizing,
first lien residential mortgage loans originated by various
originators and acquired by DLJ Mortgage Capital, Inc. The
ratings are based primarily on the credit quality of the loans,
and on the protection from subordination, overcollateralization
-- OC, and excess spread. The credit quality of the loan pool for
Groups 1- 8 is average and Groups 9A, 9B is slightly below the
average ARM loan pool backing recent Alt-A securitizations.
Select Portfolio Servicing (formerly known as Fairbanks Capital
Corp.), National City Mortgage Co., Nexstar Financial Corporation,
GreenPoint Mortgage Funding, Inc., Washington Mutual Mortgage
Securities Corp., Wells Fargo Bank, N.A., and Countrywide Home
Loans Servicing LP will service the loans. Wells Fargo Bank, N.A.
will act as master servicer for all loans other than for the
mortgage loans serviced by Washington Mutual Mortgage Securities
Corp. Moody's has assigned Wells Fargo Bank, N.A. its top
servicer quality rating as a primary servicer of prime loans.
The Complete Rating Actions Are:
* Class 1-A-1, Adjustable Rate, 62,620,000, rated Aaa
* Class 1-A-X, Interest Only, rated Aaa
* Class 2-A-1, Adjustable Rate, $155,970,000, rated Aaa
* Class 3-A-1, Adjustable Rate, $37,480,000, rated Aaa
* Class 4-A-1, Adjustable Rate, $121,120,000, rated Aaa
* Class 5-A-1, Adjustable Rate, $78,260,000, rated Aaa
* Class 6-A-1, Adjustable Rate, $125,160,000, rated Aaa
* Class 7-A-1, Adjustable Rate, $44,165,000, rated Aaa
* Class 8-A-1, Adjustable Rate, $52,705,000, rated Aaa
* Class 9-A-1-1, Adjustable Rate, $155,178,000, rated Aaa
* Class 9-A-1-2, Adjustable Rate, $17,242,000, rated Aaa
* Class 9-A-2, Adjustable Rate, $113,000,000, rated Aaa
* Class 9-A-3, Adjustable Rate, $30,000,000, rated Aaa
* Class 9-A-4, Adjustable Rate, $20,000,000, rated Aaa
* Class 9-A-5, Adjustable Rate, $20,000,000, rated Aaa
* Class 9-A-6, Adjustable Rate, $57,200,000, rated Aaa
* Class 9-A-7, Adjustable Rate, $30,000,000, rated Aaa
* Class 9-M-1, Adjustable Rate, $26,685,000, rated Aa2
* Class 9-M-2, Adjustable Rate, $9,700,000, rated A2
* Class 9-M-3, Adjustable Rate, $3,635,000, rated Baa1
* Class 9-M-4, Adjustable Rate, $2,426,000, rated Baa2
* Class C-B-1, Adjustable Rate, $41,695,000, rated Aa2
* Class C-B-2, Adjustable Rate, $11,166,000, rated A3
* Class C-B-3, Adjustable Rate, $4,467,000, rated Baa2
* Class C-B-1X, Interest Only, rated Aa2
* Class C-B-4, Adjustable Rate, $3,347,000, rated Ba2
DATATEC SYSTEMS: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Datatec Systems, Inc.
1275 Alderman Drive
Alpharetta, Georgia 30005
Bankruptcy Case No.: 04-13536
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Datatec Industries, Inc. 04-13537
Type of Business: The Debtor specializes in the rapid, large scale
market absorption of networking technologies.
See http://www.datatec.com/
Chapter 11 Petition Date: December 14, 2004
Court: District of Delaware
Judge: Peter J. Walsh
Debtors' Counsel: John Henry Knight, Esq.
Richards, Layton & Finger, P.A.
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
Tel: 302-651-7700
Fax: 302-651-7701
Total Assets: $26,400,000
Total Debts: $47,700,000
Debtors' Consolidated List of 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Sunrise Square LC Rent $2,376,584
Attn: Rex Baker
200 Market Place, Ste. 110
Rosewell, GA 30075
Anixter Trade $863,963
Attn: Brent Swenson
Lockbox 847428
1401 Elm Street, 5th Fl.
Dallas, TX 75202
Graybar Electric Co. Trade $630,295
Attn: Rod Morgan
P.O. Box 403049
Atlanta, GA 30384
Worldnet Corporation Trade $465,725
Attn: Doug DeVore
Caller Service No. 105100
Trucker, GA 30075
American Express Trade $435,310
Attn: Francine Darragh
2965 West Corporate Lakes
Blvd.
Ft. Lauderdale, FL 33331
Selectek Trade $430,661
Attn: Lyle Staub
c/o USA Funding Inc.
5278 LBJ Freeway, Ste. 420
Dallas, TX 75266
De Lage Landen Financial Rent $405,012
Services, Inc.
1111 Old Eagle School Road
Wayne, PA 19087
Nextgen Fiber Optics Trade $403,998
Attn: Paul Napolitano
4 Tesseneer Drive
Newport, KY 41076
Commscope Trade $332,090
Attn: Rachel Pling
P.O. Box 60600
Charlotte, NC 28260
AICCO Insurance $283,780
P.O. Box 9045
New York, NY 10087
IBM Global Service Trade $275,732
Attn: Jeff Stephens
P.O. Box 91222
Chicago, IL 60693
Ace Electric Inc. Trade $266,438
Attn: Dave Maurer
813 N. 4th Street
Allentown, PA 18102
ACS Dataline LP Trade $251,861
Attn: Rich Kitslaar
1826 Krammer Lane, Ste. M
Austin, TX 78758
Fed Ex Trade $194,758
Kelly Temporary Services Trade $152,095
FXI Corporation Trade $148,033
Centratech Services Trade $131,037
Wise Components, Inc. Trade $120,742
Glenborough Properties L.P. Trade $118,767
Ford Quality Fleet Care Trade $109,899
Program
FEDERAL-MOGUL: Owens-Illinois Balks at Plan's Treatment of Claims
-----------------------------------------------------------------
Paul A. Bradley, Esq., at McCarter & English, in Wilmington,
Delaware, relates that Owens-Illinois, Inc., filed 23 claims, each
for $10 million, against each debtor in the chapter 11 cases of
Federal-Mogul and its debtor-affiliates. The Claims are the
result of an agreement reached between Owens and the Debtors
resolving certain litigation pending in the U.S. District Court
for the Eastern District of Texas.
Pursuant to a Confidential Settlement Agreement and General
Mutual Release dated December 1, 2000, by and between Owens, T&N,
Ltd., and Federal-Mogul Corporation, the Debtors agreed to pay
Owens $10,000,000. The first $5,000,000 payment was to be made no
later than October 15, 2001, and the second $5,000,000 payment was
to be made no later than October 15, 2002. At September 29, 2004,
no payments have been made. Thus, Owens has a claim against the
Debtors for $10,000,000, plus interest, attorney's fees and costs.
Owens objects to the Plan on these grounds:
(a) The Plan seeks to classify the Owens Claims as Indirect
Asbestos Personal Injury Claims to be channeled to the
Asbestos Personal Injury Trust. Indirect Asbestos PI
Claims are claims for contribution, reimbursement,
subrogation or indemnity, whether contractual or implied
by law and any other derivative or Indirect Asbestos
Personal Injury Claim of any kind whatsoever, whether in
the nature of or sounding in contract, tort, warranty, or
any other theory of law or equity. Mr. Bradley asserts
that the Owens Claims are liquidated direct claims against
the Debtors. The Owens Claims also include claims for
fraud, misrepresentation, and the Debtors' violations of
several statutes.
(b) Four separate Trust Funds will be established to
compensate the holders of Asbestos PI Claims -- T&N
Worldwide Fund, FMP Fund, Fel-Pro Fund, and Vellumoid
Fund. However, the Plan Proponents have not identified:
-- which fund will pay the Owens Claims; or
-- what assets of each fund may be used to pay the
Owens Claims; or
-- which insurance policies would provide coverage for
the Owens Claims.
If there is insufficient insurance available to pay these
types of claims, the Plan Proponents may be limiting any
recovery on the Claims. As a result, Owens may be treated
differently from other similarly situated creditors.
(c) If the Proponents are permitted to classify the Owens
Claims as Indirect Asbestos PI Claims, they may succeed in
extinguishing the Claims completely because it may be
virtually impossible for Owens to meet the required
criteria for payment of the Claims through the Trust.
The Trust Distribution Procedures govern the liquidation
and payment of claims based on certain established medical
disease criteria and the defendant's ability to satisfy
certain requirements. The Owens Claims are not subject to
medical disease criteria or evidence standards, and
therefore, these criteria must not be applied to the Owens
Claims.
(d) The Trust documents provide that Indirect Asbestos
Personal Injury Claims for indemnity and contribution will
be treated as presumptively valid and paid by the Trust if
these conditions are met:
-- the claim was filed prior to the March 3, 2003 Bar
Date;
-- the claim has not been disallowed pursuant to
Section 502(e);
-- the claimant establishes that he or she has paid in
full the Trust's obligations to the direct claimant;
-- both the indirect and direct claimant release the
Trust; and
-- the claim is not otherwise barred by the statute of
limitations.
Because of the unique nature of the Owens Claims, these
criteria should not be imposed. The Owens Claims were
filed by the deadline and would not be subject to
disallowance under Section 502(e). The remaining
requirements are not applicable.
(e) By classifying the Owens Claims as asbestos claims, the
Plan Proponents may be depriving the Claims of significant
value. The Plan Proponents intend to apply an initial
payment percentage to liquidated claims, which may include
a payment of as little as 7.5% or nothing at all if there
is no insurance to cover the Debtors' liability for the
claims. However, general unsecured claims are expected to
be paid approximately 35% of the claim amount.
(f) Owens objects to the Plan to the extent any Debtor or non-
debtor entities will receive injunctive protections or
releases without contributing any assets to the payment of
the Owens Claims.
(g) Owens objects to the Plan to the extent it has not been
proposed in good faith, those with substantially similar
claims will be treated differently, and the Claims will
not receive a value greater than the amount it would
receive if the Debtors were liquidated under Chapter 7.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some
$6 billion. The Company filed for chapter 11 protection on
October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J.
Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at
Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $10.15 billion in
assets and $8.86 billion in liabilities. (Federal-Mogul
Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
FIBERMARK INC: Files Amended Joint Plan of Reorganization
---------------------------------------------------------
FiberMark, Inc., and its debtor-affiliates filed their Amended
Joint Plan of Reorganization with the U.S. Bankruptcy Court for
the District of Vermont on Dec. 14, 2004.
The Plan provides for the equal treatment of claims in accordance
with the priorities established under the Bankruptcy Code. Claims
that have priority status under the Bankruptcy Code or are secured
by valid liens on collateral are reinstated or paid in full. Non-
priority, unsecured claims will receive a pro rata distribution of
New Common Stock and of New Notes to be created and issued under
the Plan, providing estimated recoveries of approximately 70%.
Because holders of non-priority, unsecured claims will not be paid
in full, the holders of old FiberMark Common Stock will receive no
distributions under the Plan, and all shares of Old FiberMark
Common Stock will be cancelled.
The holders of noteholder claims and general unsecured claims will
share in a distribution of
(i) 10,000,000 shares of New Common Stock; and
(ii) up to $125,000,000 in aggregate principal amount
of the New Notes to be issued under the Plan.
The reorganization value of the Reorganized Debtors is assumed to
be between approximately $265 million and $305 million.
Unless an Option Termination Event (defined in detail in the Plan)
occurs, a Cash Payment Option will be available to unsecured
creditors:
(i) holders of general unsecured claims will have the option to
elect a discounted cash payment and
(ii) holders of noteholder claims will have the opportunity to
participate in the funding of the discounted Cash payment
and thereby acquire the New Common Stock and New Notes
allocable to the electing holders of general unsecured
claims.
Headquartered in Brattleboro, Vermont, FiberMark, Inc. --
http://www.fibermark.com/-- produces filter media for
transportation applications and vacuum cleaning; cover stocks and
cover materials for books, graphic design, and office supplies and
base materials for specialty tapes, wallcoverings and sandpaper.
The Company filed for chapter 11 protection on March 30, 2004
(Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D.J.
Baker, Esq., David M. Turetsky, Esq., and Rosalie Walker Gray,
Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from its creditors, they listed $329,600,000 in
total assets and $405,700,000 in total debts.
GATEWAY EIGHT: Gets Interim Okay to Use Lender's Cash Collateral
----------------------------------------------------------------
The Honorable William C. Hillman of the U.S. Bankruptcy Court for
the District of Massachusetts gave Gateway Eight Limited
Partnership interim approval to use cash collateral securing its
obligations to the Employees' Retirement System of Rhode Island,
acting by and through the State Investment Commission and the
Small Business Loan Fund Corporation of Rhode Island. The Debtor
needs immediate access to the cash collateral to avoid irreparable
harm to its estate.
The Debtor's use of the cash collateral will be in accordance with
a 12-month budget through Nov. 2005, projecting:
Dec. Jan. Feb. Mar.
---- ---- ---- ----
Income $253,253 $1,083,646 $15,000 $20,000
Expenses 28,989 135,579 141,081 82,781
-------- --------- --------- ---------
Total $224,264 948,067 (126,081) (62,781)
Beginning Cash 182,106 406,370 1,354,437 1,228,356
-------- --------- --------- ---------
Ending Cash 406,370 1,354,437 1,228,356 1,165,575
Apr. May June July
---- --- ---- ----
Income $20,000 $25,000 $25,000 $25,000
Expenses 167,931 84,281 82,781 167,931
-------- --------- --------- ---------
Total (147,931) (59,281) (57,781) (142,931)
Beginning Cash 1,165,575 1,017,644 958,363 900,582
-------- --------- --------- ---------
Ending Cash 1,017,644 958,363 900,582 757,651
Aug. Sept. Oct. Nov.
---- ----- ---- ----
Income $25,000 $25,000 $25,000 $25,000
Expenses 84,281 82,781 167,931 84,281
-------- --------- --------- ---------
Total (59,281) (57,781) (142,931) (59,281)
Beginning Cash 757,651 698,370 640,589 497,658
-------- --------- --------- ---------
Ending Cash 698,370 640,589 497,658 438,377
The Court grants the secured creditors replacement liens and
security interests having the same priority, validity and
enforceability to adequately protect their interests.
Headquartered in Boston, Massachusetts, Gateway Eight Limited
Partnership -- http://www.congressgroup.com/--is a real estate
development, construction, property & asset management and
investment company. The Debtor filed for chapter 11 protection on
Nov. 30, 2004 (Bankr. Mass. Case No. 04-19692). When the Company
filed for protection from its creditors, it listed more than $10
million in assets and debts.
GATEWAY EIGHT: Wants to Retain Winograd Shine as Special Counsel
----------------------------------------------------------------
Gateway Eight Limited Partnership asks the U.S. Bankruptcy Court
for the District Massachusetts for permission to employ Winograd,
Shine & Zacks, P.C., as its special counsel.
Winograd Shine is expected to:
a) advise and counsel the Debtor in connection with any
matters implicating Rhode Island law or concerning the
Debtor's assets located within the State of Rhode Island;
and
b) perform the full range of services normally associated
with the matters set forth above as the Debtor's special
business counsel.
Diane Finkle, Esq., at Winograd Shine, discloses that the Debtor
paid her Firm a $16,095 retainer. Ms. Finkle does not disclose
the Firm professionals' current hourly rates.
To the best of the Debtor's knowledge, Winograd Shine is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Boston, Massachusetts, Gateway Eight Limited
Partnership -- http://www.congressgroup.com/--is a real estate
development, construction, property & asset management and
investment company. The Debtor filed for chapter 11 protection on
Nov. 30, 2004 (Bankr. Mass. Case No. 04-19692). When the Company
filed for protection from its creditors, it listed more than $10
million in assets and debts.
GATX FINANCIAL: Fitch Puts Low-B Rating on $2.8 Billion Debt
------------------------------------------------------------
Fitch Ratings affirms GATX Financial Corp.'s ratings:
-- Senior debt 'BB';
-- Commercial paper 'B';
Fitch has also revised GATX Financial's Rating Outlook to Positive
from Stable. Approximately $2.8 billion of debt are covered by
Fitch's actions.
GATX Financial is the principal operating subsidiary of GATX
Corp., a specialized equipment finance and leasing holding
company. To eliminate the impact of double leverage, Fitch
analyzes GATX Financial at the GATX level.
GATX's rating strengths center on the company's significant amount
of contingent liquidity, improving capitalization and declining
financial leverage, demonstrated asset knowledge and good market
position in selected equipment sectors, and management's
willingness to make difficult decisions for the long-term benefit
of the company. Rating concerns focus on the economic cyclicality
inherent in the company's businesses, the timing and the magnitude
of future lease rate increases and resultant improvement in core
profitability, and the ability to cost effectively fund business
in the unsecured debt markets.
The Rating Outlook revision reflects the initiatives that
management completed in 2004 to strengthen GATX's balance sheet
and the general improvement in the company's core markets: railcar
and aircraft leasing. In terms of the balance sheet, the
company's quarterly common dividend was cut to 20 cents a share
from 32 cents in January 2004. Although painful, this was the
right action as management had, in 2000, repositioned GATX as a
specialty finance company, a business in which internal capital
formation is crucial to support growth. Previously, GATX was a
diversified transportation company.
Also, on June 30, 2004, GATX sold GATX Technology Services -- GTS
-- to subsidiaries of CIT Group, Inc. for net proceeds of $246
million, of which $31 million was yet to be received as of Sept.
30, 2004. While Fitch is comfortable with the vendor-neutral
information technology business model, GATX may have been
disadvantaged to others due to a lack of scale. In exiting this
business, GATX was able to reduce its financial leverage while
redeploying capital to business units where better prospects
exist.
In contrast to the improvement in its balance sheet, GATX's
operating results remain mixed. For 2004, the company is likely
to report its best operating results since 2001. However, similar
to the financial results reported over the past four full years,
the company's 2004 results will be affected by nonrecurring
gains/losses. For the nine months ended Sept. 30, 2004, GATX
realized approximately $58 million in nonrecurring gains from an
insurance settlement ($48 million) and a reversal in loan loss
reserve ($10 million). Taken together, these two gains equate to
approximately $38 million after-tax income for the nine-month
period ended Sept. 30, 2004. The good news about the company's
operating results in 2004 is that asset impairment charges have
been modest.
This suggests, along with management's public commentary, that the
equipment demand in the company's end-markets has begun to
strengthen. GATX's rail and aircraft utilization rates at Sept.
30, 2004, were 97% and 100%, respectively, which were their
highest levels over the past five years. While these equipment
utilization levels are not reflected in the company's lease
revenues, if demand remains strong, GATX will continue to be able
to selectively raise lease rates as existing contracts expire, but
the impact of increased lease rates probably will not be clear
until 2006.
GATX's asset quality has also evolved into a good story for 2004
and has helped propel earnings. Given the physical collateral
nature of GATX's assets and increased demand by its customers, the
company, through Sept. 30, 2004, reported significantly improved
asset quality relative to full-year 2003. While the
sustainability of asset quality at current levels will be
difficult, Fitch does not expect credit costs to rise to the
levels reported in 2002 and 2003. However, as the company shrinks
its Specialty Finance business, the denominator effect could
result in credit losses, in percentage terms, being artificially
inflated relative to previous periods.
All measures of capitalization and leverage have improved in 2004
due to improved earnings retention and asset shrinkage. The
capital base is solid, with goodwill representing less than 10% of
common equity at Sept. 30, 2004. Similarly, financial leverage
also improved. While financial leverage, measured as total on-
balance sheet debt plus off-balance sheet operating leases
(managed debt) divided by tangible equity, remained high, for an
operating lessor, at Sept. 30, 2004, at 5.06 times, this was a
substantial reduction from the 7.59x that was reported at year-end
2002. Fitch notes that at Sept. 30, 2004, GATX' unrestricted cash
balance was unusually large, at $143 million, due to the proceeds
received from recent asset sales.
Tracing its roots to 1898, GATX Financial is a wholly owned
subsidiary of GATX. GATX Financial operates through three
business segments:
* GATX Rail,
* GATX Air, and
* GATX Specialty Finance.
Through these businesses, GATX Financial combines asset knowledge
and services, structuring expertise, partnering, and risk capital
to provide business solutions to customers and partners worldwide.
GATX Financial specializes in railcar, locomotive, and aircraft
operating leasing.
HILB ROGAL: Moody's Places Ba3 Rating on Senior Secured Facility
----------------------------------------------------------------
Moody's Investors Service has assigned a provisional rating of
(P)Ba3 to the senior secured bank credit facility to be entered
into by Hilb, Rogal and Hobbs (NYSE: HRH). Moody's provisional
rating is subject to final documentation and completion of the
transaction. The credit agreement is to be secured by the capital
stock of, and guaranteed by, the subsidiaries of HRH. This
agreement will replace the company's previous facility and will
consist of a $50 million senior secured Term Loan A, a
$200 million senior secured Term Loan B, and a $175 million senior
secured revolving credit facility. Concurrently, Moody's will
withdraw its ratings on the company's former facility, also rated
Ba3. The outlook on HRH's rating remains positive based on the
company's strong earnings and operating metrics.
According to Moody's, the Ba3 rating reflects HRH's position as
the seventh largest insurance broker in the US, its good market
position in the commercial middle market, and its expanding client
base and geographic profile. Additional strengths include the
company's stable earnings, strong brokerage margins, significant
interest coverage and adequate retained cash flow to debt
characteristics.
These strengths are tempered by the competitive gap between HRH
and the larger insurance brokers as well as by the company's
aggressive acquisition related growth strategy which Moody's
believes presents integration and execution risks. Additional
negative factors include significant financial leverage and the
general uncertainty surrounding the ongoing regulatory
investigations into contingent commission arrangements between
brokers and insurers.
Moody's believes that contingent commissions, which represent 8.6%
of HRH's revenues for the first nine months of 2004, are likely to
be eliminated or curtailed in some form as a result of these
investigations. According to HRH's public disclosures, the
company has not received a subpoena from the New York Attorney
General, but has received subpoenas from state attorney generals,
and inquiries from state departments of insurance, seeking
information on its contingent commission arrangements. As
additional substantive information becomes available on the
investigations and their potential implications on HRH and the
insurance brokerage market, Moody's may re-evaluate its positive
outlook.
The positive outlook on HRH reflects Moody's expectation that the
company will continue to perform well on an operational basis over
the medium term. Moody's expectations regarding specific metrics
at the company's rating level include continued EBITDA margins
over 20%, retained cash flow to total debt over 15%, debt to
EBITDA under 2.5x, and organic revenue growth in the low single
digits. Also incorporated into the rating are expectations that
the pace of acquisitions will be moderate (i.e. acquisition
related revenue will be less than 15% of prior year revenues).
HRH, headquartered in Glen Allen, Virginia, is an insurance
brokerage firm specializing in property and casualty risks,
employee benefits, and professional liability. For the first nine
months of 2004, the company reported total revenue of $460 million
and net income of $66 million. As of September 30, 2004, HRH
reported shareholders' equity of $498 million.
HOLLINGER CANADIAN: Will Distribute Cash Dividends to Unitholders
-----------------------------------------------------------------
Hollinger Canadian Newspapers, Limited Partnership reported that a
special cash distribution in the amount of $0.005 per Unit has
been declared by the board of directors of Hollinger Canadian
Newspapers G.P. Inc., in its capacity as the General Partner of
the Partnership, to holders of Units as shown on the record of the
Partnership at the close of business on December 23, 2004, such
special distribution to be paid to the Unitholders on
December 30, 2004.
Hollinger Canadian Newspapers, Limited Partnership owns and
operates of 13 daily and non-daily community newspapers, 55 trade
magazines and directories, 7 newsletters, the Northern Miner
weekly industry newspaper, and four business publications in
electronic formats (TSX: HCN.UN)
* * *
As reported in the Troubled Company Reporter on Aug. 23, 2004, the
Toronto Stock Exchange formally suspended Hollinger Canadian's
Units from trading on the TSX as of 5:00 p.m. Toronto time on
August 6, 2004. The Units were suspended from trading on the TSX
due to the failure of Hollinger Canadian Newspapers G.P., Inc.,
the general partner of the Partnership to have at least two
independent directors on its board of directors, as required by
the TSX continued listing requirements. The Limited Partnership
Agreement governing the Partnership requires the General Partner
to have at least three independent directors. The General Partner
currently has one independent director.
HOLLINGER PARTICIPATION: Moody's Withdraws Rating on Trust Notes
----------------------------------------------------------------
Moody's Investors Service has withdrawn its Ba3 rating on
$490 million of Hollinger Participation Trust Senior Notes.
This action follows the announcement that CanWest Media Inc., a
wholly owned subsidiary of CanWest Global Communications Corp.,
has completed an exchange offer in respect of these notes.
Hollinger Participation Trust is a Delaware business trust formed
for the purpose of issuing the Participation Trust Notes.
HOME PRODUCTS: Wants to Voluntarily Delist Common Stock
-------------------------------------------------------
Home Products International Inc.'s Board of Directors approved the
delisting of Home Products' common stock, which is anticipated to
be effective prior to the commencement of trading on The Nasdaq
Stock Market today, December 16, 2004. Following the delisting,
it is unlikely that Home Products' shares will be traded on the
over-the-counter bulletin board, or that price quotations will be
reported through any other sources.
The reconstituted Board of Directors of Home Products also has
approved the deregistration of the common stock subject to and
conditioned on receipt of a certification from its transfer agent
that Home Products has fewer than 300 stockholders of record.
Upon receipt of such certification, Home Products intends promptly
to file a Form 15 with the Securities and Exchange Commission to
deregister its common stock and suspend its reporting obligations
under the Securities Exchange Act of 1934 pursuant to Rule
12g-4(a)(1)(i) thereof.
The filing of the Form 15 will immediately suspend Home Products'
obligation to file reports under the Securities Exchange Act,
including Forms 10-K, 10-Q and 8-K. The deregistration will not
become effective, however, until the SEC terminates the
registration, which Home Products expects to occur 90 days after
the filing of the Form 15.
Notwithstanding the suspension of its obligation to file periodic
financial reports, by the terms of Home Products' indenture
governing its 9- 5/8% Senior Subordinated Notes due 2008, Home
Products would continue to be required voluntarily to file the
same annual, periodic and current reports that it is now required
to file as an SEC registrant so long as the indenture covenants
remain in effect (the notes issued under the indenture have a
stated maturity date of May 14, 2008).
Home Products International, Inc. is an international consumer
products company specializing in the manufacture and marketing of
quality diversified housewares products. The Company sells its
products through national and regional discounters including
Kmart, Wal-Mart and Target, hardware/home centers, food/drug
stores, juvenile stores and specialty stores.
* * *
As reported in the Troubled Company Reporter on November 4, 2003,
Standard & Poor's Ratings Services lowered its corporate credit
rating on household goods manufacturer Home Products International
Inc. to 'CCC+' from 'B'. At the same time, Standard & Poor's
lowered the senior secured rating on the company to 'B-' from 'B+'
and the subordinated debt rating to 'CCC-' from 'CCC+'. The
outlook is negative.
IESI CORP: Moody's Withdraws B3 Rating on $150M Sr. Sub. Notes
--------------------------------------------------------------
Moody's Investors Service withdrew the B3 rating on IESI
Corporation's $150 million issue of 10.25% Senior Subordinated
Notes due 2012. The rating was withdrawn after the company
announced the receipt of tenders and consents of the notes for
over 98% of the outstanding principal.
