/raid1/www/Hosts/bankrupt/TCR_Public/050308.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, March 8, 2005, Vol. 9, No. 56
Headlines
ACXIOM CORP: S&P Affirms BB- Subordinated Debt Rating
ADELPHIA COMMS: Willing to Allow Tow Insurance's Claim for $10M
AEP INDUSTRIES: Noteholders Agree to Amend Sr. Sub. Note Indenture
AIR CANADA: Workers Accuse Airline of Bad Faith Bargaining
ALLIANCE LEASING: Section 341(a) Meeting Slated for April 8
ALLIANCE LEASING: Taps Lefkovitz & Lefkovitz as Bankruptcy Counsel
AMERICAN REAL: Declares Annual PIK Distribution on Preferred Units
AMERICAN REPROGRAPHICS: Names Mark Mealy as Independent Director
AMERIQUEST MORTGAGE: Moody's Pares Rating on Class B Cert. to Ba2
ASSET BACKED: Fitch Puts 'BB+' Rating on $10.4 Mil. Mortgage Cert.
ATA AIRLINES: Gets Court Nod to Hire Ryan & Co. as Tax Consultants
AVADO BRANDS: Court Okays Exit Financing Pact with DDJ Capital
BEAR STEARNS: S&P Affirms Class F Certificates' BB+ Rating
CAPITAL ONE: Acquiring Hibernia Corp. for $5.3-Bil in Stock & Cash
CARIBBEAN RESTAURANTS: S&P Affirms B+ Corporate Credit Rating
CATHOLIC CHURCH: Portland Wants to Execute Right of Way Easements
CELGENE CORP: S&P Withdraws 'B' Corporate Credit Rating
CLYDESDALE STRATEGIC: Moody's Puts Ba2 Rating on $9M Class D Notes
COLTS: Fitch Assigns BB+ Rating on $10.568 Million Interest Notes
CONE MILLS: Judge Walrath Okays $28 Million Settlement with Banks
CONTINENTAL AIRLINES: NYSE Says Okay to New Stock Option Issue
CORAM HEALTHCARE: Chapter 11 Trustee & Professionals Want $21 Mil.
CRANSTON R.I.: S&P Raises Gen. Obligation Bonds to BBB- from BB
DAVITA INC: Justice Department Issues Subpoena for Documents
DAVITA INC: Moody's Puts B3 Rating on $850MM Sr. Sub. Notes
DEL MONTE: Earns $48.5 Million of Net Income in Third Quarter
DELPHI CORP.: Financials Unreliable & Financial Executives Resign
DELPHI CORP: Moody's Reviews (P)Ba1 Sub. Rating for Downgrade
DELPHI CORP: Fin'l. Restatements Cue Fitch to Downgrade Ratings
DELPHI CORP: S&P Puts 'BB+' Corp. Credit Rating on Watch Negative
DII/KBR: Wants to Delay Entry of Final Decree Filing to May 10
DLJ MORTGAGE: S&P Raises Class B-2 Cert. Rating to B+ from D
EGAN FAMILY LLP: Voluntary Chapter 11 Case Summary
FRIENDLY ICE: Jan. 2 Balance Sheet Upside-Down by $105 Million
GENERAL FIRE: Late Filing Prompts Fitch to Downgrade Rating to BB-
GENEVA STEEL: Wants Plan Mediator Appointed
GH RANCH LLC: Case Summary & 20 Largest Unsecured Creditors
HOLLINGER INC: Releases Alternative Financial Information
HOST MARRIOTT: Launches $300 Million Sr. Debt Offering
HOST MARRIOTT: Increases Proposed Private Debt Placement
HOT 'N NOW: STEN Subsidiary Completes Franchisor Rights Purchase
INDUSTRY MORTGAGE: Fitch Junks Class B Series 1998-1 Certificates
INTERSTATE BAKERIES: Court Okays Key Employee Retention Plan
IONICS INC: GE Acquisition Cues S&P to Withdraw 'BB-' Rating
IRON HORSE GRADING: Case Summary & 19 Largest Unsecured Creditors
LA QUINTA: Declares 9% Preferred Stock Dividend
LA QUINTA CORP: S&P Says Outlook on BB- Credit Rating Now Positive
LORAL SPACE: Selling Television Assets to dbsXMedia for $400,000+
MAGUIRE PROPERTIES: Moody's Puts (P)Ba2 Rating on $450MM Notes
MILLENNIUM PHARMACEUTICALS: S&P Withdraws 'B' Corp. Credit Rating
MIRANT CORP: Equity Panel Wants Interest Rate Under Plan Fixed
MIRANT CORP: Alstom Power Holds Allowed $3.8 Mil. Unsecured Claim
MIRANT CORP: Approves 2005 Base Salaries of Five Executives
MOSAIC INFOFORCE: KPMG Files Section 304 Petition in N.D. Texas
MOSAIC INFOFORCE GP HOLDCO: Section 304 Petition Summary
NATIONAL MEDICAL: Involuntary Chapter 11 Case Summary
NORTEL NETWORKS: Names Bill Owens Vice Chairman & CEO
NORTHWEST AIRLINES: Nominates R. Bostock & J. Katz as Directors
ORIGEN: Moody's Junks Rating on 8.30% Class M-2 Certificates
OWENS CORNING: Court Names Lawrence Watson Asbestos PD Mediator
PARKER COUNTY: S&P Cuts Bond Rating to BB from BBB-
PARMALAT USA: Court Okays Plan; GE Gets 70% Equity on Dairy Unit
PARMALAT USA: Wells Fargo Wants $2.9M Claim Allowed for Voting
PIKE COUNTY: S&P Puts Junk Rating on $15.3 Million Bonds
PNM RESOURCES: Moody's Puts (P)Ba2 Rating on Pref. Stock Issues
PORTUS ALTERNATIVE: Ontario Court Appoints KPMG as Receiver
RAVENEAUX LTD: Section 341(a) Meeting Slated for March 31
RAVENEAUX LTD: Hires Weycer Kaplan as Bankruptcy Counsel
RURAL/METRO: 92% of Noteholders Tender 7-7/8% Senior Notes
S AND S PORK: Case Summary & 14 Largest Unsecured Creditors
SALOMON BROTHERS: Fitch Downgrades Class MF-3 Rating to 'C'
SHADOW CREEK: Court OKs Hiring Kutner Miller as Bankruptcy Counsel
SHOWTIME ENTERPRISES: Court Okay Asset Sale to Sparks for $7.5M
SOLUTIA INC: Taps Colliers Turley as Real Estate Broker Until June
SOLUTIA INC: FMR Corporation Discloses 11.919% Equity Stake
SOUTHEASTERN TRANSPORT: Case Summary & Largest Unsecured Creditors
SPX CORP: Moody's Places Ratings on Review for Possible Upgrade
TRUMP HOTELS: Equity Committee Wants to Retain HVS as Appraiser
TRUMP HOTELS: Court Approves Increase in Cooper's Compensation Cap
TRUMP HOTELS: Court Approves CRDA Parking Fee & Donation Agreement
UAL CORP: District Court Certifies ESOP Plaintiff Class
UNITED AIRLINES: Reports 74.8% Load Factor in February 2005
UNITED DEFENSE: Fitch Affirms 'BB+' Rating on Senior Secured Loan
W.R. GRACE: Equity Panel Gets Court Nod on Lexecon Engagement
WADDINGTON NORTH: Moody's Junks Senior Unsecured Issuer Rating
WESTPOINT STEVENS: Bidding Procedures for Sale of All Assets
WHEELING-PITTSBURGH: Coal Supplier Says Contract Can't be Assigned
WINN-DIXIE: Look for Bankruptcy Schedules on April 7
WINN-DIXIE: Wants to Employ Smith Gambrell as Special Counsel
YELLOW ROADWAY: Holding Investors & Analysts' Meeting Today
ZIFF DAVIS: Dec. 31 Balance Sheet Upside-Down by $948.5 Million
* 5th Circuit Limits Shareholder Suits Over Public Reg. Statements
* Former European Commissioner David Byrne Joins Wilmer Cutler
* Bridge Associates Names Gary Burns Senior Consultant
* Roderick Walston Joins Best Best & Krieger as Of Counsel
* Large Companies with Insolvent Balance Sheets
*********
ACXIOM CORP: S&P Affirms BB- Subordinated Debt Rating
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Standard & Poor's Ratings Services affirmed its 'BB+' corporate
credit, 'BB+' senior secured debt, and BB- subordinated debt
ratings on Little Rock, Arkansas-based Acxiom Corporation, and
revised the outlook to positive from stable.
"The positive outlook reflects an improved financial position, a
broader product and customer base, and positive trends in the
industry," said Standard & Poor's credit analyst Philip Schrank.
For the nine months ended December, Acxiom reported 23% revenue
growth to $901 million from the prior year period (of which 9% was
organically driven), while net income increased 31% to almost
$55 million.
The ratings reflect its good niche market position and adequate
cash flow generation. Acxiom provides database marketing, data
warehousing, and decision-support services.
Business risk is tempered by Acxiom's expertise in managing its
comprehensive consumer databases. More than one-half of its
direct-marketing assignments are performed for long-term clients,
and outsourcing contracts generally cover multiple years,
offsetting a concentrated customer base and providing a degree of
revenue predictability.
However, the company is still a relatively small participant in a
growing and fragmented industry that may see the entrance of
several, much larger competitors. Channel partnerships and
moderate acquisitions could continue, primarily to expand
participation in selected vertical markets, enhance distribution
capability, and provide additional operational diversity.
Acxiom has implemented cost-reduction actions and has increased
revenues and profitability over the past year. Operating margins
are approaching the mid-teens area, attributed to improving
performance and scale of its international operations.
In addition, Acxiom generated good free cash flow, which allowed
it to pay down debt obligations during this period. The company
has announced that it plans to redeem its $175 million of
convertible subordinated notes into stock. Current total debt to
EBITDA is about 1.5x, and EBITDA interest coverage is above 9x.
Pro forma for the debt redemption, total debt to EBITDA will be
below 1X.
ADELPHIA COMMS: Willing to Allow Tow Insurance's Claim for $10M
---------------------------------------------------------------
On July 30, 1992, Century Communications Corp., before it merged
with Adelphia Communications Corporation and the Tow Insurance
Trust entered into a Split Dollar Agreement pursuant to which Old
Century agreed to pay the premiums on certain life insurance
policies procured by the Tow Insurance Trust for the benefit of
Leonard Tow and his wife.
At the time of the execution of the Split Dollar Agreement, Mr.
Tow was the Chief Executive Officer and Chief Financial Officer of
Old Century and his wife was the Vice-President and Director.
The purpose of the Split Dollar Agreement was to provide a
mechanism to protect the Tows' estates from the tax consequences
of having to monetize their substantial Old Century stock holdings
upon the latter of them to die, and to protect Old Century from a
market disruption upon the liquidation of that substantial
quantity of stock in the marketplace. The Split Dollar Agreement
obligated Old Century to reimburse the Tows for the imputed income
taxes and gift taxes resulting from Old Century's payment of the
premiums on the Split Dollar Policies.
Pursuant to the Employment Agreement, Old Century will continue to
provide and maintain the Split Dollar Policies under the Split
Dollar Agreement.
Under the Termination Agreement, Old Century will pay or provide
for and keep in full force and effect all of its obligations by
reason of Mr. Tow's termination of the Employment Agreement, and
will continue to abide by and comply with its obligations under
the Split Dollar Agreement.
On June 30, 1999, in connection with Mr. Tow's termination and
based on Old Century's obligation under the Employment Agreement
to comply with the Split Dollar Agreement upon Tow's termination,
Old Century and the Trustee established a special insurance trust
for the "exclusive purpose of funding the premium payments when
due on the Split Dollar Policies." The amount placed in the
Special Insurance Trust (i.e., $14 million) represented an
estimate of the future liabilities for the premiums due on the
Split Dollar Policies.
In addition, pursuant to the Termination Agreement, Old Century
was required to place $7.5 million in the Special Payment Trust to
reimburse the Tows, as required under the Split Dollar Agreement,
for future income tax liability resulting from the Special
Insurance Trust's payment of premiums on account of the Split
Dollar Policies. As with the $14 million amount calculated to
fund the Special Insurance Trust, the $7.5 million portion of the
initial corpus of the Special Payment Trust represented an
estimate of the amount of future tax reimbursements to which the
Tows would be entitled as a result of future premiums paid on
account of the Split Dollar Agreement.
On January 7, 2004, the Tow Insurance Trust filed three identical
claims, one against each of the estates of ACOM, Arahova and
Century, for $12,223,071 each.
In the Insurance Trust Claims, the Tow Insurance Trust seeks a
lump-sum payment of both:
-- the aggregate undiscounted expected amounts that would have
been paid over the years by the Special Insurance Trust for
premiums on account of the Split Dollar Policies; and
-- the aggregate undiscounted expected amount of tax
reimbursement that the Tows would have received over the
years from the Special Payment Trust as a result of the
Special Insurance Trust's future premium payments on
account of the Split Dollar Agreement.
Both the Special Insurance Trust and the Special Payment Trust are
"rabbi trusts," insofar as both of those trusts expressly provide
that the corpus of each trust is subject to the claims of Old
Century's creditors.
As of June 10, 2002, the corpus of the Special Payment Trust was
around $18,667,202, and the corpus of the Special Insurance Trust
was approximately $5,790,184. Pursuant to an adversary proceeding
commenced by the Debtors on November 17, 2003, the Debtors sought
the turnover of the corpus of both of the rabbi trusts.
Significantly, Mr. O'Connor points out, neither the Employment
Claims nor the Insurance Trust Claims are premised on any rights
afforded under either of the rabbi trusts, a tacit acknowledgement
that the corpus of the trusts is property of the Debtors' estates.
Rather, the Employment Claims and the Insurance Trust Claims are
premised entirely on the Employment Agreement, the Termination
Agreement, the Split Dollar Agreement and the Merger Agreement.
The ACOM Debtors assert that only the Century and ACOM estates
bear liability on account of the Insurance Trust Claims.
Accordingly, the ACOM Debtors ask the U.S. Bankruptcy Court for
the Southern District of New York to disallow the Insurance Trust
Claim against Arahova -- Claim No. 9051 for $12,233,071. It is
duplicative of the claims asserted against Century and ACOM as
guarantor, Mr. O'Connor states.
Like the Century Employment Claim, the Century Insurance Trust
Claim and the ACOM Insurance Trust Claim are subject to a cap
under Section 506(b)(7), inasmuch as those claims are for damages
relating to the termination of the Employment Agreement. Thus, to
the extent not otherwise disallowed under Section 502(d), the
ACOM Debtors ask Judge Gerber to:
(a) allow the Century Insurance Trust Claim as general
unsecured claim in the reduced amount of $1,671,993; and
(b) reduce the ACOM Insurance Trust Claim in an amount equal
to the balance of the Century Insurance Trust Claim.
To the extent any portion of the Century Insurance Trust Claim and
ACOM Insurance Trust Guaranty Claim is not disallowed, the ACOM
Debtors ask the Court to subordinate the claims pursuant to
Section 510(c), to all general unsecured claims asserted against
Century and ACC.
Century/ML Cable Venture filed for Chapter 11 protection on
September 30, 2002 (Bankr. S.D.N.Y. Case No. 02-14838).
Century/ML Cable Venture is a New York joint venture of Century
Communications Corporation, a wholly owned indirect subsidiary of
Adelphia Communications Corporation, and ML Media Partners, LP.