IESI Corporation, based in Fort Worth, Texas, provides non-
hazardous collection, transfer, disposal, and recycling services
in two geographic regions: its South Region, which includes
11 operating districts in Texas, Louisiana, Oklahoma, Arkansas,
and Missouri; and its Northeast Region, which includes 3 operating
districts in New York, New Jersey, Pennsylvania, and Maryland.
Revenues for fiscal 2003 were $256 million.
INERGY LP: Moody's Rates $400M Senior Unsecured Notes at B1
-----------------------------------------------------------
Moody's Investor Service issued first time ratings to Inergy, L.P.
a Kansas City, Missouri-based propane distribution Master Limited
Partnership -- MLP. With a stable outlook, Moody's assigned a B1
rating to Inergy's proposed $400 million senior unsecured notes, a
Ba3 senior implied rating, and a speculative grade liquidity
rating of SGL-3 to Inergy, L.P.
Proceeds from the proposed notes offering will be used to
partially fund two acquisitions which consist of the initially
expensive $475 million acquisition of Star Gas Partners, L.P.'s
propane business and the recently closed $50 million acquisition
of Moulton Gas. Moody's believes that although the Star Gas
acquisition provides Inergy with significantly increased scale in
the propane sector, it is being acquired at a very full value of
almost 10x based on Moody's estimates for Star Gas Propane's LTM
EBITDA for 9/30/04. However, given the proximity of the Star Gas
Propane operations relative to Inergy's, the deal appears to have
some synergy opportunities and will enhance Inergy's presence in
some of its core markets. In conjunction with the acquisitions,
Inergy is also planning to issue approximately $250 million of
equity (up to $115 million from institutional investors).
Inergy's ratings reflect:
(1) the substantial cash distributions of all free cash flow to
the MLP unit holders, resulting in negligible organic
credit accretion which is typical for publicly traded
MLP's;
(2) the initially high pro forma leverage (adjusted
debt/EBITDAR) of 4.2 to 4.4x, depending on the total amount
of equity raised by closing of the transaction;
(3) the need to see a successful integration this very large
acquisition;
(4) ongoing event risk as Inergy continues to pursue additional
propane acquisitions;
(5) the inherent volatility of the company's earnings and cash
flows; and
(6) management's strategy to materially increase the non-
propane business which may alter the firm's current risk
profile.
The ratings are supported by:
(1) the company's disciplined financial policies relative to
its peers while growing its business to become one of the
larger propane distribution companies in the country;
(2) the company's track record of issuing equity since its IPO
in 2001;
(3) the regional diversification of its propane business; and
(4) the increased scale the Star Gas acquisition provides
Inergy in its core markets.
The SGL-3 rating is based on the company's liquidity over the next
twelve months which should provide adequate coverage of the
company's working capital needs, debt service, cash unit
distributions and planned non-acquisition capex spending through
the next twelve months. The SGL-3 rating tempered by the large
cash distributions made to common unit holders.
The stable outlook reflects the expectation that management will
reduce leverage from its currently high levels to less than 4.0x
within the next twelve months and that material future
acquisitions will be amply funded with equity, especially non-
propane acquisitions. However, the outlook could face downward
pressure Inergy does not reduce debt and bring leverage under 4.0x
within the next twelve months; completes material debt funded
acquisitions; or if cash flow does not cover maintenance capex,
interest and dividends. A positive outlook would depend on
leverage (lease adjusted debt/EBITDAR) improving to and being
maintained easily under 3.5x while EBITDA continues to grow; or if
largely equity funded acquisitions add sufficient scale and
further geographic diversification to the company's existing
propane business.
Moody's ratings for Inergy, L.P. are:
* Assigned a B1 -- Inergy's proposed $400 million senior
unsecured notes offering
* Assigned a Ba3-- senior implied rating
* Assigned a B1 -- issuer rating
* Assigned a SGL-3 -- Inergy's liquidity rating
Due to the large secured debt carveout (the $325 million in
secured credit facilities) and that the indenture permits MLP unit
distributions even in a weak margin environment warrants a one
notch adjustment from the senior implied rating despite the
guarantee from all of the MLP's present and future domestic
subsidiaries.
The ratings are restrained by the company's MLP business model,
which distributes all available cash flows to unit holders,
leaving little or no cash flow available for debt repayment. In
addition, the expectation of the MLP units market is for
distribution growth, which consistently maintains pressure on
management for cash flow growth which is due to occur from
continued acquisitions given the mature nature of the propane
business.
Pro forma for the Star Gas and Moulton acquisitions, Inergy's
leverage (lease adjusted debt/EBITDAR) will significantly increase
from the company's 3.67x for the twelve months ended 9/30/04
(including prior acquisitions made in late FY 2004) to at least
4.2x (assuming $250 million of new equity) pro forma for the Star
Gas and Moulton acquisitions (based on reported earnings).
Further, as the company progresses in its peak heating months,
Moody's expects working capital needs will at least temporarily
push leverage higher for the quarter ended 12/31/04.
The ratings also consider the earnings and cash flow volatility,
which results from higher commodity prices, seasonality and
dependency on weather. Inergy's propane distribution business
generates approximately 90% of consolidated earnings and cash
flows, most of which occurs during the middle two quarters of its
fiscal year, when winter weather drives the demand for propane.
While overall, the majority of Inergy's customers use company
owned tanks that can only be filled by Inergy, high retail propane
prices and warmer winter weather tends to hold back demand.
The ratings are further restrained by the potential for Inergy to
grow its mid-stream businesses, which is currently not core to
Inergy. The company owns a fractionation plant, some storage
terminals and a small pipeline operated primarily on fee-based
contracts on the West Coast. As a recently acquired business, it
is still a small contributor to the company's overall earnings and
cash flow, however, it is an area that management has indicated it
intends to grow.
The ratings are supported by the company's track record of growing
the firm to a scale within striking distance of larger competitors
while maintaining one of the more conservative leverage profiles
among its peers. After closing of the Star Gas transaction,
Inergy will be the 5th largest propane distributor in the U.S. and
will have grown its EBITDA of $17 million for FY2001 to about
$108 million pro forma for the LTM 9/30/04 while consistently
maintaining leverage on the lower end of its peer group.
Subsequent to the company's IPO in 2001 that raised about
$37.6 million, Inergy issued through three secondary public
offerings and a private placement, an additional $176 million and
another $70 million directly to owners of acquired businesses,
making the total amount of equity issued since 2001 (while
consummating five significant acquisitions adding 102.6 million
retail gallons), approximately $240 million. In conjunction with
the Star Gas and Moulton acquisitions, the company will also issue
approximately $250 million of new equity through both the
institutional and public markets, which represents about 48% of
the total purchase price.
The propane business is a fairly durable business and represents
about 85% of Inergy's segment EBITDA. Since Inergy owns over 75%
of the propane tanks used by its customers, it has a relatively
base level of business (weather patterns and conservation aside).
This built-in base enables Inergy to have over 90% of its
contracts to be market based and pass through price increases.
For those that are under fixed price contracts, the company will
hedge those supplies at the time of the contract in order to
preserve gross margins.
While the company's wholesale supply, marketing and distribution
business generates more than 50% of revenues, it is only
approximately 15% of total EBITDA given its low margin nature.
Inergy supplies third party companies (competitors) with propane
typically for a fixed price, which it then attempts to hedge to
lock in a small margin and avoid price risk. The company also has
some potential price exposure under its arrangement with two
refineries whereby under annually renewable contracts, Inergy is
obligated to take the propane from the two refineries at a market
based index price, and in turn attempt to sell it as a supply
source for the third party supply business and for its own retail
customer use.
The SGL-3 rating is supported by the adequate cash flow outlook
over the next twelve months and the availability of the company's
two revolvers, which are sufficient to cover the company's working
capital needs, interest expense, estimated cash distributions to
shareholders, and normal capital expenditures. For FYE 2005,
Moody's estimated Inergy's EBITDA will range between $105 million
and $115 million, based on historical gallons sold and the recent
acquisition completed over the past two quarters versus working
capital of about $35 million, estimated interest expense about
$27 million and capex of about $16 million (excluding
acquisitions).
The company is expected to remain in compliance with its
maintenance covenants of EBITDA/Interest of 2.5x, senior secured
debt /EBITDA (at the operating company) of 3.75x beginning
12/31/05 and total consolidated debt/EBITDA of 5.5x before
stepping down to 4.75x beginning 6/30/05, thus ensuring
accessibility during the next twelve months.
Inergy, L.P. is headquartered in Kansas City, Missouri.
INTEGRATED HEALTH: Gets Court Nod to Make $20,000,000 Distribution
------------------------------------------------------------------
As previously reported, IHS Liquidating, LLC, sought the United
States Bankruptcy Court for the District of Delaware's permission
to make interim distributions to the holders of allowed claims in
Classes 4 and 6 under the Plan.
IHS Liquidating has about $58,000,000 in funds in its bank
accounts, of which $35,000,000 is being held in reserve on account
of Excluded Administrative Expense Claims, Priority Tax Claims,
Other Priority Claims, Other Secured Claims and the expense
reserve for the estimated costs of administering the Integrated
Health Services, Inc. and its debtor-affiliates' Chapter 11 cases
to conclusion. IHS Liquidating also anticipates at least
$25,000,000 in additional distributable value through the
disposition and monetization of certain other limited assets.
* * *
Judge Walrath authorizes IHS Liquidating, LLC, to make a
$20,000,000 initial distribution to the holders of Allowed Class 4
and Class 6 claims.
Integrated Health Services, Inc. -- http://www.ihs-inc.com/--
operated local and regional networks that provide post-acute care
from 1,500 locations in 47 states. The Company and its 437
debtor-affiliates filed for chapter 11 protection on February 2,
2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation
and its direct and indirect debtor-subsidiaries broke away from
IHS and emerged under their own plan of reorganization on March
26, 2002. Abe Briarwood Corp. bought substantially all of IHS'
assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May
12, 2003, and that plan took effect September 9, 2003. Michael J.
Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq.,
at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS
Debtors. 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. 86; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
INTERMET CORP: Discloses Plans to Close 2 Sturtevant Racine Plants
------------------------------------------------------------------
December 15, 2004 / PR Newswire
INTERMET Corporation (INMTQ.PK) intends to close its Racine (die-
casting) Plant and Racine Machining Plant, both of which are
located in Sturtevant, Wisconsin. The plants are expected to
close during the second quarter of 2005.
The facilities currently employ 603 people, including hourly and
salaried staff, and manufacture aluminum die castings for the
automotive industry.
Continuing high costs at the facilities and a significant
underutilization of current casting and machining capacity
prompted the need for concessions, which were voted down by hourly
employees represented by UAW Local 627 on Sunday, Dec. 12, 2004.
Commenting on yesterday's announcement, INTERMET's Chairman and
CEO Gary F. Ruff said, "INTERMET's restructuring and turnaround
plan called for significant changes in order to make the
Sturtevant operations viable. Unfortunately, the final
concessions offer we proposed to the union bargaining committee
was not acceptable to the employees."
Company officials are notifying plant employees of the decision to
close the plants and will be meeting with representatives of UAW
Local 627 to discuss the effects of the closures.
The company expects to record costs related to the closures of $13
million to $16 million during the fourth quarter of 2004, and
expects to incur additional related costs during the wind-down
period.
Headquartered in Troy, Michigan, Intermet Corporation --
http://www.intermet.com/-- provides machining and tooling
services for the automotive and industrial markets specializing in
the design and manufacture of highly engineered, cast automotive
components for the global light truck, passenger car, light
vehicle and heavy-duty vehicle markets. Intermet, along with its
debtor-affiliates, filed for chapter 11 protection on Sept. 29,
2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614).
Salvatore A. Barbatano, Esq., at Foley & Lardner LLP, represents
the Debtors. When the Debtors filed for protection from their
creditors, they listed $735,821,000 in total assets and
$592,816,000 in total debts.
JESSUP CELLARS: Case Summary & 15 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Jessup Cellars, Inc.
3377 Solano Avenue #402
Napa, California 94559
Bankruptcy Case No.: 04-12890
Type of Business: The Debtor is a wine maker using Napa valley
and Sonoma valley grapes.
See http://www.jessupcellars.com/
Chapter 11 Petition Date: December 13, 2004
Court: Northern District of California (Santa Rosa)
Judge: Alan Jaroslovsky
Debtor's Counsel: Michael C. Fallon, Esq.
Law Offices of Michael C. Fallon
100 E Street #219
Santa Rosa, CA 95404
Tel: 707-546-6770
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 15 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
La Vonna Wood Personal Loan and $197,000
3454 Redwood Road court costs
Napa, CA 94558
Los Amigos, LLC 2004 Bulk Wine $148,497
4044 Escuela Secured Value:
Napa, CA 94558 $112,000
Andrea Bornstein Breach of Contract $50,750
Brian Gearinger, Esq.
Mosley & Gearinger, LLP
825 Van Ness Avenue, 4th
Floor
San Francisco, CA 94109
Coombs & Dunlap Attorney Fees $45,000
John C. Usnick Attorney Fees $45,000
Diablo Valley Packing Bottling material $41,268
APM 2002 Bottling $21,500
Supplies
Dan and Geraldine Jessup Personal Loan $20,000
Computer Engineering Group Computer $10,000
hardware/software
G & J Seiberlich Accounting Fees $9,520
MBNA Credit card $5,202
MBNA Credit card $5,122
Lafitte Cork & Capsule Business expense $4,310
Energy Miser Dishwasher $4,162
Fleet Credit Card Service Credit card $3,633
KAISER ALUMINUM: Asks Court to Okay Third Old Republic Stipulation
------------------------------------------------------------------
As previously reported, pursuant to an agreement between Kaiser
Aluminum Corporation, its debtor-affiliates and Old Republic
Insurance Company, dated October 14, 1996, Old Republic agreed to
issue workers' compensation, automobile liability and general
liability insurance coverage for the Debtors. Under the Program
Agreement, the Debtors have maintained workers' compensation,
automobile liability and general liability insurance coverage
under a series of insurance policies issued by Old Republic since
October 14, 1996.
MAXXAM, Inc., the Debtors' principal shareholder, also maintained
general liability and automobile liability coverage under the
same insurance policies as the Debtors before October 14, 2002.
MAXXAM has posted a separate letter of credit securing its
obligation to Old Republic, and Old Republic has agreed not to
look to or hold the Debtors responsible for any deductible or
retention owed to Old Republic as a result of any occurrence
involving MAXXAM.
Under the workers' compensation component of the Program
Agreement, the Debtors maintain workers' compensation coverage
for:
(a) current employees in 22 states; and
(b) longshore and harbor worker employees.
The Debtors are required by applicable state laws to provide
workers' compensation insurance for their employees.
For the Longshore Workers and employees in 19 states, the Debtors
maintain workers' compensation and employers' liability policies
that cover losses up to the applicable statutory workers'
compensation liability limit, with a $1,000,000 deductible per
occurrence. In those states where the Debtors currently operate
as self-insured employers -- Louisiana, Ohio and Washington --
Old Republic issues separate excess workers' compensation and
employers' liability policies to the Debtors. The Self-Insured
Programs provide insurance coverage above a per occurrence
retention. The Excess Coverage insures losses up to the
applicable statutory workers' compensation liability limits for
periods before October 14, 2003, and losses up to $100,000,000
per occurrence for periods on or after October 14, 2003.
Moreover, Old Republic provides insurance coverage for automobile
liability claims up to the $1,000,000 policy liability limit,
with a $1,000,000 deductible per occurrence. Old Republic also
provides insurance coverage for general liability claims up to
the policy limits of $1,000,000, with a $1,000,000 deductible per
occurrence and applicable aggregate limits.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, relates that to secure payment of its
obligations under the Program Agreement, the Debtors provided Old
Republic with certain collateral, including but not limited to, a
letter of credit, as amended, issued by Bank of America, N.A.,
for $6,320,000 as of October 29, 2002.
In the course of discussions between the Debtors and Old Republic
regarding Old Republic's potential issuance of new insurance
policies to the Debtors for the one-year period commencing
October 14, 2002, Old Republic informed the Debtors that it was
unwilling to issue the 2002-2003 Policies without clarification
of certain issues raised by the policies then in place, and the
assumption of the Program Agreement and the related policies.
Old Republic also requested additional collateral.
In December 2002, the United States Bankruptcy Court for the
District of Delaware authorized the Debtors to assume their
executory contracts with Old Republic Insurance Company.
Pursuant to the First Stipulation, the Debtors assumed the
Program Agreement and increased the amount of the from $6,320,000
Letter of Credit, by amendment, to $10,720,000. For its part,
Old Republic issued the 2002-2003 Policies providing coverage
through October 14, 2003, under the Program Agreement.
In February 2003, the Debtors, with the consent of Old Republic,
further amended the Letter of Credit securing payment of the
Debtors' obligations under the Program Agreement to delete an
automatic renewal clause and change the April 1, 2003 maturity
date to November 30, 2003. In October 2003, the Debtors again
amended the Letter of Credit by extending the maturity date to
December 31, 2003.
In December 2003, the Court approved a second stipulation between
the Debtors and Old Republic. Old Republic agreed to issue new
insurance coverage in accordance with the terms of certain
binders provided to the Debtors and continue insurance coverage
through October 14, 2004, on the same terms and conditions as the
2002-2003 Policies except that the excess workers' compensation
policies under the Self-Insured Programs contained a $100,000,000
per occurrence policy limit. Additionally, Old Republic agreed,
in connection with the issuance of the 2003-2004 Policies, to
reduce the amount of the Letter of Credit securing the Debtors'
obligations to Old Republic to $8,720,000, provided that:
(a) the maturity date of the Letter of Credit was extended to
November 30, 2004;
(b) an automatic renewal clause was reinserted in the Letter
of Credit that required the issuing bank to provide 30
days notice of non-renewal to the Debtors and Old
Republic; and
(c) certain issues with respect to the 2003-2004 Policies were
clarified.
Old Republic Claims
In January 2003, Old Republic filed Claim Nos. 7248, 7251, 7257,
7265 and 7270 against Kaiser Bauxite Company, Kaiser Jamaica
Corporation, Alpart Jamaica, Inc., Kaiser Finance Corporation and
Kaiser Alumina Australia Corporation. In each Claim, Old
Republic asserted unsecured, unliquidated, contingent non-
priority claims for any premiums, reimbursements or other amounts
that might arise from or in connection with various insurance
policies that were issued before the parties' entry into the
Program Agreement.
Many of the Old Policies are based on retrospective insurance
premiums, resulting in potential subsequent adjustments to
premiums, even after policy expiration, based on actual losses
generated during the policy period. The Old Policies were in
effect from April 1, 1986, to October 13, 1996, and were fully
reinsured by Trochus Insurance Company, Ltd., a captive insurance
company affiliated with the Debtors. Kaiser Aluminum & Chemical
Corporation agreed to hold Old Republic harmless and indemnify it
if Trochus Insurance failed to satisfy its obligations to Old
Republic under the Old Policies. As partial security for its
obligations, Trochus Insurance provided Old Republic with a
$1,620,000 letter of credit.
Insurance Coverage Renewal & Claims Disallowance
Mr. DeFranceschi relates that Old Republic has issued or shortly
will issue new insurance coverage in accordance with the terms of
binders delivered to the Debtors, which will continue this array
of insurance coverage through October 14, 2005, on essentially
the same terms and conditions as the 2003-2004 Policies. The
Letter of Credit securing the Debtors' obligations to Old
Republic will be increased from $8,720,000 to $9,644,219.
As a condition to the issuance of the New Policies, the Debtors
agreed to enter into a third stipulation, the basic terms of
which, are similar to conditions agreed to in connection with the
2003-2004 Policies.
The salient terms of the Third Stipulation are:
(a) Old Republic will be entitled to an unliquidated
administrative claim against the Debtors -- other than
Alpart Jamaica, Kaiser Jamaica, Kaiser Australia, Kaiser
Finance, and Kaiser Bauxite -- on account of the
possibility that the Debtors fail to make:
-- premium payments or pay any other amounts due with
respect to the Policies;
-- payments within the deductible layer of the Policies
with respect to claims covered by the Policies; or
-- payments to the third party administrator that is
administering the covered claims;
(b) The Administrative Claim will:
-- survive confirmation of the applicable Debtors'
reorganization plan;
-- not be liquidated or adjudicated by the Court; and
-- not be payable upon the effective date of that plan,
unless the confirmed plan or plans provides for a
complete liquidation of the Debtors in which event Old
Republic's Administrative Claim against the applicable
Debtors is to be estimated and/or adjudicated by the
Court, as appropriate, and paid when allowed by the
Court.
In addition, in the event the Debtors' Chapter 11 cases
are converted to Chapter 7 cases, Old Republic's
Administrative Claim is to be estimated or adjudicated by
the Court, as appropriate, and paid when allowed by the
Court;
(c) To the extent that Old Republic draws down on the Amended
Letter of Credit pursuant to the terms of the Program
Agreement, the Debtors will not seek before October 14,
2008, to exercise their rights under the Program
Agreement, if any, to recover from Old Republic any
portion of the draws on the Amended Letter of Credit,
unless otherwise agreed to by the parties;
(d) Court approval of the terms of the Third Stipulation is
deemed to be authorization for the Debtors to procure the
Amended Letter of Credit;
(e) Old Republic will be entitled -- without obtaining relief
from the automatic stay under Section 362(a) -- but only
after providing the Debtors, the Official Committee of
Unsecured Creditors, the Official Committee of Asbestos
Claimants, the Official Committee of Salaried Retirees,
Martin J. Murphy, the legal representative for future
asbestos claimants, and Anne M. Ferazzi, the legal
representative for future silica claimants, with no less
than 20 business days before written notice, to exercise
its state law rights, if any, to cancel the New Policies,
if the Debtors:
-- do not procure the Amended Letter of Credit by
December 8, 2004;
-- do not make all required premium payments owed on
account of the New Policies;
-- do not make all required deductible payments on account
of the claims covered by the Policies; or
-- fail to pay all amounts owed to the TPA;
The Cancellation Notice will be served via overnight mail
and facsimile to:
The Company:
John M. Donnan, Esq.
Deputy General Counsel
Kaiser Aluminum & Chemical Corporation
5847 San Felipe, Suite 2500
Houston, Texas 77057
Facsimile: (713) 332-4605
Mr. Kerry A. Shiba
Vice President and Treasurer
Kaiser Aluminum & Chemical Corporation
5847 San Felipe, Suite 2500
Houston, Texas 77057
Facsimile: (713) 332-4702
Debtors' Counsel:
Gregory M. Gordon, Esq.
Daniel P. Winikka, Esq.
Jones Day
2727 N. Harwood Street
Dallas, Texas 75201
Facsimile: (214) 969-5100
Creditors Committee:
Lisa G. Beckerman, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Facsimile: (212) 872-8162
Asbestos Committee:
Mark T. Hurford, Esq.
Marla Eskin, Esq.
Campbell & Levine LLC
800 North King, Suite 300
Wilmington, Delaware 19801
Facsimile: (302) 426-9947
Futures Asbestos Claimants Representative:
James L. Patton, Jr., Esq.
Young Conaway Stargatt & Taylor, LLP
The Brandywine Building
1000 West Street, 17th Floor
P.O. Box 391
Wilmington, Delaware 19899
Facsimile: (302) 571-1253
Retirees Committee:
Frederick D. Holden, Jr., Esq.
Orrick, Herrington & Sutcliffe, LLP
The Orrick Building
405 Howard Street
San Francisco, California 94105-2669
Facsimile: (415) 773-5759
Silica Representative:
Sander L. Esserman, Esq.
Stutzman, Bromberg, Esserman & Plifka
2323 Bryan Street, Suite 2200
Dallas, Texas 75201
Facsimile: (214) 969-4999
(f) The terms of the Third Stipulation will not prejudice any
rights of Old Republic to pursue other claims that might
arise under the Old Policies against any of the Debtors
other than Kaiser Bauxite, Kaiser Jamaica, Alpart Jamaica,
Kaiser Finance, and Kaiser Australia. Additionally, the
terms of the Third Stipulation will not prejudice any
rights of Old Republic to draw upon the Amended Letter of
Credit; and
(g) Old Republic has agreed to the disallowance of its Claims,
provided that the disallowance is without prejudice to Old
Republic's rights, if any, to:
-- pursue claims arising from or in connection with the
Old Policies against Debtors other than Kaiser Bauxite,
Kaiser Jamaica, Alpart Jamaica, Kaiser Finance and
Kaiser Australia; and
-- draw upon the Amended Letter of Credit.
The Debtors ask the Court to approve the Third Stipulation.
Mr. DeFranceschi asserts that the New Policies are critical to
the Debtors' operations. Any interruption in the insurance
coverage could have severe adverse effects upon the Debtors'
ability to retain employees and maintain their business
operations. It is a condition to the issuance of the New
Policies that the Debtors enter into and obtain Court approval of
the Third Stipulation. The Third Stipulation was negotiated at
arm's-length and in good faith. The Court's approval will permit
the Debtors to maintain workers' compensation, automobile
liability, and general liability insurance for the upcoming year
at rates that the Debtors believe will be favorable to their
estates.
Furthermore, the Third Stipulation resolves in:
* advance, certain issues that are likely to arise in
connection with the New Policies; and
* particular, the manners in which Old Republic's
administrative claims will be adjudicated.
Mr. DeFranceschi explains that the Policies are "occurrence
based" policies. Old Republic's reimbursement rights and
associated claims against the Debtors with respect to the
Policies will remain unliquidated for a substantial period of
time because covered workers' compensation claims may be payable
for years after the Policies' expiration. Under the
circumstances, placing a value on claims for deductible loss
reimbursement shortly after the end of a policy-year may be
difficult and could result in estimated claims that are either
significantly higher or lower that the reimbursement claims that
would actually transpire.
Headquartered in Houston, Texas, Kaiser Aluminum Corporation --
http://www.kaiseral.com/-- operates in all principal aspects of
the aluminum industry, including mining bauxite; refining bauxite
into alumina; production of primary aluminum from alumina; and
manufacturing fabricated and semi-fabricated aluminum products.
The Company filed for chapter 11 protection on February 12, 2002
(Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones
Day, represent the Debtors in their restructuring efforts. On
June 30, 2004, the Debtors listed $1.619 billion in assets and
$3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 55;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
KING PHARMACEUTICALS: S&P Puts Ratings on CreditWatch Developing
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its CreditWatch listing
on drugmaker King Pharmaceuticals, Inc., to CreditWatch with
developing implications. King had been on CreditWatch positive
since July 26, 2004, following the announcement that the company
would be acquired by unrated Mylan Laboratories for about
$4 billion in Mylan stock. (The King ratings on CreditWatch
include the 'BB' corporate credit, 'BB' senior secured, and
'BB-' senior unsecured ratings.)
"The outlook revision reflects the increased uncertainty that the
transaction will be completed as originally proposed, as King
needs to restate prior financials and increase reserves for
higher-than-expected product returns," said Standard & Poor's
credit analyst Arthur Wong.
The ratings on Bristol, Tennessee-based King had previously been
lowered on July 13, 2004, because of uncertainties about the
company's business profile, including excess wholesaler inventory
of key products and potential near-term generic competition to the
company's core drugs Levoxyl and Skelaxin. In addition, the
company's CEO had recently resigned. A negative outlook was
assigned to King's rating at that time.