It holds the cable franchise in Leviton, Puerto Rico.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than
200 affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No.
80; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AEP INDUSTRIES: Noteholders Agree to Amend Sr. Sub. Note Indenture
------------------------------------------------------------------
AEP Industries Inc. (Nasdaq: AEPI) disclosed that, in connection
with its offer to purchase for cash any and all of its 9.875%
Senior Subordinated Notes due 2007, the Company has received the
requisite consents to eliminate substantially all of the
restrictive covenants and certain events of default contained in
the indenture governing the Notes, as detailed in the Offer to
Purchase and Consent Solicitation Statement dated Feb. 17, 2005.
As of 12:00 midnight on March 3, 2005, the Company had received
tenders of Notes and deliveries of related consents from holders
of $166,818,000 principal amount of Notes representing
approximately 83.4% of the outstanding Notes. As a result of
obtaining the requisite consents, the Company will execute a
supplemental indenture adopting the proposed amendments. The
supplemental indenture will provide that the amendments to the
indenture will become operative only upon the Company's acceptance
for purchase of the Notes tendered and not validly withdrawn. As
the Withdrawal Deadline of 12:00 midnight, New York City time on
March 3, 2005, has passed, Notes tendered may no longer be
withdrawn and consents delivered may no longer be revoked.
The tender offer commenced on Feb. 17, 2005 and will expire at
12:00 midnight, New York City time, on March 17, 2005, unless
extended or earlier terminated. Closing of the tender offer is
subject to the satisfaction of certain conditions, including:
(i) the Company entering into financing arrangements
satisfactory to it with respect to the financing
necessary to complete the tender offer and the consent
solicitation and
(ii) certain other customary conditions.
The Company has engaged Merrill Lynch & Co. to act as the
exclusive dealer manager and consent solicitation agent for the
tender offer and the consent solicitation. Questions regarding
the tender offer and the consent solicitation may be directed to
Merrill Lynch & Co. at (212) 449-4914 (call collect) or (888) ML4-
TNDR (toll-free). The terms and conditions of the tender offer
and the consent solicitation are described in the Offer to
Purchase and Consent Solicitation Statement dated Feb. 17, 2005.
Any questions or requests for assistance or for copies of
documents may be directed to D.F. King & Co., Inc., the
Information Agent for the tender offer and the consent
solicitation, at (212) 269-5500 or (800) 714-3313 (toll-free).
The Depositary for the tender offer and the consent solicitation
is The Bank of New York, which can be reached at (212) 815-2923.
About the Company
AEP Industries Inc. manufactures, markets and distributes an
extensive range of plastic packaging products for the
food/beverage, industrial and agricultural markets. The Company
has operations in eight countries throughout North America, Europe
and Australasia.
* * *
As reported in the Troubled Company Reporter on March 2, 2005,
Moody's Investors Service assigned a B2 rating to AEP Industries
Inc.'s proposed $175 million senior unsecured note, due 2013, and
concurrently affirmed AEP Industries' existing ratings.
Proceeds from the proposed issuance, along with drawings from the
company's existing $100 million borrowing base governed secured
revolver (not rated by Moody's), are intended to repay AEP
Industries' $200 million 9.875% senior subordinated note, due
2007, and to pay related fees and expenses.
Upon tender of the subordinated notes, the existing B3 rating will
be withdrawn. The proposed transaction is relatively credit
neutral with a minimal increase in financial leverage offset by
reduced interest expense (EBIT covers pro-forma interest expense
close to 2 times) and extended maturities.
While recognizing AEP Industries' solid performance during the
last three years despite having a prolonged adverse business
conditions (e.g. rapidly rising resin, energy costs, regulatory
compliance, and other operating expenses, intense competition,
global economic malaise, etc.), moderate levels of free cash flow
relative to debt well below 10% during the historical period and
projected during the intermediate term - as well as high financial
leverage with pro-forma debt to EBIT approaching 8 times
(approximately 4 times EBITDA) - continue to constrain the
ratings.
Moody's rating actions are:
* B2 assigned to the proposed $175 million senior unsecured
note, due 2013
* B3 affirmed $200 million 9.875% senior subordinated note, due
2007
* B1 affirmed senior implied rating
* B2 affirmed senior unsecured issuer rating (non-guaranteed
exposure)
The ratings outlook is stable.
The ratings actions are subject to the completion of the proposed
transactions and review of executed documentation.
AIR CANADA: Workers Accuse Airline of Bad Faith Bargaining
----------------------------------------------------------
The International Association of Machinists and Aerospace Workers
has accused Air Canada of bargaining in bad faith following the
airline's announced closure of nine of its mainline stations.
Air Canada is shifting all of its service to nine Canadian cities
to its regional Jazz subsidiary - a decision that results in the
layoff of 224 IAMAW members at Air Canada.
"During negotiations with Air Canada under the CCAA process, we in
fact talked about and indeed modified working conditions to
increase the percentage of part time workers at these stations for
the real purpose of having them remain open," said IAMAW General
Vice President Dave Ritchie. "Our agreements were bargained in
good faith and the company is not honoring those agreements. We
intend to take this issue to the Canadian Industrial Relations
Board."
The closures affect gate, baggage and ground handling workers in
Charlottetown, Moncton, Fredericton, Saint John, Quebec City,
Thunder Bay, Saskatoon, Regina and White Horse.
"Air Canada is offering no severance benefits to 54 part time
workers affected," said IAMAW Assistant Deputy Pete Tilley. "We
met with the company on Monday to explore options for our members
and they offered us nothing. They won't sweeten the severance
package, they won't carry part time workers as surplus and they're
going to contract out all positions at Jazz. Our full time
workers have nowhere to transfer to because there are no
openings." "The meeting was an exercise in futility," said
Tilley.
Air Canada filed for CCAA protection on April 1, 2003 (Ontario
Superior Court of Justice, Case No. 03-4932) and filed a Section
304 petition in the U.S. Bankruptcy Court for the Southern
District of New York (Case No. 03-11971). Mr. Justice Farley
sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004.
Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman
Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier.
Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie
Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the
Debtors filed for protection from their creditors, they listed
C$7,816,000,000 in assets and C$9,704,000,000 in liabilities.
On September 30, 2004, Air Canada successfully completed its
restructuring process and implemented its Plan of Arrangement.
The airline exited from CCAA protection raising $1.1 billion of
new equity capital and, as of September 30, has approximately
$1.9 billion of cash on hand.
As of September 30, 2004, Air Canada's shareholders' deficit
narrowed to $611 million, compared to a $4.155 billion deficit at
December 31, 2004. (Air Canada Bankruptcy News, Issue No. 59;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALLIANCE LEASING: Section 341(a) Meeting Slated for April 8
-----------------------------------------------------------
The U.S. Trustee for Region 8 will convene a meeting of Alliance
Leasing Corporation's creditors at 8:30 a.m., on April 8, 2005, at
the Office of the U.S. Trustee, Customs House, 701 Broadway, Room
100, Nashville, Tennessee 37203. This is the first meeting of
creditors required under U.S.C. Sec. 341(a) in all bankruptcy
cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Franklin, Tennessee, Alliance Leasing
Corporation, filed for chapter 11 protection on Feb. 28, 2005
(Bankr. M.D. Tenn. Case No. 05-02397). Steven L. Lefkovitz, Esq.,
at Law Offices Lefkovitz & Lefkovitz represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed total assets of $24,190,072 and total
debts of $29,147,788.
ALLIANCE LEASING: Taps Lefkovitz & Lefkovitz as Bankruptcy Counsel
------------------------------------------------------------------
Alliance Leasing Corporation asks the U.S. Bankruptcy Court for
the Middle District of Tennessee for permission to employ Law
Offices of Lefkovitz & Lefkovitz as its general bankruptcy
counsel.
Lefkovitz & Lefkovitz is expected to:
a) advise the Debtor as to its rights, duties and powers as
Debtor-in-Possession in the continued operation and
management of its business;
b) prepare and file the statements, schedules, plans, and
other documents and pleadings necessary to be filed by the
Debtor in bankruptcy proceedings;
c) represent the Debtor at all hearings, meetings of creditors,
conferences, trials and any other proceedings in its chapter
11 case; and
d) perform all other legal services to the Debtor as may be
necessary in connection with its chapter 11 case.
Steven L. Lefkovitz, Esq., a Member at Lefkovitz & Lefkovitz, is
the lead attorney for the Debtor. Mr. Lefkovitz discloses that
his Firm received a $50,000 retainer. Mr. Lefkovitz will bill the
Debtor $325 per hour for his services.
Mr. Lefkovitz reports Lefkovitz & Lefkovitz's professionals bill:
Designation Hourly Rate
----------- -----------
Associates $160
Paralegals $85
Lefkovitz & Lefkovitz assures the Court that it does not represent
any interest adverse to the Debtor or its estate.
Headquartered in Franklin, Tennessee, Alliance Leasing
Corporation, filed for chapter 11 protection on Feb. 28, 2005
(Bankr. M.D. Tenn. Case No. 05-02397). When the Debtor filed for
protection from its creditors, it listed total assets of
$24,190,072 and total debts of $29,147,788.
AMERICAN REAL: Declares Annual PIK Distribution on Preferred Units
------------------------------------------------------------------
American Real Estate Partners, L.P. (NYSE: ACP PR) has declared
its scheduled annual preferred unit distribution, payable solely
in additional preferred units, on its 5% cumulative pay-in-kind
redeemable preferred units representing limited partnership
interests which have a liquidation preference of $10.00 per unit.
The in-kind preferred unit distribution is based upon a rate of 5%
of the liquidation preference and is payable on March 31, 2005 to
holders of record as of the close of business on March 15, 2005.
About the Company
American Real Estate Partners, L.P., is a master limited
partnership. Based in Mount Kisco, New York, USA, American Real
Estate Partners, L.P., is the holding company of American Real
Estate Holdings Limited Partnership, a diversified operating
company that directly or through its subsidiaries engages in
rental real estate, real estate development, resort, hotel and
casino operations, investments in equity and debt securities, and
oil and gas exploration and production. American Real Estate
Partners had approximately $2.3 billion of assets as of
September 30, 2004.
* * *
As reported in the Troubled Company Reporter on Jan. 26, 2005,
Moody's Investors Service affirmed its Ba2 senior unsecured
ratings on American Real Estate Partners, L.P. -- AREP -- with
a stable outlook.
AREP is a master limited partnership that has publicly traded
depositary units (NYSE: ACP). AREP's general partner is American
Property Investors, Inc., which is a wholly owned subsidiary of
Becton Corp., which is owned by Carl Icahn. Affiliates of Carl
Icahn own approximately 86.5% of the outstanding depositary units
of AREP, and 86.5% of the firm's cumulative pay-in-kind preferred
units.
AMERICAN REPROGRAPHICS: Names Mark Mealy as Independent Director
----------------------------------------------------------------
American Reprographics Company (NYSE: ARP), the nation's leading
provider of reprographic services and technology in more than 170
locations across the U.S., disclosed that Mark W. Mealy has joined
the Board of Directors of ARC as an independent member. Also, Mr.
Mealy is the chair of the Company's Audit Committee.
Mr. Mealy has over 20 years of financial experience with several
investment banks and financial services firms. Most recently, he
was a managing director and the group head of mergers and
acquisitions at Wachovia Securities, Inc., one of the largest
investment firms in the U.S.
Prior to that, Mr. Mealy became a director of Morton Metalcraft
Co. in 1995, and upon conclusion of that company's merger, he
became a director of the successor company, Morton Industrial
Group, Inc.
"We are delighted that Mr. Mealy has chosen to join our Board,"
said S. "Mohan" Chandramohan. "He brings additional financial
expertise to ARC. We also believe that his recent experience in
mergers and acquisitions will provide specific insight into that
part of our growth strategy. Our executive team, along with the
rest of the Board, look forward to his contributions."
About the Company
American Reprographics Company is the leading reprographics
company in the United States providing business-to-business
document management services to the architectural, engineering and
construction industry, or AEC industry. It also provides these
services to companies in non-AEC industries, such as technology,
financial services, retail, entertainment, and food and
hospitality that also require sophisticated document management
services. American Reprographics Company provides its core
services through a suite of reprographics technology products, a
network of locally branded reprographics service centers across
the U.S., and on-site at customers' locations. Service centers
are arranged in a hub and satellite structure and are digitally
connected as a cohesive network, allowing the provision of
services both locally and nationally. The company services more
than 65,000 active customers.
* * *
As reported in the Troubled Company Reporter on Feb. 14, 2005,
Standard & Poor's Ratings Services revised its outlook on American
Reprographics Co. to positive from stable. At the same time,
Standard & Poor's affirmed its ratings, including its 'BB-'
corporate credit rating, on the Glendale, Calif.-based company.
Approximately $330 million in debt was outstanding as of Sept. 30,
2004.
"The outlook revision follows the IPO that was announced on
Feb. 4, 2005, and incorporates the expectation that the proceeds
will be applied toward debt reduction and the redemption of
preferred stock," said Standard & Poor's credit analyst Sherry
Cai. As a result, credit measures are expected to improve
meaningfully. S&P said an upgrade will be considered if the
company can demonstrate its ability to improve and sustain debt to
EBITDA in the 3x area over the intermediate term.
AMERIQUEST MORTGAGE: Moody's Pares Rating on Class B Cert. to Ba2
-----------------------------------------------------------------
Moody's Investors Service has upgraded four certificates,
downgraded one certificate and confirmed one certificate, from
Ameriquest asset-backed securitization deals from 2001. The
transactions consist of fixed-rate and adjustable-rate first-lien
subprime mortgage loans. The servicer and the originator on the
transactions is Ameriquest Mortgage Company.
The Class M-1 certificate from Series 2001-1, the Class M-1 and M-
2 from Series 2001-2 and the Class M-2 certificates from Series
2001-3 have been upgraded based on the substantial build-up in
credit support. The projected pipeline losses are not expected to
significantly affect the credit support for these certificates.
The seasoning of the loans and low pool factor reduce loss
volatility.
The most subordinate B tranche from the Series 2001-AQ1
transaction has been downgraded because existing credit
enhancement levels are low given the current projected losses on
the underlying pools. The transaction has taken losses and
pipeline loss could cause eventual erosion of the
overcollateralization.
The complete rating actions are:
-- Issuer: Ameriquest Mortgage Securities Inc., Floating Rate
Mortgage Pass-Through Certificates
Upgrades:
* Series 2001-1; Class M-1, upgraded to Aa1 from Aa2
* Series 2001-2; Class M-1, upgraded to Aaa from Aa2
* Series 2001-2; Class M-2, upgraded to Aa2 from A2
* Series 2001-3; Class M-2, upgraded to Aa2 from A2
Confirmed:
* Series 2001-3; Class M-3, Baa2 rating confirmed
* Issuer: ABFC Mortgage Loan Asset-Backed Certificates
Downgrade:
* Series 2001-AQ1; Class B, downgraded to Ba2 from Baa2
ASSET BACKED: Fitch Puts 'BB+' Rating on $10.4 Mil. Mortgage Cert.
------------------------------------------------------------------
Asset Backed Securities Corporation Home Equity Loan Trust 2005-
HE2 is rated:
-- $550.0 million classes A-1 through A-3 mortgage pass-
through certificates 'AAA';
-- $62.4 million class M-1 certificates 'AA';
-- $16.9 million class M-2 certificates 'AA-';
-- $28.0 million class M-3 certificates 'A';
-- $8.2 million class M-4 certificates 'A-';
-- $10.4 million class M-5 certificates 'BBB+';
-- $5.7 million class M-6 certificates 'BBB';
-- $7.9 million class M-7 certificates 'BBB-';
-- $10.4 million class M-8 certificates 'BB+'.