Resolution of the CreditWatch listing will depend on the new
timeline for the Mylan transaction and any financing developments.
KMART CORP: Supreme Court Won't Review Critical Vendor Orders
-------------------------------------------------------------
Knight-Ridder, Inc., Handleman Company, and Irving Pulp & Papers,
Ltd., appealed to the United States Supreme Court to get the
Seventh Circuit Court of Appeals' ruling reversed. As previously
reported, the Seventh Circuit ruled that the Bankruptcy Court
order authorizing Kmart Corporation and its debtor-affiliates to
pay critical vendors cannot stand.
On November 15, 2004, the Supreme Court declined to review the
Seventh Circuit's decision on critical vendor orders, In re Kmart
Corp., 359 F.3d 866 (3d Cir. 2004).
Bankruptcy Court Judge Sonderby had allowed Kmart to pay over
$300,000,000 to satisfy the prepetition debts of some 2,330
"critical vendors." The District Court reversed, concluding that
the Bankruptcy Code did not authorize these so-called critical
vendor orders.
On appeal, Circuit Judges Frank H. Easterbrook, Daniel Manion and
Ilana Diamond Rovner affirmed the District Court's ruling
reversing the order authorizing payment. According to Judge
Easterbrook, preferential payments to a class of creditors are
proper only if the record shows the prospect of benefit to other
creditors.
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. 86; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
LIONEL CORP: Wants Access to $60 Million of DIP Financing
---------------------------------------------------------
Lionel LLC and its debtor-affiliates seek authority from the U.S.
Bankrutpcy Court for the Southern District of New York to enter
into postpetition credit agreements with Guggenheim Corporate
Funding LLC and Congress Financial Corp.
After several months of examining potential sources of
postpetition financing, the Debtors determined that the proposals
of Congress Financial and Guggenheim are the most viable. These
creditors agreed to provide the Debtors an aggregate amount of
approximately $60 million of new credit.
The Debtors will use $30 million of the three-year DIP Facility to
transform Guggenheim's pre-petition $30 million term loan into a
post-petition obligation. Lionel will gain access to $25 million
of fresh credit on a revolving basis and will obtain a new $4.2
million term loan.
The loans will allow the Debtors to pay for manufacturing costs
and debt owed to PNC Bank and GE Business Capital.
As part of the new credit agreements, the Debtors are obliged to
pay Guggenheim $100,000 and $146,000 to Congress Financial as
expense deposit, work and commitment fees.
* * *
As previously reported in the Troubled Company Reporter on Nov.
29, 2004, the Debtors sought and obtained approval from the Court
for a short term postpetition financing amounting to $1 million
from its prepetition, senior, secured lenders PNC Bank, National
Association, and GE Business Capital Corporation while they are in
the process of securing postpetition financing from other sources.
This interim financing will terminate on Dec. 15, 2004.
Headquartered in Chesterfield, Michigan, Lionel LLC --
http://www.lionel.com/-- is a marketer of model train products,
including steam and die engines, rolling stock, operating and non-
operating accessories, track, transformers and electronic control
devices. The Company filed for chapter 11 protection on Nov. 15,
2004 (Bankr. S.D.N.Y. Case No. 04-17324). Abbey Walsh Ehrlich,
Esq., at O'Melveny & Myers, LLP, represents the Debtors on their
restructuring efforts. When the Company filed for protection from
its creditors, it listed more than $10 million in assets and
debts.
LNR PROPERTY: Fitch Downgrades Sr. Subordinated Debt to 'B-'
------------------------------------------------------------
Fitch Ratings lowers LNR Property Corp.'s senior subordinated debt
rating to 'B-' from 'BB-'. Fitch also lowers the company's senior
unsecured debt rating to 'B' from 'BB+'. The ratings are removed
from Rating Watch Evolving. The Rating Outlook is Stable.
Approximately $985 million of debt securities are affected by
Fitch's actions.
Fitch placed LNR's ratings on Rating Watch Evolving on Aug. 30,
2004, following the announcement that Cerberus Capital Management
L.P. had agreed to acquire the company in a transaction targeted
to close in early 2005.
The rating actions reflect Fitch's anticipation that there will be
meaningful changes in LNR's leverage, capitalization, funding, and
liquidity profile as a result of the Cerberus Ownership. Cerberus
is a New York City based private investment firm that is acquiring
LNR for total consideration of $4.2 billion of debt and equity.
Cerberus will own 75% of the company, current LNR Chairman Stuart
Miller and his family will own 20.4% and LNR management will own
the remaining 4.6%.
The terms of the company's planned credit facilities will encumber
all existing available unencumbered assets and cash flows. While
the market value of LNR's total asset base will be meaningfully in
excess of the company's total indebtedness, all available assets
will effectively be used to secure funding. Most of the funding
used in the acquisition will be extended on a senior secured basis
and will deeply subordinate the existing interests of unsecured
investors. Tangible leverage at the LNR level, defined as total
debt divided by total equity less goodwill, is expected to rise
into the 4.00 times to 5.00x range, compared with the historical
range of 1.30x to 1.90x.
In addition, Fitch also believes that LNR will have considerably
less available unsecured contingent liquidity. The company
currently has a $400 million unsecured line of credit, which it
will not have following the transaction. LNR will have a $150
million secured revolving credit facility that will be available
following the close of the transaction. New acquisitions will be
funded with a nonrecourse $600 million committed repurchase
warehouse line, whereas the company historically had over $1.5
billion of combined available secured revolving credit and
repurchase lines.
It is also anticipated that LNR's asset acquisition strategy will
become more aggressive. With higher leverage, Fitch expects that
the company will continue to pursue on balance sheet growth of its
high yield CMBS and B-note mortgage businesses. The company may
also make much greater use of third-party equity to finance
continued growth of its equity property and European investment
businesses. In Fitch's view, increased use of partnerships
further distances unsecured investors from the company's
performing asset pools. While these investments and financing
structures will continue to be well considered by LNR's management
team, Fitch believes that this will introduce a higher level of
risk, particularly to the company's unsecured investors.
There are several positives that emerge from the transaction and
that have resulted in Fitch leaving the company's senior
subordinated debt rating within the 'B' rating category. LNR's
existing operating management team is expected to retain control
over the company's day-to-day operations. The company's top five
executives, which have generally been responsible for the
development, growth, and success of large portions of the
company's core businesses will remain in place.
Over the past five years, LNR has consistently generated solid
core recurring income from the CMBS and B-note portfolios that
will remain on balance sheet. It is also anticipated that Lennar
Partners, LNR's CMBS special servicing organization, will remain
intact and continue to be a market leader. Fitch also believes
that the expected indebtedness raised in conjunction with the
acquisition will have relatively light principal maturity schedule
in the first few years following the transaction.
Based in Miami Beach, FL, with roots dating to 1969, LNR
underwrites, purchases, and manages real estate and real estate-
driven investments. LNR has one of the premier commercial
mortgage-backed securities -- CMBS -- special servicing franchises
in the U.S.
MAGIC LANTERN: Raises $1.2 Million from Equity & Debt Financing
---------------------------------------------------------------
Magic Lantern Group, Inc. (AMEX: GML), received net proceeds of
approximately $1.2 million USD from two new investors to
strengthen its balance sheet and restructure certain debt
obligations. The Company also announced the voluntary conversion
of $250,000 USD of existing debt into equity.
The Company will use the proceeds to prepay and restructure a
significant portion of its current convertible debt and for
working capital needs. The Company and Laurus Master Funds, Ltd.
have reached an agreement whereby the Company will use a portion
of the net proceeds from the new investors to pay approximately
$800,000 of existing debt, accrued interest and prepayment premium
in exchange for the removal of certain required approvals and
offering restrictions in their entirety from the terms of their
original financing agreement dated April 28, 2004. Details of the
aforementioned transactions can be found in the Company's SEC 8-K
filing that will be available at http://www.sec.gov/edgar/
President and CEO of MLG Bob Goddard stated, "We are pleased that
Laurus Master Funds, Ltd. continues to support our Company. We
welcome our new North American investors and we note that the
conversion of an outstanding short-term promissory note into an
equity position is a testament to renewed interest in MLG's
future."
About Magic Lantern Group, Inc.
Magic Lantern Group, Inc., operates several, new strategic
subsidiaries and divisions, including its core business for nearly
30 years of being a global distributor of videos and DVD's from
more than 300 world-renowned producers. Recently launched
vertical subsidiaries and divisions are: Magic Vision Digital
Media, Inc., a provider of digital on-demand/on-line desktop
delivery for sports entertainment, health care, human resource,
and corporate governance and compliance industries; Sonoptic
Technologies, a pioneer in Video Digital Asset Management ("VDAM")
and leading provider of third-generation digital technology
solutions; its newest division, Parasol Video, an online digital
video library enterprise for worldwide educational markets; and
the recent launch of DigiTron, Ltd, an in-house producer of
original TV broadcast programming. For more information, visit:
http://www.magiclanterngroup.com/
* * *
As reported in the Troubled Company Reported on April 23, 2004,
included in the Company's Form 10-K are financial statements
audited by Mahoney Cohen & Company, CPA, P.C. independent
auditors, as of and for the year December 31, 2003. Mahoney Cohen
& Company has issued an opinion with respect to the financial
statements that includes a qualification as to the company's
ability to continue as a going concern.
MCI INC: Moody's Assigns B2 Ratings to $13.6B Sr. Unsecured Notes
-----------------------------------------------------------------
Moody's Investors Service assigned B2 ratings for MCI Inc.'s
senior unsecured notes. Moody's also assigned MCI a B2 senior
implied rating. The ratings broadly reflect the company's high
business risk given eroding consumer long distance and intense
enterprise data competition in the telecommunications industry,
offset somewhat by comparatively moderate financial leverage and
very good near-term liquidity. The rating outlook is stable.
Ratings assigned:
* Senior Implied Rating -- B2
* Issuer Rating -- B3
* $1.983 billion Senior Notes due 2007 -- B2
* $1.983 billion Senior Notes due 2009 -- B2
* $1.699 billion Senior Notes due 2014 -- B2
* Speculative Grade Liquidity Rating -- SGL-1
* Outlook -- Stable
The ratings also reflect Moody's concern that MCI will be
challenged to stabilize its top line revenues and reduce operating
costs and that consistent free cash flow generation will be
difficult to achieve as the company increases its effort to win
new business. Moody's believes that long haul pricing is still
under considerable pressure, and that IP's effectiveness in
reducing costs and increasing revenue in the industry's long haul
segment is at this time speculative. Moody's also believes that
unless MCI successfully refinances its May '07 note, the need to
reserve cash for this maturity effectively constrains the
company's ability to pursue growth opportunities or to defend its
existing customer base from competition. Factors supporting the
ratings, however, include the company's deeply entrenched market
position especially with regard to blue chip enterprise data
customers as well as the U.S. government, strong debt leverage and
EBITDA interest coverage metrics, and a cash balance in excess of
$5 billion.
The stable outlook reflects Moody's expectation that MCI's
revenues will decline largely as a result of exiting the consumer
long distance business and that revenue for enterprise data,
commercial and U.S. government accounts could show improvement if
MCI successfully grows its IP and managed services offerings. The
stable outlook also assumes that MCI will benefit from efforts to
reduce costs through billing efficiencies, network grooming and
reduced marketing and advertising efforts. Even with modest
margin improvement, Moody's believes MCI's free cash flow
generation is uncertain and could vary greatly depending on
investment needs. Moody's would likely raise MCI's rating outlook
to positive if annual revenues decline at a rate of less than 5%
or EBITDA margins surpass 12%. Likewise, Moody's would lower
MCI's ratings if the company fails to generate free cash flow as a
result of deteriorating earnings. Modest cash burn that may
result sporadically from growth capital expenditures would not
necessarily result in a rating or outlook change.
Moody's rates MCI's senior unsecured notes at the same level as
the company's senior implied rating since the notes represent all
of the company's debt outstanding and since subsidiary guarantees
rank the debt pari passu with all subsidiary general unsecured
obligations. The B2 rating on the notes also anticipates that MCI
may establish a senior secured revolving credit facility of up to
$1 billion, which would rank ahead of these notes. Moody's
believes the likely impact on asset coverage of a $1 billion
liquidity facility is not sufficient to notch the notes below the
senior implied rating though the bank facility may have sufficient
senior attributes to be notched higher than the senior implied
rating.
As part of MCI's Plan of Reorganization, the company's board
determined that the company had $2.2 billion of excess cash that
could be distributed to shareholders. Pursuant to the plan, the
company will distribute this cash on a quarterly basis at the
discretion of the board. On September 15, 2004, the company paid
its first quarterly dividend of $0.40 per share for $127 million
and Moody's expects these payments to continue quarterly through
2008. For the sake of its analysis, Moody's calculates the
company's net debt and free cash flow as if the $2.2 billion has
already been distributed to shareholders. Likewise, Moody's also
incorporates in its net debt and free cash flow calculations any
remaining bankruptcy claims. Therefore, Moody's expects MCI's
2006 net debt to EBITDA to be close to 1.2x while net debt should
approximate 7x free cash flow.
MCI's solid liquidity profile is a direct reflection of the
company's sizeable cash position and nominal free cash flow and is
further reflected in the company's SGL-1 liquidity rating. MCI's
lack of available externally committed financing only marginally
impairs its liquidity profile due to the high cash balance. MCI
had over $5.6 billion in cash and equivalents on its balance sheet
as of 9/30/04. However, $2.2 billion has been has been earmarked
for distribution to shareholders over a five year period.
Additionally, Moody's notes that roughly $800 million will be
utilized to pay claims related to the company's emergence from
bankruptcy, resulting in roughly $2.5 billion of available cash.
Moody's believes that MCI has sufficient cushion to fund any
nominal operating cash flow shortfalls as well as its current
investment plans for at least the next three years. The company
has no debt maturities until May 2007 when the $1.98 billion
5.908% senior notes mature. Moody's expects the company will
attempt to refinance the 5.908% notes prior to maturity. Moody's,
however, anticipates that MCI's liquidity will continue to weaken
as pricing pressures persist and the company encounters increasing
challenges reducing costs commensurate with revenue declines. In
the event that MCI's cash on hand falls beyond expectations and
the company's cash generating ability materially degrades over the
next twelve months, the SGL-1 liquidity rating could decline.
MCI, Inc., is a global telecommunications provider headquartered
in Ashburn, Virginia.
MED GEN: Settles $2.4 Million Judgment with Global Healthcare
-------------------------------------------------------------
Med Gen, Inc. (OTCBB:MDGN), reached a settlement with Global
HealthCare, Inc., the company's former distributors. The
Judgment, which was awarded in a jury trial in August, was for
$2.4 million plus interest. The company elected to settle rather
than to try to mitigate the award using alternative measures
available to it, which would have included a Chapter 11 Bankruptcy
filing, the filing of an Appeal and the filing for a new trial.
All the alternative measures would have included significant
costs, shareholder losses and various fees.
The settlement calls for a cash component of $200,000, which is to
be paid in five installments ending in March 2005. The balance is
a stock component of 8 million shares, which will be registered in
an SB2 Offering submitted to the SEC by January 15th. The
"Effectiveness" date would be determined by the SEC. All parties
to the action will be released and all pending court actions
between the parties will be cancelled. The Company has made no
guarantees as to the future value of the shares when issued and
Rule 144 of the Securities & Exchange Commission laws will govern
the sale of all issued shares.
In signing the settlement, the Management of the Company stated
that it is pleased that the settlement is finalized and the
company can now continue, unencumbered with any further legal
issues before it.
About the Company
Med Gen, Inc., was established under the laws of the State of
Nevada in October 1996 to manufacture, sell and license healthcare
products, specifically to the market for alternative therapies
(health self-care). Med Gen, Inc., is a publicly traded company
on the OTCBB exchange "MDGN".
MERIDIAN AUTOMOTIVE: S&P Revises Outlook on Ratings to Negative
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on 'B+'-
rated Dearborn, Michigan-based Meridian Automotive Systems, Inc.,
to negative from stable. The ratings on the company were
affirmed. Meridian has total debt of about $617 million (including
off-balance-sheet accounts receivable financing and operating
leases).
"The outlook revision reflects concerns about the company's
weaker-than-expected earnings and cash flow generation resulting
from challenging industry conditions, including reduced vehicle
production, pricing pressure, and higher raw material costs," said
Standard & Poor's credit analyst Martin King. "Operating results
are expected to remain under pressure during the next year. The
ratings assume that over time, Meridian will withstand industry
challenges and gradually improve its financial profile by focusing
on improving cash flow and reducing debt. Ratings could be
lowered should financial performance deteriorate, liquidity
tighten, or debt leverage escalate."
Meridian's operating results have fallen short of the company's
business plan, primarily because of the increased challenges of
the North American automotive industry. Production cuts will
continue to pressure Meridian's results, as major manufacturers
have announced reduced production schedules through the first
quarter of 2005. Additional cuts may be necessary if lackluster
sales do not improve. The weak financial performance of certain
customers has led to very aggressive pricing actions as they
attempt to reduce their costs and improve their own financial
performance.
Meridian makes bumper systems, composite plastic modules,
structural components, and interior components and is a large user
of steel, plastic resin, and other commodities.
Liquidity is thin. A $100 million revolving credit facility due
2009 provides about $36 million of borrowing availability.
MERRILL LYNCH: Fitch Upgrades Series 2001-S1 Class B-2 to 'A'
-------------------------------------------------------------
Fitch Ratings has taken rating actions on Merrill Lynch Mortgage
Loans, Inc. (MLMI) mortgage pass-through certificates:
Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificate, series 2001-A1:
-- Classes 1-A, 2A and 3A affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 affirmed at 'AAA';
-- Class B-1 affirmed at 'AAA';
-- Class B-2 affirmed at 'A';
Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificate, series 2001-S1:
-- Classes 1-A and 2-A affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 upgraded to 'AAA' from 'A+';
-- Class B-1 upgraded to 'AA' from 'BB';
-- Class B-2 upgraded to 'A' from 'B.'
The affirmations, representing approximately $27.2 million of
outstanding principal, reflect credit enhancement consistent with
future loss expectations. The pool factors (current principal
balance as a percentage of original) range from 3% to 7%
outstanding. Both pools have seen cumulative losses to date of
less than 1% of their original closing balance.
The upgrades affect approximately $1.90 million in certificate
principal. Credit enhancement (provided by subordination) for
each of the upgraded classes has grown to at least 11 times the
original amount.
The underlying collateral for a series 2001-A1 consists of both
traditional and hybrid, fully amortizing 15- to 30-year
adjustable-rate mortgage loans secured by first liens on one- to
four-family residential properties.
The underlying collateral for series 2001-SO1 consists of fully
amortizing 15- to 30-year fixed-rate mortgage loans secured by
first liens on one- to four-family residential properties.
METRON TECH: Liquidating Assets After Applied Materials Spin-Off
----------------------------------------------------------------
Nortem N.V. (Nasdaq:MTCH), formerly "Metron Technology N.V.",
reported that Applied Materials, Inc., has acquired the worldwide
operating subsidiaries and businesses of Metron, as approved by
Nortem's shareholders at its 2004 annual general meeting of
shareholders. In connection with the consummation of the asset
sale to Applied Materials, Metron Technology N.V. changed its name
to "Nortem N.V." and began the liquidation process. Under the
terms of the asset sale, Applied Materials acquired the
outstanding shares of Nortem's worldwide operating subsidiaries
and substantially all of the other assets of Nortem, including,
but not limited to, Nortem's intellectual property and technology
and all cash and cash equivalents, other than an amount equal to
$2,000,000 plus cash received prior to closing upon exercise of
warrants and options. Under the terms of the asset sale, Applied
Materials also assumed certain liabilities of Nortem, paid to
Nortem $84,567,158 in cash and agreed to reimburse Nortem for
amounts related to certain Netherlands surtax liabilities and
withholding obligations and certain other costs and expenses.
As described in the company's Definitive Proxy Statement filed
with the U.S. Securities and Exchange Commission on Nov. 12, 2004,
shareholders of Nortem will receive two or more liquidating
distributions. The initial distribution is currently expected to
be made in the first two months of 2005, and the final cash
distribution would be made when all liabilities of the company
have been satisfied, which is currently expected to be within six
months following the closing. The amount and timing of the
distributions are dependent upon a variety of factors, including
the timing of winding up Nortem's business and dissolving, and the
costs, expenses and time involved in satisfying Nortem's current
liabilities and obligations and those incurred by Nortem following
the closing of the asset sale.
Immediately following the consummation of the asset sale, Peter
Verloop and Charles Roffey were appointed as Nortem's liquidators,
having been previously approved as liquidators by Nortem's
shareholders at Nortem's 2004 annual general meeting of
shareholders. In addition, Mr. Roffey was appointed as the
principal executive officer and principal financial officer of
Nortem.
Effective as of the consummation of the asset sale, each of the
managing directors and officers of Nortem resigned as managing
directors and officers of Nortem, and Edward D. Segal, Nortem's
former Chief Executive Officer and Managing Director; Dennis R.
Riccio, Nortem's former President, Chief Operating Officer and
Managing Director; Gregory S. Geskovich, Nortem's former Vice
President Fab Solutions Group and Managing Director; and Peter
Postiglione, Nortem's former Vice President Equipment Solutions
Group, have each entered into employment agreements with Applied
Materials. In addition, effective as of the consummation of the
asset sale, Robert Anderson and William George resigned as
supervisory directors of Nortem.
Metron Technology, according to Hoovers, sells third-party
equipment (for cleaning, fabrication, and inspection) and
materials (wafer handling components, chemicals, and clean room
products) to customers such as Intel, Philips, and
STMicroelectronics. The company also offers services such as
installation, materials management, and maintenance.
MICROTEC ENTERPRISES: Asks Court to Extend CCAA Protection
----------------------------------------------------------
Microtec Enterprises, Inc., (TSX:EMI) and its affiliates asks the
Superior Court to extend the initial order rendered on
November 11, 2004 pursuant to the Companies' Creditors Arrangement
Act. The Court postponed the hearing of the request and of other
request presented by the Lenders to December 15, 2004. The Initial
Order was extended to December 17, 2004.
Solidly established in Canada, Microtec Enterprises Inc. provides
a wide range of security and home automation services that ensure
the protection and well-being of its residential and commercial
customers. The Company is building on its strong position in the
industry by developing new products and services, expanding its
subscriber base, and creating strategic alliances.
MIRANT CORP: Court Approves Claim Estimation Procedures
--------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
authorizes Mirant Corporation and its debtor-affiliates to file a
request to estimate a particular claim by January 3, 2005. If a
claimant has appropriate grounds to assert that estimation of a
particular claim does not meet the requirements of Section 502(c)
of the Bankruptcy Code, the Claimant may file an objection setting
for the legal basis for its objection by January 13, or within 10
days after the Estimation Motion is served. Hearings on the
objections will take place on scheduled hearing dates beginning
January 18.
The Debtors may seek to estimate claims subject to pending
proceedings. The Debtors must file an application by
January 3, 2005. Affected Claimants may file objections by
January 13, or within 10 days after the request is served.
Hearings on the issue will take place beginning January 16.
Estimation trials will take place beginning February 25, 2005, and
continuing through March 4.
The Debtors will provide the Committees and the Examiner and its
counsel with:
-- three days' notice before filing a notice of the Settled
Claim Amount that is between $0 and $5,000,000; and
-- five days' notice before filing (i) a notice of the Settled
Claim Amount that exceeds $5,000,000 or (ii) a motion
pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure seeking approval of the Settled Claim Amount that
exceeds 120% of the Debtors' estimate.
A Claimant may seek modification of the Estimation Procedures.
The Court will hold status conferences beginning
January 15, 2005, to consider whether a reasonable basis exists to
modify the Estimation Procedures.
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,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$20,574,000,000 in assets and $11,401,000,000 in debts.
(Mirant Bankruptcy News, Issue No. 49; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MOONEY AEROSPACE: Bankruptcy Court Confirms Plan of Reorganization
------------------------------------------------------------------
Mooney Aerospace Group, Ltd.'s (OTCBB:MASGQ.OB) Plan of
Reorganization was approved by the U.S. Bankruptcy Court for the
District of Delaware yesterday, Dec. 15, 2004. A court order has
been submitted to the judge for signature. As of today, Dec. 15,
2004 the company will have a new trading symbol, MNYG.OB. As part
of the plan, the company will reacquire the stock of Mooney
Airplane Company from its current owner, Allen Financial Holdings,
Ltd.
As part of the plan, existing shareholders will be issued new
shares of Mooney Aerospace Group, Ltd., common stock based on a
reverse split of 3223 old MASG shares for one share of new common
stock. (Fractional shares will be issued as part of the plan.)
J. Nelson Happy, President and CEO of Mooney Aerospace Group,
Ltd., commented: "We are very pleased to have the bankruptcy
proceeding behind us. We now have a fresh start without old
financial problems diverting management's attention from our core
business, which is making and selling airplanes and thereby
enhancing shareholder value. I am especially pleased to welcome
Gretchen Jahn, the recently appointed CEO of Mooney Airplane
Company. She has already shown herself to be a strong leader of
the Mooney team. We are looking forward to 2005 as a year of
consolidation of the business improvements initiated since our
acquisition of the Mooney assets in 2002."
According to Mr. Happy, "Special thanks are due to our creditors,
who approved a plan of reorganization which allowed our existing
shareholders to continue to have an equity stake in the company,
although smaller than before. This is unprecedented in my
experience. Our existing shareholders should submit their shares
to our stock transfer agent, American Stock Transfer and Trust
Co., 59 Maiden Lane, Plaza Level, New York, N.Y. 10038; phone 800-
937-5449, by mail or through their stock broker."
The plan imposes two restrictions on sale of the new stock, which
is otherwise free trading. No sale of the stock may occur until
90 days after the plan's effective date. Thereafter, no more than
10% of each shareholder's total holdings can be sold per month.
Complete details of the Plan of Reorganization can be read as part
of the Company's most recent quarterly report filed with the
Securities and Exchange Commission.
Headquartered in Kerrville, Texas, Mooney Aerospace Group, Ltd.
-- http://www.mooney.com/-- is a general aviation holding company
that owns Mooney Airplane Co., located in Kerrville, Texas. The
Company filed for chapter 11 protection on June 10, 2004 (Bankr.
Del. Case No. 04-11733). Mark A. Frankel, Esq., at Backenroth
Frankel & Krinsky LLP, represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed $16,757,000 in total assets and $69,802,000
in total debts.
NORTEL NETWORKS: Reports $2.3 Billion Revenues for Third Quarter
----------------------------------------------------------------
Nortel Networks Corporation (NYSE:NT)(TSX:NT) REPORTED limited
estimated unaudited financial results for the third quarter of
2004, and updated limited estimated unaudited results for the
first and second quarters of 2004 and for the years 2001, 2002 and
2003 prepared in accordance with United States generally accepted
accounting principles. These estimated results are subject to
audit or review by the Company's external auditors and the other
limitations outlined below.
The Company and NNL continue to work on the restatement of their
financial results for each fiscal quarter in 2003 and for the
years 2002 and 2001, and the preparation of their financial
statements for the year 2003 and the first, second and third
quarters of 2004. As previously announced, the Company expects
that it and NNL will commence to file these statements and related
periodic reports on January 10, 2005, and in conjunction with the
filings the Company anticipates holding a conference call.
Estimated unaudited revenues in the third quarter of 2004 were
approximately US$2.3 billion and the Company estimates an
unaudited net loss per share in the quarter of US$0.06. The net
loss per share in the quarter included approximately US$0.03 per
share for the majority of the investment costs associated with a
wireless contract in India and approximately US$0.02 per share in
special charges associated with restructuring activities in the
quarter, primarily related to the work plan announced in
August 2004 and updated in September 2004, which were partially
offset by a gain of approximately US$0.01 per share on the
transfer in the quarter of certain assets of the directory and
operator services business to a joint venture in return for a
minority equity interest in such venture.
"While customer support remains strong, the ongoing restatement
activities and the internal restructuring and realignment programs
initiated in August have impacted business performance in the
third quarter but this impact is temporary. I expect Q4 2004
revenues in the range of US$2.8 billion to US$2.9 billion," said
Bill Owens, president and chief executive officer, Nortel. "We
are committed to driving the business forward and with the
completion of much of our restatement activities and restructuring
work plan during the first part of 2005, we will return to a
dedicated business focus. It is important to reinforce that we
have made significant progress on a number of key fronts during
this quarter. In particular, we announced today that we have made
a strategic investment to secure our first wireless network
footprint in India, a growing and dynamic market which is a key
foundation for future growth. Further progress in both the third
and current quarters included signing a multi-year extension to
provide wireless infrastructure to Sprint in the United States and
continuing traction with our highly regarded IP telephony
solutions among enterprises and with voice over IP solutions with
service providers. I am particularly encouraged by a
strengthening fourth quarter."
Outlook
The Company expects revenues in the fourth quarter of 2004 of
approximately US$2.8 billion to US$2.9 billion and for the full
year 2004 of approximately US$10.1 billion to US$10.2 billion.
Given the expected increase in 2003 revenues of approximately
US$460 million as a result of revenue adjustments announced
previously in connection with the Company's restatement
activities, revenues for the full year 2004 are now expected to be
slightly lower than the adjusted revenues for the full year 2003.
Nortel is a recognized leader in delivering communications
capabilities that enhance the human experience, ignite and power
global commerce, and secure and protect the world's most critical
information. Serving both service provider and enterprise
customers, Nortel delivers innovative technology solutions
encompassing end-to-end broadband, Voice over IP, multimedia
services and applications, and wireless broadband designed to help
people solve the world's greatest challenges. Nortel does
business in more than 150 countries. For more information, visit
Nortel on the Web at http://www.nortel.com/
* * *
As reported in the Troubled Company Reporter on Dec. 10, 2004,
Standard & Poor's Ratings Services placed its B-/Watch Developing
credit rating on Nortel Networks Lease Pass-Through Trust
certificates series 2001-1 on CreditWatch with negative
implications.
The rating on the pass-through trust certificates is dependent
upon the ratings assigned to Nortel Networks Ltd. and ZC Specialty
Insurance Co. This CreditWatch revision follows the Dec. 3, 2004,
withdrawal of the ratings assigned to ZC Specialty Insurance Co.
Previously, the rating had a CreditWatch developing status due to
the CreditWatch developing status on the rating assigned to
Nortel.
The pass-through trust certificates are collateralized by two
notes that are secured by five single-tenant, office/R&D buildings
that are leased to Nortel ('B-'). Nortel guarantees the payment
and performance of all obligations of the tenant under the leases.
The lease payments do not fully amortize the notes. A surety bond
from ZC Specialty Insurance Co. insures the balloon amount.
The notes mature in August 2016, at which time a final principal
payment of $74.7 million is due. If this amount is not repaid,
the indenture trustee can obtain payment from the surety, provided
certain conditions are met.
The notes will remain on CreditWatch while Standard & Poor's
examines the impact of the withdrawal of the ratings on ZC
Specialty Insurance Co.
NORTEL NETWORKS: Declares Preferred Stock Dividends
---------------------------------------------------
The board of directors of Nortel Networks Limited today declared a
dividend on each of the outstanding Cumulative Redeemable Class A
Preferred Shares Series 5 (TSX:NTL.PR.F) and the outstanding
Non-cumulative Redeemable Class A Preferred Shares Series 7
(TSX:NTL.PR.G). The dividend amount for each series is calculated
in accordance with the terms and conditions applicable to each
respective series, as set out in the Company's articles. The
annual dividend rate for each series floats in relation to changes
in the average of the prime rate of Royal Bank of Canada and The
Toronto-Dominion Bank during the preceding month and is adjusted
upwards or downwards on a monthly basis by an adjustment factor
which is based on the weighted average daily trading price of each
of the series for the preceding month, respectively. The maximum
monthly adjustment for changes in the weighted average daily
trading price of each of the series will be plus or minus 4.0% of
Prime. The annual floating dividend rate applicable for a month
will in no event be less than 50% of Prime or greater than Prime.
The dividend on each series is payable on February 14, 2005, to
shareholders of record of such series at the close of business on
January 31, 2005.
Nortel is a recognized leader in delivering communications
capabilities that enhance the human experience, ignite and power
global commerce, and secure and protect the world's most critical
information. Serving both service provider and enterprise
customers, Nortel delivers innovative technology solutions
encompassing end-to-end broadband, Voice over IP, multimedia
services and applications, and wireless broadband designed to help
people solve the world's greatest challenges. Nortel does business
in more than 150 countries. For more information, visit Nortel on
the Web at http://www.nortel.com/
* * *
As reported in the Troubled Company Reporter on Dec. 10, 2004,
Standard & Poor's Ratings Services placed its B-/Watch Developing
credit rating on Nortel Networks Lease Pass-Through Trust
certificates series 2001-1 on CreditWatch with negative
implications.
The rating on the pass-through trust certificates is dependent
upon the ratings assigned to Nortel Networks Ltd. and ZC Specialty
Insurance Co. This CreditWatch revision follows the Dec. 3, 2004,
withdrawal of the ratings assigned to ZC Specialty Insurance Co.
Previously, the rating had a CreditWatch developing status due to
the CreditWatch developing status on the rating assigned to
Nortel.
The pass-through trust certificates are collateralized by two
notes that are secured by five single-tenant, office/R&D buildings
that are leased to Nortel ('B-'). Nortel guarantees the payment
and performance of all obligations of the tenant under the leases.
The lease payments do not fully amortize the notes. A surety bond
from ZC Specialty Insurance Co. insures the balloon amount.
The notes mature in August 2016, at which time a final principal
payment of $74.7 million is due. If this amount is not repaid,
the indenture trustee can obtain payment from the surety, provided
certain conditions are met.
The notes will remain on CreditWatch while Standard & Poor's
examines the impact of the withdrawal of the ratings on ZC
Specialty Insurance Co.
NORTH ATLANTIC: S&P Downgrades Corporate Credit Rating to B
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
smokeless tobacco processor and niche cigarette manufacturer North
Atlantic Holding Company, Inc., and its wholly owned subsidiary
North Atlantic Trading Co., Inc., including its corporate credit
rating to 'B' from 'B+'.
The ratings remain on CreditWatch with negative implications where
they were originally placed on Nov. 18, 2004. About $347 million
of rated debt on New York, New York-based North Atlantic is
affected.
The senior unsecured notes are notched down one from the corporate
credit rating because borrowing usage under the revolving credit
facility has been greater ($34.8 million at Sept. 30, 2004, which
has been reduced somewhat since then) than Standard & Poor's
originally expected (under $5 million).
"The downgrade reflects the decline in North Atlantic's operating
performance and financial measures and our expectation that credit
protection measures and performance will not improve to levels
appropriate for a 'B+' rating in the near term," said Standard &
Poor's credit analyst Jayne Ross. This follows the company's
weaker-than-expected operating performance in the third quarter
and through the first nine months of fiscal 2004, ended
Sept. 30, 2004. Results were affected by:
-- very competitive market conditions in the company's core
operations;
-- volume declines;
-- slower-than-expected realization of cost savings and
synergies from the integration of the Stoker Inc.
acquisition and;
-- a decision by the company to proceed more rapidly with the
development of the Zig-Zag premium cigarettes.
In addition, the company expects to be in violation of its
fixed-charge covenant requirement for the 12 months ending
March 31, 2005, and June 30, 2005, respectively. North Atlantic
is currently in discussions with lenders on amending the covenant.
If a default were to occur under the bank credit agreement, it
would also trigger an event of default under the senior notes and
under North Atlantic Holding's senior discount notes.
Standard & Poor's will meet with management to discuss the current
operating environment and North Atlantic's business strategies and
financial policies. Furthermore, before resolving the CreditWatch
listing, North Atlantic will have to secure amendments to its
existing senior secured credit facility.
NRG ENERGY: S&P Junks Proposed $400M Convertible Preferred Stock
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' rating to
NRG Energy Inc.'s (NRG; B+/Stable/--) proposed $400 million
convertible perpetual preferred stock. The outlook is stable.
The proceeds of the preferred stock issuance will be used to
redeem a portion of NRG's outstanding second priority notes due
2013. In addition, NRG will repurchase 13 million shares of
common stock held by investment partnerships managed by
MatlinPatterson Global Advisors LLC using available cash.
NRG, previously a 100% owned subsidiary of Xcel Energy Inc.,
emerged from bankruptcy on Dec. 5, 2003, and has operated for one
year. It is engaged in the ownership and operation of power
generating facilities, primarily in the U.S. merchant power
market, thermal production and resource recovery facilities, and
various international independent power producers.
"NRG has benefited in the past year from high natural gas prices,
which have allowed it to maintain high gross margins," said credit
analyst Arleen Spangler. "There is little room for a ratings
upgrade in the near term based on the high business risk of
operating as predominantly a merchant generator where cash flows
may be volatile."
Among other risks, the 'B+' corporate credit rating on NRG
reflects:
(1) the risks that about two-thirds of the cash available for
debt service is exposed to U.S. merchant power markets;
(2) regulatory and political uncertainty;
(3) one-third of the assets are peaking assets that will tend
to depend more on speculative and uncertain capacity
values; and
(4) there are bullet maturities in 2011 that NRG will have to
refinance.
Strengths mitigating these risks include, among others:
(1) that the reorganized NRG reduced liabilities by
$5.2 billion in debt and $1.3 billion in other claims in
the bankruptcy process;
(2) NRG sold various assets in 2004, resulting in the removal
of over $990 million in consolidated debt and cash proceeds
of about $150 million; and
(3) NRG's 2004 results were good, with the company generating
cash flow in excess of projections.
ORIGEN MANUFACTURED: S&P Pares Ratings on Class D Certs. to B-
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on all
classes of Origen Manufactured Housing Contract Senior/Subordinate
Asset-Backed Certificates Series 2002-A and removed them from
CreditWatch with negative implications, where they were placed
Nov. 24, 2004.
The lowered ratings reflect the worse-than-expected performance of
the underlying pool of manufactured housing contracts, high
projected cumulative net losses, and deteriorating credit support.
After 32 months of performance, the current cumulative net loss
rate of 7.71% is trending higher than what was initially expected.
As a result, the overcollateralization level has been reduced for
10 straight months, to 5.10% (of the initial collateral balance),
which is below the required level of 7% of the initial collateral
balance. In addition, the percentage of the collateral pool
comprising receivables that are 60-or-more-days delinquent is
significant at 6.44%. Furthermore, recovery rates remain in the
35% range, which is higher than the recovery rates realized by
other manufactured housing issuers. The higher recovery rates are
most likely a function of Origen Financial LLC's continued
participation in the loan originations business, yet they are
still lower than Standard & Poor's initial expectations.
The higher-than-expected losses experienced by the collateral pool
to date leads Standard & Poor's to believe that the remaining
credit support is no longer sufficient to maintain the previous
ratings.
Ratings Lowered and Removed from Creditwatch Negative
Origen Manufactured Housing Contract
Senior/Subordinate Asset-Backed
Certificates Series 2002-A
Rating
Class To From
----- -- ----
A-1 AA AAA/Watch Neg
A-2 AA AAA/Watch Neg
A-3 AA AAA/Watch Neg
A-4 AA AAA/Watch Neg
B A AA/Watch Neg
C BBB- A/Watch Neg
D B- BBB/Watch Neg
OVERSEAS SHIPHOLDING: S&P Puts Ratings on CreditWatch Negative
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
the 'BB+' corporate credit rating, on Overseas Shipholding Group,
Inc. on CreditWatch with negative implications. The CreditWatch
placement follows Overseas Shipholding's announcement yesterday
that it has agreed to acquire Stelmar Shipping Ltd. Including
$450 million of assumed debt, the total transaction cost is
approximately $1.3 billion. Overseas Shipholding will finance the
purchase with cash on hand and borrowings under its existing
revolving credit facilities. The transaction must be approved by
Stelmar's shareholders and is expected to close by the end of
January 2005.
"Overseas Shipholding's acquisition of Athens, Greece-based
Stelmar Shipping, in addition to the company's recently announced
entry into the liquefied natural gas -- LNG -- sector, will
significantly increase the company's debt burden," said Standard &
Poor's credit analyst Kenneth L. Farer. "However, the Stelmar
vessels are mainly on long-term time charters, which generate
stable revenues and cash flow." Standard & Poor's will meet with
management and assess the potential benefits, risks, and financial
effects of the proposed transaction to resolve the CreditWatch.
Overseas Shipholding had $1.1 billion of lease-adjusted debt at
Sept. 30, 2004.
Ratings on New York, New York-based Overseas Shipholding Group,
Inc., reflect the company's participation in the volatile, highly
fragmented, capital-intensive bulk ocean shipping industry, and
historically volatile earnings. Positive rating factors include
the company's business position as a leading operator of tankers,
with a diversified customer base of oil companies and governmental
agencies, and a historically solid balance sheet. This
acquisition would somewhat change the company's business mix,
increasing the proportion of the fleet on long-term charter.
At Dec. 13, 2004, Overseas Shipholding's fleet consisted of 61
oceangoing vessels, totaling 11.2 million deadweight tons -- dwt.
With the acquisition of Stelmar, the fleet will consist of 91
vessels, totaling 12.9 million dwt. The company's fleet size is
substantial, with vessels that are relatively modern due to an
ongoing fleet renewal program, which has been replacing older,
typically single-hull vessels with new double-hulled vessels. The
company participates in commercial pools with other owners of
modern vessels to provide additional flexibility and high levels
of service to customers, while providing scheduling efficiencies
to the overall pool.
OWENS CORNING: Asks Court to Approve Mt. Mckinley Settlement
------------------------------------------------------------
Over the past 20 years, the liability insurers of Owens Corning
and its debtor-affiliates have paid more than $2 billion toward
the settlement and defense of asbestos claims. The Debtors
previously exhausted the available "products" limits of their
policies that had been issued by solvent insurers without
asbestos-related exclusions. For several years, the Debtors have
been seeking confirmation from their insurers that the insurers
will pay asbestos claims that are not subject to the "products"
limits under the policies -- the "non-products" claims. The non-
products claims include claims involving alleged injury during the
Debtors' installation of asbestos-containing materials.
In 1992, the Debtors and Gibraltar Casualty Company, now known as
Mt. McKinley Insurance Company, entered into a settlement
agreement pursuant to which Mt. McKinley asserts that it fully
exhausted all applicable limits of its insurance policies for any
and all asbestos-related claims.
Anna P. Engh, Esq., at Covington & Burling, in Washington, D.C.,
informs the Court that the Debtors and Mt. McKinley have disagreed
as to whether, and the extent to which, Mt. McKinley has further
coverage obligations to the Debtors. The Debtors assert that Mt.
McKinley continues to have coverage obligations with respect to
asbestos-related "non-products" claims notwithstanding the
exhaustion of the policies' "products" limits.
Mt. McKinley insists that it has no further coverage obligations
to the Debtors with respect to asbestos-related claims, regardless
of whether they are characterized as "products" or "non-products."
In the alternative, Mt. McKinley argues that if the "non-products"
claims are indeed covered, then Mt. McKinley would have paid
prematurely with respect to "products" claims and has suffered
damages as a result of allegedly premature payments.
Mt. McKinley filed a proof of claim against the Debtors on
April 15, 2002, which it purported to amend on June 8, 2004.
On October 26, 2001, the Debtors commenced a lawsuit against Mt.
McKinley and other insurance companies seeking coverage for
"non-products" claims, styled Owens Corning v. Birmingham Fire
Insurance Company, et al., before the Court of Common Pleas of
Lucas County, Ohio.
After the commencement of the lawsuit, the Debtors and the
defendants, including Mt. McKinley, engaged in extensive discovery
and motion practice. After principal-to-principal negotiations,
the Debtors and Mt. McKinley reached an agreement in principle to
settle their dispute concerning coverage for "non-products"
claims. The parties executed a term sheet outlining the agreement
on June 19, 2004. Thereafter, conditioned on an undertaking of
confidentiality, the Debtors offered to provide a copy of the term
sheet to counsel for the Asbestos Committee, the Creditors
Committee, and the Futures Representative.
The Settlement Agreement
The Debtors and the Mt. McKinley Parties have finalized the terms
of their settlement pursuant to a Settlement Agreement effective
November 1, 2004. The Settlement Agreement provides that:
(a) Mt. McKinley will pay a monetary amount. Depending on the
progress of the Debtors' case at the time the payments are
made, payments will be made either into an escrow account
or as directed by a confirmed plan of reorganization;
(b) Mt. McKinley's payment of the Settlement Amount will
constitute a sale to and purchase by Mt. McKinley of the
Debtors' rights and interests in the policies issued by
Mt. McKinley to the Debtors within the meaning of Sections
363(6)(1) and (f) of the Bankruptcy Code;
(c) Mt. McKinley's payment obligations under the Settlement
Agreement will be guaranteed by Everest Reinsurance
Holdings, Inc.;
(d) The Debtors and Mt. McKinley will mutually release one
another and their related entities from all claims
relating to the 1992 Settlement, the Mt. McKinley policies
at issue in the Non-Products Coverage Litigation, and
certain other policies issued by Mt. McKinley or Everest
to the Debtors;
(e) The key terms of the Settlement Agreement are contingent
on the entry of a Final Order confirming a Plan that
includes a 524(g) Injunction protecting the Mt. McKinley
Parties;
(f) The Debtors will also use their reasonable best efforts to
obtain other injunctive protections for Mt. McKinley as
part of the Debtors' Plan; and
(g) In the event that the Settlement Agreement becomes null
and void. Mt, McKinley:
-- will not be obligated to make any further payments of
the Settlement Amount;
-- will be entitled to the prompt release and return of
any payment previously made to the Escrow Account; and
-- together with the other parties, will have restored all
rights, defenses and obligations relating to the 1992
Settlement or policies issued by Mt. McKinley or its
affiliates.
The Settlement Agreement requires the Debtors to maintain certain
information confidential. Hence, the Debtors ask the Court for
permission to file the Settlement Agreement under seal.
Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com/-- manufactures fiberglass
insulation, roofing materials, vinyl windows and siding, patio
doors, rain gutters and downspouts. The Company filed for chapter
11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom,
represents the Debtors in their restructuring efforts. At
Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in
assets and a $4.2 billion stockholders' deficit. The company
reported $132 million of net income in the nine-month period
ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No.
89; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PARMALAT USA: Farmland Wants to Settle with GE Capital & Committee
------------------------------------------------------------------
According to James A. Mesterharm, Parmalat USA Corporation's
Chief Restructuring Officer, the terms of Farmland Dairies, LLC's
Chapter Plan are based on a settlement by and among Farmland, the
Official Committee of Unsecured Creditors and the GE Capital
Public Finance, Inc. Farmland and the Creditors Committee
investigated potential causes of action in connection with
Farmland's Master Lease Financing Agreement with GE Capital and
related issues affecting allocation of value in its Chapter 11
case. Among other things, Farmland and the Creditors Committee
investigated:
(i) whether the Master Lease Financing Agreement could be
recharacterized as a financing transaction as opposed to a
lease agreement;
(ii) whether the Master Lease Financing Agreement could be
avoided as a fraudulent transfer; and
(iii) the value, if any, of GE Public Finance's secured claim.
"If GE Public Finance's ownership interest in the equipment
subject to the Master Lease Financing Agreement were
recharacterized as a lien, then the equipment would constitute
property of Farmland's bankruptcy estate and potentially available
for use in the operation of its business in accordance with
Section 363 of the Bankruptcy Code," Mr. Mesterharm says.
"Moreover, if Farmland had not received reasonably equivalent
value in connection with the Master Lease Financing Agreement, and
was insolvent at the time of the transaction or rendered insolvent
as a result of the transaction, the Master Lease Financing
Agreement and potentially GE Public Finance's claim against
Farmland could be avoided as a fraudulent transfer for Farmland's
and its creditors' benefit."
After the Creditors Committee concluded its investigation and
considered its litigation alternatives, Farmland, GE Public
Finance and the Creditors Committee conducted extensive and
vigorous negotiations in an effort to resolve all outstanding
issues relating to the allocation of value between GE Public
Finance and Farmland's general unsecured creditors.
Following extensive, arm's-length negotiations, Farmland, GE
Public Finance and the Creditors Committee agreed that:
(1) On Farmland's rejection of the Master Lease Financing
Agreement, GE Public Finance will receive, among other
things, a $96,226,490 rejection damage claim. Under
the U.S. Debtors' Postpetition Financing Order, a portion
of the rejection damage claim is secured because Farmland
pledged certain real estate to GE Public Finance. On
account of all claims arising out of the Master Lease
Financing Agreement, GE Public Finance will receive 80% of
the new common equity in Reorganized Farmland on a fully
diluted basis, some or all of which may be in the form of
warrants, its share in the Litigation Trust, and any of
Farmland's claims and causes of action under Section 547
of the Bankruptcy Code. In addition, pursuant to the
Buyback Agreement, GE Public Finance will sell to
Farmland:
* all of the equipment subject to the Master Lease
Financing Agreement in exchange for Preferred Membership
Interests with a $9,176,445 liquidation value; and
* the real property subject to the Second Mortgages,
pledged to GE Public Finance in connection with the
Master Lease Financing Agreement, in exchange for:
-- preferred membership interests, known as the
interests shares of non-convertible preferred
membership interests of Reorganized Farmland with a
liquidation value of $10,365,00; and
-- the release of any obligation GE Public Finance has
under the Postpetition Financing Order to share or
distribute any proceeds with Farmland or Reorganized
Farmland.
Finally, on account of GE Public Finance's claim for
postpetition lease payments, which it has agreed to defer
in accordance with the terms of the Postpetition Financing
Order, GE Public Finance will receive Preferred Membership
Interests with a $14,844,555 liquidation value.
(2) Holders of allowed Farmland General Unsecured Claims will
receive approximately $3 million in cash -- less the cash
payable to holders of allowed Convenience Claims -- and a
five-year unsecured note of $7 million, subordinated to
the Exit Facility, paying 6% interest quarterly in
arrears, with payment-in-kind interest for the first ten
quarters and thereafter payable in cash, and amortization
beginning on the third anniversary of issuance, based on a
ten-year amortization schedule, with a balloon at
maturity. In addition, holders of allowed Farmland
General Claims -- other than the Convenience Claims --
will be entitled to share in the proceeds of the
Litigation Trust. The settlement further provides that
the Unsecured Creditors' Trust will be set up to object to
Farmland General Unsecured Claims and make distributions
to allowed Farmland General Unsecured Claims. The
Creditors Committee and Farmland created the Convenience
Claims class to permit holders of Farmland General
Unsecured Claims less than $2,400 to receive a cash
payment of 40% of their claim in lieu of the blended
recovery received by other creditors.
(3) At the time of the negotiations, Farmland, GE Public
Finance, and the Creditors Committee estimated that about
$30 million in general unsecured claims would be allowed
against Farmland. Because the parties recognized that the
recoveries received by general unsecured creditors could
vary dramatically if the amount of general unsecured
claims allowed against Farmland differed from the
estimate, they built in certain adjustments to the
consideration received by the general unsecured creditors
to ensure the percentage recoveries received by general
unsecured creditors would not vary significantly for
certain occurrences. The parties recognize that certain
other factors could cause dramatic changes in the forecast
recoveries. To that end, the settlement and the Plan
provide that the elements of recovery to general unsecured
creditors -- $3 million cash, the $7 million Farmland
Note, and the share of the Litigation Trust -- will be
adjusted by a formula if either or both of two specified
events occur, each of which could have an impact on the
general unsecured claim pool. These two events are:
(a) if the US Debtors' General Unsecured Claim against
Farmland is allowed at less than $10,392,497; and
(b) if additional claims totaling more than $1 million are
filed against Farmland as a result of preference
recoveries by Reorganized Farmland.
Headquartered in Wallington, New Jersey, Parmalat USA Corporation
-- http://www.parmalatusa.com/-- generates more than 7 billion
euros in annual revenue. The Parmalat Group's 40-some brand
product line includes milk, yogurt, cheese, butter, cakes and
cookies, breads, pizza, snack foods and vegetable sauces, soups
and juices and employs over 36,000 workers in 139 plants located
in 31 countries on six continents. The Company filed for chapter
11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No.
04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at
Weil Gotshal & Manges LLP represent the Debtors in their
restructuring efforts. On June 30, 2003, the Debtors listed
EUR2,001,818,912 in assets and EUR1,061,786,417 in debts.
(Parmalat Bankruptcy News, Issue No. 38; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PILLOWTEX CORP: Fireman's Fund Gets Stay Lifted to Pursue Action
----------------------------------------------------------------
Lee and Claire Kaufman are the owners of a real property and a
residence constructed in LaDue, Missouri. Fireman's Fund
Insurance Company issued a homeowner's insurance policy on the
Premises to the Kaufmans.
On June 30, 2002, a fire started at the foot of the Kaufmans' bed,
which caused extensive damage to the Premises and its contents.
After a thorough investigation, it was determined that the cause
and origin of the fire was the electrical controller on an
electric blanket on the bed. The electric blanket was
manufactured by Pillowtex Corporation for J.C. Penney Co. and sold
by J.C. Penney to the Kaufmans.
By this motion, Fireman's Fund asks the United States Bankruptcy
Court for the District of Delaware to lift the automatic stay to
bring a subrogation action in Missouri State Court against
Pillowtex Corporation, its debtor-affiliates and their insurers.
J.C. Penney had insurance coverage through AIG, and the Debtors
had insurance coverage through Crum & Forester. AIG has informed
Fireman's Fund that J.C. Penney is an additional insured on the
Debtors' Crum & Forester policy.
Fireman's Fund has paid out $700,970 on the loss. Fireman's Fund
gave notice of its subrogation claim to the Debtors by letter
dated March 10, 2003.
Fireman's Fund, as subrogee of the Kaufmans, has a strong interest
in having the automatic stay lifted so that it can pursue its
rightful claims against the Debtors.
R. Karl Hill, Esq., at Seitz, Van Obtrop, & Green, P.A., asserts
that the Debtors' creditors have no right to the proceeds under
the Debtors' liability insurance coverage for it only affords
coverage for an "occurrence" as defined in the policy. The
Debtors' creditors should join in Fireman's Fund's Motion as
Fireman's Fund would waive the right to collect on the Debtors'
self-insured retention.