The 'AAA' rating on the senior certificates reflects the 23.30%
total credit enhancement provided by:
* the 8.70% class M-1,
* the 2.35% class M-2,
* the 3.90% class M-3,
* the 1.15% class M-4,
* the 1.45% class M-5,
* the 0.80% class M-6,
* the 1.10% class M-7,
* the 1.45% class M-8, and
* the 2.40% initial overcollateralization -- OC.
All certificates have the benefit of monthly excess cash flow to
absorb losses. In addition, the ratings reflect the integrity of
the transaction's legal structure, as well as the primary
servicing capabilities of Saxon Mortgage Services, Inc.
U.S. Bank National Association will act as trustee. All of the
mortgage loans were purchased by an affiliate of the depositor
from NC Capital Corporation, which in turn acquired them from New
Century Mortgage Corporation.
As of the cut-off date, Feb. 1, 2005, the mortgage loans have an
aggregate balance of $717,027,009. The weighted average mortgage
rate is approximately 7.216%, and the weighted average remaining
term to maturity is 353 months. The average cut-off date
principal balance of the mortgage loans is approximately $180,839.
The weighted average original loan-to-value ratio is 79.74%, and
the weighted average Fair, Isaac & Co. -- FICO -- score is 621.
The properties are primarily located in:
* California (38.34%),
* Florida (9.21%), and
* New York (5.44%).
ATA AIRLINES: Gets Court Nod to Hire Ryan & Co. as Tax Consultants
------------------------------------------------------------------
The United States Bankruptcy Court for the Southern District of
Indiana approves ATA Airlines and its debtor-affiliates' request
to employ Ryan & Company, Inc., as their motor fuels and excise
tax consultants, nunc pro tunc to Oct. 26, 2004.
Ryan & Company will provide the Debtors tax consulting services
related to a review of the Debtors' motor fuels tax payment
records to identify tax refund, tax reduction and tax exposure
adjustments. Additional details about ATA's application to
employ Ryan & Company appeared in the Troubled Company Reporter
on Feb. 24, 2005.
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. 16; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
AVADO BRANDS: Court Okays Exit Financing Pact with DDJ Capital
--------------------------------------------------------------
The Honorable Steven A. Felsenthal of the U.S. Bankruptcy Court
for the Northern District of Texas, Dallas Division, approved an
exit financing agreement between Avado Brands, Inc., its debtor-
affiliates, and DDJ Capital Management, LLC.
As contemplated by the Debtors' Plan of Reorganization, DDJ
Capital will provide a $12.5 million Term B Loan and a $17.5
million investment in new convertible preferred stock. The loan
and the investment will provide Reorganized Avado with working
capital to fund its operations upon emergence from chapter 11.
The loan will be secured by a second lien on substantially all of
the assets of the Reorganized Debtors.
Miller Buckfire Ying & Co., LLC, as the Debtors' investment
banker, negotiated the exit financing agreement with DDJ.
Review of Avado's Plan
As previously reported in the Troubled Company Reporter, Avado's
Plan of Reorganization provides for a substantive consolidation of
the Debtors' Estates and for the possible merger of certain
Debtor-affiliates.
The Plan contemplates that the Reorganized Debtors will receive
exit financing from three sources:
(i) a $45 million New Tranche A Financing Facility;
(ii) a $12.5 million New Tranche B Financing Facility from
DDJ Capital; and
(iii) the sale of $17.5 million of New Convertible Preferred
Stock to DDJ Capital.
The Plan groups claims and interests into eight classes.
Unimpaired Claims, consisting of Secured Claims and Non-Tax
Priority Claims, will be paid in full.
The Plan identifies six classes of Impaired Claims and describes
how they'll be treated:
a) General Unsecured Claims will receive their Pro Rata share
of New Common Stock and the Litigation Trust Beneficial
Interests;
b) Senior Noteholder Claims will receive their Pro Rata share
of the New Common Stock, the Subordinated Notes
Redistribution Shares, the TECONS Redistribution Shares, the
Litigation Trust Beneficial Interests and the TECONS
Redistribution Interests;
c) Subordinated Noteholder Claims will receive their Pro Rata
share of Class A Warrants if those claims and Class 4 Claims
vote to accept the Plan, but if those two claims vote to
reject the Plan, the Subordinated Noteholder claimants will
not receive any Class 1 Warrants;
d) TECONS Claims will receive their Pro Rata share of Class B
Warrants if those claims, Class 5 claims and Class 6 claims
vote to accept the Plan, but if those three claims
vote to reject the Plan, the TECONS claimants will not
receive any Class B Warrants;
e) Allowed Small Claims will receive a 14.5% cash payment; and
f) Old Avado Stock Interests and Subordinated Claims will not
receive or retain any property under the Plan.
Headquartered in Madison, Georgia, Avado Brands, Inc., owns and
operates two proprietary brands comprised of 102 Don Pablo's
Mexican Kitchens and 37 Hops Grillhouse & Breweries. The Company
and its debtor-affiliates filed a voluntary chapter 11 petition on
February 4, 2004 (Bankr. N.D. Tex. Case No. 04-31555). Deborah D.
Williamson, Esq., and Thomas Rice, Esq., at Cox & Smith
Incorporated, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $228,032,000 in total assets and
$263,497,000 in total debts.
BEAR STEARNS: S&P Affirms Class F Certificates' BB+ Rating
----------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on classes B
and C from Bear Stearns Commercial Mortgage Securities Inc.'s
series 1999-C1. Concurrently, ratings are affirmed on the
remaining classes from the same transaction.
The rating actions reflect credit enhancement levels that
adequately support the raised and affirmed ratings, as well as the
stable operating performance of the mortgage loan pool.
As of Feb. 15, 2004, the trust collateral consisted of 112 loans
with an aggregate outstanding principal balance of $421.6 million,
down from 113 loans with a balance of $478 million at issuance.
The master servicer, Wachovia Bank N.A. (Wachovia), provided full-
year 2003 or partial-year 2004 net cash flow debt service coverage
(DSC) figures for 97.0% of the pool. Based on this information,
Standard & Poor's calculated a weighted average DSC of 1.84x, up
from 1.71x at issuance. This figure excludes 10% of the pool that
is defeased. The pool has experienced one loss to date, amounting
to $3.2 million (0.7%).
The top 10 loans secured by real estate have an aggregate
outstanding balance of $100.5 million (23.5%) and reported a
weighted average DSC of 1.90x, up from 1.63x at issuance.
Standard & Poor's reviewed recent property inspections provided by
Wachovia for assets underlying the top 10 loans, and all such
assets were characterized as "good" or "excellent." There are no
top 10 loans currently in special servicing or on the servicer's
watchlist.
There are three loans totaling $10 million (2.6%) currently with
the special servicer.
-- Gateway Inn ($5.8 million, 1.4%) is secured by a 356-unit
lodging property located in Orlando, Florida. The borrower
filed for bankruptcy in June 2004 and is making payments
pursuant to the cash collateral order. The borrower has
proposed a discounted payoff, which is currently being
reviewed.
-- 1509 Glen Avenue Associates ($3.5 million, 0.8%) is secured
by a 77,000-square-foot industrial property located in
Moorestown, New Jersey. The borrower defaulted after the
sole tenant of the property vacated. The borrower is
attempting to sell the asset; should this not occur,
foreclosure will be pursued.
-- Lowden Gardens ($1.6 million, 0.4%) is secured by an 80-unit
multifamily property located in Long Branch, New Jersey.
The loan was recently transferred due to monetary default.
The property reported a DSC of 1.81x as of December 2003.
As of February 2005, Wachovia reported 19 loans on its watchlist
totaling $44.7 million (10.5% of the pool). All of the loans
appear on the watchlist due to either a decrease in occupancy,
cash flow, or upcoming lease roll.
The pool has property type concentrations in excess of 10% in:
-- multifamily (27.9%),
-- retail (25.1%), and
-- office (18.2%).
In addition, the pool has significant geographical concentration
in:
-- California (27.5%),
-- New York (13.9%), and
-- Connecticut (9.7%),
with the remaining 48.9% located throughout the U.S.
Based on discussions with the master and special servicers,
Standard & Poor's stressed various loans in the mortgage pool as
part of its analysis.
The expected losses and resultant credit levels adequately support
the raised and affirmed ratings.
Ratings Raised
Bear Stearns Commercial Mortgage Securities Inc.
Commercial mortgage pass-thru certificates series 1999-C1
Rating
------
Class To From Credit Support
----- -- ---- --------------
B AAA AA+ 18.86%
C AA- A+ 14.67%
Ratings Affirmed
Bear Stearns Commercial Mortgage Securities Inc.
Commercial mortgage pass-thru certificates series 1999-C1
Class Rating Credit Support
----- ------ --------------
A-1 AAA 24.45%
A-2 AAA 24.45%
F BB+ 5.16%
X AAA N/A
CAPITAL ONE: Acquiring Hibernia Corp. for $5.3-Bil in Stock & Cash
------------------------------------------------------------------
Capital One Financial Corporation (NYSE: COF) and Hibernia
Corporation (NYSE: HIB) disclosed a definitive agreement under
which Capital One will acquire Hibernia in a stock and cash
transaction valued at approximately $5.3 billion. Among U.S.
financial institutions, the combined company will be one of the
top 10 largest consumer lenders and one of the top 20 in terms of
total deposits.
The transaction will combine Capital One, a bank holding company
that is one of the nation's leading diversified consumer financial
services companies, with Hibernia, a financial holding company
with operations in Louisiana and Texas that provides a wide array
of financial products and services through its bank and non-bank
subsidiaries, including a full range of deposit products, small
business, commercial, mortgage and private and international
banking, trust and investment management, brokerage, investment
banking and insurance. Hibernia is the largest depository
institution in Louisiana and has 207 current locations throughout
Louisiana and 109 locations in Texas, including the high-growth
areas of Houston and Dallas-Fort Worth.
Upon closing of the transaction, Hibernia National Bank will
become a subsidiary of Capital One, with Hibernia President and
Chief Executive Officer J. Herbert Boydstun as its President,
reporting to Capital One's Chairman and Chief Executive Officer,
Richard D. Fairbank. Hibernia's Chairman, E.R. Campbell, will
join Capital One's Board of Directors.
Mr. Fairbank said, "This acquisition is a natural extension of the
diversification strategy that we have been pursuing for some time.
The transaction brings together two financial companies with
complementary strengths and represents a compelling long-term
value proposition for shareholders of both companies. Hibernia's
leading market share in Louisiana and its promising Texas branch
expansion creates not only a solid growth platform as we continue
to expand, but also an additional source of lower cost funding.
Additionally, we believe our national brand, 48 million accounts,
broad product offerings, asset generation capabilities, and
marketing expertise will drive profitable growth in branch
banking," said Mr. Fairbank.
"I am especially pleased to welcome Herb Boydstun, his experienced
management team and Hibernia's employees to Capital One. Equally,
we have been very impressed by Hibernia's strong relationships in
its communities and it is our intention to continue supporting the
commitment Hibernia has demonstrated through its community
activities," said Mr. Fairbank.
Mr. Boydstun of Hibernia Corporation said, "We strongly believe
that joining with Capital One is the right strategy for Hibernia's
shareholders, customers and communities. Together, we will create
more opportunities for long-term growth than either company could
on its own. With Capital One, we will gain access to higher-
growth consumer financial services businesses where Capital One's
48 million accounts and national brand make it an established
leader. And due to the complementary nature of our businesses, we
expect that there will be minimal disruption for our customers,
employees and local communities. In fact, we expect that
Hibernia's ability to serve consumers and businesses in both
Louisiana and Texas markets will be strengthened."
Under the terms of the definitive agreement, which has been
approved by both companies' boards of directors, Hibernia
shareholders will have the right, subject to proration, to elect
to receive cash or Capital One common stock, in either case having
a value equal to $15.35 plus the value at closing of .2261 Capital
One shares. Based on the price of Capital One shares at the close
of business on Friday, March 4, 2005, the transaction is valued at
$33.00 per Hibernia share. The actual value on consummation of
the acquisition will depend on Capital One's share price at that
time. The total transaction value of approximately $5.3 billion
includes approximately $2.4 billion in cash. The acquisition
price represents a 24 percent premium over the closing price of
Hibernia shares on Friday, March 4, 2005.
The transaction is subject to regulatory and Hibernia shareholder
approvals and is expected to close in the third quarter of 2005.
Capital One reaffirmed its earnings per share guidance for 2005 to
be between $6.60 and $7.00 per share (fully diluted). Capital One
expects the transaction to achieve cost savings and other
synergies of $135 million fully phased in by 2007 and to be
accretive beginning in 2007.
Credit Suisse First Boston acted as financial adviser to Capital
One and Cleary Gottlieb Steen & Hamilton acted as its legal
counsel. J.P. Morgan Securities, Inc., and Bear, Stearns acted as
financial advisers to Hibernia and Wachtell, Lipton, Rosen & Katz
and Phelps Dunbar acted as its legal counsel.
In connection with the proposed merger, Capital One will file with
the SEC a Registration Statement on Form S-4 that will include a
proxy statement of Hibernia that also constitutes a prospectus of
Capital One. Hibernia will mail the proxy statement/prospectus to
its stockholders. Investors and security holders are urged to
read the proxy statement/prospectus regarding the proposed merger
when it becomes available because it will contain important
information. To obtain a free copy of the proxy
statement/prospectus (when available) and other related documents
filed by Capital One and Hibernia, visit the Securities and
Exchange Commission at http://www.sec.gov/The proxy
statement/prospectus (when it is available) and the other
documents may also be obtained for free by accessing Capital One's
website at http://www.capitalone.com/under the tab "Investors"
and then under the heading "SEC & Regulatory Filings" or by
accessing Hibernia's website at http://www.hibernia.com/under the
tab "About Hibernia" and then under the heading "Investor
Relations-SEC Filings".
Capital One, Hibernia and their respective directors, executive
officers and certain other members of management and employees may
be soliciting proxies from Hibernia stockholders in favor of the
merger. Information regarding the persons who may, under the
rules of the SEC, be considered participants in the solicitation
of the Hibernia stockholders in connection with the proposed
merger will be set forth in the proxy statement/prospectus when it
is filed with the SEC. You can find information about Capital
One's executive officers and directors in its definitive proxy
statement filed with the SEC on March 17, 2004. You can find
information about Hibernia's executive officers and directors in
its definitive proxy statement filed with the SEC on March 18,
2004. You can obtain free copies of these documents from Capital
One and Hibernia using the contact information above.
About Hibernia
Headquartered in New Orleans, Louisiana, Hibernia is on Forbes
magazine's list of the world's 2,000 largest companies and Fortune
magazine's list of America's top 1,000 companies according to
annual revenue. Hibernia has $22.3 billion in assets at December
31, 2004 and locations in 35 Texas counties and 34 Louisiana
parishes. Hibernia Corporation's common stock (HIB) is listed on
the New York Stock Exchange.
About Capital One
Headquartered in McLean, Virginia, Capital One Financial
Corporation -- http://www.capitalone.com/-- is a bank holding
company whose principal subsidiaries, Capital One Bank, Capital
One, F.S.B. and Capital One Auto Finance, Inc., offer a variety of
consumer lending products. Capital One's subsidiaries
collectively had 48.6 million accounts and $79.9 billion in
managed loans outstanding as of December 31, 2004. Capital One is
a Fortune 500 company and, through its subsidiaries, is one of the
largest providers of MasterCard and Visa credit cards in the
world. Capital One trades on the New York Stock Exchange under
the symbol "COF" and is included in the S&P 500 index.