Mr. Hill assures the Court that lifting the automatic stay would
not prejudice the Debtors' liability carrier since it has already
collected substantial premiums from the Debtors to provide
coverage for Fireman's Fund's claims. Fireman's Fund's agreement
to waive the right to collect on the Debtors' self-insured
retention serves the purpose of having a self-insured retention in
the first place.
* * *
Judge Walsh lifts the automatic stay and rules that:
(a) Fireman's Fund's recovery against the Debtors will be
limited to available insurance proceeds, if any, under the
Debtors' applicable insurance policies; and
(b) Fireman's Fund will not be entitled to seek recovery
through property of the Debtors' estate other than with
respect to the insurance proceeds.
Headquartered in Dallas, Texas, Pillowtex Corporation --
http://www.pillowtex.com/-- sold top-of-the-bed products to
virtually every major retailer in the U.S. and Canada. The
Company filed for Chapter 11 protection on November 14, 2000
(Bankr. Del. Case No. 00-4211), emerged from bankruptcy under a
chapter 11 plan, and filed a second time on July 30, 2003 (Bankr.
Del. Case No. 03-12339). The second chapter 11 filing triggered
sales of substantially all of the Company's assets. David G.
Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., at
Morris Nichols Arsht & Tunnel, represent the Debtors. On
July 30, 2003, the Company listed $548,003,000 in assets and
$475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 73;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
PNC MORTGAGE: S&P Affirms Low-B Ratings on Six Certificate Classes
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on eight
classes of PNC Mortgage Acceptance Corp.'s commercial mortgage
pass-through certificates from series 2001-C1. Concurrently,
ratings on 11 other classes from the same transaction are
affirmed.
The raised and affirmed ratings reflect credit enhancement levels
that provide adequate support through various stress scenarios.
As of the Nov. 15, 2004, remittance report, the collateral pool
consisted of 118 loans with an aggregate principal balance of
$830.9 million, down from 131 loans totaling $881.6 million at
issuance. The master and special servicer, Midland Loan Services,
Inc., provided net cash flow -- NCF -- debt service coverage --
DSC -- figures for 99% of the pool. Based on this information,
Standard & Poor's calculated the weighted average DSC of the
outstanding loans at 1.35x, flat from issuance. To date, the pool
has experienced losses on two loans totaling $5.1 million (0.6% of
pool balance). All of the loans in the pool are current.
The top 10 loans have an aggregate outstanding balance of
$308.4 million (37% of the pool balance). The weighted average
DSC for the top 10 loans is 1.48x, up from 1.39x at issuance.
Standard & Poor's reviewed property inspection reports prepared
over the past year, provided by Midland, for all of the assets
underlying the top 10 loans. The inspections characterized all of
the assets as "excellent" and "good."
There is one loan with an outstanding balance of $7.1 million
(0.9%) that is with the special servicer. The loan is secured by
a 183,416-sq.-ft. retail property in Henrietta, New York. The
loan is current and was transferred to the special due to transfer
of ownership without lender consent. It is anticipated that the
ownership transfer will be approved, at which time it will be
transferred back to master servicing.
Midland's watchlist consists of 18 loans with an aggregate
outstanding balance of $81.8 million (9.85%). No top 10 loan
appears on the watchlist. Two of the loans have balances in
excess of $10 million. The first is the Radisson Plaza Hotel loan
(14.2 million, 1.7%), secured by a 185-unit property located in
San Jose, California. The loan has experienced a decline in DSC
due to a decrease in corporate travel and increase in competition.
As of Dec. 31, 2003, the property reported a NCF DSC of 0.0x and
occupancy of 43. The second is Twelve Oaks Office Park
(12.6 million, 1.5%), a 127,616 sq.-ft. property located in
Rockville, Maryland. This loan has experienced a DSC decline due
to renovation work on one of the buildings. As of
Dec. 31, 2003, the property had a NCF DSC of 0.73x and occupancy
of 89%. The NOI DSC was 01.53x.
The trust collateral is located across 32 states, and only
California (16.0%), Connecticut (11.6%), and Illinois (11.1%)
account for more than 10% of the pool balance. Property
concentrations greater than 10% of the pool balance are found in
retail (40.2%), office (23.6%), and multifamily (16.1%)
properties.
Standard & Poor's stressed various loans with credit issues as
part of its pool analysis. The resultant credit enhancement
levels support the raised and affirmed ratings.
Ratings Raised
PNC Mortgage Acceptance Corp.
Commercial mortgage pass-through certs series 2001-C1
Rating
Class To From Credit Enhancement (%)
----- -- ---- ----------------------
B AAA AA 16.38
C1 A+ A 12.66
C2 A+ A 12.66
D A A- 11.34
E A- BBB+ 10.28
F BBB+ BBB 8.69
G BBB BBB- 7.76
C2X A+ A N/A
Ratings Affirmed
PNC Mortgage Acceptance Corp.
Commercial mortgage pass-through certs series 2001-C1
Class Rating Credit Enhancement (%)
----- ------ ----------------------
A-1 AAA 20.36
A-2 AAA 20.36
H BB+ 5.77
J BB 4.04
K BB- 3.38
L B+ 2.32
M B 1.79
N B- 1.52
X AAA N/A
X1 AAA N/A
X2 AAA N/A
N/A - Not applicable
POLYMER RESEARCH: Committee Taps Bernard S. Feldman as Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of Polymer Research
Corp. of America's chapter 11 proceedings asks the U.S. Bankruptcy
Court for the Eastern District of New York for permission to
employ Bernard S. Feldman, P.C. as its counsel.
Bernard F. Feldman is expected to:
a) provide legal advice with respect to the Committee's powers
and duties in the Debtor's chapter 11 case;
b) prepare on behalf of the Committee all the necessary
applications, answers, orders, reports and other legal
papers;
c) represent the Committee in any and all matters, involving
contests with the Debtor, alleged secured creditors and
other third parties;
d) negotiate a plan of reorganization for the Debtor; and
e) perform all other legal services for the Committee which may
be necessary and proper in the Debtor's chapter 11
proceedings.
Bernard S. Feldman, Esq., a Member at Bernard S. Feldman, is the
lead attorney for the Committee. Mr. Feldman will charge at $350
per hour, while counsels who will perform services to the
Committee will charge at $225 per hour.
Bernard S. Feldman assures the Court that it does not represent
any interest adverse to the Committee, the Debtor or its estate.
Headquartered in Brooklyn, New York, Polymer Research Corp. of
America -- http://www.polymer-ny.com/-- is a company devoted to
research and development utilizing a proprietary process called
chemical grafting. The Company filed for chapter 11 protection on
October 1, 2004 (Bankr. E.D.N.Y. Case No. 04-24036). Randy M.
Kornfeld, Esq., at Stavis & Kornfeld LLP, represent the Debtor in
its restructuring. When the Debtor filed for protection from its
creditors, it listed $15,000,000 in total assets and $5,033,000 in
total liabilities.
POLYMER RESEARCH: U.S. Trustee Picks 5-Member Creditors Committee
-----------------------------------------------------------------
The United States Trustee for Region 2 appointed five creditors
to serve on the Official Committee of Unsecured Creditors in
Polymer Research Corporation of America chapter 11 case:
1. Relkar, Inc.
c/o Hochheiser & Hochheiser, LLP
Attn: Daniel Hochheiser
270 Madison Avenue, #1203
New York, New York 10016
Phone: 212-689-4343
2. Munters Euroform GMBH
c/o Reiss Eisenress & Eisenberg
Attn: Lloyd Eisenberg
425 Maidson Avenue
New York, New York 10017
Phone: 212-753-2424
3. Hord Crystal Corp.
Attention: Mark Thomas
33-45 York Avenue
Pawtucket, Rhode Island 02860
Phone: 401-723-2989
4. Rockland, Inc.
Attn: Michael Mullaney
P.O. Box 5
Bedford, Pennsylvania 15522
Phone: 814-623-1115
5. Signstrut, Ltd.
Attn: Ralph Pagleiri
970 Pittsburgh Drive
Delaware, OH 43015
Phone: 740-368-4163
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Brooklyn, New York, Polymer Research Corp. of
America -- http://www.polymer-ny.com/-- is a company devoted to
research and development utilizing a proprietary process called
chemical grafting. The Company filed for chapter 11 protection on
October 1, 2004 (Bankr. E.D.N.Y. Case No. 04-24036). Randy M.
Kornfeld, Esq., at Stavis & Kornfeld LLP, represent the Debtor in
its restructuring. When the Debtor filed for protection from its
creditors, it listed $15,000,000 in total assets and $5,033,000 in
total liabilities.
RELIANT ENERGY: Fitch Holds B Ratings Amid Technical Default Fears
------------------------------------------------------------------
Fitch Ratings anticipates no immediate change to Reliant Energy,
Inc.'s -- RRI -- outstanding ratings as a result of yesterday's
disclosure that RRI could be in technical default under certain
debt securities if the company is unable to complete the pending
transfer of its ownership interest in Liberty Electric Power, LLC
-- LEP. Fitch currently rates RRI's outstanding debt:
-- $1.1 billion senior secured notes 'B+'
-- Senior unsecured debt (indicative) 'B';
-- $275 million convertible senior subordinated notes 'B-'.
The ratings remain on Rating Watch Positive where they were placed
on Nov. 29, 2004, following the announcement of RRI's plan to
refinance approximately $4.5 billion of outstanding secured debt.
RRI has disclosed that if it is unable to transfer or divest its
interest in the defaulted LEP subsidiary to the underlying project
lenders by March 15, 2005, certain debt instruments, specifically
RRI's $550 million 9.25% senior secured notes due 2010 and $550
million 9.50% notes due 2013, could be in technical default. The
default would occur if LEP were deemed a 'significant subsidiary,'
defined as any entity constituting 10% of consolidated assets,
equity, or pretax income.
Under the senior secured note indenture, bankruptcy or insolvency
of a significant subsidiary would trigger an event of default
under the notes. Although LEP does not appear to meet either the
asset or equity test, there is some uncertainty over whether or
not LEP would trigger the pretax income threshold at year-end
2004. Fitch notes that, in addition to the planned foreclosure
with the LEP lenders, RRI could pursue other remedies to resolve a
default, including sale of its LEP interest to an alternative
third party or seeking consent from existing noteholders.
Fitch will continue to monitor RRI's progress toward completing
the planned transfer of LEP to the project lenders or an
alternative third party, as well as the company's pending senior
secured note and term loan B offerings. Resolution of the current
Rating Watch status, including the expected upgrades to RRI's
existing ratings detailed in Fitch's press release dated Nov. 29,
2004, is contingent upon RRI reaching a favorable outcome
regarding the LEP default, including completing the planned
divestiture and/or receipt of a waiver from existing RRI senior
secured noteholders.
RESIDENTIAL ACCREDIT: Fitch Puts BB+ Rating on 1998-QS3 Class B-2
-----------------------------------------------------------------
Fitch took action on Residential Accredit Loan, Inc. -- RALI --
mortgage asset-backed pass through certificates:
Series 1998-QS3:
-- Class A-1 affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 affirmed at 'AAA';
-- Class B-1 upgraded to 'A+' from 'A';
-- Class B-2 affirmed at 'BB+'.
Series 1998-QS6:
-- Classes CB-3 and AP affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 affirmed at 'AAA';
-- Class B-1 upgraded to 'A' from 'BBB';
-- Class B-2 upgraded to 'BBB' from 'BB'.
Series 1998-QS8:
-- Classes NB, CB, and AP affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 affirmed at 'AA+';
-- Class B-1 affirmed at 'A';
-- Class B-2 affirmed at 'BB'.
Series 1998-QS16:
-- Classes A-1 and A-P affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 affirmed at 'AAA';
-- Class B-1 affirmed at 'A+';
-- Class B-2 affirmed at 'BB'.
Series 1999-QS8:
-- Classes A-1 and A-P affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 affirmed at 'AA';
-- Class B-1 upgraded to 'A-' from 'BBB+';
-- Class B-2 upgraded to 'BB' from 'B+'.
Series 2000-QS4:
-- Classes CB and A-P affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 affirmed at 'AA+';
-- Class B-1 affirmed at 'A';
-- Class B-2 affirmed at 'BB+'.
Series 2002-QS3:
-- Classes A-2 through A-4, A-10, A-12, and A-P affirmed at
'AAA'.
Series 2002-QS11:
-- Classes A-3, A-5 through A-8, and A-P affirmed at 'AAA'.
Series 2002-QS12:
-- Classes A-1, A-2, A-4 through A-10, and A-P affirmed at
'AAA'.
Series 2002-QS19:
-- Classes A-1, A-2, A-4 through A-8, and A-P affirmed at
'AAA';
Series 2003-QS2:
-- Classes A-1 through A-4, A-6, A-7, and A-P affirmed at
'AAA';
Series 2003-QS3:
-- Classes A-1, A-2, A-4, A-5, A-7, and A-P affirmed at
'AAA';
Series 2003-QS4:
-- Classes A-1 through A-4, A-P affirmed at 'AAA';
Series 2003-QS5:
-- Classes A-1 through A-3, A-5, A-6, and A-P affirmed at
'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A';
-- Class M-3 affirmed at 'BBB';
-- Class B-1 affirmed at 'BB';
-- Class B-2 affirmed at 'B'.
Series 2003-QS6:
-- Classes A-1, A-3, A-4, A-5, A-7, A-9, A-13, A-14, and A-P
affirmed at 'AAA';
Series 2003-QS9:
-- Classes A-1, A-2, and A-P affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A';
-- Class M-3 affirmed at 'BBB';
-- Class B-1 affirmed at 'BB';
-- Class B-2 affirmed at 'B'.
The upgrades, affecting $2.6 million of outstanding certificates,
are being taken as a result of low delinquencies and losses, as
well as significantly increased credit support levels. The
affirmations, affecting over $1.8 billion of certificates, are due
to stable collateral performance and small to moderate growth in
credit enhancement -- CE.
All of the RALI transactions included in this rating action are of
the 1998, 1999, 2000, 2002, and 2003 vintages and are secured by
15- and/or 30-year fixed-rate mortgages extended to prime quality
borrowers generally for one- to four-family residences.
As of the last distribution date Nov. 25, 2004, the most seasoned
of these deals (series 1998-QS6, pools 1 and 2) has a pool factor
(mortgage principal outstanding as a percentage of original
mortgage principal as of closing) of 7% and currently benefits
from CE levels over eight times the original. The least seasoned
transaction maintains a pool factor of 70% and has only
experienced a slight increase in CE coverage. The B1 and B2
classes that are upgraded (series 98-QS3, 98-QS6, and 99-QS8) have
experienced increases in credit enhancement levels by a factor of
between 4 times and 8 times original levels.
RUSSELL CORP: S&P Places Ratings on CreditWatch Negative
--------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Atlanta,
Georgia-based athletic apparel and sports equipment manufacturer
Russell Corp on CreditWatch with negative implications, including
the company's 'BB' long-term corporate credit rating.
Russell Corp.'s total debt outstanding at Oct. 3, 2004, was
$377.4 million.
"The CreditWatch placement follows the company's announcement that
it has signed an agreement to acquire Brooks Sports Inc. for
approximately $115 million. While Russell expects the transaction
to be accretive to 2005 earnings, it will be entirely financed
with debt," said Standard & Poor's credit analyst Susan Ding.
Standard & Poor's analysis will focus on Russell's increased pro
forma debt levels, acquisition strategy, and its business
strategies including its entrance into the very competitive
athletic footwear segment.
SALEM COMMS: Moody's Upgrades Sr. Sub. Notes' Rating to B2
----------------------------------------------------------
Moody's Investors Service upgraded the long-term debt ratings for
Salem Communications Holding Corporation. The upgrades are driven
mostly by improvements at development-stage stations, better than
expected financial performance in 2004, the company's willingness
to issue equity to reduce total debt and the subsequent balance
sheet de-leveraging. The outlook is stable.
Moody's upgraded these ratings:
* $94 million 9% senior subordinated notes due 2011 upgraded to
B2 from B3, and
* $100 million 7.75% senior subordinated notes due 2010
upgraded to B2 from B3.
Moody's assigned these ratings:
* assigned a Ba3 senior implied rating, and
* assigned a B1 senior unsecured issuer rating.
Moody's withdrew the former senior implied rating and issuer
rating for Salem Communications Corporation (the Parent) and
upgraded and reassigned them to Salem Communications Holding
Corporation.
The rating outlook is stable.
The upgrades further reflect the improved debt protection measures
of the company as compared to the period from 2001 through 2003,
when leverage remained well above 7 times and the company was not
producing free cash flow. As of the TTM period ended 3Q'04,
Salem's leverage was 5.3 times on a debt-to-EBITDA basis,
representing a discernible improvement from 7.4 times at YE2003.
Interest coverage improved to 2.5 times (EBITDA-to-Interest) for
the TTM period, as compared to 1.9 times for the YE2003 period.
Moody's notes that as of September 30, 2004, only 14% of the
revolving credit facility was outstanding and the incurrence of
additional senior secured debt is likely as Salem finances its
$38 million in pending acquisitions. Pro forma for these
acquisitions, leverage may increase to as much as 6.0 times.
However, Moody's believes that Salem has sufficient flexibility in
the rating category to sustain this level of leverage. It is our
expectation that the company will use free cash generation to
reduce outstandings under its revolving credit facility. Moody's
also expects that operating performance may generate further
upside as it integrates its developing stations, which currently
represent 40% of its portfolio. Finally, the upgrades incorporate
Moody's belief that, going forward, Salem will execute
proportionally fewer acquisitions, thus limiting the need for
significant additional financing.
In addition, the ratings benefit from Salem's leading position in
the growing religious format niche, the lack of significant
competition within this format, its major market presence and
geographically diverse station clusters, and reliance on more
stable block programming revenue stream (accounting for about 35%
of revenues). The ratings are also supported by Salem's larger
proportion of local advertising revenues (about 45% of revenues),
which are subject to less volatility than national advertising.
Furthermore, the ratings benefit from the significant asset value
of its major market radio stations that provide ample coverage
relative to its debt burden.
Salem's ratings remain constrained, however, by the likelihood of
continued debt-financed acquisitions and the integration risk
associated with this strategy. Also, integration risk remains
higher for Salem than for traditional radio broadcasters as its
acquisitions often require a format change. Salem's broadcast
margins continue to lag its peers, mostly due to the high
proportion of development-stage stations. The ratings are also
somewhat constrained by the highly competitive radio broadcasting
sector, and exposure to the cyclical advertising environment,
which is somewhat offset by the company's block programming
approach.
The stable outlook incorporates Moody's expectation that Salem's
leverage will stay within a more modest range than historically as
the company improves profitability at existing and developing
stations. It also reflects Moody's expectation that the company
will finance any potential acquisitions with a prudent mix of debt
and equity and, under most circumstances, maintain leverage below
6 times debt-to-EBITDA. The ratings could be lowered if the
company reverts to a focus on larger debt-financed acquisitions or
utilizes free cash flow to make sizable share repurchases.
Conversely, the ratings may be lifted if the company continues to
reduce leverage with free cash generation and further equity
issuances.
Salem's senior subordinated B2 rating reflects its contractual
subordination to the unrated $75 million senior secured term loan
and $75 million senior secured revolving credit facility. The
senior subordinated notes benefit from guarantees from operating
subsidiaries.
Salem Communications Holding Corporation, headquartered in
Camarillo, California, is a religious programming radio
broadcaster; it owns and operates 103 radio stations, including
67 stations in 24 of the top 25 markets.
SAN LUIS HILLS: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: San Luis Hills Farm, Inc.
P.O. Box 609
Fort Garland, Colorado 81133
Bankruptcy Case No.: 04-36809
Type of Business: The Debtor operates a farm.
Chapter 11 Petition Date: December 13, 2004
Court: District of Colorado (Denver)
Judge: Michael E. Romero
Debtor's Counsel: Deanna L. Westfall, Esq.
Bennington Johnson Biarman & Craigmile, LLC
3500 Republic Plaza
370 17th Street
Denver, CO 80202
Tel: 303-629-5200
Fax: 303-629-5718
Total Assets: $1 Million to $10 Million
Total Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
KSK Bank Two Loans: $3,199,982
Elnsteinstr. 11 $3,198,224
53757 Sankt Augustin and $1,759
Germany
VR Bank Rhein-Sieg Two Loans: $1,673,791
Neue Poststr. 21
53721 Siegburg
Germany
Schall Chemical Supply Credit $78,251
120 North Broadway
Monte Vista, CO 81144
Colorado Crop Management Credit $62,566
Alta Fuels Credit $39,820
Norcon Rail, Inc. Credit $35,944
Mountain Valley Seed Credit $29,243
Valley Electric, Inc. Credit $28,252
Central Pump Company Credit $21,374
Wall, Smith, Bateman Credit $20,000
Monte Vista Co-op Credit $17,444
Lenco West Credit $15,539
North River Greenhouse Credit $14,700
U.S. Tractor & Harvest Credit $12,854
Haynies Auto Parts Credit $9,986
SLV Research Center Credit $8,069
Center Parts Credit $5,184
Potato Services Credit $5,104
Intermountain First Aid & Credit $4,689
Safety
Kar Products (Barnes) Credit $4,402
SIRVA WORLDWIDE: Moody's Assigns Ba3 Rating to $490M Term Loan
--------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to SIRVA Worldwide
Inc.'s amended $490 million Term Loan B due 2010. In addition,
Moody's has moved the company's senior implied rating (Ba3) and
Issuer Rating (B1) from the subsidiary level, North American Van
Lines, Inc., to SIRVA Worldwide, Inc. The ratings have a stable
outlook.
The ratings continue to reflect the company's leadership position
in the relocation services sector and its historic moderate level
of financial leverage. Leverage will increase as a result of the
expansion of the term loan B to partially finance the acquisition
of Executive Relocation. Moreover, because of the company's
relatively high level of operating leases, adjusted leverage is
more significant. The ratings also consider the moderate level of
collateral protection for secured creditors as a consequence of
the company's "asset-light" business strategy, and its reliance on
businesses ancillary to its traditional moving services activities
for growth, including its global relocation services enterprise.
The stable ratings outlook reflects expectations that the company
can maintain or improve its revenue base and operating margins in
the near term. Ratings or their outlook would be subject to
downward revision if the company were to further increase leverage
such that lease-adjusted debt/EBITDAR were to exceed 4.5x, or if
additional risk becomes apparent in SIRVA's mortgage financing
operation (not guaranteed by SWI but integral to the company's
core business operations) or its insurance segment, which could
include the possibility of required funding by SWI for reserve
adequacy. The ratings outlook could be revised upward if the
company were to demonstrate strong cash flow generation while
repaying significant debt levels, resulting in free cash flow at
over 20% of total debt over a sustained period, and a reduction in
lease-adjusted debt/EBITDAR of under 3.5x.
The purpose of the $490 million amended senior secured term loan B
is to partially fund the acquisition of Executive Relocation,
Inc., a Chicago-based provider of business moving services, for
$100 million, as well as to repay the existing $415 million term
loan B that it replaces. The purchase of Executive Relocation and
repayment of the acquired company's existing debt will also be
funded through use of cash on hand, proceeds provided by parent
company SIRVA, Inc.'s amended Accounts Receivable Securitization
Facility, as well through use of SWI's $175 million revolving
credit facility.
SWI's leverage will increase modestly as the result of this
transaction. Upon close of the acquisition, SWI's debt will
increase by about 13%, from $500 million as of September 2004, to
pro forma $565 million. Moody's estimates that Debt/EBITDA, which
was a modest 2.8x as of September 2004 (3.9x EBITDAR on a
lease-adjusted basis) will increase to about pro forma 3.2x (4.2x,
lease-adjusted) considering both the increased debt and estimated
contributions from Executive Relocation's operations. Interest
coverage, which had been particularly strong at 5.4x nine months
September 2004 EBIT/interest, should decrease to below 5x on a pro
forma basis. Moody's notes that pro forma estimated leverage and
coverage are within the appropriate range for this rating
category.
SWI's free cash generation has been strong over the past twelve
months, as the company has grown its revenue base by over 10%
while maintaining approximately 11-12% EBIT margins to revenue net
of purchased transportation expense. For the LTM September 2004
period, SWI generated free cash flow of approximately $100
million, representing about 20% of total debt. Based on recent
business trends, Moody's expects SWI to continue to generate about
this level of cash generation over the near term, although FY 2004
free cash flow will be substantially negative as a result of the
Executive Relocation acquisition.
However, Moody's remains concerned that SWI's reliance on
ancillary moving services provided both by SWI-owned subsidiaries
as well as from affiliates within the parent company SIRVA, Inc.,
may contribute some degree of uncertainty to the company's cash
flow generating capabilities going forward. In order for the
company to grow its affiliate-oriented relocation services
business, SWI must provide an increasing level of financing,
insurance, and other related services to these affiliates in order
to maintain its market position, as well as to expand its
higher-margin suite of relocation services offered to its clients.
Disruption in the company's ability to provide these services may
have a negative impact on the company's overall financial
performance. In particular, Moody's is concerned that if
unexpected losses were to occur in the insurance captive, Network
Services, SWI might be required to provide cash funding to meet
regulatory requirements.
The Ba3 rating assigned to the amended senior secured credit
facilities continues to reflect the predominance of the secured
debt in the company's capital structure. Although the senior
secured facilities are secured by essentially all of the company's
assets (except for real property), Moody's assesses coverage
provided to this facility to be modest. SWI's reported September
2004 asset base of $1.7 billion consists largely of goodwill and
intangible assets ($570 million) and accounts receivable
($449 million), with a relatively small fixed asset balance
($149 million). The company's collateral base is reflective of
the "asset-light" nature of SIRVA's business model and, as such,
may not provide adequate coverage of senior debt outstanding under
a distressed asset-sale scenario.
SIRVA Worldwide, Inc., headquartered in Westmont, Illinois, is a
wholly owned operating subsidiary of SIRVA, Inc. SIRVA is a
leader in the global relocation industry, providing service to a
well-established and diverse customer base. The company handles
more than 385,000 relocations per year, including transferring
corporate and government employees and moving individual
consumers. The company operates in 43 countries under brand names
including Allied(R), northAmerican(R), Global(R) and SIRVA
Relocation in North America, Pickfords(R) in the U.K., Maison
Huet(R) in France, Scanvan(R) in Scandinavia and Allied Pickfords
in the Asia Pacific region. SIRVA Worldwide had LTM September
2004 revenues of $2.6 billion.
SOLA INTERNATIONAL: S&P Places Ratings on CreditWatch Developing
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on spectacle
lens-maker SOLA International, Inc., on CreditWatch with
developing implications in light of the company's anticipated
acquisition by Carl Zeiss AG (unrated) and EQT III fund for about
$1.1 billion. The purchase price includes the assumption of about
$285 million in SOLA's debt.
A newly formed company consisting of SOLA and the carved out
eyeglass business of Carl Zeiss will be owned fifty-fifty by Carl
Zeiss and EQT. "The manner in which the transaction is financed,
and the credit profile and strategy of the new owners, will need
to be assessed to determine the creditworthiness of the new entity
into which SOLA will be absorbed," said Standard & Poor's credit
analyst Cheryl Richer. "As a result, SOLA's ratings could be
raised, lowered, or maintained. The ratings will be withdrawn if
information is insufficient to provide a rating prospectively.
Completion of the transaction, subject to certain approvals, is
expected to be completed during the first calendar quarter of
2005."