* * *
As reported in the Troubled Company Reporter on Sept. 10, 2004,
Standard & Poor's Ratings Services raised its long-term
counterparty credit rating on Capital One Financial Corp. to
'BBB-' from 'BB+' and the long-term counterparty credit rating on
its bank subsidiaries, Capital One Bank, Falls Church, VA and
Capital One FSB, to 'BBB' from 'BBB-'. The short-term
counterparty credit ratings are affirmed at 'A-3'. At the same
time, Standard & Poor's revised the outlook to stable from
positive.
"The ratings action considers Capital One's successful navigation
through a challenging operating environment, the company's success
to-date in diversifying its business lines, the moderation of its
managed loan growth, and management's adoption of a long-term
strategy that considers further diversification," said Standard &
Poor's credit analyst John K. Bartko, C.P.A. Despite some
weakening of asset quality metrics due in large part to
opportunistic forays into subprime lending in late 2002 and into
early 2003, Capital One nevertheless navigated its way through a
challenging operating environment that, though not a deep
recession, saw sector competitors marginalized, credit quality
compromised, and regulatory scrutiny intensified.
CARIBBEAN RESTAURANTS: S&P Affirms B+ Corporate Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Caribbean Restaurants LLC -- CRI -- to stable from negative.
Ratings on the company, including the 'B+' corporate credit
rating, were affirmed.
"The outlook revision is based on the company's consistent
operating fundamentals, including a steady performance of
comparable-store sales increases over the past year, and modestly
improved leverage due to steady EBITDA generation," explained
Standard & Poor's credit analyst Kristi Broderick.
Ratings on CRI reflect the company's highly leveraged capital
structure, the risks of operating in the extremely competitive
quick-service restaurant industry, the company's small size, and
its regional concentration.
Overall business risk for this third-largest franchisee of Burger
King restaurants is influenced heavily by strong competition in
the fast-food segment, especially from McDonald's and Subway in
Puerto Rico, where CRI operates all 167 of its units. Somewhat
tempering these factors is the strength the company derives from
its exclusive franchise agreement with Burger King for Puerto Rico
and the unique characteristics of that market.
CRI is the dominant player in the $1 billion Puerto Rican fast-
food market. It controls about 18% of total units and about 25%
of total revenues. Subway, with a 19% share of total fast-food
units, and McDonald's, with 12%, are its closest competitors.
The company also competes with other quick-service eating
establishments, mom-and-pop takeouts, pizza restaurants,
convenience food stores, delis, and supermarkets. Demographics in
the region are favorable for quick-service restaurants. Puerto
Rico has a higher percentage of people between the age of 15 and
34 than the U.S., and of low- to moderate-income families -- both
segments are the heaviest consumers of fast food. In addition,
the population density in Puerto Rico is 10 times that of the
U.S., and labor and occupancy costs are lower than in the U.S.
CRI has a unique operating environment within the Burger King
system because of its exclusive territory rights and isolation
from other Burger King markets. Unlike U.S.-based Burger King
franchisees, CRI is able to custom tailor menu items, and it
controls its advertising budget. The company produces its own
advertising content that is tailored to the local consumer.
CRI also has lower food and distribution costs than the U.S.-based
Burger King system because it sources its own product. Hence, the
company has been able to avoid many of the problems that have
beleaguered the Burger King system over the past few years. In
the U.S., the Burger King system has shown improvement in 2004,
reporting positive same-store sales for each of the last 12 months
ending January 2005.
CATHOLIC CHURCH: Portland Wants to Execute Right of Way Easements
-----------------------------------------------------------------
Pursuant to Section 364(b)(1) of the Bankruptcy Code, the
Archdiocese of Portland seeks authority from the U.S. Bankruptcy
Court for the District of Oregon to execute:
(a) in favor of PacifiCorp, an Oregon Corporation, a Right of
Way Easement for an area of parish property to provide
additional electric service to Holy Redeemer School on
North Portland; and
(b) a Grant of Easement for Road and Right of Way Purposes, in
favor of Clackamas County, over Gethsemani Cemetery
property, in exchange for frontage improvements to the
cemetery.
PacifiCorp
Holy Redeemer Church requires additional electrical service for
its school located at 127 N. Portland Boulevard. To provide
additional service, PacifiCorp requires an easement for right of
way over an area approximately 10 feet by 225 feet of parish
property owned by Holy Redeemer Church, but as to which record
title is in the name of the Archdiocese. Holy Redeemer Church is
and will be responsible for the costs of the improvements and for
all amounts owed to PacifiCorp as a result of the electrical
improvements.
Clackamas County
The Archdiocese operates Gethsemani Cemetery, located at 11666 SE
Stevens Road, in Portland, Oregon, pursuant to a perpetual care
cemetery trust established in 1963. An adjoining landowner sought
authority to develop property at the intersection of SE Stevens
Road and SE Monterey Avenue for a mixed-use development, known as
"Eagle Landing."
As a condition of development, Clackamas County required frontage
improvements to the intersection, which in turn, requires a
dedication of 1,426 square feet of cemetery property for Road and
Right-of-Way Purposes, pursuant to Section 363(b)(1), for the
benefit of the cemetery.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq. and William N. Stiles, Esq. of Sussman
Shank LLP represent the Portland Archdiocese in its restructuring
efforts. Portland's Schedules of Assets and Liabilities filed
with the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities. (Catholic
Church Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CELGENE CORP: S&P Withdraws 'B' Corporate Credit Rating
-------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on Warren,
New Jersey-based emerging pharmaceutical company Celgene
Corporation, including the 'B' corporate credit rating, citing a
lack of investor interest.
CLYDESDALE STRATEGIC: Moody's Puts Ba2 Rating on $9M Class D Notes
------------------------------------------------------------------
Moody's Investors Service had assigned the ratings to five classes
of notes issued by Clydesdale Stragetic CLO I Ltd.:
(i) Aaa to the U.S. $221,000,000 Class A-1 Floating Rate Notes
Due 2017;
(ii) Aa2 to the U.S. $19,000,000 Class A-2 Floating Rate Notes
Due 2017;
(iii) A2 to the U.S. $15,000,000 Class B Deferrable Floating
Rate Notes Due 2017;
(iv) Baa2 to the U.S. $3,000,000 Class C-1 Floating Rate Notes
Due 2017 and U.S. $8,000,000 Class C-2 Fixed Rate Notes
Due 2017; and
(v) Ba2 to the U.S. $9,000,000 Class D Floating Rate Notes Due
2017.
Nomura Corporate Research and Asset Management, Inc., is the
collateral manager of the collateral pool. Moody's noted that its
ratings on this cash flow CLO reflect the credit quality of the
underlying assets, which consist primarily of senior secured bank
loans, the credit enhancement for the notes inherent in the
capital structure and the transaction's legal structure.
COLTS: Fitch Assigns BB+ Rating on $10.568 Million Interest Notes
-----------------------------------------------------------------
Fitch Ratings assigns these ratings to CoLTS 2005-1 Ltd./Corp.:
-- US$279,000,000 class A-1 floating-rate notes due 2015
'AAA';
-- US$11,083,333 class A-2 revolving floating-rate notes due
2015 'AAA';
-- US$23,251,000 class B floating-rate deferrable interest
notes due 2015 'AA';
-- US$31,705,000 class C floating-rate deferrable interest
notes due 2015 'A';
-- US$25,364,000 class D floating-rate deferrable interest
notes due 2015 'BBB';
-- US$10,568,000 class E floating-rate deferrable interest
notes due 2015 'BB+'.
The ratings are based upon the credit quality of the underlying
assets, the credit enhancement provided to the capital structure
through subordination and excess spread, and the strength of the
Loan Arbitrage Group of Wachovia Bank, National Association as
servicer to the portfolio assets.
The ratings of the class A-1 and A-2 notes address the likelihood
that investors will receive full and timely payments of interest,
as per the governing documents, as well as the stated balance of
principal by the legal final maturity date. The ratings of the
class B, C, D, and E notes address the likelihood that investors
will receive ultimate and compensating interest payments, as per
the governing documents, as well as the stated balance of
principal by the legal final maturity date.
The class A-2 notes are a revolving class of notes tied to the
balance of revolving loans in the portfolio with a maximum
commitment amount of $11.083 million. The notes may increase or
decrease as amounts are borrowed, repaid, and reborrowed. Each
purchaser of the class A-2 notes will be required to satisfy the
Fitch-rating criteria of 'F1'. There are four revolving loan
borrowers, representing 2.62% of the portfolio.
The notes are supported by the cash flows of an asset portfolio
consisting of high yield loans to traditional and larger middle-
market U.S. businesses and of broadly syndicated loans. The
middle-market loans were made for the purposes of buyouts, working
capital, growth, acquisitions, and general corporate purposes,
refinancing existing indebtedness and restructuring. The loan
obligors, the majority of which are privately owned and not
publicly rated, primarily operate in the media, health care,
finance, business services, and manufacturing sectors. Of the
total portfolio, 85.5% of the loans are to middle-market
companies, 12.8% are to large middle-market companies, and 1.6% of
the loans are broadly syndicated loans.
Approximately 86.3% of the loans are first lien loans and 13.7%
are second lien loans. The overall portfolio has a weighted-
average rating of approximately 'BB-/B+'. The pool has 56 loan
obligors with no single obligor representing more than 3.55% of
the total portfolio value. There is some overconcentration with
respect to industry exposure specifically in business services,
which was addressed in the Fitch Vector model. It is important to
note that the portfolio will generally be a static pool. There
will be no discretionary trading; however, substitutions for
specified reasons will be permitted up to 20% of the initial
balance over the life of the deal.
As part of the rating process for this transaction, Fitch stressed
the underlying asset portfolio with a variety of default rates,
timing scenarios, and interest-rate scenarios, designed to
simulate varying economic conditions. The class A-2 notes can
have an unlikely but potential situation where the outstanding
balance of the class A-2 notes may increase after more junior
notes have paid in full. Fitch stressed the class A-2 notes at
each of the maturity dates of the revolving loans to the maximum
balance. Then, the credit enhancement was tested for each of the
maturity dates after default timing, prepayment, redraw timing,
and interest-rate stresses were applied to the capital structure.
For further details on the stress tests Fitch employed while
rating CoLTS 2005-1, Ltd./Inc., see the presale report dated Feb.
10, 2005, on the Fitch Ratings web site
http://www.fitchratings.com/
CONE MILLS: Judge Walrath Okays $28 Million Settlement with Banks
-----------------------------------------------------------------
The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the
District of Delaware approved a settlement agreement between Cone
Mills Corporation and its debtor-affiliates, the Bank of America,
N.A., Prudential Insurance Company of America and the Bank of New
York, as Indenture Trustee.
On June 28, 2000, Cone Mills entered into a series of loan
agreements with a group of lenders. Bank of America served as the
Revolving Credit Agent for the lenders asserting a $28 million
claim.
On June 9, 2004, the lenders filed a complaint for declaratory
relief in the Bankruptcy Court. The Lenders wanted the Court to
confirm the validity, perfection, priority and enforceability of
the their liens and quantify Cone Mills' obligations.
In July, the Bank of New York answered the Lenders' complaint,
asserted counterclaims challenging the validity and priority of
their liens, and alleged that the Lenders breached an
Intercreditor Agreement.
After an extensive litigation, the Debtors and the Lenders have
agreed to fully and finally resolve all of their disputes. The
secured creditors will hold a $9.7 million priority claim and a
$18.3 million general secured claims.
Cone Mills Corporation, with its debtor-affiliates filed for
chapter 11 protection on September 24, 2003 (Bankr. Del. Case No.
03-12944). Cone Mills filed a Chapter 11 Liquidation Plan
following a sale of substantially all of the company's assets to
WL Ross & Co. in March 2004, for $46 million plus assumption of
certain liabilities. WL Ross, in turn, merged Cone Mills' assets
with Burlington Industries' assets to form International Textile
Group. Pauline K. Morgan, Esq., at Young, Conaway, Stargatt &
Taylor represents the Debtors. When the Company filed for
protection from its creditors, it listed $318,262,000 in total
assets and $224,809,000 in total debts.
CONTINENTAL AIRLINES: NYSE Says Okay to New Stock Option Issue
--------------------------------------------------------------
The New York Stock Exchange (NYSE) has accepted the reliance by
Continental Airlines, Inc. (NYSE: CAL) on an exception to the
NYSE's stockholder approval policy so that the company may issue
to its employees stock options for approximately 10 million shares
of Continental's common stock in connection with previously
announced pay and benefits reductions. In taking this action, the
Audit Committee of Continental's Board of Directors determined
that the delay necessary in obtaining stockholder approval would
seriously jeopardize the financial viability of the company.
On Feb. 28, 2005, Continental said it reached tentative agreements
on new contracts covering its pilots, flight attendants, mechanics
and dispatchers, which are subject to ratification by members of
each union group. The results of the ratification process are
expected by the end of March 2005.
As an essential condition to securing the necessary wage and
benefits cost reductions and as part of its commitment to its
employees that their cost reduction contributions represent an
investment in their future, Continental will be granting stock
options to U.S. based employees that participate in wage and
benefits cost reductions. International employees will
participate where practical based on foreign laws and regulations.
Members of the company's board of directors and its officers will
not receive these stock option grants. Each stock option grant
will represent the right to acquire shares of Continental common
stock at the closing price of the common stock on the NYSE on the
date of grant.
Approximately 10 million shares of Continental's Class B common
stock will be subject to these stock options, representing
approximately 15% of Continental's outstanding shares as of
Feb. 25, 2005 (13% on a fully distributed basis). The options
will generally become exercisable in three equal installments on
the first, second and third anniversaries of the date of grant,
and will have a term ranging from six to eight years. The company
anticipates that the stock options will be issued by the end of
March 2005, subject to ratification of the tentative agreements.
The company expects to achieve approximately $500 million of
annual cost savings on a run-rate basis when its agreements with
its various work groups are implemented. This excludes the non-
cash cost of the employee stock options and accruals for certain
non-cash costs or charges relating to items contained in the
tentative agreements. Further, the company's ability to achieve
certain of the cost reductions will depend on timely and effective
implementation of new work rules, actual productivity improvement,
implementation of technology and other items, the timing and full
impact of which are difficult to estimate at this time.
Continental is mailing a letter to all its stockholders notifying
them of the company's intent to issue shares of its common stock
in connection with the stock options described above without
seeking stockholder approval. The company will not issue stock
options until at least ten days after that letter is mailed.
The securities discussed herein have not been registered under the
Securities Act of 1933 and may not be offered or sold in the
United States absent registration or an applicable exemption from
registration requirements.
About the Company
Continental Airlines -- http://continental.com/--is the world's
sixth-largest airline, serving 128 domestic and 111 international
destinations -- more than any other airline in the world -- and
serving nearly 200 additional points via codeshare partner
airlines. With 42,000 mainline employees, the airline has hubs
serving New York, Houston, Cleveland and Guam, and carries
approximately 51 million passengers per year. FORTUNE ranks
Continental one of the 100 Best Companies to Work For in America,
an honor it has earned for six consecutive years. FORTUNE also
ranks Continental as the top airline in its Most Admired Global
Companies in 2004.
* * *
Continental Airlines reported a $363 million loss for 2004. In a
recorded message on Feb. 11, 2005, Larry Kellner, Continental's
Chairman and Chief Executive Officer, told employees that losses
in January 2005 continued and are running more than $1.5 million
per day. Continental expects to incur a significant loss in 2005.
The carrier's balance sheet dated Sept. 30, 2004, shows
$10.8 billion in assets and $685 million in shareholder equity.
As reported in the Troubled Company Reporter on Feb. 28, 2005,
Standard & Poor's Ratings Services placed its single-B ratings on
Continental Airlines Inc. equipment trust certificates and
enhanced equipment trust certificates on CreditWatch with negative
implications. S&P's rating action does not affect issues that are
supported by bond insurance policies.
"The CreditWatch review is prompted by Standard & Poor's concern
that a prolonged difficult airline industry environment,
characterized by high fuel prices, excess capacity, and intense
price competition in the domestic market, has weakened the
financial condition of almost all U.S. airlines and increased
the risk of widespread simultaneous bankruptcies," said Standard &
Poor's credit analyst Philip Baggaley.
CORAM HEALTHCARE: Chapter 11 Trustee & Professionals Want $21 Mil.
------------------------------------------------------------------
Arlin M. Adams, the Chapter 11 Trustee overseeing Coram Healthcare
Corp. and Coram, Inc., during their pass through the chapter 11
process, and his professionals ask the U.S. Bankruptcy Court for
the District of Delaware to approve their final applications for
compensation and some requests for fee enhancements:
Professional Fees Expenses Enhancement
------------ ---- -------- -----------
Arlin M, Adams,
the Chapter 11 Trustee $335,230 $10,327 $335,000
Schnader Harrison Segal
& Lewis LLP, counsel to
the Chapter 11 Trustee 7,981,862 400,185 798,862
Weir & Partners LLP,
Co-Counsel to the Chapter
11 Trustee 618,560 232,087
Michael J. Koenigsknecht
& Associates LLC,
Special Counsel to the 2,796,961 587,651
Chapter 11 Trustee
Epstein Becker and Green,
P.C., Special Counsel to
the Chapter 11 Trustee 370,661 20,554
Chanin Capital Partners,
LLC, Financial Advisor to
the Chapter 11 Trustee 2,026,968 49,228
Ewing Bemis & Co.,
Investment Banker for the
Chapter 11 Trustee 690,000 29,038
Ernst & Young LLP,
Auditors and Accounting
Advisors to the Chapter
11 Trustee 3,629,869 55,242
Chapter 11 Case History
On Aug. 8, 2000, Coram Healthcare Corp, and Coram, Inc., filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code. On August 22, 2000, the United States Trustee appointed an
Official Committee of Unsecured Creditors. On October 18, 2000,
the United States Trustee appointed a Committee of Equity Interest
Holders to represent the interests of Coram Healthcare
Corporation's common shareholders.
Coram filed its First Joint Plan of Reorganization the day it
filed for bankruptcy protection. That pre-negotiated plan
provided for, among other things, the cancellation of all
shareholder interests, issuance to the Noteholders of all stock of
the reorganized company, a pro rata distribution of $2 million to
general unsecured creditors, and nothing for the shareholders.
The Court denied confirmation of that Plan on December 21, 2000,
because of the widely publicized actual conflict of interest
arising from Daniel Crowley simultaneous employment as the
Debtors' chief executive and as a consultant for Cerberus.
Following the collapse of the pre-negotiated plan, the Debtors
created a special committee of independent directors and hired
Harrison L. Goldin to serve as Coram's independent restructuring
advisor. On July 11, 2001, Mr. Goldin issued his report, the
recommendations of which were incorporated into the Debtors'
proposed Second Plan of Reorganization. Nearly identical to the
First Plan in every other respect, the Second Plan provided for a
$10 million pro rata distribution to CHC shareholders if that
class voted to accept the Second Plan. The Court denied
confirmation of the Second Plan on December 21, 2001.
After the Second Plan cratered, the Court granted two motions on
February 12, 2002, requesting appointment of a chapter 11 trustee
to assume control over the Debtors' property and affairs pursuant
to 11 U.S.C. Sec. 1104. On March 1, 2002, the Court appointed
Arlin M. Adams to that post.
At the time of the Trustee's appointment, Mr. Adams and his
counsel remind Judge Walrath, the Debtors' future was uncertain:
(a) the Debtors two failed plans and appointment of an
operating Trustee fueled doubt concerning the Debtors
among their employees, suppliers and customers;
(b) the Equity Committee was seeking leave to file a
derivative complaint for hundreds of millions of dollars
against the Debtors' Noteholders, outside directors and
CEO, asserting, inter alia, RICO violations and breach
of fiduciary duties;
(c) the Official Committee of Unsecured Creditors in the
R-Net Subsidiaries' bankruptcy cases was seeking relief
from the automatic stay to file its own RICO complaint
alleging $50 million in damages and seeking to pierce
the corporate veil to make the Debtors responsible to
all of the R-Net creditors of the subsidiaries;
(d) there was a shareholder derivative action pending in the
United States District Court for the District of New
Jersey;
(e) the Debtors faced uncertainty concerning the Stark II
law; and
(f) the Debtors faced substantial business challenges,
including staff competition, third party reimbursement
rate pressures, increases in the cost of medications,
nurses, pharmacists, and other personnel and regulatory
issues.
During this critical time, the Trustee and his legal and other
advisors worked to stabilize the Debtors' operational affairs,
immediately and continuously interface with the Debtors' senior
management, the Noteholders and the Equity Committee, and
undertook measures that gave the Debtors "breathing room."
The result: the Debtors prospered.
Mr. Adams says that he reached out to all parties-in-interest in
an effort to reach a global resolution and he was able to
negotiate favorable settlements, which the creditors favored and
the Court approved, with the Noteholders, the IRS and R-Net. Mr.
Adams proposed, through his counsel, his Second Amended Joint Plan
of Reorganization, which, after lengthy and hotly contested
confirmation hearings on the Plan and a competing proposed plan of
reorganization proposed by the Equity Committee, the Court
confirmed by an Order entered November 1, 2004. The Trustee's
Plan became effective on December 1, 2004.
Now, the Debtors are reorganized. Under the Trustee's confirmed
Plan, the creditors are receiving 100% of their pre-petition
claims and may receive post-petition interest from the net
proceeds of retained Causes of Action. Furthermore, the
shareholders will receive an estimated cash distribution in excess
of $40 million (provided that, among other things, the
administrative claim filed by Daniel Crowley is denied) plus the
remaining net proceeds of the Causes of Action.
March 24 Hearing
Judge Walrath will convene a hearing on the Final Fee Applications
filed by the Chapter 11 Trustee and his professionals on at 9:30
a.m. on March 24, 2005, in Wilmington. Objections, if any, must
be filed by 4:00 p.m. on March 17, 2005, and served on:
The Reorganized Debtor:
Allen J. Marabito, Esq.
Coram Healthcare Corporation
1675 Broadway, Suite 900
Denver, CO 80202
The Chapter 11 Trustee:
Arlin M. Adams, Esq.
1600 Market Street, Suite 3600
Philadelphia, PA 19103
The Chapter 11 Trustee's counsel:
Barry E. Dressier, Esq.
Schnader Harrison Segal & Lewis LLP
1600 Market Street
Philadelphia, PA 19103
- and -
Kenneth E. Aaron, Esq.
Weir & Partners, LLP
824 Market Street Mall, Suite 1001
P.O. Box 708
Wilmington, DE 19899
Counsel to the Official Committee of Unsecured Creditors:
Mark D. Collins, Esq.
Richards, Layton & Finger, P.A.
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
- and -
Chaim J. Fortgang, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019-6150
Counsel to the Senior Noteholders:
Alan B, Miller, Esq.
Weil, Gotshal & Manges LLP
767 Sixth Avenue
New York, NY 10153
Counsel for the DIP Lenders:
Carol Morrison, Esq.
Schulte Roth & Zabel, LLP
900 Third Avenue
New York, NY 10022
Counsel to the Official Committee of Equity Security
Holders:
Mark Minuti, Esquire
Saul Ewing LLP
222 Delaware Avenue, Suite 1200
P.O. Box 1266
Wilmington, DE 19899
- and -
Richard F, Levy, Esq.
Jenner & Block, LLC
One IBM Plaza
Chicago, IL 60611
the Office of the United States Trustee:
Richard Schepacarter, Esq.
844 North King Street, Room 2313
Wilmington, DE 19801
Investment Banker to the Chapter 11 Trustee:
J. Scott Victor, Esq.
SSG Capital Advisors, L.P.
Five Tower Bridge
300 Barr Harbor Drive, Suite 420
West Conshohocken, PA 19428
Coram Healthcare Corporation is a provider of infusion-therapy
services. The Company filed for chapter 11 protection on
August 8, 2000 (Bankr. D. Del. Case No. 00-03299), and emerged
from chapter 11 in 2004 under a Plan of Reorganization prosecuted
to confirmation by the Chapter 11 Trustee. Sam Zell, represented
by Richard F. Levy, Esq., at Jenner & Block, LLC, led the Equity
Committee in its charge to defeat confirmation of two plans
proposed by the Debtors.
CRANSTON R.I.: S&P Raises Gen. Obligation Bonds to BBB- from BB
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its underlying rating
(SPUR) on Cranston, R.I.'s general obligation bonds outstanding to
'BBB-' from 'BB' based on the city's continued success in
implementing financial management practices, leading to in
structural budgetary balance without the use of deferrals,
questionable revenues, or onetime revenues; and key hiring of an
experienced financial management team that has focused on
multiyear financial and capital planning.
The upgrade also reflects:
-- the restoration of positive, growing reserve levels and
budgeting of rainy day reserves,
-- the result of the aforementioned management actions; and
-- the disbanding of the state financial review board last
fall, a result of favorable audited results and structurally
balanced budgets.
The outlook is positive.
"The rating could be raised further if the city continues its
successful progress in restoring financial position and building
reserves, manages labor costs within the context of its fiscal
recovery, and makes further progress in reducing the police and
fire unfunded pension liability," said Standard & Poor's credit
analyst Karl Jacob.
At the same time, Standard & Poor's affirmed its 'A+' SPUR on the
city's outstanding state-qualified general obligation bonds,
reflecting the security provided by the Cranston Qualified Bond
Act, Chapters 7/8 of the Public Laws of 2003. The Rhode Island
Qualified Bond Program is a new program, and to date, only
Cranston has received legislative approval from the state to issue
debt through this type of repayment mechanism.
Although Cranston has made significant strides in restoring fiscal
balance, its very large $215 million unfunded police and fire
pension plan liability remains a credit weakness. While the city
has been meeting, and slightly exceeding, annual funding
requirements over the past two fiscal years, this significant
liability will continue to be a burden for years to come.
DAVITA INC: Justice Department Issues Subpoena for Documents
------------------------------------------------------------
DaVita Inc. (NYSE: DVA), has received a subpoena from the U.S.
Department of Justice, United States Attorney's Office for the
Eastern District of Missouri. The subpoena, which was received on
March 4, 2005, requires production of a wide range of documents
relating to the operations of the Company and its subsidiaries
from Dec. 1, 1996, to the present. The Company will meet with
representatives of the government to discuss the scope of the
subpoena and the production of responsive documents.
The subpoena requires the production of documents related to,
among other things, pharmaceutical and other services provided to
patients, relationships with pharmaceutical companies, financial
relationships with physicians and joint ventures. The subject
matter of this subpoena significantly overlaps with the subject
matter of the investigation being conducted by United States
Attorney's Office for the Eastern District of Pennsylvania. This
subpoena has been issued in connection with a joint civil and
criminal investigation.
To the Company's knowledge, no proceedings have been initiated
against the Company at this time, although the Company cannot
predict whether or when proceedings might be initiated. The
Company intends to cooperate with the government's investigation.
Kent Thiry, Chairman & CEO of DaVita stated, "We have worked hard
to create and sustain a culture of compliance at DaVita, as well
as the policies and systems to support that culture. We look
forward to the opportunity to answer whatever questions the
government has." Additionally, Mr. Thiry stated, "This process
will have no impact on our plans to acquire Gambro Healthcare."
About the Company
DaVita, Inc., is an independent provider of dialysis services for
patients suffering from chronic kidney failure. The Company
operates and provides administrative services to kidney dialysis
centers and home peritoneal dialysis programs domestically
throughout the US. For the nine months ended September 30, 2004,
Davita reported total revenues of $1.7 billion.
* * *
As reported in the Troubled Company Reporter on Dec. 9, 2004,
Moody's Investors Service placed the ratings of DaVita, Inc., on
review for possible downgrade. The rating action follows the
announcement by DaVita that it has entered into an agreement to
purchase Gambro Healthcare, the U.S. dialysis clinics of Sweden's
Gambro AB, for $3.05 billion in cash. The transaction is expected
to be financed through a new credit facility and the issuance of
notes.
Ratings placed on review for possible downgrade:
* $115 million senior secured revolving credit facility due
2007, rated Ba2
* $150 million senior secured term loan A (amortized to
$93 million) due 2007, rated Ba2
* $1,050 million senior secured term loan B (amortized to
$1,030 million) due 2010, rated Ba2
* $250 million senior secured term loan C due 2010, rated Ba2
* Ba2 senior implied rating
* Ba3 senior unsecured issuer rating
Ratings Withdrawn:
* $200 million senior secured term loan B due 2009, rated Ba2,
because it was refinanced
* $850 million senior secured term loan B due 2009, rated Ba2,
because it was refinanced
Moody's review will primarily focus on DaVita's ability to service
its new, and significantly higher, debt burden with free cash flow
from operations. While the combination of DaVita and Gambro
Healthcare will diversify DaVita's revenues and cash flows,
Moody's will consider the capital needs of the combined company
going forward.
Moody's is also concerned about the ongoing Department of Justice
and third-party carrier investigations at DaVita. In addition,
Moody's understands that DaVita and other U.S. dialysis service
providers have received subpoenas for information related to
documentation of testing for parathyroid hormone levels and to
products relating to vitamin D therapies.
DAVITA INC: Moody's Puts B3 Rating on $850MM Sr. Sub. Notes
-----------------------------------------------------------
Moody's Investors Service assigned ratings to DaVita, Inc.'s
proposed offering of $500 million in senior unsecured notes and
$850 million in senior subordinated notes. The issuance of these
notes represents the first phase of financing related to DaVita's
proposed acquisition of Gambro Healthcare, the U.S. dialysis
clinics of Sweden's Gambro AB.
Moody's expects the proceeds of these issuances will be used to
repay the existing outstanding debt of DaVita prior to the
proposed acquisition. Concurrently, Moody's downgraded DaVita's
senior implied rating, senior unsecured issuer rating, and the
ratings of the company's term loans and revolving credit facility.
These ratings reflect the significant increase in the debt burden
of the company anticipated in connection with the next phase of
financing for the proposed acquisition.
This rating action concludes the review of DaVita Inc. for
possible downgrade initiated in December 2004. Moody's placed the
ratings of DaVita on review for possible downgrade following the
announcement that DaVita had entered into an agreement to purchase
Gambro Healthcare for $3.05 billion in cash.
Moody's ratings reflect the likelihood that the proposed
acquisition will be completed and considers the company's ability
to service the new, and significantly higher, debt burden
associated with the anticipated second phase of financing required
to complete the proposed acquisition with free cash flow from
operations.
Risks and concerns reflected in the ratings also include those
associated with the ability to successfully integrate the Gambro
operations, the company's focus on a single line of business, the
high concentration of revenues from the administration of Epogen
(EPO) and the potential for reimbursement changes or negative
pricing changes of EPO, and the company's high reliance on
reimbursement from private and managed care payors coupled with
expectations for a tougher commercial pay contracting environment.