As reported in the Troubled Company Reporter on Dec. 3, 2004,
Standard & Poor's Ratings Services revised the outlook of SOLA
International, Inc., to negative from stable and affirmed the
'BB-' corporate credit rating on the company. The outlook
revision reflects our heightened concern that SOLA will be unable
to comply with Section 404 of the Sarbanes-Oxley Act by March 31,
2005, the company's fiscal year-end. Section 404 mandates that a
company's auditor identify "any material internal control
weakness" in attesting to whether management has sufficient
operational command to produce reliable and compliant financial
reports. SOLA's external auditors have identified internal
control deficiencies.
San Diego, California-based SOLA makes plastic and glass spectacle
lenses and holds a leading manufacturing and technology position
in the growing plastic lens segment of the market.
Its current ratings reflect the company's operating concentration
in eyeglass lenses, a well-penetrated, mature, and innovative
industry that faces challenges from large competitors as well as
other forms of vision correction. The company is expanding its
prescription laboratory network, which now contributes a
significant portion of sales, through a series of modest-sized
acquisitions. Prescription labs provide SOLA with more control
over its product and distribution channels to end-users. Still,
barriers to entry in this business are relatively low. On
Dec. 1, 2004, SOLA's outlook was revised to negative, reflecting
heightened concern that the company would be unable to comply with
Section 404 of the Sarbanes-Oxley Act by March 31, 2005, the
company's fiscal year-end. While these risks contribute to a
below-average business profile, SOLA benefits from a meaningful
global market share (according to the company, it holds a No. 2
position in lens sales), financial parameters that are strong for
the rating, and adequate liquidity.
SONIC AUTOMOTIVE: S&P Revises Outlook on Ratings to Negative
------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Charlotte, North Carolina-based Sonic Automotive, Inc., to
negative from stable, reflecting concerns about the company's
ability to reduce debt and improve its financial profile in line
with previous expectations. The ratings on the company, including
the 'BB' corporate credit rating, were affirmed. Sonic, an
automotive retailer, has total debt, including the present value
of operating leases and excluding floorplan liabilities, of about
$1.5 billion.
"A challenging operating environment, with slower-than-expected
new vehicle sales, heavy inventory levels, and a weak pricing
environment, combined with higher-than-average operating expenses,
have resulted in subpar financial results," said Standard & Poor's
credit analyst Martin King. Sonic's EBITDA has remained virtually
flat during the past few years despite spending almost
$200 million on acquisitions. The company has struggled to
control costs while also gaining the full benefit from acquired
dealerships. A concerted effort to reign in administrative costs
and implement more robust expense controls has been under way for
the past year. Although some progress has been made, Sonic's
sales, general, and administrative expenses was 81% of gross
profit in the third quarter, exceeding the company's 77% goal for
the quarter. Progress has been slowed by the current difficult
market conditions, which is pressuring Sonic's profit margins.
The company's credit statistics have been stretched for the rating
during the past two years, with debt to EBITDA more than 5x, but
were expected to improve to more acceptable levels as it scaled
back acquisitions and used free cash flow to reduce debt. Credit
protection measures have yet to improve materially, however, and
the rate of progress will likely be slowed as long as market
conditions remain challenging.
The ratings reflect Sonic's below-average business profile as a
consolidator in the highly competitive and cyclical U.S.
automotive retailing industry, combined with high debt leverage
and modest cash flow protection.
A slower pace of acquisitions, reduced debt leverage targets, and
a more intense focus on improving internal operations are expected
to result in stronger credit statistics beginning in 2005 over the
current subpar levels. Ratings could be lowered should
challenging industry conditions, acquisition spending, or share
repurchase activity prevent the company from improving its credit
profile.
SPHERIS INC: Moody's Junks $125 Million Senior Subordinated Notes
-----------------------------------------------------------------
Moody's Investors Service assigned new ratings to Spheris, Inc., a
leading provider of transcription services to health systems,
hospitals and physician practices. This is the first time Moody's
has rated the company. These ratings were assigned:
* $25 million senior secured revolving credit facility due
2009, rated B2
* $75 million senior secured term loan B due 2010, rated B2
* $125 million senior subordinated notes due 2012, rated Caa2
* Senior Implied Rating, rated B3
* Senior Unsecured Issuer Rating, rated Caa1
The outlook for the company is stable.
The rating assignment reflects:
(1) the company's high leverage,
(2) its small size and limited resources (in general, but not
relative to competitors),
(3) the company's single business line focus, and
(4) the limited track record of the company, which was formed
only in June 2003 through the combination of two medical
transcription services providers, Total eMed and EDiX.
The ratings also reflect:
(1) the high level of competition in the fragmented industry,
(2) limited pricing power of transcription services providers,
and
(3) Moody's concern that the shortages in medical
transcriptionists may lead to pressure on wages and
benefits expenses.
Positive factors recognized by the ratings include:
(1) Spheris' strong financial performance since its formation,
(2) favorable performance trends at HealthScribe,
(3) good industry growth trends, and
(4) the combined entity's strong leadership position.
Moody's also considered:
(1) the high historical contract retention rates at both
Spheris and HealthScribe,
(2) the good visibility into near term revenues driven by the
retention rates and the multi-year terms of the customer
contracts,
(3) the diversified customer base,
(4) the company's success in generating $19 million in
synergies from the combination of Total eMed and EDiX, and
(5) the potential for $6 million in synergies and further
margin expansion resulting from the acquisition of
HealthScribe.
The stable outlook incorporates Moody's expectation for continued
favorable revenue growth trends at the combined entity, which we
anticipate to be in the high single digit range over the near-to-
intermediate term. However, it also reflects our uncertainty over
whether the company can sustain margins on an ongoing basis, given
the company's limited pricing power, our concern over the
potential for pressure on wages and benefits, and a lack of
meaningful historical trends to base our forecast.
Moody's notes that the company has done a good job with managing
payroll expenses for medical transcriptionists, and has not
experience any increases. With the acquisition of HealthScribe,
Spheris intends to shift some production overseas to help lower
the cost structure as well. Additionally, Moody's recognizes that
Spheris' management has successfully driven margin expansion at
the company since it's formation in 2003. However, the dramatic
improvement in performance was due substantially to an one time
event, the realization of synergies, as opposed to positive
changes in the fundamental drivers of the industry.
The stable outlook also incorporates a degree of conservatism on
Moody's part regarding whether the company will be successful in
achieving the full amount of expected synergies from the
HealthScribe acquisition, and whether the synergies will be
realized during the expected time frame. Moody's notes that if
the company is successful in achieving the expected amount of
synergies in 2005, the majority of which is related to headcount
reductions, the company's leverage will still be very high.
However, it will be more in line with companies rated in the B2
category. Under this scenario, Moody's may consider upgrading the
company's rating if its operating trends remain favorable. When
considering an upgrade, Moody's will evaluate the likelihood of
near term acquisitions, and the potential impact acquisitions may
have on the company's credit profile.
On November 5, 2004, Warburg Pincus LLC and Soros Private Equity
Partners LLC acquired Spheris from Parthenon Capital and
management for total consideration of $227.7 million. The
acquisition was financed with the proceeds from a $50 million
bridge loan and the $75 million term loan B, which was pre-funded
by JPMorgan Chase Bank, as well as with $102 million of equity
contributed by the equity sponsors and management. The sponsors
and Spheris now intend to acquire HealthScribe for total
consideration of $75 million. The transaction is expected to
close on December 22, 2004.
Spheris is currently seeking financing to repay the $50 million
bridge loan and to fund the HealthScribe acquisition. The company
is seeking financing consisting of an undrawn $25 million senior
secured revolver, the $75 million senior secured term loan B, and
$125 million in senior subordinated notes.
Moody's assigned B2 ratings to the revolver and term loan. The
credit facilities are notched one level above the senior implied
rating to reflect sufficient enterprise value coverage of the bank
commitment under a distressed scenario. Moody's rated the
subordinated notes two notches below the senior implied to reflect
the notes effective and contractual subordination to the bank
debt.
The acquisition of HealthScribe will further solidify Spheris'
position as the second largest provider of services in the medical
transcription services industry. Based on revenues, the combined
entity will still be considerably smaller than the market leader,
MedQuist, Inc. However, competitively, it will be well positioned
given that MedQuist, the only other national provider, is
currently experiencing significant problems with billing issues.
As a leading national provider, Spheris can target the large
customers segment, which is seeking a higher level of service.
Competitive pressure in the area is lower due to the limited
number of providers who have the capability to meet the customers
demand for technology, the ability to integrate with their
systems, the rapid implementation of service, and the medical
transcriptionist capacity to handle the volume.
Strategically, the acquisition of HealthScribe also provides the
company with the capability to service more price conscious
customers who may require a lower level of service. This will
enable the company to cover a wider customer base with a broader
spectrum of services while still generating good margins.
HealthScribe has an offshore operation in India with a lower cost
structure.
The acquisition, however, will lead to an increase in Spheris'
already high leverage. For 2005, assuming the company is
successful in generating the $4.0 million of forecasted synergies,
the company's adjusted cash flow coverage of adjusted debt
(adjustments made for leases) will still be modest at
approximately 8%, while the adjusted free cash flow coverage of
adjusted debt will be weak at approximately 4%. For the same
period, Adjusted Debt / EBITDAR will be high at approximately
5.5 times, and EBIT is expected to cover interest at only 1.3
times.
Spheris, Inc., headquartered in Franklin, Tennessee, is a leading
national provider of medical transcription services to health
systems, hospitals and physician practices.
SPIEGEL INC: Wants Court to Approve MBIA & BNY Claims Settlement
----------------------------------------------------------------
Spiegel, Inc. and its debtor-affiliates seek the United States
Bankruptcy Court for the Southern District of New York's authority
to enter into a settlement agreement, dated December 3, 2004, made
by and among:
(a) the Spiegel Parties:
* Spiegel, Inc.,
* Newport News, Inc.,
* Eddie Bauer, Inc.,
* Spiegel Catalog, Inc.,
* Spiegel Catalog Services, LLC,
* Spiegel Credit Corporation III,
* Spiegel Acceptance Corporation,
* First Consumers National Bank,
* Michael Crusemann,
* Horst Hansen,
* Martin Zaepfel,
* Michael Otto,
* Spiegel Holdings, Inc.,
* Otto (GmbH & Co KG);
(b) The Bank of New York, as Trustee under the Master
Indenture, dated December 1, 2000, between the Spiegel
Credit Card Master Note Trust and the Trustee, including
the Series 2000-A Supplement, and Series 2001-A Supplement
to the Master Indenture; and
(c) MBIA Insurance Corporation.
Issuance of Notes Under the Note Trust
Andrew V. Tenzer, Esq., at Shearman & Sterling, LLP, in New York,
New York, relates that Spiegel, Inc., acquired FCNB in 1990.
FCNB is chartered, supervised, and examined by the Comptroller of
the Currency of the United States of America. FCNB has entered
into a consent order and disposition plan with the OCC under which
it has agreed to a voluntary liquidation.
Before the Petition Date, many of the Debtors' customers received
credit through private-label credit cards issued by FCNB. The
holders could use their credit cards to make purchases from the
Spiegel retail affiliates, which included Eddie Bauer, Spiegel
Catalog, Inc., and Newport News. The Cardholders' purchases
generated receivables in FCNB's favor. Until June 2003, FCNB was
responsible for servicing the Receivables from the Cardholders.
FCNB securitized the Receivables by selling them to securitization
vehicles, which, in turn, financed their purchase of those
Receivables by selling asset-backed securities to investors. The
Debtors formed SCC III, a special purpose vehicle, and SAC to
participate in the securitization transactions. FCNB, SAC, SCC
III, are all wholly owned non-debtor subsidiaries of Spiegel.
Pursuant to a series of agreements, FCNB sold Receivables to SCC
III, a bankruptcy-remote entity, and SAC. Receivables sold to
SAC were transferred to SCC III, which, in turn transferred the
Receivables to the Note Trust. The Bank of New York acted as
trustee for the Note Trust.
Using its interest in the Receivables as security, the Note Trust
issued and sold three interest-bearing series of notes to
investors:
-- $600,000,000 of 2000-A Notes, on December 1, 2000;
-- $600,000,000 of 2001-A Notes, on July 19, 2001; and
-- $426,000,000 in Variable Funding Notes, on October 17,
2001, which principal amount was increased over time to
$512,000,000.
The Bank of New York applied collections from Cardholders of the
principal amount of and finance charges on Receivables in
accordance with a "waterfall" set forth in the Transaction
Documents, including payment of principal and interest on the
Notes. In consideration for SCC III selling its interest in the
Receivables to the Note Trust, the Note Trust transferred to SCC
III, directly or indirectly proceeds from the issuance of the
Notes and is subject to certain exceptions.
The Seller Interest is the interest of SCC III or its assigns, in
the Note Trust and the Receivables, as the seller of the
Receivables to the Note Trust, which entitles Spiegel Credit Corp
or its assigns to receive the various amounts specified in the
Transaction Documents to be paid or transferred to the Seller
Interest holder. In December 2000, SCC III transferred all of its
right, title, and interest in the Seller Interest to SAC
Mr. Tenzer notes that MBIA agreed to insure payment of all
interest and principal due to the Noteholders pursuant to the
2000-A Notes and the 2001-A Notes. Cash collateral was held in
certain segregated trust accounts to secure, among other things,
certain amounts payable to MBIA. Cash collateral was held in an
escrow account for the benefit of the VFN Noteholders.
The VFN Notes were paid off in January 2004, after which VFN Cash
Collateral aggregating $16,608,166 was to be released by Bank of
New York to SAC, as the current holder of the Seller Interest.
Pursuant to a Court-approved stipulation, Bank of New York is
holding the VFN Cash Collateral Amount in a segregated account.
Additionally, the Seller Interest portion of the monthly
allocation from the portion of the Receivables representing
finance charges is held in the Seller Interest Account. The
balance of the allocation in the Seller Interest Account as of
November 15, 2004, is $16,395,786.
Bank of New York has received, but not disbursed, collections from
Receivables received in February 2003 of $18,178,835. MBIA, on
behalf of the Series 2000-A and Series 2001-A Noteholders, and SCC
III and SAC have each asserted a right to the full amount of the
February 2003 Collections.
MBIA has incurred $48,861,585 in fees and expenses in connection
with the performance of its obligations under the Transaction
Documents and prosecution of its claims as of November 15, 2004.
That Amount consists of:
(a) $5,486,317 in legal fees;
(b) $580,881 in external and internal audit fees;
(c) $1,491,691 for Cardholder Management Services, LLC's back-
up servicer fees;
(d) $3,168,243 for Gordian Group's fees;
(e) $30,131,428 for CMS's successor servicer fees; and
(f) $8,003,025 of accrued unpaid Monthly Insurance Premium,
under the Series 2000-A Supplement and the Series 2001-A
Supplement.
District Court Case &
Securities Litigation
On September 16, 2003, MBIA commenced an action styled, MBIA
Insurance Corporation v. First Consumers National Bank and
Spiegel Credit Corporation III, 03-CIV-7246 (RCC) (RLE), in the
United States District Court for the Southern District in New
York. In its Complaint and Jury Demand against FCNB and SCC III,
MBIA sought, inter alia:
(a) damages in an undetermined amount;
(b) imposition of a constructive trust over the February 2003
Collections and certain servicing fees collected by First
Consumers; and
(c) certain declaratory relief with respect to the February
2003 Collections.
In November 2003, MBIA filed an Amended Complaint and Jury Demand
pursuant to which MBIA, inter alia, added SAC as a defendant in
the District Court Case.
Mr. Tenzer states that because of the value of SAC and SCC III,
the Debtors are underwriting their defense in the District Court
Case. Pursuant to an agreement between the Debtors and the
Official Committee of Unsecured Creditors, the Debtors funded all
of the fees and expenses associated with defending SAC and SCC III
in the litigation. To date, those fees and expenses have exceeded
$600,000.
In December 2003, the defendants filed motions in the District
Court Case to dismiss the case or, in the alternative, to transfer
venue to Oregon. The District Court has not yet ruled on those
motions and the defendants have not filed answers in the case.
The District Court has scheduled a status conference for mid-
January to discuss the status of the parties' settlement
negotiations.
Mr. Tenzer notes, the parties in the District Court Case commenced
discovery before entering into settlement discussions. SAC and
SCC III had begun the process of collecting and reviewing
documents to be produced, but had not yet produced any documents
to MBIA when the parties began negotiating. The parties agreed to
stay discovery during settlement discussions.
"If the Settlement Agreement were not to become effective and the
parties were to complete the discovery process in the District
Court Case, the Debtors would be forced to incur substantial
additional costs," Mr. Tenzer says. The Debtors estimate that the
cost just for the vendor producing their electronic documents
would be between $700,000 and $1,100,000.
On December 19, 2003, MBIA, on behalf of the Noteholders of the
2000-A Note Series and the 2001-A Note Series, commenced an action
styled MBIA Insurance Corp. v. Spiegel Holdings, Inc., Michael
Otto, Michael Crusemann; Horst Hansen; Martin Zaepfel; and Otto
(GmbH & Co KG), 03 Civ. 10097 (GEL) alleging several violations of
the Securities Act of 1933 and the Securities Exchange Act of
1934.
A judgment dismissing the Securities Litigation was entered on
September 2, 2004. MBIA filed a Notice of Appeal of the judgment
on September 29, 2004. The Appeal is still pending.
MBIA and Trustee Claims
On October 1, 2003, MBIA filed five proofs of claim against the
Debtors:
Debtor Entity Claim Number Claim Amount
------------- ------------ ------------
Spiegel Catalog 3035 $4,931,619
Newport News, Inc. 3036 4,931,619
Eddie Bauer, Inc. 3037 4,931,619
Spiegel, Inc. 3038 11,852,564
Spiegel Catalog Services 3039 4,931,619
MBIA filed Claim No. 4162 in July 2004, against the Debtors for
$28,268,290, amending proof of claim number 3038. Moreover, MBIA
notified the Debtors of an outstanding $9,600,000 administrative
claim.
Additionally, Bank of New York filed five proofs of claim against
the Debtors:
Debtor Entity Claim Number Claim Amount
------------- ------------ ------------
Spiegel, Inc. 3024 $4,931,619
Spiegel Catalog 3025 4,931,619
Eddie Bauer 3026 4,931,619
Spiegel Catalog Services 3027 4,931,619
Newport News 3034 4,931,619
Settlement Agreement
In November 2004, the parties reached agreement on the terms of a
settlement. To save the time and expense that would result from
litigating the District Court Case and the Securities Litigation,
and objecting to the MBIA Claims and the Trustee Claims, the
Spiegel Parties, the Trustee and MBIA and the other parties have
elected to enter into the settlement agreement.
The salient terms of the Settlement Agreement are:
A. Distribution of the February 2003 Collections
On the settlement effective date, Bank of New York will
disburse $14,800,000 from the February 2003 Collections to the
Note Trust for distribution to the Series 2000-A and 2001-A
Noteholders. Within two business days after 94 days after
the Effective Date, Bank of New York will disburse the
remainder of the February 2003 Collections plus any
accrued interest to SAC, except that if SAC becomes
subject -- voluntarily or involuntarily -- to any
bankruptcy proceeding during the 94-Day Period, then,
within two business days, Bank of New York will disburse the
Remaining February 2003 Collections to the Note Trust for
distribution to the Series 2000-A and 2001-A Noteholders.
B. Distribution of Seller Interest Account Portion to SAC
The Seller Interest Account contains the VFN Cash Collateral
Amount and the Seller Interest portion of the monthly
allocation from the finance charge portion of the Receivables,
which in the aggregate exceed $30,100,000, representing
finance charges being held in the Seller Interest Account.
Bank of New York will disburse $16,600,000 to SAC from the
Seller Interest Account.
C. MBIA Settlement Trust
On the Effective Date, all amounts remaining in the Seller
Interest Account after the $16,600,000 payment to SAC will be
transferred to a trust that will be created pursuant to a
"MBIA Settlement Trust Agreement". In addition to the
remainder of the Seller Interest Account, the MBIA Settlement
Trust assets will include all future monthly cash receipts
from the Note Trust and the Collateral for the Notes --
including Receivables -- SAC's interest and SCC III's
interest, if any, in the Seller Interest, the Collateral and
any other interest in the Note Trust -- including any interest
in the Note Trust, including any interest in certain spread
accounts.
D. MBIA Settlement Trust Assets
The MBIA Settlement Trust Agreement provides, among other
things, that the MBIA Settlement Trust's assets will be
distributed to MBIA pursuant to the priority set forth in the
Settlement Agreement on account of the MBIA Expenses, the MBIA
Future Expenses, interest on those expenses, and refused
claims and returned claims. SAC or its successor will hold a
residual interest in the Trust Assets.
E. MBIA Claims Treatment
On the entry of the Final Court Order, the Debtors or other
parties-in-interest is deemed to acknowledge that:
(a) Prepetition Claims continue to accrue in the Debtors'
Chapter 11 case and are at $48,861,586, as of November 15,
2004. The Claim constitutes an allowed prepetition claim
against the Debtors; and
(b) The Postpetition Claim constitutes an allowed $8,000,000
administrative claim.
In the event that the Settlement Agreement does not become
effective or no transfer of funds occurs pursuant to the terms
of the Settlement Agreement, the Debtors will have the right
to object to and otherwise contest the claims. Upon
completion of the transfer of funds to the Note Trust and the
releases by MBIA becoming effective, MBIA will have absolutely
and unconditionally waived its right to payment from the
Debtors on account of the MBIA Claims.
F. Mutual Releases
The Settlement Agreement provides for certain waivers and
releases by the parties, including, inter alia:
(a) Release by MBIA of the Debtors and their subsidiaries and
affiliates, from any and all manner of claims, provided,
however, that:
-- the release will not be effective and will be of no
force and effect if SAC becomes subject, voluntarily or
involuntarily, to any bankruptcy proceeding during the
94-Day Period; and
-- the release by MBIA of the Released Claims against FCNB
will be effective on the Effective Date;
(b) Releases by the Spiegel Parties, including the Debtors, of
MBIA, the Trustee and CMS, and their subsidiaries and
affiliates, from any and all manner of claims; and
(c) MBIA will seek dismissals, with prejudice, of the District
Court Case and its Appeal of the Securities Litigation
after the 94-Day Period.
Headquartered in Downers Grove, Illinois, Spiegel, Inc. --
http://www.spiegel.com/-- is a leading international general
merchandise and specialty retailer that offers apparel, home
furnishings and other merchandise through catalogs, e-commerce
sites and approximately 560 retail stores. The Company filed for
Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No.
03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq.,
at Shearman & Sterling, represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $1,737,474,862 in assets and
$1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 34;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
STANADYNE CORP: S&P Rates Proposed $55M Sr. Discount Notes at B-
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Windsor, Connecticut-based Stanadyne Corp. to 'B+' and
assigned its 'B+' corporate credit rating to Stanadyne Holdings,
Inc. (formerly known as KSTA Holdings Inc.), the indirect parent
company of Stanadyne. At the same time, Standard & Poor's
assigned its 'B-' debt rating to the proposed $55 million senior
discount notes due 2015 to be issued by Stanadyne Holdings,
Inc. Standard & Poor's also lowered its rating on Stanadyne's
$35 million senior secured asset-based revolving bank facility to
'BB-', $65 million senior secured term loan to 'B', and
$160 million senior subordinated notes to 'B-'. The outlook is
stable.
"The rating actions reflect higher leverage that will result from
additional debt at the parent holding company to fund a cash
distribution to its stockholders," said Standard & Poor's credit
analyst Nancy C. Messer.
Pro forma at Sept. 30, 2004, for the transaction, Stanadyne will
have about $288 million of balance sheet debt and total debt to
EBITDA of about 5.3x for the trailing 12 months. The transaction
is expected to close within the next several weeks. Stanadyne's
existing senior secured credit facility and senior subordinated
debt both mature before the 2015 maturity date of the proposed
discount notes, which will accrete to about $90 million aggregate
principal amount at maturity and begin cash interest payments in
2010. Stanadyne is wholly owned by Stanadyne Automotive Holding
Corp., which in turn is wholly owned by Stanadyne Holdings, Inc.
Stanadyne, the only asset held by the holding companies, will not
guarantee the proposed discount notes.
The outlook is stable. Downside ratings risk is mitigated by the
expectation of continued positive free cash flow generation that
will enable Stanadyne to reduce leverage in the near term. This
expectation rests on the assumption that the economic uplift that
has supported the company's improved sales in the past several
quarters will continue into 2005. Downside risk is also limited
by Standard & Poor's expectation that operating leverage, combined
with the effect of restructuring activities, will produce improved
EBITDA margins in the 2005-2006 period.
The outlook incorporates the assumption that acquisitions
undertaken to support expansion will not impede the company's
deleveraging trend. Upside ratings potential is limited by the
cyclical and competitive characteristics of Stanadyne's operating
environment, which produce shrinking EBITDA when the economic
cycle ultimately weakens, and by the company's very aggressive
financial policy. Given the narrowness of Stanadyne's product
line and moderate revenue base, the company has limited
alternative revenue sources to mitigate a prolonged downturn in
demand for its products.
Privately held Stanadyne, controlled by Kohlberg & Co. LLC since
August 2004, is an independent manufacturer of diesel
fuel-injection equipment and precision engine components for
diesel and gasoline engines supplied to original equipment
manufacturers -- OEMs -- in the automotive, agricultural,
construction, industrial, and marine industries.
STRUCTURED ENHANCED: Fitch Rates Reference Assets at 'BB-'
----------------------------------------------------------
Fitch Ratings affirms the ratings of Structured Enhanced Return
Vehicle Trust -- SERVES, series 2001-3:
-- $20,000,000 class A notes 'A+';
-- $10,000,000 class B-1 notes 'BBB+';
-- $5,000,000 class B-2 notes 'BBB+'.
SERVES is a synthetic collateralized loan obligation -- CLO --
that provides investors with leveraged exposure to a diversified
portfolio of high-yield loans. The transaction utilizes a total
rate of return swap between the SERVES trust and Bank of America,
N.A. to obtain the leveraged exposure. The reference asset
portfolio is managed by 40|86 Advisors, Inc., a wholly owned
subsidiary of Conseco, Inc.
Fitch has reviewed the credit quality of the individual assets
comprising the portfolio. SERVES 2001-3 has experienced a slight
negative credit migration since it was reviewed in September 2003.
The composition of the portfolio has improved as overall market
conditions strengthened. The weighted average spread on the
reference assets is 2.37%, the weighted average rating factor --
WARF -- is 45.2 ('BB-'), the leverage factor is 5.18 times, and
the weighted average market value is slightly above par.
The rating addresses the timely payment of interest and the
ultimate return of principal, but does not address the payment of
additional interest to the notes.
As a result of this analysis, Fitch has determined that the
current ratings assigned to the notes still reflects the current
risk to noteholders.
Fitch will continue to monitor and review this transaction for
future rating adjustments. Additional deal information and
historical data is available on the Fitch Ratings web site at
http://www.fitchratings.com/
TECHNICAL OLYMPIC: Moody's Puts B2 Rating on $200M Sr. Sub. Notes
-----------------------------------------------------------------
Moody's Investors Service, Inc., assigned a B2 rating to the new
$200 million of senior subordinated notes of Technical Olympic
USA, Inc. At the same time, Moody's confirmed all of the
company's existing ratings, including the Ba3 senior implied
rating, Ba3 on the existing issue of senior notes, B2 on the
existing issue of senior subordinated notes, and the B1 issuer
rating. The ratings outlook remains stable.