The rating is also limited by risks related to the government's
investigation of the company.
Positive factors supporting the ratings include DaVita Inc.'s good
cash flow generation supported by the recurring nature of
revenues, the geographic diversification of revenue streams, which
will be enhanced by the acquisition of the Gambro business, and
continued favorable industry growth trends. The ratings also
consider the company's strong management team and the fact that
the combined company will be in a clear market leader position
with respect to revenue and the number of patients, centers, and
treatments.
The stable outlook anticipates continued favorable operating
performance for the company, with moderate growth in revenues and
EBITDA. Margins may continue to be pressured from flat to
declining government reimbursement for dialysis treatments in the
face of rising labor, supplies and insurance costs, less favorable
contract negotiations with managed care payors, and integration
costs and initiatives. However, Moody's expects cash flow from
operations as well as free cash flow to remain consistent.
Moody's expects the company to use free cash flow to pay down debt
while continuing to add to the number of centers it operates
through acquisitions and de novo openings. Material deleveraging
and debt reduction, such that cash flow from operations and free
cash flow to adjusted debt ratios reach sustainable levels of
approximately 15% and 10%, respectively, could result in upward
pressure on the ratings.
Alternatively, Moody's may consider downgrading the ratings if
strains on free cash flow from the increased debt load result in
cash flow from operations and free cash flow to adjusted debt
ratios that remain below 10%.
Other developments that could result in a rating downgrade
include:
(i) unsuccessful integration of acquisitions causing pressure
on operating margins,
(ii) a decline in free cash flow because of reimbursement
changes or reduced pricing for dialysis treatments, and
(iii) a negative outcome to the DOJ investigation resulting in
additional leverage on the company's balance sheet.
Gambro Healthcare's recent settlement with the DOJ highlights the
need for increased controls and the potential for risks associated
with the integration of the Gambro Healthcare business.
Pro forma for the acquisition and giving effect to both phases of
financing, DaVita Inc.'s cash flow coverage of debt for the year
ended December 31, 2004 would have been moderate for the B1
category. Moody's estimates that adjusted cash flow from
operations to adjusted debt would have been approximately 10%
while adjusted free cash flow to adjusted debt would have been
approximately 6%. EBIT coverage of interest would have been low
at approximately 2.6 times. Leverage, defined as adjusted debt to
EBITDAR, would have been a relatively high 5.8 times. Moody's
believes that the use of EBITDA and related EBITDA ratios as a
single measure of cash flow without consideration of other factors
can be misleading. (See Moody's Special Comment, "Putting EBITDA
in Perspective," dated June 2000).
DaVita Inc. currently has a Speculative Grade Liquidity Rating of
SGL-1. Moody's believes that DaVita's SGL-1 rating will remain
stable for the six months ending June 30, 2005 because of the
company's stable revenue and cash flow streams. The proposed debt
offering will be used to repay the company's existing term loans
and, therefore, debt is expected to remain constant until the next
phase of financing. For the next two quarters ended March 31,
2005 and June 30, 2005, Moody's expects DaVita to have cash flow
from operations to debt in the range of 20-30% and free cash flow
to debt in the range of 10-20%.
The company has access to a $115 million revolving credit facility
that remains undrawn. Moody's will review the SGL rating when the
company completes the second phase of financing in connection with
the proposed acquisition. At that time, Moody's may conclude that
the acquisition puts pressure on the liquidity of the combined
company due to integration expenses and increased debt service
obligations.
The senior secured credit facilities are rated at the senior
implied level of B1 reflecting the significant value that these
debt instruments represent to the company's overall debt
capitalization. The B2 rating for the proposed senior unsecured
notes reflects the unsecured nature of this obligation. The B3
rating for the proposed senior subordinated notes, two notches
below the senior implied rating, reflects the contractual
subordination to the senior secured and senior unsecured debt.
Ratings remain subject to final review of documentation by
Moody's.
A summary of Moody's rating actions for DaVita Inc. are:
The ratings assigned are:
* $500 million guaranteed senior unsecured notes due 2013,
rated B2
* $850 million guaranteed senior subordinated notes due 2015,
rated B3
The ratings downgraded are:
* Senior implied rating from Ba2 to B1
* Senior unsecured issuer rating from Ba3 to B2
* $115 million Senior Secured Revolving Credit Facility due
2007, from Ba2 to B1
* $150 million Senior Secured Term Loan A due 2007, from Ba2 to
B1 (to be repaid with proceeds from the issuance of the
proposed notes)
* $1,050 million Senior Secured Term Loan B due 2010, from Ba2
to B1 (to be repaid with proceeds from the issuance of the
proposed notes)
* $250 million Senior Secured Term Loan C due 2010, from Ba2 to
B1 (to be repaid with proceeds from the issuance of the
proposed notes)
The rating outlook is stable.
DaVita, Inc., headquartered in El Segundo, California, is an
independent provider of dialysis services in the U.S. for patients
suffering from end-stage renal disease (chronic kidney failure).
As of December 31, 2004, the company operated 658 outpatient
dialysis centers located in 37 states and the District of
Columbia, serving over 53,000 patients. For the twelve months
ended December 31, 2004, DaVita reported total revenues of $2.3
billion.
Gambro AB is a global medical technology and healthcare company
with positions in renal care (services and products) and blood
component technology. Gambro generated approximately $3.23
billion (SEK 26.1 billion) of revenue in 2003, 60 percent of which
was for dialysis services.
DEL MONTE: Earns $48.5 Million of Net Income in Third Quarter
-------------------------------------------------------------
Del Monte Foods Company (NYSE: DLM) reported diluted earnings per
share of $0.23 for the third quarter ended Jan. 30, 2005, compared
to $0.25 per diluted share from continuing operations for the
prior year period. Integration costs of $3.2 million and
$7.2 million are included in the results for the third quarter of
fiscal 2005 and fiscal 2004, respectively.
Net sales increased 6.2% from the prior year period to
$861.3 million. The sales increase was driven by higher volume
from new product introductions and increased marketing support, as
well as by increased pricing. Sales increased across each of Del
Monte's operating segments (Del Monte Brands, StarKist Seafood,
Private Label Soup and Pet Products).
Income from continuing operations decreased to $48.6 million for
the quarter from $52.2 million a year ago due to increased
inflationary costs in steel and energy, logistics and other
transportation-related costs, as well as due to higher fish costs.
Marketing spending also increased, as Del Monte continued to
invest in its brands and new products. These higher costs were
partially offset by increased pricing, cost reduction actions,
lower overhead expenses, higher volume and lower interest expense.
"We continued to benefit from pricing actions taken over the last
several quarters," said Richard G. Wolford, Chairman and CEO of
Del Monte Foods. "We also continued to make the strategic
investments in our brands and new product introductions that we
believe will position our Company for growth over the longer term.
"During the quarter, we continued to experience higher costs
driven primarily by inflationary pressures. Earlier in the year,
we fielded pricing actions and cost reduction programs and, during
the quarter, continued to implement initiatives to address these
pressures. While we anticipate this difficult cost environment is
likely to persist over the next 12 to 18 months, over the longer
term we believe actions we are taking will fortify our brands,
expand our product line through innovation and reduce our
operating costs. This will result in Del Monte emerging from this
difficult environment stronger and better positioned."
Nine Months Ended January 30, 2005
The Company reported diluted earnings per share of $0.47 for the
nine months ended January 30, 2005, compared to $0.50 per diluted
share from continuing operations for the prior year period.
Integration costs of $16.0 million and $21 million are included in
the results for the first nine months of fiscal 2005 and fiscal
2004, respectively.
Net sales increased 5.4% from the first nine months of fiscal 2004
to $2,333.9 million, driven by higher volume from new product
introductions and increased marketing support, as well as
increased pricing.
Income from continuing operations was $99.0 million for the first
nine months of fiscal 2005 versus $106.4 million a year ago. This
decrease in income was driven by the increased inflationary costs
and the strategic decision to invest in marketing. The Company
was able to partially offset this decrease by increased pricing
and higher volume, lower corporate expenses and lower interest
expense.
Other Events
The Company (NYSE: DLM) completed a refinancing which included the
successful tender for approximately $297 million of its
$300 million principal amount 9-1/4% senior subordinated notes,
the issuance of $250 million of new 6-3/4% senior subordinated
notes and the establishment of a new credit facility, including
$600 million of term loans and a new increased
$350 million working capital revolver. The result of the
refinancing will be reduced interest rates on its notes, reduced
interest spreads on our floating rate debt, improved financial
flexibility and extended maturities. Refinancing fees and
expenses totaled approximately $40 million, primarily due to
approximately $33 million of consideration paid in connection with
the note tender. In the fourth quarter, the EPS impact of the
fees and write-offs associated with the refinancing is
preliminarily estimated to be $0.11 per diluted share.
Richard G. Wolford, Chairman and CEO of Del Monte Foods, noted,
"The refinancing was a successfully executed transaction that
increases our overall financial flexibility. We believe it is an
important investment in our future."
In addition, on March 2, 2005, a jury reached a verdict on the
Mars Kal-Kan litigation. Kal-Kan Inc., which was a subsidiary of
Mars, Inc., sued the H.J. Heinz Company on December 19, 2001
alleging infringement of one of its patents. Del Monte assumed
defense of this litigation in December 2002 when Del Monte
acquired rights to the Heinz U.S. pet food business. The trial on
this matter began on February 22. The jury awarded Mars damages
of $3.6 million and Del Monte is considering an appeal. This
award resulted in a $0.01 per share negative impact for the third
quarter.
Outlook
For fiscal 2005, the Company expects sales growth of approximately
2% to 3% over fiscal 2004 net sales of $3,129.9 million.
Excluding the impact of the 53rd week in fiscal 2004, the Company
expects sales growth of approximately 4% to 5%. Diluted earnings
per share from continuing operations is expected to be $0.65 to
$0.70. This includes integration expense of approximately $0.06
per share and $0.11 of refinancing fees and write-offs. The
Company reported $0.76 of diluted earnings per share from
continuing operations in fiscal 2004, which included integration
expense of $0.13 per share and the impact of the 53rd week of
approximately $0.03 per share. The Company expects cash provided
by operating activities, less cash used in investing activities,
of approximately $185 to $200 million in fiscal 2005.
For the fiscal 2005 fourth quarter, the Company expects sales to
decline approximately 4% to 6% versus net sales of $915.9 million
in the fourth quarter of fiscal 2004 primarily driven by the
absence of the 53rd week in the fourth quarter of fiscal 2005.
Excluding the impact of the 53rd week, the Company expects sales
growth of 1% to 3%. Diluted earnings per share is expected to be
approximately $0.18 to $0.23. This includes integration expense
of approximately $0.01 per share and $0.11 per share in
refinancing fees and write-offs. The Company reported $0.26 from
continuing operations for the fourth quarter of fiscal 2004, which
included integration expense of $0.06 per share and the impact of
the 53rd week of approximately $0.03 per share.
Del Monte Foods -- http://www.delmonte.com/-- is one of the
country's largest and most well-known producers, distributors and
marketers of premium quality, branded and private label food and
pet products for the U.S. retail market, generating over $3
billion in net sales in fiscal 2004. With a powerful portfolio of
brands including Del Monte(R), Contadina(R), StarKist(R), S&W(R),
Nature's Goodness(TM), College Inn(R), 9Lives(R), Kibbles 'n
Bits(R), Pup-Peroni(R), Snausages(R), and NawSomes! (R), Del Monte
products are found in nine out of ten American households.
* * *
As reported in the Troubled Company Reporter on Jan. 28 2005,
Fitch Ratings assigns a 'BB-' rating to Del Monte Foods Company's
new $250 million 6-3/4% privately placed senior subordinated notes
due Feb. 15, 2015. Fitch also expects to rate Del Monte's new
secured credit facility, projected to close in early February
2005. Fitch currently rates Del Monte's debt:
-- Senior secured bank facility 'BB+';
-- Senior subordinated notes 'BB-'.
-- Rating Outlook Stable.
Del Monte's total debt as of October 31, 2004 was $1.5 billion.
DELPHI CORP.: Financials Unreliable & Financial Executives Resign
-----------------------------------------------------------------
Delphi Corporation's Audit Committee, as a result of its ongoing
internal investigation, have concluded that certain prior
transactions involving the receipt of rebates, credits or other
lump-sum payments from suppliers and off-balance sheet financing
of certain indirect materials and inventory were accounted for
improperly. Based upon information to date, Delphi believes that
the improper accounting for off-balance sheet financing
transactions in 2000 resulted in the Company overstating cash flow
from operations for that year by approximately $200 million on a
GAAP basis and that the improper accounting for Rebate
Transactions in 2001 resulted in the Company overstating pre-tax
income under GAAP for that year by approximately $61 million. The
Company says it is still evaluating the impact of adjustments to
the Company's financial statements for other periods that will be
required to be reflected as the Company unwinds the improper
accounting for these transactions.
Although the Company is still evaluating additional transactions,
the magnitude of the errors and the preliminary conclusions
reached to date with respect to the transactions under review led
the Audit Committee to conclude that the audited financial
statements and related independent auditors' reports for 2001 and
subsequent periods as a result of the unwinding of the improperly
recorded transactions, should no longer be relied upon and a
restatement will be required. Delphi emphasizes that its internal
investigation is not complete and the Audit Committee's findings
have not been reviewed or audited by Deloitte & Touche LLP,
Delphi'a outside auditor.
The Audit Committee shared with certain of the other independent
members of the Board of Directors, including the lead independent
director, the results to date of its internal investigation. In
recognition of the circumstances in which the instances of
improper accounting identified to date occurred, particularly
during the fourth quarter of 2000 and the third and fourth
quarters of 2001, the Audit Committee, after considering the views
of the other independent directors, took certain personnel
actions, including accepting the resignation, effective March 4,
2005, of the Company's former Chief Accounting Officer and
Controller and current business line executive in charge of
certain product lines, and reassigning the current Vice President
of Treasury, Mergers & Acquisitions and New Markets to a non-
officer position with a commensurate reduction in responsibilities
and compensation. Each of these individuals had supervisory
authority for others involved in or were directly involved in
certain of the principal transactions under investigation, Delphi
said last week.
In addition, the Audit Committee accepted the resignation,
effective March 4, 2005 of the Company's Vice Chairman and Chief
Financial Officer, Alan S. Dawes. Mr. Dawes has also resigned
from Delphi's Board of Directors. Mr. Dawes agreed to resign
after the Audit Committee expressed a loss of confidence in him.
The Audit Committee accepted his resignation, as it determined it
would be in the best interest of the Company and its shareholders.
This will enable the Company to name a new CFO who will not be
distracted from managing the Company's ongoing business while the
Company's internal review and the SEC's investigation continue.
In addition, the independent directors are reviewing the conduct
of certain other present and former officers and executives.
John D. Sheehan (age 44), the current Chief Accounting Officer and
Controller of the Company was appointed as acting Chief Financial
Officer, and the Board is conducting an internal and external
search for Mr. Dawes' permanent replacement. Mr. Sheehan became
the Company's Chief Accounting Officer in June of 2002 and had
previously been a partner at KPMG LLP. Pamela M. Geller (age 39)
remains the Company's Treasurer and will now report to Mr.
Sheehan. The remaining responsibilities of the other individuals
will be allocated among the Company's existing senior executives
until successors have been determined.