The stable outlook reflects Moody's expectation that the company
will maintain capital structure discipline while pursuing its
expansion opportunities.
The ratings reflect the moderately heavy debt leverage employed,
the developing strategy of moving more assets off the balance
sheet, the still-heavy geographic concentration in Florida, and
the lack of certainty with regard to the plans of its ultimate
owner, Technical Olympic S.A. -- TOSA, of Athens, Greece.
At the same time, the ratings are supported by the company's
transition from a start up/roll up operation to one that possesses
moderate size, scale, geographic diversification, improved
competitive position, and the opportunity to harvest the benefits
of the infrastructure investment made in the last three years.
Moody's expects these benefits to be translated into stronger
earnings growth and improved financial ratio performance going
forward.
The rating actions are:
* B2 on the $200 million of senior subordinated notes due
1/15/2015 is assigned
* Ba3 senior implied rating is confirmed
* Ba3 on $300 million of 9% senior notes due 7/01/2010 is
confirmed
* B1 issuer rating is confirmed
* B2 on $125 million of 7.5% senior subordinated notes due
3/15/2011 is confirmed
* B2 on $185 million of 10.375% senior subordinated notes due
7/01/2012 is confirmed
All of the rated debt is guaranteed by the company's material
operating subsidiaries other than its mortgage and title
subsidiaries.
Pro forma for the issuance of these senior subordinated notes as
of September 30, 2004, repayment of the then-outstanding bank debt
of $67.6 million, and application of the balance of the proceeds
to working capital, total homebuilding debt/capitalization would
be 56.9% and total homebuilding debt/LTM EBITDA would be 3.9x. As
the expected strong fourth quarter earnings get added to the mix,
these leverage ratios should moderate somewhat, although they have
a ways to go before they return to the actual pre-transaction
ratios of 52.4% and 2.9x, respectively. Moody's views these
latter ratios as being more representative of a Ba3 rating and
expects that future growth, whether organic or from additional
acquisitions, will be financed with a judicious mix of debt and
equity.
In the future, factors that could stress the company's outlook and
ratings would include its re-leveraging up for acquisitions, land
purchases, or share repurchases, taking a large impairment charge,
and having difficulty in integrating its acquisitions. Factors
that would enhance the company's outlook and ratings would include
its deleveraging the balance sheet (both on an as-reported basis
and as adjusted for the off-balance sheet joint venture
operations), growing the equity base, experiencing smooth
integration of its acquired entities, and diversifying the revenue
and earnings base.
Headquartered in Hollywood, Florida, Technical Olympic USA, Inc.
builds and sells single-family homes largely for the move-up
homebuyer. It also operates captive mortgage origination and
title insurance service companies. It is 73.38% owned by Technical
Olympic S.A. Revenues and net income for the last twelve months
ended September 30, 2004 were approximately $1.8 billion and
$91 million, respectively.
Established in 1965 and headquartered in Athens, Greece, Technical
Olympic S.A. (TOSA, the parent company) is one of the larger
construction companies in Greece, with additional construction
ventures in the U.K., Romania, and the Balkans. It is managed and
approximately 46%-owned by Constantine Stengos and his family.
TECHNICAL OLYMPIC: Fitch Rates $200 Million Senior Notes at B-
--------------------------------------------------------------
Fitch Ratings assigned a 'B-' rating to Technical Olympic USA,
Inc.'s -- TOA -- $200 million senior subordinated unsecured notes
due Jan. 15, 2015. The Rating Outlook is Positive.
The $200 million issue will be ranked on a pari passu basis with
all other senior subordinated notes outstanding. Proceeds from
the new debt issue will be used to repay amounts outstanding under
its revolving credit facility and for general corporate purposes.
The ratings for TOA are based on the company's reasonable
geographic diversity, broad customer base, conservative land and
inventory management practices, strong management team and
acquisition expertise.
TOA is a subsidiary of Technical Olympic SA, a publicly traded
Greek corporation. Technical Olympic SA owns approximately 73% of
TOA's stock.
This is a young company in its current form. Much positioning has
been done during the past couple of years and the company seems
poised to show sustainable improvement in margins, overall
financial performance and credit metrics. The key issue is
whether the company can properly execute. Management has been
enhanced, particularly with the recent addition of David Keller
(formerly of D.R. Horton, Inc.) as CFO, and appears capable of
raising its performance closer to its public peers.
TOA's EBITDA margins, among the lowest of the public homebuilders,
have been roughly 9% for the past few years , but edged up to 9.7%
in 2003 and 10.1% for the 12 months ending Sept. 30, 2004.
Coverage ratios have declined - from 7.8 times in 2001 to 2.9x in
2003 and 3.1x at the close of the third quarter of 2004. TOA's
debt-to-EBITDA was 3.3x in 2002, 3.1x last year and 3.5x at the
close of the September 2004 quarter. Debt-to-capitalization was
52.4% as of Sept. 30, 2004, which compares to a ratio of 47.9% at
the end of 2003. Inventory turnover ranged between 1.6x in 2002
to 1.4x at present.
The company's EBITDA and EBIT to interest ratios, debt/EBITDA and
other leverage ratios are somewhat higher than those of the other
larger public homebuilders that Fitch follows, while its inventory
turnover ratio is similar to the majority of the builders that
Fitch rates. Although the company has certainly benefited from
the generally strong housing market of recent years, a degree of
profit enhancement is also attributed to purchasing design and
engineering, access to capital and other scale economies that have
been captured by the large national and regional public
homebuilders in relation to non-public builders.
These economies, the company's presale operating strategy and a
return on equity and assets orientation provide the framework to
soften the margin impact of declining market conditions in
comparison to previous cycles. TOA's ratio of sales value of
backlog to debt is 3.3x - a comfortable cushion.
Risk factors include the inherent (although somewhat tempered)
cyclicality of the homebuilding industry. The ratings also
manifest the company's historic aggressive growth strategy, below
peer margins and credit metrics and TOA's size.
In 2004 (and beyond) the company is prepared to leverage the
platform that it has established. As TOA grows in its existing
markets (aided by a healthy step-up in community count), it is
positioned to leverage existing capabilities, including
experienced local management, local brand strength and
recognition, and regional market knowledge. As volume grows, its
new systems and best practices initiatives should also improve
efficiencies and with greater economies of scale financial returns
can be maximized, its low margins can be strengthened and revenues
and profitability can be enhanced. Credit metrics should also
improve under this scenario.
TOA typically options or purchases land only after necessary
entitlements have been obtained so that development or
construction may begin as market conditions dictate. The company
extensively uses lot options. At present approximately 75% of its
lots are controlled through options - one of the higher
percentages among the public builders that Fitch tracks. TOA has
a small number of specific performance options. A modest amount
of its owned or optioned land is unentitled.
The company currently has refundable and nonrefundable deposits
aggregating $108.7 million reflected within inventories on its
balance sheet. A portion of this represents the capital at risk
should TOA not go forward with the exercise of its options. Also,
in accordance with SFAS No. 66 and FIN 46 $193 million is included
within total inventories of $1.40 billion and termed consolidated
inventory not owned. The company typically controls a 5-7 year
homesite supply. It owns 1-2 years supply of lots. The balance
is options. It targets communities for completion in a 2-3 year
time frame. As of the end of the third quarter, there were only
0.9 finished specs per community.
The four acquisitions in late 2002 and early 2003 and the
acquisition of Gilligan Homes in September of this year enabled
the company to build its position, broadening product and customer
bases in some existing markets, and enabled the company to enter
new markets. The acquisitions were typically funded by cash on
the balance sheet and debt. Typically, there were earn-outs which
reduced risk and served to retain key management. Now that TOA
has the geographic diversity and has built up its skilled
personnel and systems infrastructure Fitch expects the company
will concentrate on expanding volume within these existing
markets.
As of Sept. 30, 2004, the company had $58 million outstanding
under the $315 million revolving credit facility and had issued
letters of credit of $126.8 million, with $165.2 million remaining
in availability. In late October, TOA entered into a new,
unsecured revolving credit facility which increases the amount the
company is permitted to borrow to the lessor of:
(i) $600 million or
(ii) TOA's borrowing base minus its outstanding senior debt.
The new facility increases the amount of the letter of credit
subfacility to $300 million. In addition, the company has the
right to increase the size of the facility to provide up to an
additional $150 million of revolving loans, subject to meeting
certain requirements. The revolving credit facility expires on
Oct. 26, 2008. The company's stock has a small float and there
has not been share repurchase in the past.
TOA paid a cash dividend of $0.015 per share on its common stock
on June 15, 2004, the first dividend since the merger of the Engle
and Newmark businesses in June 2002. On Nov. 10, 2004, the Board
of Directors again declared a cash dividend of $0.015 per share.
Future declarations of cash dividends by the Board of Directors
will be at their discretion and will depend upon future operating
results and capital needs.
Debt holders are protected by financial covenants, including
adjusted consolidated tangible net worth, maximum indebtedness to
adjusted consolidated tangible net worth ratio, minimum interest
coverage ratio, unsold land to adjusted consolidated tangible net
worth and unsold units to units closed.
TRANSCONTINENTAL GAS: S&P Assigns B+ Rating to $75M Senior Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' rating to
Transcontinental Gas Pipeline Corp.'s (Transco; B+/Stable/--)
$75 million floating rate senior notes due 2008. The notes will
primarily be used to repay a portion of the existing $200 million
senior notes that mature on Jan. 15, 2005.
The rating on Transco reflects parent company The Williams Cos.
Inc.'s highly leveraged financial condition, the uncertain
financial performance of Williams' power subsidiary (formerly
known as energy, marketing, and trading), and the company's
consolidated creditworthiness.
The risks are partially offset by a substantial debt reduction
plan, an improving liquidity profile, and the stability of the
company's FERC-regulated natural gas pipelines, Transco and
Northwest Pipeline Corp.
The stable outlook reflects the expectation that Williams'
year-end financial ratios will improve as a result of its
significant debt reduction earlier this year.
If Williams continues to improve its financial ratios, the rating
could improve over the three-year time horizon of the outlook.
However, if cash usage at its power segment is considerably higher
than expectations or financial ratios fall considerably below
expectations, the outlook or the rating could change.
UNITED AIRLINES: Wants to Enter Into Verizon Omnibus License Pact
-----------------------------------------------------------------
UAL Corporation, its debtor-affiliates and Verizon Airfone, Inc.,
were parties to seven agreements:
1) A License Agreement where Verizon provided installation and
operation of telephone equipment to the Debtors' aircraft;
2) A GenStar IVS License Agreement where GenStar provided
installation and operation of Satellite and Individual Video
Systems on the Debtors' aircraft;
3) A JetConnect System Trial Agreement that provided for the
Debtors' use of Verizon's proprietary e-mail package;
4) An Equipment Lease and Service Agreement where Verizon
leased telephone equipment leased to the Debtors for
aircraft;
5) A Quick Connect Agreement where Verizon provided a speed
dial number used to re-route aircraft and confirm routing
instructions aboard aircraft;
6) A Speed Dial Service Agreement where Verizon provided a
speed dial number to allow passengers aboard aircraft to
access the Debtors' reservations services; and
7) A Speed Dial Service Agreement where Verizon provided a
speed dial number for the Debtors' employees to access
certain terminating phone numbers.
Since the Petition Date, the Debtors and Verizon have been
negotiating a termination of the Prior Agreements and entry into a
new omnibus license agreement. The material terms of the
License Agreement are:
a) The Prior Agreements will be mutually terminated;
b) The Debtors' billing obligations will be eliminated;
c) Verizon will provide the Debtors with minimum revenue
guarantees; and
d) The parties will mutually release each other.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago,
Illinois, asserts that rejection of the License Agreement is
within the ordinary course of business and does not require Court
approval. However, because the License Agreement contains a
mutual release, it may be considered a settlement or compromise
requiring Court approval under Section 363 of the Bankruptcy
Code.
By this motion, the Debtors seek the United States Bankruptcy
Court for the Northern District of Illinois' authority to reject
the Prior Agreements and enter into an omnibus License Agreement.
Mr. Sprayregen explains that the termination of the Prior
Agreements and entry into the License Agreement will provide a net
benefit to the Debtors' estates worth over $2,000,000. The
Debtors are waiving a $2,700,000 potential contingent claim for a
contingent reimbursement incentive under the License Agreement.
In consideration, Verizon is waiving a potential $2,600,000
administrative claim for postpetition services under the Prior
Agreements, plus potential breach of contract claims and rejection
damages claims.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. (United Airlines
Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
VALLEY REGIONAL: Moody's Withdraws Ba3 Bond Rating After Refund
---------------------------------------------------------------
Moody's Investors Service has withdrawn its Ba3 long-term bond
rating on Valley Regional Hospital's Series 1993 bonds issued
through the New Hampshire Higher Educational and Health Facilities
Authority. The outstanding Series 1993 bonds were refunded in
full in March 2003. Valley Regional Hospital has no other
outstanding debt rated by Moody's.
VERMEER FUNDING: Fitch Rates $12.6 Mil. Preference Shares at BB-
----------------------------------------------------------------
Fitch Ratings assigns these ratings to Vermeer Funding II, Ltd.
and Vermeer Funding II, Inc.:
-- $210,000,000 class A-1 senior secured floating rate notes
due 2039 'AAA';
-- $3,000,000 class A-2A senior secured floating rate notes
due 2039 'AAA';
-- $25,250,000 class A-2B senior secured floating rate notes
due 2039 'AAA';
-- $35,290,000 class B senior secured floating rate notes due
2039 'AA';
-- $12,014,000 class C-1 mezzanine secured floating rate
notes due 2039 'BBB';
-- $2,686,000 class C-2 mezzanine secured fixed rate notes
due 2039 'BBB';
-- $12,625,000 preference shares due 2039 'BB-'.
Vermeer II is an arbitrage cash flow collateralized debt
obligation -- CDO -- managed by Rabobank International, rated
'CAM2' by Fitch.
The ratings of the class A and class B notes address the
likelihood that investors will receive full and timely payments of
interest, as per the governing documents, as well as the aggregate
outstanding amount of principal by the stated maturity date. The
ratings of the class C notes address the likelihood that investors
will receive ultimate interest payments, as per the governing
documents, as well as the aggregate outstanding amount of
principal by the stated maturity date. The rating of the
preference shares addresses the likelihood that investors will
receive the ultimate return of the aggregate outstanding amount of
principal only.
The ratings are based upon the credit quality of the underlying
assets and the credit enhancement provided to the capital
structure through subordination and excess spread, as well as the
experience and capabilities of the collateral manager. Excess
spread exceeding a 14.75% dividend yield on the preference shares
will be used to redeem the class C notes.
Proceeds from the issuance will be invested in a portfolio of
residential mortgage-backed securities -- RMBS, CDOs, commercial
mortgage-backed securities -- CMBS, and asset-backed securities --
ABS. At the end of a 120-day ramp-up period, the collateral will
have a maximum Fitch weighted average rating factor -- WARF -- of
5.75 ('BBB'/'BBB-').
Vermeer Funding II will have a three-year substitution period
during which principal proceeds will be used to pay down notes and
sale proceeds may be reinvested to purchase substitute collateral
or amortize notes. Rabobank International has the ability to sell
15% of the collateral per year on a discretionary basis during the
substitution period and may sell defaulted, credit risk, and
credit improved securities at any time.
Vermeer Funding II, Ltd., is a Cayman Islands exempted company.
Vermeer Funding II, Inc., is a Delaware corporation.
For more information, please refer to the presale report titled
'Vermeer Funding II, Ltd.,' dated Nov. 2, 2004, available on the
web site at http://www.fitchratings.com/
W.R. GRACE: Asks Bankruptcy Court to Estimate Asbestos Liability
----------------------------------------------------------------
Promptly after their bankruptcy petition date, W.R. Grace & Co.
and its debtor-affiliates filed a detailed case management
procedures motion intended to resolve their actual liability to
Asbestos Personal Injury Claimants through pre-confirmation common
issues litigation. The Asbestos PI Committee opposed the Debtors'
case management procedures, and responded instead with a proposal
to estimate the size of a post-confirmation trust to be set aside
for the claims based solely on its preferred method of
extrapolating future claim obligations from the Debtors'
pre-bankruptcy claim settlements. In the five or more years
preceding the bankruptcy, those settlements were typically made on
a large-scale "inventory" basis because the volume of claims
precluded the Debtors from resolving them through the tort system
based on their individual merits.
The unexplained and unprecedented surge in claims in 2000 made it
impossible for the Debtors to continue these inventory
settlements. Rather than addressing this problem, the PI
Committee's estimation proposals would perpetuate it. The PI
Committee's approach would extrapolate the Debtors' liability for
pending and future claims by assuming the 2000 claims were valid,
despite the overwhelming evidence to the contrary.
The PI Committee's approach would also capitalize on the lack of
effective claim screening that was inherent in the pre-2000
inventory settlement approach, compounding rather than solving the
problem of the mass filing of illegitimate claims that drove the
Debtors into bankruptcy. The PI Committee's July 2002 deposition
of Jay Hughes, the senior Grace Law Department attorney
responsible for Asbestos PI Claims, confirmed that even before the
2000 surge of claims, the Debtors had no means of limiting
inventory settlements to valid claims. Mr. Hughes testified that
the sheer volume of the claims against the Debtors in the mid to
latter 1990s forced the company to settle the claims on a mass
scale even though it knew most were of doubtful validity.
The Debtors later recognized that as an alternative, the asbestos
personal injury litigation can be deferred to the period following
the confirmation of a reorganization plan. Toward that end, the
Debtors propose to set aside a post-confirmation trust for
Asbestos PI Claimants satisfying recognized medical standards for
asbestos-related disease and impairment, who can also demonstrate
sufficient exposure to the Debtors' asbestos products.
Thus, the Debtors' Plan provides for the creation of the
post-confirmation trust to which all Asbestos Property Damage
Claims and Asbestos Personal Injury Claims will be channeled for
recovery.
As promised by the Debtors in their June 21, 2004, Status Report,
and in recognition of the Bankruptcy Court's desire to proceed
quickly to plan confirmation, they propose an alternative
protocol, which calls for an estimation of their liability pre-
confirmation, with common issues litigation to follow post-
confirmation. They are prepared to pursue either approach.
Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones
& Weintraub, P.C., in Wilmington, Delaware, explains that
implementing estimation procedures would facilitate the two
approaches. The estimation procedures can be used to determine
the feasibility of the Plan and to cap the Debtors' liability for
all classes of Asbestos Claims other than the Asbestos PI-AO
Claims detailed in the Plan. Alternatively, the information
gained through the estimation process would also be of critical
value in defining the Debtors' liability through the litigation
process proposed in the Debtors' Original Case Management Motion.
Accordingly, the Debtors ask the Court to:
* determine estimates of the aggregate amounts needed to fund
the Asbestos Trust to enable the full payment of all Allowed
Asbestos Claims and Asbestos Trust Expenses, as and when
they become due; and
* establish a schedule and procedures for carrying out
these estimations.
For traditional property damage claims, the Bankruptcy Court has
already set a bar date and the completed claim forms have already
been received and analyzed. These claims are therefore already in
a posture, after an appropriate period for the completion of
expert discovery and the scheduling of a contested estimation
hearing, for the Bankruptcy Court to reach a binding estimation.
The validity of individual claims can then be litigated post-
confirmation through omnibus objections and other common issue
litigation procedures, with litigation of specific claims to
follow if and when necessary.
For ZAI property damage claims, the parties have completed
discovery and have fully briefed summary judgment motions
concerning the threshold science issues needed to determine
whether any of these claims should be allowed. If any types of
ZAI Claims survive the science trial process, the next step should
be to approve a bar date, claim form and a notice program to
identify the actual ZAI claimants. The information gained through
these claim forms would be critical to either an estimation of
Grace's ultimate liability under a plan process or, in the
alternative, to the litigation of the remaining ZAI common issues
pursuant to the proposed Original Case Management Motion.
Ms. Jones notes that the Asbestos PI Claims pose the biggest
challenge, because no progress has been made on this front since
the Original Case Management Motion had been filed. Whether these
Chapter 11 cases are resolved through a plan process or through
pre-confirmation common issues litigation, the first priority
should be to better understand the population of claimants with
unresolved personal injury lawsuits as of the Petition Date.
Those claimants have already retained counsel, who in turn were
sufficiently prepared to file suit against the Debtors. The
Debtors know who those claimants and their counsel are, so direct
notice of a bar date can be served, and prompt responses can be
required.
Claim forms can be followed up with claims questionnaires, which
will enable the parties to develop a detailed "snapshot" of the
actual medical conditions and exposure histories of the claiming
population as it existed on the Petition Date. From that
information, the parties can develop meaningful estimates of the
Debtors' actual liability to these claimants for plan confirmation
purposes, as well as projections of the Debtors' liability to
future claimants. Alternatively, the claims questionnaires can be
used to litigate common issues through pre-confirmation
litigation. Under either approach, obtaining the information
requested in the questionnaire is a critical first step.
If the Bankruptcy Court decides to pursue the plan process and to
defer common issues litigation of the liability issues until the
post-confirmation stage of these proceedings, it is critical that
case management procedures be set, Ms. Jones contends.
In their Plan, the Debtors proposed that the Asbestos Trust
initially be funded with the amount of money the Bankruptcy Court
estimates to be sufficient to enable the Asbestos Trust to pay all
Allowed Asbestos PI Claims and Asbestos PD Claims in full, once
they are eventually settled or adjudicated on the merits, and all
Asbestos Trust Expenses.
The Debtors intend to use these estimates in support of
feasibility and other findings necessary to achieve Plan
confirmation. The only alternative would be to litigate hundreds
of thousands of Asbestos Claims individually prior to
confirmation, which is an expensive and unwieldy proposition that
would delay distributions for years.
To carry out the proposed estimations, the Debtors ask the Court
to adopt this five-step process:
(1) Establishing an Asbestos PI Prepetition Litigation Bar
Date and Questionnaire Return Date
The Asbestos PI Prepetition Litigation Bar Date is the
final date by which any person or entity holding an
Asbestos PI Prepetition Litigation Claim must file an
Asbestos PI Proof of Claim Form to receive distribution.
The Debtors propose that the Asbestos PI Prepetition
Litigation Bar Date be 40 days after the Court enters an
Estimation Order, allowing the Debtors to complete the
mailing of the Notice of the Asbestos PI Prepetition
Litigation Bar Date and Asbestos PI Proof of Claim Form
within the 10 days of the Estimation Order. No later than
five days after the Asbestos PI Prepetition Litigation Bar
Date, Holders of Asbestos PI Prepetition Litigation Claims
who timely filed Asbestos PI Proof of Claim Forms would be
sent an Asbestos PI Questionnaire, which would be due 30
days later -- the "Questionnaire Return Date."
(2) Approving the scope and manner of notice of the Asbestos
PI Prepetition Litigation Bar Date and Questionnaire
Return Date
The Debtors propose that within the 10 calendar days after
entry of the Estimation Order, they will distribute notice
of the Asbestos PI Prepetition Litigation Bar Date and the
Asbestos PI Proof of Claim Form, to all known Holders of
Asbestos PI Prepetition Litigation Claims. No later than
five days after the Asbestos Prepetition Litigation Bar
Date, the Debtors will distribute notice of the Asbestos
PI Questionnaire and the Asbestos PI Questionnaire to all
Holders of Asbestos PI Prepetition Litigation Claims who
timely filed Asbestos PI Proof of Claim Forms. The
Asbestos PI Questionnaire would be required to be returned
30 days later.
Because the proposed Asbestos PI Prepetition Litigation
Bar Date Notice will apply only to Holders of Asbestos PI
Claims who are known to the Debtors or their
professionals, there is no need for the Debtors' estates
to incur the expense and burden associated with publishing
notice of the Asbestos PI Prepetition Litigation Bar Date
or the Questionnaire Return Date.
(3) Approving the form and manner of distribution of Asbestos
PI Proof of Claim Forms and Asbestos PI Questionnaires
The Debtors ask the Court to approve the form, use and
manner of distribution of the Asbestos PI Claim Materials
to Holders of Asbestos PI Prepetition Litigation Claims
for purposes of eliciting information related to the
nature and scope of these Claims.
(4) Setting an expert discovery schedule
The Debtors ask the Court to set an expert discovery
schedule that provides for a reasonable period of time for
the Debtors' and other interested parties' experts to
review the data received in the Asbestos PI Proof of Claim
Forms and Asbestos PI Questionnaires and prepare expert
reports. The Debtors propose that the appointed claims
processing agent in their Chapter 11 cases, Rust
Consulting, Inc., be given 21 days from the deadline for
receipt of the Asbestos PI Questionnaire to compile the
Claims information into a navigable database and make it
available to the Debtors and the various official
committees' estimation experts, if any. The Debtors also
propose that the experts be allowed 45 days to complete
their reports and be given two weeks to be deposed.
(5) Holding an evidentiary hearing to estimate the requisite
monetary allocations to the Asbestos Trust
After the completion of the expert discovery process, the
Debtors ask the Court to permit them to proceed to the
final step in the estimation process by holding an
evidentiary hearing to estimate the requisite monetary
allocations to the Asbestos Trust. The Debtors anticipate
that the estimation hearing could be scheduled within six
months after the entry of the Estimation Order.
In conjunction with their Plan, the Debtors ask the Court to
estimate the aggregate amounts needed to fund the Asbestos Trust
to enable the Trust to pay in full all Allowed Asbestos PI-SE
Claims, Allowed Asbestos PI-AO Claims, Allowed Asbestos PD Claims,
and Asbestos Trust Expenses, as and when they become due. These
estimates are referred to in the Debtors' Plan as:
* the Asbestos PI-SE Class Fund;
* the Asbestos PI-AO Class Fund;
* the Asbestos PD Class Fund; and
* the Asbestos Trust Expenses Fund.
The Debtors also ask the Court to determine that:
(a) the Asbestos PI-SE Class Fund will constitute the maximum
amount that the Reorganized Debtors will have to pay on
account of all Allowed Asbestos PI-SE Claims;
(b) the Asbestos PD Class Fund will constitute the maximum
amount that the Reorganized Debtors will have to pay on
account of all Allowed Asbestos PD Claims; and
(c) the Asbestos Trust Expenses Fund will constitute the
maximum amount that the Reorganized Debtors will have to
pay on account of all expenses of the Asbestos Trust.
Ms. Jones relates that the Bankruptcy Court has jurisdiction to
estimate the Asbestos PI Claims for Plan purposes. Cases
generally hold that the estimation of personal injury claims for
purposes of determining plan feasibility is a core proceeding that
can be heard by the bankruptcy court without a jury, while the
estimation of these claims for distribution purposes may need to
be heard by a district court, and may give rise to the claimants'
rights to a jury trial. The Bankruptcy Court also has the
authority to estimate claims, including Asbestos PI Claims, in
conjunction with the confirmation of the Debtors' Plan.
Moreover, Ms. Jones says, estimation of Asbestos Claims is
necessary (i) in conjunction with the Debtors' Plan if litigation
is deferred until after confirmation, and (ii) because of the fact
that the Debtors' bankruptcy was the result of a surge of claims
that overwhelmed the tort system.
In addition, the PI Committee has never attempted to justify the
spike in claims against the Debtors based on an actual increase in
disease caused by the Debtors' products. Ms. Jones points out
that actual asbestos-related malignant disease rates are declining
in response to the regulatory curtailment of significant asbestos
exposures in the early 1970s. The death rates for mesothelioma
have been declining since 1992. Leading medical researchers have
also similarly described asbestosis as a disappearing disease.
There is no explanation, grounded either in medicine or in the
Debtors' liability, for the 2000 spike in claims against the
Debtors. Since the Debtors' Chapter 11 filing, numerous courts,
academics and other observers have confirmed widespread, national
abuse of the asbestos claims process. Thus, the estimation of
Asbestos Claims is appropriate.
Headquartered in Columbia, Maryland, W.R. Grace & Co., --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally. The Company and its debtor-
affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in
their restructuring efforts. (W.R. Grace Bankruptcy News, Issue
No. 76; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WELLS FARGO: S&P Assigns Low-B Ratings to 79 Issue Classes
----------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on
61 publicly rated classes from 16 series issued by Wells Fargo
Mortgage Backed Securities Trust. At the same time, ratings are
affirmed on the remaining classes from the same issuer.
The raised ratings reflect:
(1) credit support percentages that are at least 1.56x the loss
coverage levels associated with the raised ratings;
(2) excellent collateral pool performance as demonstrated by
low cumulative losses of no greater than 3 basis points --
bps;
(3) A shifting interest structure which was further influenced
by significant principal prepayments as evidenced by a
12-month constant prepayment rate -- CPR, averaging 39.59%;
and
(4) remaining collateral balances that are less 43.88% of their
original sizes (with the majority at less than 30%).
The accelerated prepayments are a result of the strong wave of
refinancings due to the continued pattern of low mortgage rates.
To illustrate the effect of significant prepayments to the
shifting interest structure, series 2003-C, with 23 months of
mortgage seasoning, has paid down to less than 26% of its original
balance, due to experiencing a 12-month CPR of 42.81%. As a
result, five of its classes with raised ratings have credit
support percentages that are at least 1.90x the loss coverage
levels associated with the new ratings. Consideration was also
given to the fact that series 2003-C had no loans in the serious
delinquencies (90-plus days, foreclosure, and REO) category.
Twenty-one classes from seven series of 15-year, fixed-rate
mortgage loans were among those that were upgraded. As of the
October 2004 distribution date, no series in this group had any
seriously delinquent loans. Furthermore, all series experienced
low or no realized losses. The average mortgage seasoning for the
15-year, fixed-rate group is 26 months.
Forty classes from 11 series of 30-year, fixed-rate mortgage loans
were among those that were upgraded. Serious delinquencies ranged
between 0.00% (for five series) and 0.56% (series 2002-18).
Cumulative realized losses were no greater than 3 bps for the 11
series. The average mortgage seasoning for the 30-year,
fixed-rate group is 27 months.
The rating affirmations reflect credit enhancement percentages
that are sufficient to support the current ratings. As with the
upgraded certificates, the mortgage pools backing the certificates
with affirmed ratings have experienced excellent collateral
performance with low delinquencies and low or zero realized
losses.
The collateral backing the certificates consists of prime, first-
lien mortgage loans secured by one- to four-family residential
properties.
Ratings Raised
Wells Fargo Mortgage Backed Securities Trust
Mortgage pass-through certs
Rating
Series Class To From
2001-30 B-2 AAA AA
2001-30 B-3 AA+ BBB+
2002-1 B-1 AAA AA+
2002-1 B-2 AA+ A+
2002-1 B-3 AA- BBB+
2002-11 B-2 AAA AA
2002-11 B-3 AA+ A
2002-13 B-1 AAA AA+
2002-13 B-2 AAA AA
2002-13 B-3 AA+ A-
2002-16 B-1 AAA AA+
2002-16 B-2 AAA AA
2002-16 B-3 AA+ A-
2002-17 B-1 AAA AA+
2002-17 B-2 AAA AA
2002-17 B-3 AA+ A-
2002-18 B-1 AAA AA+
2002-18 B-2 AA+ AA-
2002-18 B-3 AA- BBB+
2002-19 B-1 AAA AA+
2002-19 B-2 AAA AA
2002-19 B-3 AA BBB+
2002-20 B-1 AAA AA+
2002-20 B-2 AA+ A+
2002-20 B-3 AA- BBB+
2002-22 B-1 AAA AA+
2002-22 B-2 AAA AA
2002-22 B-3 AA+ A
2003-1 I-B-1 AA+ AA
2003-1 I-B-2 AA- A
2003-1 I-B-3 A- BBB
2003-1 I-B-4 BBB- BB
2003-1 I-B-5 BB- B
2003-1 II-B-1 AA+ AA
2003-1 II-B-2 AA- A
2003-1 II-B-3 A BBB
2003-1 II-B-4 BBB- BB
2003-2 B-1 AA+ AA
2003-2 B-2 AA- A
2003-2 B-3 BBB+ BBB
2003-2 B-4 BB+ BB
2003-2 B-5 B+ B
2003-3 I-B-1 AA+ AA
2003-3 I-B-2 A+ A
2003-3 I-B-3 BBB+ BBB
2003-3 II-B-1 AA+ AA
2003-3 II-B-2 A+ A
2003-A B-1 AA+ AA
2003-A B-2 AA- A
2003-A B-3 A- BBB
2003-A B-4 BBB- BB
2003-A B-5 B+ B
2003-C B-1 AA+ AA
2003-C B-2 AA- A
2003-C B-3 A- BBB
2003-C B-4 BB+ BB
2003-C B-5 B+ B
2003-D B-1 AA+ AA
2003-D B-2 A+ A
2003-D B-3 BBB+ BBB
2003-D B-4 BB+ BB
Ratings Affirmed
Wells Fargo Mortgage Backed Securities Trust
Mortgage pass-through certs
Series Class Rating
2001-30 A-3,A-PO,B-1 AAA
2002-1 A-2,A-PO AAA
2002-7 *II-A-5 AAA
2002-11 A-1,A-PO,B-1 AAA
2002-13 A-1A,A-2,A-3,A-4,A-5,A-PO AAA
2002-16 A-4,A-PO AAA
2002-17 A-1,A-2,A-3,A-PO AAA
2002-18 I-A-1,*I-A-2,I-A-3,I-A-4,I-A-5,I-A-6,I-A-8 AAA
2002-18 I-A-16,I-A-17 AAA
2002-18 II-A-4,II-A-5,II-A-18,II-A-WIO,A-PO AAA
2002-19 I-A-4,I-A-5,I-A-6,I-A-7,I-A-8,I-A-9 AAA
2002-19 I-A-PO,II-A-3,*II-A-4,II-A-5,II-A-7,II-A-PO AAA
2002-20 A-2,A-3,A-4,A-5,A-PO AAA
2002-22 I-A-9,I-A-12,II-A-4,II-A-10 AAA
2002-22 II-A-PO,I-A-WIO,II-A-WIO AAA
2003-1 I-A-1,I-A-2,I-A-3,I-A-4,I-A-5,I-A-6,I-A-7 AAA
2003-1 I-A-8,I-A-9,I-A-10 AAA
2003-1 II-A-1,II-A-2,II-A-3,II-A-4,II-A-5,II-A-6 AAA
2003-1 II-A-7,II-A-8,II-A-9,A-PO AAA
2003-1 II-B-5 B
2003-2 A-2,A-3,A-4,A-5,A-6,A-7,A-8,A-9,A-10 AAA
2003-2 A-11,A-PO AAA
2003-3 I-A-1,I-A-2,I-A-3,I-A-4,I-A-5,I-A-6,I-A-7 AAA
2003-3 I-A-8,I-A-9,I-A-10,I-A-11,I-A-12,I-A-13 AAA
2003-3 I-A-14,I-A-15,I-A-16,I-A-17,I-A-18,I-A-19 AAA
2003-3 I-A-20,I-A-21,I-A-22,I-A-23,I-A-24 AAA
2003-3 II-A-1,A-PO AAA
2003-3 II-B-3 BBB
2003-3 I-B-4,II-B-4 BB
2003-3 I-B-5,II-B-5 B
2003-6 I-A-1,I-A-PO,II-A-1,II-A-2,II-A-3,II-A-PO AAA
2003-6 B-1 AA
2003-6 B-2 A
2003-6 B-3 BBB
2003-6 B-4 BB
2003-6 B-5 B
2003-7 A-1,A-2,A-3,A-4,A-PO AAA
2003-7 B-1 AA
2003-7 B-2 A
2003-7 B-3 BBB
2003-7 B-4 BB
2003-7 B-5 B
2003-8 A-1,A-2,A-3,A-4,A-5,A-6,A-7,A-9,A-PO AAA
2003-8 B-1 AA
2003-8 B-2 A
2003-8 B-3 BBB
2003-8 B-4 BB
2003-8 B-5 B
2003-9 I-A-1,I-A-2,I-A-3,I-A-4,I-A-5,I-A-6,I-A-7 AAA
2003-9 I-A-8,I-A-9,I-A-10,I-A-11,I-A-12,I-A-13 AAA
2003-9 I-A-14,I-A-15,I-A-16,A-PO,II-A-1 AAA
2003-10 A-1,A-2,A-3,A-4,A-PO AAA
2003-10 B-1 AA
2003-10 B-2 A
2003-10 B-3 BBB
2003-10 B-4 BB
2003-10 B-5 B
2003-11 I-A-1,I-A-2,I-A-3,I-A-4,I-A-5,I-A-6,I-A-8 AAA
2003-11 I-A-9,I-A-10,I-A-11,I-A-12,I-A-13,I-A-PO AAA
2003-11 II-A-1,II-A-PO AAA
2003-11 B-1 AA
2003-11 B-2 A
2003-11 B-3 BBB
2003-11 B-4 BB
2003-11 B-5 B
2003-12 A-1,A-2,A-3,A-PO AAA
2003-12 B-1 AA
2003-12 B-2 A
2003-12 B-3 BBB
2003-12 B-4 BB
2003-12 B-5 B
2003-13 A-1,A-2,A-3,A-4,A-5,A-6,A-7,A-PO AAA
2003-13 B-1 AA
2003-13 B-2 A
2003-13 B-3 BBB
2003-13 B-4 BB
2003-13 B-5 B
2003-14 I-A-1,I-A-2,I-A-3,I-A-4,II-A-1,II-A-2,A-PO AAA
2003-14 B-1 AA
2003-14 B-2 A
2003-14 B-3 BBB
2003-14 B-4 BB
2003-14 B-5 B
2003-15 I-A-1,I-A-2,I-A-3,II-A-1,A-PO AAA
2003-15 B-1 AA
2003-15 B-2 A
2003-15 B-3 BBB
2003-15 B-4 BB
2003-15 B-5 B
2003-16 I-A-1,II-A-1,II-A-2,II-A-3,II-A-4,II-A-IO AAA
2003-16 III-A-1,III-A-2,A-PO AAA
2003-16 B-1 AA
2003-16 B-2 A
2003-16 B-3 BBB
2003-16 B-4 BB
2003-16 B-5 B
2003-17 I-A-1,I-A-2,I-A-3,I-A-4,I-A-5,I-A-6,I-A-7 AAA
2003-17 I-A-8,I-A-9,I-A-10,I-A-11,I-A-12,I-A-13 AAA
2003-17 I-A-14,I-A-IO,II-A-1,II-A-2,II-A-3,II-A-4 AAA
2003-17 II-A-5,II-A-6,II-A-7,II-A-8,II-A-9,II-A-10 AAA
2003-17 II-A-11,A-PO AAA
2003-17 B-1 AA
2003-17 B-2 A
2003-17 B-3 BBB
2003-17 B-4 BB
2003-17 B-5 B
2003-19 A-1,A-2,A-3,A-4,A-PO AAA
2003-19 B-1 AA
2003-19 B-2 A
2003-19 B-3 BBB
2003-19 B-4 BB
2003-19 B-5 B
2003-A A-5,A-6,A-7 AAA
2003-C A-3,A-4,A-5,A-6,A-7,A-8,A-9 AAA
2003-D A-1 AAA
2003-D B-5 B
2003-E A-1,A-2,A-3,A-4,A-WIO AAA
2003-E B-1 AA
2003-E B-2 A
2003-E B-3 BBB
2003-E B-4 BB
2003-E B-5 B
2003-F A-1 AAA
2003-F B-1 AA
2003-F B-2 A
2003-F B-3 BBB
2003-F B-4 BB
2003-F B-5 B
2003-G A-1,A-IO AAA
2003-G B-1 AA
2003-G B-2 A
2003-G B-3 BBB
2003-G B-4 BB
2003-G B-5 B
2003-H A-1 AAA
2003-H B-1 AA
2003-H B-2 A
2003-H B-3 BBB
2003-H B-4 BB
2003-H B-5 B
2003-J I-A-1,I-A-2,I-A-3,I-A-4,I-A-5,I-A-6,I-A-7 AAA
2003-J I-A-8,I-A-9,I-A-10,I-A-11,I-A-12 AAA
2003-J II-A-1,II-A-2,II-A-3,II-A-4,II-A-5,II-A-6 AAA
2003-J II-A-7,III-A-1,III-A-2,III-A-3 AAA
2003-J IV-A-1,IV-A-2,IV-A-3,V-A-1 AAA
2003-J B-1 AA
2003-J B-2 A
2003-J B-3 BBB
2003-J B-4 BB
2003-J B-5 B
2003-K I-A-1,I-A-2,I-A-3,I-A-4,I-A-5 AAA
2003-K II-A-1,II-A-2,II-A-3,II-A-4,II-A-5,II-A-6 AAA
2003-K II-A-7,III-A-1,III-A-2,III-A-3,III-A-4 AAA
2003-K IV-A-1 AAA
2003-K B-1 AA
2003-K B-2 A
2003-K B-3 BBB
2003-K B-4 BB
2003-K B-5 B
2003-L I-A-1,I-A-2,I-A-3,I-A-4,I-A-5,II-A-1 AAA
2003-L B-1 AA
2003-L B-2 A
2003-L B-3 BBB
2003-L B-4 BB
2003-L B-5 B
2003-M A-1,A-2,A-3 AAA
2003-M B-1 AA
2003-M B-2 A
2003-M B-3 BBB
2003-M B-4 BB
2003-M B-5 B
2003-O I-A-1,I-A-2,I-A-3,I-A-4,I-A-5,I-A-6 AAA
2003-O I-A-7,I-A-8,I-A-9,I-A-10,I-A-11 AAA
2003-O II-A-1,II-A-2,II-A-3,III-A-1,III-A-2 AAA
2003-O III-A-3,IV-A-1,IV-A-2,V-A-1 AAA
2003-O B-1 AA
2003-O B-2 A
2003-O B-3 BBB
2003-O B-4 BB
2003-O B-5 B
2004-1 A-1,A-2,*A-3,A-4,A-5,A-6,A-7,A-8,A-9 AAA
2004-1 A-10,A-11,A-12,A-13,A-14,A-15,A-16,A-17 AAA
2004-1 A-18,A-19,A-20,A-21,A-22,A-23,A-24,A-25 AAA
2004-1 A-26,A-27,A-28,A-29,A-30,A-31,A-32,A-33 AAA
2004-1 A-34,A-35,A-36,A-37,A-39,A-PO,A-WIO AAA
2004-1 B-1 AA
2004-1 B-2 A
2004-1 B-3 BBB
2004-1 B-4 BB
2004-1 B-5 B
2004-2 A-1,A-PO AAA
2004-2 B-1 AA
2004-2 B-2 A
2004-2 B-3 BBB
2004-2 B-4 BB
2004-2 B-5 B
2004-3 A-1,A-PO AAA
2004-3 B-1 AA
2004-3 B-2 A
2004-3 B-3 BBB
2004-3 B-4 BB
2004-3 B-5 B
2004-A A-1 AAA
2004-A B-1 AA
2004-A B-2 A
2004-A B-3 BBB
2004-A B-4 BB
2004-A B-5 B
2004-B A-1 AAA
2004-B B-1 AA
2004-B B-2 A
2004-B B-3 BBB
2004-B B-4 BB
2004-B B-5 B
2004-C A-1 AAA
2004-C B-1 AA
2004-C B-2 A
2004-C B-3 BBB
2004-C B-4 BB
2004-C B-5 B
2004-D A-1,A-2,A-IO AAA
2004-D B-1 AA
2004-D B-2 A
2004-D B-3 BBB
2004-D B-4 BB
2004-D B-5 B
2004-E A-1,A-2,A-3,A-4,A-5,A-6,A-7,A-8,A-9 AAA
2004-E A-10,A-11 AAA
2004-E B-1 AA
2004-E B-2 A
2004-E B-3 BBB
2004-E B-4 BB
2004-E B-5 B
2004-F A-1,A-2,A-3,A-4,A-5,A-6,A-7,A-8,A-9 AAA
2004-F A-10,A-11 AAA
2004-F B-1 AA
2004-F B-2 A
2004-F B-3 BBB
2004-F B-4 BB
2004-F B-5 B
2004-G A-1,A-2,A-3,A-4 AAA
2004-G B-1 AA
2004-G B-2 A
2004-G B-3 BBB
2004-G B-4 BB
2004-G B-5 B
2004-H A-1,A-2 AAA
2004-H B-1 AA
2004-H B-2 A
2004-H B-3 BBB
2004-H B-4 BB
2004-H B-5 B
WORLDCOM INC: Savvis Wants Court to Okay $405K Admin. Claim Fee
---------------------------------------------------------------
Savvis Communications Corporation is a tenant in a building
located at 580 Winter Street, in Waltham, Massachusetts. Since
the Petition Date, WorldCom, Inc. and its debtor-affiliates have
also occupied and utilized a portion of the available space in the
Massachusetts Facility, and have utilized and benefited from
utility service provided to the Facility.
Notwithstanding that the Debtors have occupied a substantial
portion of the Facility, Anusia L. Gaver, Esq., at Lowenstein
Sandler, in New York, informs the United States Bankruptcy Court
for the Southern District of New York that Savvis has paid all of
the utility charges for the entire Facility since before the
Petition Date. The services for electric power consumption were
utilized by MCI.
According to Ms. Anusia L. Gaver, a fair minimum estimate of the
monthly dollar value of the utility services, which Savvis has
provided to Debtors postpetition is $15,000 per month. Thus, the
total minimum administrative claim, using a multiplier of 27
months postpetition, is $405,000.
Ms. Gaver clarifies that Savvis' administrative claim is being
filed on a protective basis as Savvis cannot presently determine
with precision as of October 15, 2004, the exact amount of utility
services provided to and actually used by the Debtors. Savvis
seeks the right to amend its administrative claim in the future.
By this motion, Savvis asks the Court to allow its administrative
claim in an amount not less than $405,000, and direct the Debtors
to pay the full amount of the allowed administrative claim to
them.
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. 67; Bankruptcy Creditors' Service, Inc., 215/945-7000)
YUKOS OIL: Files Voluntary Chapter 11 Petition in S.D. Texas
------------------------------------------------------------
Yukos Oil Company filed a voluntary petition for reorganization
under Chapter 11 of Title 11 of the United States Bankruptcy Code.
The existing management continues to operate the business and
manage its properties as debtor-in-possession. The Company also
asked the Court for an Emergency hearing on a Motion for a
Temporary Restraining Order and for a Preliminary Injunction to
halt the planned December 19th auction of its core asset,
Yuganskneftegas and to compel the Russian Federation to arbitrate
the Company's claims for the billions of dollars in damages.
Yukos was forced into reorganization because Russian authorities
are proceeding with the sale of the Company's largest unit,
Yuganskneftegas, which accounts for roughly 60% of the Company's
oil production. If allowed, the sale of Yuganskneftegas will
cause the Company to suffer immediate and irreparable harm. Also,
Yukos Oil Company's bank accounts and other assets have been
frozen by Russian authorities as part of an unprecedented campaign
of illegal, discriminatory, and disproportionate tax claims
escalating into raids and confiscations, culminating in
intimidation and arrests. These actions have severely damaged
Yukos and the company's ability to conduct normal business
operations.
The company made the filing in the United States Bankruptcy Court
for the Southern District of Texas, Houston Division. U.S.
Bankruptcy law has worldwide jurisdiction over property of the
debtor and the Company is seeking a judiciary that will protect
the value of all shareholders' investment in Yukos. Houston is a
major international oil and gas center. Yukos has assets and
business dealings in the area. Also, the Company's Chief
Financial Officer is currently fulfilling his management
responsibilities from Houston.
Yukos is asking the Court for a Temporary Restraining Order
halting the planned Sunday auction of Yuganskneftegas by Russian
authorities. The order seeks to prevent the Russian Government,
the auction bidders and financiers from participating in the sale
process of purchasing, attempting to purchase, facilitating the
purchase, financing or encumbering the property of Yukos.
"The management of Yukos has worked tirelessly and in good faith
over the past year to establish a dialogue with the Russian
authorities in an attempt to work out a compromise that would have
prevented [Tuesday]'s reorganization filing. We have submitted
more than 70 settlement offers and publicly stated that
reorganization was a distinct possibility if a reasonable
resolution was not reached. It is regrettable that we did not
receive one substantive response," said Yukos Chief Executive
Officer Steven Theede. "The steps we took [Tuesday] were done as
a last resort to preserve the rights of our shareholders,
employees and customers. Unfortunately, we believe it was the
only resort left for us."
"The selective and retroactive application of tax law by Russian
authorities is improper under Russian and international law and
has directly resulted in the loss of approximately $38 billion in
market value for our investors. The actions by the Russian
authorities appear to be expropriation - 21st century style," said
Mr. Theede.
The Russian authorities have pursued an unprecedented campaign
against Yukos by asserting tax claims (in excess of 100% in 2001
and 2002 and 80% in 2003 of the company's annual consolidated
gross revenues - not net income, consolidated gross revenues) that
are not consistent with Russian tax policy or the rule of law. As
a result of these obviously exorbitant claims, the Company
believed it has no other choice but to seek reorganization
protection while pursuing its damage claims.
"Yukos worked and fought hard to become the most transparent and
successful company in Russia, as well as one of the most efficient
and successful oil and gas companies in the world. In many ways
it became the poster child for business reform in Russia. On
behalf of our 100,000 employees, shareholders and customers,
management is committed to do everything in its power to
maintaining our position as leader in the world energy markets and
an example of the spirit and accomplishments of the Russian
people," said Mr. Theede.
Headquartered in Houston, Texas, Yukos Oil Company is an open
joint stock company existing under the laws of the Russian
Federation. Yukos is involved in the energy industry
substantially through its ownership of its various subsidiaries,
which own or are otherwise entitled to enjoy certain rights to oil
and gas production, refining and marketing assets. The Company
filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex.
Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq.,
Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton,
Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent
the Debtor in its restructuring efforts. When the Debtor filed
for protection from its creditors, it listed $12,276,000,000 in
total assets and $30,790,000,000 in total debts.
YUKOS OIL COMPANY: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Yukos Oil Company
c/o Bruce K. Misamore, Chief Financial Officer
6791 Lempria Court
Houston, Texas 77069
Bankruptcy Case No.: 04-47742
Type of Business: The Debtor is an oil-and-gas company
headquartered in Moscow, Russia.
See http://www.yukos.com/
Chapter 11 Petition Date: December 14, 2004
Bankruptcy Court: United States Bankruptcy Court
Southern District of Texas
Houston Division
5401 Bob Casey United States Courthouse
515 Rusk Avenue
Houston, Texas 77002
Tel: 713-250-5500
Bankruptcy Judge: Letita Z. Clark
Debtor's Counsel: Zack A. Clement, Esq.
C. Mark Baker, Esq.
Evelyn H. Biery, Esq.
John A. Barrett, Esq.
Johnathan C. Bolton, Esq.
R. Andrew Black, Esq.
Fulbright & Jaworski LLP
1301 McKinney, Suite 5100
Houston, Texas 77010
Tel: 713-651-5434
Fax: 713-651-5246
U.S. Trustee: Diane G Livingstone, Esq.
Ellen Maresh Hickman, Esq.
Office of the United States Trustee
515 Rusk Ave., Suite 3516
Houston, TX 77002
Tel: 713-718-4650
Financial Condition as of October 31, 2004,
according to Russian accounting principles:
Total Assets: $12,276,000,000
Total Debts: $30,790,000,000
Debtor's 20 Largest Unsecured Creditors:
Approximate
Entity Nature of Claim Claim Amount
------ --------------- ------------
Russian Federation Alleged Tax $17,000,000,000
The Ministry of Justice of the Debt -- Disputed
Russian Federation
ul. Vorontsovo Pole, 4a,
Moscow 109830, GSP, Gh-28
Russian Federation
Societe Generale Trade Debt $1,426,000,000
SG Corporate & Investment Banking
17 Cours Valmy
92987 Paris
La Defence Cedex France
Attn: Alexandre Huet, Senior VP
Telephone: (33 1) 414 59704
State Customs Committee of the Trade Debt $185,000,000
Russian Federation
Russia 107842 Moscow
1 A Komsomolskaya Place
Telephone: 7-095-975-4070
Transneft Trade Debt $73,000,000
Russia, 119180,
Moscow, Bolshaya
Polyanka Str., 57
Attn: Simon M. Vainshtock
Telephone: (095) 951 48 89
Zapadno MalyBalyk Trade Debt $28,000,000
Nefteyugansk,
11 districk, 26
628300 KhMAO
Makrotrade Trade Debt $21,000,000
Lenina avenue 5
Saransk, Mordovia
Russian Federation 430000
Bank Menatep Trade Debt $3,500,000
Moscow Branch
4 Kolpachny Lane
Moscow 101990
Russia
Attn: Yuri Kotler
JSC Mazeikiu Nafta Trade Debt $2,200,000
5526 Mazheikiu,
Lodeikiu, 89467, Lithuania
BCEN Eurobank Trade Debt $2,000,000
79-81 Bulevard Haussmann
75382 Paris cedex 08
France
Kargill Yug OOO Other Debt $1,000,000
Krasnaya street, 180
Krasnodar
Investpribor ZAO Trade Debt $1,000,000
Veresayeva, 6
Moscow, 121357
Prikaspburneft Povolzhie OOO Trade Debt $1,000,000
Neftyanikov street, 14
Volgograd prospect
Russian Federation
NPO Intekh OOO Trade Debt $1,000,000
Tetcrenskyi per., 4/8, cxp.2
Moscow, 109004
ZAO PricewaterhouseCoopers Trade Debt $1,000,000
Kosmodamianskaya nab., 52
Building 5,
115054, Moscow, Russia
Tyumen exploration Trade Debt $760,000
expedition ZAO
128 Druzhba
Tyumen, 625031
Russian Federation
SovGeoInfo Trade Debt $615,000
Nezhinskaya street, 13/4
Moscow, 117571
Burson Marsteller/NIS Trade Debt $600,000
1801 K Street, N.W. Suite 1000-L
Washington, DC 20006
See terminal Trade Debt $600,000
Primorsk, Vyborg region
Leningrad oblast, 188910
Property Committee of Other Debt $600,000
Khanty Mansyisk Region
Mira street, 5
Khanty-Mansyisk, Tyumen oblast
KhMAO, 626200
Obneftegasgcologia Trade Debt $500,000
Federova street, 68A
Surgut, 628400
*********
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
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Each Tuesday edition of the TCR contains a list of companies with
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*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
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F. Casquejo and Peter A. Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
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