Delphi did not file its Form 10-Q for the period ended Sept. 30,
2004, and has not yet issued audited financial statements for the
year-ended Dec. 31, 2004. The Audit Committee is working
diligently to complete its investigation and reach final
conclusions on the related accounting. Completion of the
investigation should enable the Company to understand the final
results of the investigation, to restate prior historical
financial statements to reflect any material adjustments warranted
by the results of the investigation, and to issue audited
financial statements for the year ended 2004. Although the
Company is not able to predict with certainty when its
investigation will be complete, it expects that it will be able to
issue any necessary restatement of prior historical financial
statements on or before June 30, 2005 and become fully current in
its filings of periodic reports with the SEC.
Mr. Sheehan confirmed that Delphi continues to cooperate fully
with an on-going investigation by the staff of the SEC.
About the Company
Delphi -- http://www.delphi.com/-- is the world's largest
automotive component supplier with annual revenues topping $25
billion. Delphi is a world leader in mobile electronics and
transportation components and systems technology. Multi-national
Delphi conducts its business operations through various
subsidiaries and has headquarters in Troy, Michigan, USA, Paris,
Tokyo and Sao Paulo, Brazil. Delphi's two business sectors --
Dynamics, Propulsion, Thermal & Interior Sector and Electrical,
Electronics & Safety Sector -- provide comprehensive product
solutions to complex customer needs. Delphi has approximately
186,500 employees and operates 171 wholly owned manufacturing
sites, 42 joint ventures, 53 customer centers and sales offices
and 34 technical centers in 41 countries.
* * *
As reported in the Troubled Company Reporter on Dec. 23, 2004,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Delphi Corp. to 'BB+' from 'BBB-' and its short-term
corporate credit rating to 'B' from 'A-3'. The ratings were
removed from CreditWatch where they were placed Dec. 2, 2004. The
outlook is stable.
"The action reflected our view that Delphi's earnings outlook will
remain weak for the next few years because of challenging
conditions in the automotive industry, a heavy dependence on
General Motors Corp. (BBB-/Stable/A-3), which is losing market
share in the U.S., and continued heavy underfunded employee
benefit obligations," said Standard & Poor's credit analyst Martin
King.
As reported in the Troubled Company Reporter on Feb. 7, 2005,
Moody's Investors Service lowered the long-term ratings of
Delphi Corporation to Baa3 and its short term rating for
commercial paper to P-3. Moody's said the rating outlook is
negative. The downgrade reflects Moody's expectations that Delphi
Corp.'s cash generation and credit metrics will remain under
pressure through 2006 as a result of:
1. lower US production levels and market share of General
Motors, its largest customer;
2. higher commodity costs;
3. large required pension contributions during 2005 and 2006;
and
4. a high wage and benefit structure among its domestic UAW
master agreement work force.
While Delphi Corp. has continued to make progress on several of
its key longer-term strategic objectives (growing its non-General
Motors volumes, increasing its geographic diversification and
reducing higher cost domestic employment levels), the magnitude of
lower General Motors volumes, short term rigidity in its domestic
employee expense and contractual arrangements, and net un-
recovered raw material costs more than offset these gains.
These challenges and the resulting pressure on Delphi's
performance are expected to continue into 2006. However, Moody's
believes that if Delphi can maintain progress in expanding its
non-GM and its non-US operations, while reducing higher wage and
benefit domestic employment levels, the company could lay the
groundwork for operating margins, cash generation and credit
measures that are more solidly supportive of the Baa3 rating.
S&P, Moody's and Fitch Ratings Ratings took a dim view of last
week's news, cutting their ratings further or placing them under
review.
DELPHI CORP: Moody's Reviews (P)Ba1 Sub. Rating for Downgrade
-------------------------------------------------------------
Moody's Investor Services has placed the Baa3 long-term and Prime-
3 short-term ratings of Delphi Corporation under review for
possible downgrade. The review is prompted by the uncertainty
created by the company's announcement that the audited financial
statements and related independent auditors' reports for 2001 and
subsequent periods, as a result of the unwinding of improperly
recorded transactions, should no longer be relied upon, and a
restatement will be required.
Moreover, additional transactions are under examination and it is
possible that the review will determine that these transactions
were not properly recorded, and that previously issued financial
statements for other periods may require additional corrections.
These developments have resulted in significant changes in Delphi
Corp.'s senior financial management, and may necessitate an
ongoing re-evaluation of the company's internal financial controls
and procedures.
Ratings under review for possible downgrade include:
-- Delphi Corporation:
* Senior unsecured at Baa3
* Commercial Paper at Prime-3
* Shelf ratings (P)Baa3 for senior unsecured, (P)Ba1 for
subordinated and (P)Ba2 for preferred
-- Delphi Trust(s):
* Backed Preferred Stock at Ba1
* Shelf Ratings at (P)Ba1
The review will focus on the ultimate impact of the internal
investigation on Delphi's reported financial results and its
ability to resolve the investigation in a timely manner. The
review will also consider the degree to which the company can
address any reporting and control inadequacies, and remain in full
compliance with regulatory requirements and its obligations under
all borrowing and capital market transactions. Moody's notes
Delphi and its board has taken aggressive initial steps to address
these issues, including significant changes in senior financial
management.
The review will assess the impact that these management changes
will have on the company's strategic direction and financial
policies. Moody's notes that the company will be attempting to
address these reporting issues at the same time that it is facing
a very challenging operating environment characterized by lower
production schedules and rising raw material costs. In this
environment Moody's review will also consider changes in the
company's business outlook, and earnings and cash flow prospects,
as well as its ability to maintain an adequate liquidity profile.
Delphi Corp., headquartered in Troy, Michigan, is the world's
largest automotive component supplier with annual revenues of
$28.6 billion in 2004.
DELPHI CORP: Fin'l. Restatements Cue Fitch to Downgrade Ratings
---------------------------------------------------------------
Fitch Ratings has downgraded Delphi Corporation's ratings:
-- Senior unsecured rating to 'BB+' from 'BBB-';
-- Trust preferred rating to 'BB-' from 'BB+';
- -Commercial paper rating to 'B' from 'F3'.
Additionally, Fitch has placed Delphi on Rating Watch Negative.
Fitch's rating actions reflect concerns regarding financial re-
statements, the potential for further re-statements and the
resulting management changes made at a crucial juncture where a
convergence of events raises the risk of negative cash flow and
higher debt levels.
The near-term loss of key financial management occurs at a time
when:
* Fitch believes that the bank agreements may be
renegotiated to provide the banks with security which
would impair the position of the unsecured holders;
* General Motors - Delphi's largest customer - has become
more aggressive at correcting inventory which will
probably result in tighter operating margins for Delphi;
* raw material cost pressures continue;
* pension and health care funding requirements are
onerous;
* tightened funding requirements have been proposed and
are currently being discussed in congress;
* the state of the automotive industry may require Delphi
to make higher than anticipated cash restructuring
payments.
While Delphi has enjoyed strong growth in non-GM business, a
healthy proportion of high technology products and strong cash
balances, Fitch believes these positive factors are outweighed by
the heightened risk of negative cash flow and increased balance
sheet leverage.
Delphi announced that financial re-statements are needed for 2000
and 2001 and that the CFO and two other key financial officers
have left their positions. Improper accounting for off-balance
sheet financing caused fiscal-year 2000 cash flow from operations
to be overstated by $200 million. Improper accounting for rebate
transactions in FY2001 caused pretax income to be overstated by
$61 million. Delphi said that it is, 'still evaluating additional
transactions' and that, 'previously issued financial statements
for other periods may require additional corrections.' The
company also stated that it expects to 'issue any necessary
restatement' and to 'become fully current in its filings of
periodic reports with the SEC' by June 30, 2005.
In addition Delphi's primary customer (General Motors about 50% of
revenue) has been sporadically shutting down production to correct
vehicle inventories, especially in SUVs and pickups. This type of
inventory correction is used by the OEMs for quicker adjustments
and leaves suppliers with little opportunity to adjust variable
cost structure in the short-term. These issues - in combination
with Fitch's concerns regarding the company's increasing raw
material costs as well as pension and health care funding
requirements - increase the risk of saddling the balance sheet
with higher debt, despite currently healthy liquidity.
High required pension contributions, currently projected to peak
in 2006 at approximately $1 billion, could absorb the large
majority of Delphi's cash flow given expected margin pressures.
New legislation currently being discussed, if passed along the
lines of the recent Department of Labor proposals, could represent
a significant increase in pension funding requirements. In
Fitch's view, this would require access to additional external
capital and would further impair Delphi's balance sheet. However,
Delphi is currently funding in excess of moderate benefit
payments. This provides an extended timeframe over which the
company can achieve an adequate return on its pension assets.
In the area of other post-retirement health care and insurance,
Delphi continues to face long-term challenges with an approximate
$9 billion unfunded obligation. However, near-term requirements
are minimal as Delphi has only 0.25 retirees per active employee
under a pay-as-you-go system.
Fitch expects commodity price pressures to remain high in 2005,
especially steel costs, and to some degree the cost of petroleum-
based raw materials like plastic resins. Margins will continue to
be squeezed as the full impact of recent cost escalations work
their way into supply contracts. Additionally, Delphi is exposed
to commodity price pressures and supply issues among its
suppliers.
Delphi's legacy cost structure remains a key concern. The company
has said that the 2005 U.S. work force attrition rate would be
slower relative to historic attrition rates. It also initiated
another headcount reduction program totaling 8,500 (4.6% of its
total work force) and added another three facilities to its
Automotive Holdings Group.
Fitch recognizes the long-term positive impact of headcount
reductions, but addressing its legacy cost structure has resulted
in continued claims on operating cash flows (announced 2005
restructuring charges of $150 million in after-tax cash) at a time
when other cash requirements are rising. If production and raw
material costs continue to be issues for not only Delphi but also
its customers, then Delphi may need to step-up its restructuring
efforts as its customers are likely to step-up their pressure for
price reductions.
DELPHI CORP: S&P Puts 'BB+' Corp. Credit Rating on Watch Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB+' corporate
credit and senior unsecured ratings on Delphi Corporation on
CreditWatch with negative implications.
"The rating action reflects concerns about the integrity of
Delphi's financial statements following the company's announcement
that an ongoing internal investigation has identified improper
accounting treatment of certain prior transactions," said Standard
& Poor's credit analyst Martin King.
These findings have resulted in the departure of the company's
chief financial officer and of the former chief accounting
officer. The full extent of the accounting issues has not yet
been determined, but these issues compound the challenges the
Troy, Michigan-based company already faces in dealing with a very
difficult operating environment in the industry. Delphi has total
debt of about $4 billion and underfunded benefit liabilities of
about $13 billion.
The audit committee of Delphi's board of directors has uncovered
the improper accounting treatment of various transactions
involving the receipt of rebates, credit, or other lump-sum
payments from suppliers and of off-balance-sheet financing of
certain indirect materials and inventory. The newly disclosed
improper accounting of the materials and inventory items
resulted in a $200 million overstatement of cash from operations
and a $6 million understatement of pretax income in 2000, which
were reversed in later years.
With respect to the rebate transactions, Delphi reaffirmed the
preliminary conclusions it reported in December 2004, mainly that
the company failed to recognize certain liabilities and did not
appropriately defer recognition of payment and credits that were
received in conjunction with agreements for future information
technology services. This led to a $61 million overstatement of
pretax income in 2001 and the understatement of pretax income from
2002-2004.
Delphi's internal investigations are continuing, including a
review of $237 million in cash payments made to General Motors
Corporation (GM) (BBB-/Stable/A-3) in 2000 related to warranty
claims and employee benefit obligations, and $85 million in
credits received from GM in 2001 for related matters. The
ultimate impact of the identified accounting issues is uncertain.
The company has not filed its September 30, 2004, 10-Q, and the
filing of its 2004 10-K will be delayed, likely requiring a waiver
of its bank facility reporting requirements. The company has
initiated a search for a new chief financial officer and is also
searching for a new chief executive officer pending the previously
announced retirement of its current CEO. An SEC investigation
into the company's accounting is continuing and could be
expanded, based on Delphi's recent announcement.
Meanwhile Delphi faces numerous business challenges, which are not
expected to reverse in the near term, and profitability during
2005 will likely be weaker than previously assumed. Standard &
Poor's will review the Delphi's accounting issues, as well as the
company's near-term earnings and cash flow prospects. The
CreditWatch is expected to be resolved within the next few months.
DII/KBR: Wants to Delay Entry of Final Decree Filing to May 10
--------------------------------------------------------------
Local Bankruptcy Rule 3021-1 promulgated in the Western District
of Pennsylvania states that a proponent of a confirmed plan will
file and serve on all parties-in-interest a request for final
decree within 90 days after plan confirmation.
Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Nicholson
Graham, LLP, in New York, relates that the Reorganized DII
Industries, LLC and its debtor-affiliates have established an
arbitration protocol and timeline that is consistent with their
Plan.
The arbitration protocol provides that:
(i) all arbitrations will be commenced no later than
April 5, 2005;
(ii) all arbitrations will be concluded by July 5, 2005;
(iii) all decisions by arbitrators will be completed by
August 5, 2005; and
(iv) the Reorganized Debtors will certify to the Asbestos PI
Trust and the Silica PI Trust the final payments to be
made to the Qualifying Claimants by September 5, 2005,
which will facilitate the disbursement of the amounts held
by the Asbestos PI Trust and the Silica PI Trust by
October 1, 2005, to Qualifying Claimants.
Mr. Rich notes that unless no arbitrations are commenced by
April 5, 2005, the Reorganized Debtors' arbitration protocol
precludes the closing of the Bankruptcy Estate prior to
October 1, 2005.
Mr. Rich reminds the Court that the Plan's Effective Date has
already occurred and the Reorganized Debtors have satisfied all of
their obligations under the Plan, including all payment and
contribution requirements to the Asbestos PI Trust and the Silica
PI Trust. In addition, Judge Fitzgerald has scheduled a hearing
on April 15, 2005, to consider final fee applications in their
bankruptcy cases.
By this motion, the Reorganized Debtors ask the Court to extend
the time to file a request for final decree until May 10, 2005, if
no arbitrations are commenced on or before April 5, 2005, or,
alternatively, on October 15, 2005, if one or more arbitrations
are commenced within that timeframe.
Headquartered in Houston, Texas, DII Industries, LLC, is the
direct or indirect parent of BPM Minerals, LLC, Kellogg Brown &
Root, Inc., Mid-Valley, Inc., KBR Technical Services, Inc.,
Kellogg Brown & Root Engineering Corporation, Kellogg Brown & Root
International, Inc., (Delaware), and Kellogg Brown & Root
International, Inc., (Panama). KBR and its subsidiaries provide a
wide range of services to energy and industrial customers and
government entities in over 100 countries. DII has no business
operations. DII and its debtor-affiliates filed a prepackaged
chapter 11 petition on December 16, 2003 (Bankr. W.D. Pa. Case No.
02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and
Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the
Debtors in their restructuring efforts. On June 30, 2004, the
Debtors listed $6.255 billion in total assets and $5.295 billion
in total liabilities. (DII & KBR Bankruptcy News, Issue No. 26;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DLJ MORTGAGE: S&P Raises Class B-2 Cert. Rating to B+ from D
------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on classes
A-3, B-1, and B-2 of DLJ Mortgage Acceptance Corporation's
commercial mortgage pass-through certificates from series
1997-CF1. At the same time, the ratings on classes A1-B and A-2
are affirmed.
The raised ratings reflect the increase in credit enhancement
levels due to loan dispositions and payoffs, as well as the full
repayment of accumulated interest shortfalls on class B-2.
Currently, the trust collateral consists of 63 commercial
mortgages with an outstanding balance of $204.9 million, down from
77 loans totaling $264.8 million at the time of the last review in
July 2004. The pool has paid down by an additional 29% since the
last review.
Currently, there are two REO assets with a combined balance of
$4.7 million (2.3%) that are with the special servicer, Lennar
Partners Inc. -- Lennar. There are no other delinquent loans in
the pool.
-- Holiday Inn-Beaufort has a balance of $2.79 million and a
total exposure of $3.84 million ($25,262 per room). The
152-room limited-service lodging property, located in
Beaufort S.C., was built in 1982 (renovated 1996). It is
now flagged as a Ramada Inn. Occupancy for 2003 was 40%
with revenue of $1.325 million and NOI of approximately
$50,000. The property was appraised for $3.0 million as is
on Dec. 31, 2003. A significant loss is expected upon
disposition.
-- 21930 Groesbeck Highway has a balance of $1.93 million and a
total exposure of $2.42 million ($17 per sq. ft.). The
industrial property was built in 1943 (renovated 1969) and
has 140,000 sq. ft. Current occupancy is 39%. Lennar is
considering a purchase offer from a tenant or an auction
disposition. A significant loss is expected.
The servicer's watchlist includes 18 loans totaling $66.3 million,
or 32.3%. Four of the top 10 loans are on the watchlist,
including three crossed multifamily-secured loans located in
Columbus, Ohio, and a portfolio of 10 multifamily student housing
properties near the University of Oregon -- in Eugene. These
loans have DSCRs below 1.0x and are a credit risk. The remaining
loans are on the watchlist due to low DSCRs and declining or low
occupancies.
Standard & Poor's stressed the assets in special servicing as well
as those loans on the watchlist as part of its analysis, and the
expected losses and the resulting credit enhancement levels
adequately support the raised and affirmed ratings.
Ratings Raised
DLJ Mortgage Acceptance Corporation
Commercial mortgage pass-thru certificates series 1997-CF1
Rating
------
Class To From Credit Enhancement
----- -- ---- ------------------
A-3 AAA AA+ 25.24%
B-1 BBB+ BBB- 12.11%
B-2 B+ D 6.65%
Ratings Affirmed
DLJ Mortgage Acceptance Corporation
Commercial mortgage pass-thru certificates series 1997-CF1
Class Rating Credit Enhancement
----- ------ ------------------
A-1B AAA 52.58%
A-2 AAA 40.52%
EGAN FAMILY LLP: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Egan Family, LLP
405 Andrews Road
Trevose, Pennsylvania 19053
Bankruptcy Case No.: 05-12589
Type of Business: Real Estate
Chapter 11 Petition Date: March 1, 2005
Court: Eastern District of Pennsylvania (Philadelphia)
Judge: Stephen Raslavich
Debtor's Counsel: Alan L. Frank, Esq.
Frank, Rosen, Snyder & Moss, LLP
8380 Old York Road, Suite 410
Elkins Park, PA 19027
Tel: 215-935-1000
Total Assets: $980,000
Total Debts: $1,100,000
The Debtor did not file a list of its 20-largest creditors.
FRIENDLY ICE: Jan. 2 Balance Sheet Upside-Down by $105 Million
--------------------------------------------------------------
Friendly Ice Cream Corporation (AMEX: FRN) reported results for
the fourth quarter and year ended Jan. 2, 2005.
Fourth Quarter Results
Total company revenues for the three months ended January 2, 2005
were $143.2 million as compared to total revenues of $135.1
million for the three months ended December 28, 2003. Comparable
restaurant sales decreased 0.7% for company-operated restaurants
and increased 3.3% for franchised restaurants. Including the
results of the current quarter, franchise-operated restaurants
have reported fifteen consecutive quarters of positive comparable
restaurant sales growth. During the quarter, restaurant revenues
declined by $5.0 million compared to the same quarter in the prior
year as a result of the re-franchising of 27 company-operated
restaurants over the last fifteen months.
The 2004 fourth quarter included 14 weeks compared with 13 weeks
in the 2003 fourth quarter, and the estimated impact of the extra
week was an additional $10.7 million in total revenues.
Certain of the Company's employees are covered under a
noncontributory defined benefit pension plan. During 2004, lump-
sum cash payments to participants exceeded the interest cost
component of net periodic pension cost for the plan year. As a
result of the settlement volume, due in part to the March 2004 and
earlier restructurings, an additional pension expense of
$2.2 million pre-tax ($1.3 million after-tax or $0.17 per share)
was recorded in the 2004 fourth quarter. Effective December 31,
2003, all benefits accrued under the pension plan were frozen at
the level attained on that date. As a result, the 2003 fourth
quarter included a one-time non-cash pension curtailment gain of
$8.1 million pre-tax ($4.8 million after-tax or $0.62 per share)
equal to the unamortized balances as of December 31, 2003 from all
plan changes prior to that date.
The benefit from income taxes for the 2004 fourth quarter included
a $2.2 million reversal of income tax accruals recorded in prior
years. This accrual related to tax matters that, based upon
additional information obtained during the fourth quarter, was no
longer necessary.
The net loss for the three months ended January 2, 2005 was $0.2
million, compared to net income of $3.1 million, reported for the
three months ended December 28, 2003. As previously discussed,
fourth quarter 2004 results include an additional pension expense
of $2.2 million pre-tax ($1.3 after-tax or $0.17 per share) and
fourth quarter 2003 results include a one-time non-cash pension
curtailment gain of $8.1 million pre-tax ($4.8 after-tax or $0.62
per share).
Full Year Results
Total company revenues for the year ended January 2, 2005 were
$574.5 million as compared to total revenues of $579.8 million for
the same period in 2003. Comparable restaurant sales decreased
0.6% for company-operated restaurants and increased 2.7% for
franchise restaurants. During the year ended January 2, 2005,
restaurant revenues declined by $18.0 million compared to the same
period in the prior year as a result of the re-franchising of 27
company-operated restaurants over the past twenty four months.
Fiscal 2004 included an additional week of results, or 53 weeks in
total, compared with 52 weeks in fiscal 2003. The estimated
impact of the extra week was an additional $10.7 million in total
revenues.
As previously discussed, 2004 results include an additional
pension expense of $2.2 million pre-tax ($1.3 million after-tax or
$0.17 per share) and 2003 results include a one-time non-cash
pension curtailment gain of $8.1 million pre-tax ($4.8 million
after-tax). Also included in 2004 results are $8.2 million in
expenses ($4.8 million after-tax) for debt retirement and
restructuring costs, partially offset by a gain on litigation
settlement. The benefit from income taxes for 2004 included a
$2.2 million reversal of income tax accruals recorded in prior
years.
The net loss for the year ended January 2, 2005 was $3.4 million,
compared to net income of $9.5 million reported for the year ended
December 28, 2003.
Commenting on results, John L. Cutter, Chief Executive Officer and
President of Friendly Ice Cream stated, "Weaker restaurant sales,
higher commodity costs, and increased competition and discounting
in the retail supermarket business severely impacted fiscal 2004
results. During the year, we opened four new company-operated
restaurants and our franchisees opened seven new franchise
restaurants. We are pleased with the opening sales of these new
restaurants and their annualized sales volumes are currently
projected to be 40 to 50% higher than the chain average."
Business Segment Results
In the 2004 fourth quarter, pre-tax income in the restaurant
segment was $4.9 million, or 4.5% of restaurant revenues, compared
to $5.3 million, or 5.0% of restaurant revenues, in the fourth
quarter of 2003. The decrease in pre-tax income was mainly due to
a 0.7% decline in comparable company-operated restaurant sales,
the re-franchising of 27 company restaurants over the past fifteen
months and higher commodity costs.
Pre-tax income in the Company's foodservice segment was $2.4
million in the fourth quarter of 2004 compared to $3.5 million in
the fourth quarter of 2003. The decrease was mainly due to
increased retail promotional allowances and higher commodity
costs. Case volume in the Company's retail supermarket business
increased 4.4% for the fourth quarter of 2004 compared to the
fourth quarter of 2003.
Pre-tax income in the franchise segment increased in the fourth
quarter of 2004 to $2.4 million from $1.4 million in the fourth
quarter of 2003. The improvement is mainly due to increased
royalty revenue from comparable franchised restaurant sales of
3.3% and from the opening of 10 new franchised restaurants and the
re-franchising of 27 restaurants over the past fifteen months.
Also, increased rental income from leased and sub-leased franchise
locations contributed to the revenue growth in the current year
quarter.
Corporate expenses of $12.2 million in the fourth quarter of 2004
decreased by $0.2 million, or 2%, as compared to the fourth
quarter of 2003 primarily due to lower interest and corporate
bonus expense. These decreases were partially offset by higher
costs for legal, accounting and other professional fees.
Debt Retirement Costs
In the 2004 first quarter, the Company completed the private
offering of $175 million aggregate principal amount of 8.375%
Senior Notes due 2012. The net proceeds from the offering,
together with available cash and borrowings under the Company's
revolving credit facility, were used to purchase or redeem the
Company's 10.5% Senior Notes due December 1, 2007. In March 2004,
$127.8 million of aggregate principal amount of 10.5% Senior Notes
were purchased in a cash tender offer and in April 2004, the
remaining $48.2 million of 10.5% Senior Notes were redeemed at
103.5% of the principal amount in accordance with the Senior Notes
indenture. For the year ended January 2, 2005, debt retirement
costs of $9.2 million were recorded, consisting of $6.8 million in
premium costs and $2.4 million for the write-off of unamortized
financing fees in connection with the cash tender offer.
Restatement Related to Changes for Lease Accounting
The Company has reviewed its lease accounting and leasehold
depreciation practices partially in light of the recent attention
and focus on such practices by restaurant and retail companies.
Following this review and in consultation with its independent
public accounting firm, Ernst and Young LLP, Friendly's has
adjusted its computation of straight-line rent expense and the
related deferred rent liability, as well as depreciation expense.
As part of this accounting correction, the Company has restated
certain of its previously reported financial statements in its
Annual Report Form 10-K filed with the Securities and Exchange
Commission on March 4, 2005. The restatement did not have any
impact on the Company's previously reported cash flows, revenues
or compliance with any covenant under its credit facility or other
debt instruments.
Historically, when accounting for lease renewal options, rent
expense was recorded on a straight-line basis over the non-
cancelable lease term. The depreciable lives of certain leasehold
improvements and other long-lived assets on those properties were
not aligned with the non-cancelable lease term. The Company
believed that its accounting treatment was permitted under
generally accepted accounting principles and that such treatment
was consistent with the practices of other public companies.
Following a review of its lease accounting treatment and relevant
accounting literature, the Company determined that it should:
i) conform the depreciable lives for buildings on leased land
and other leasehold improvements to the shorter of the
economic life of the asset or the lease term used for
determining the capital versus operating lease
classification and calculating straight-line rent and
ii) include option periods in the depreciable lives assigned to
leased buildings and leasehold improvements and in the
calculation of straight-line rent expense only in instances
in which the exercise of the options period can be
reasonably assured and failure to exercise such options
would result in an economic penalty.
The Company has restated its financial statements to accelerate
depreciation for certain leasehold improvements and to record
additional rent expense.
The cumulative effect of the restatement for the fiscal years 1988
through 2003 is an increase in the deferred rent liability of
$1.3 million, an increase in depreciation expense of $7.4 million
and an increase in deferred income tax assets of $3.6 million. As
a result, the retained deficit at the end of 2003 increased by
$5.1 million, net of taxes. For the year ended December 28, 2003,
rent expense increased by $310 thousand, depreciation expense
increased by $848 thousand and diluted earnings per share
decreased by $0.09. Additional details related to the restatement
can be found in the Current Report on Form 8-K filed with the
Securities and Exchange Commission on March 4, 2005.
About the Company
Friendly Ice Cream Corporation -- http://www.friendlys.com/-- is
a vertically integrated restaurant company serving signature
sandwiches, entrees and ice cream desserts in a friendly, family
environment in over 530 company and franchised restaurants
throughout the Northeast. The company also manufactures ice
cream, which is distributed through more than 4,500 supermarkets
and other retail locations. With a 69-year operating history,
Friendly's enjoys strong brand recognition and is currently
remodeling its restaurants and introducing new products to grow
its customer base.
At Jan. 2, 2005, Friendly Ice Cream's balance sheet showed a
$105,026,000 stockholders' deficit, compared to a $103,152,000
deficit at Dec. 28, 2003.
GENERAL FIRE: Late Filing Prompts Fitch to Downgrade Rating to BB-
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Fitch has downgraded the Insurer Financial Strength rating of
General Fire and Casualty Company -- GenFire -- to 'BB-' from
'BB+' and placed the rating on Rating Watch Negative.
This action follows GenFire's request for a 30-day extension for
filing its year-end 2004 statutory statement to allow for a change
in accounting of a major reinsurance contract due to concerns
regarding appropriate levels of risk transfer. This contract has
been nonrenewed and cut off effective Dec. 31, 2004. The company
restructured its reinsurance program for 2005. Fitch expects the
impact of any restatement to have a significant affect on the
company's policyholders' surplus position, as well as its parental
dividend capacity. The latter of which is particularly important
given the sizable burden on GenFire to service holding company
debt obligations.
GenFire is a specialty property and casualty insurer, which since
1999, has operated under a new and unique business model centered
on its patent-pending policy form and web-based technology. The
company focuses on specialty niches in the commercial multi-peril
business segment, such as integrated agribusiness and other
targeted commercial classes. Idaho-based GenFire reported
statutory policyholders' surplus and assets of $13.8 million and
$47.5 million, respectively, at Sept. 30, 2004.
GENEVA STEEL: Wants Plan Mediator Appointed
-------------------------------------------
Geneva Steel LLC asks the U.S. Bankruptcy Court for the District
of Utah, Central Division, to issue an order appointing a third
party to mediate and facilitate the development of a consensual
plan of reorganization in the company's bankruptcy proceeding.
As previously reported in the Troubled Company Reporter, three
plans of reorganization were delivered to the Bankruptcy Court:
* Geneva's plan, which was filed in Oct. 2004;
* Anderson Geneva LLC and Silver Point Capital L.P. each filed
their own plans. Silver Point however, withdrew its plan
after reaching an agreement with Geneva; and
* the Official Committee of Unsecured Creditors' Plan, filed
on Jan. 28, 2005.
The Debtor believes that the chance of negotiating a consensual
plan among the major players given the current positions of the
parties is unlikely without the intervention of an independent
third party mediator and facilitator.
The Court will convene a hearing at 3:00 p.m. on Mar. 17, 2005, to
consider the Debtor's request.
About the Competing Plans
The Committee's Plan
The Plan proposes to finance Geneva's emergence from bankruptcy
through debt financing, which the Committee says is cheaper than
equity financing. The objective is to reduce the cost of capital
to increase recoveries for unsecured creditors. The Plan attempts
to provide the highest levels of economic satisfaction among as
many unsecured creditors as possible.
Under the Plan, all claims, other than the unsecured claims, will
be paid using:
i) Geneva's available cash;
ii) proceeds from the sale of Geneva's water rights
and certain other assets; and
iii) a new $30 million line of credit.
The Committee wants the Reorganized Debtor to be operated solely
for the benefit of the unsecured creditors who want to participate
going forward.
General Unsecured creditors will be given two options:
i) as a "Claim Buyer" who will get equity in the
Reorganized Debtor; or
ii) as a "Claim Seller" who will offer their claims to
claim purchasers in what is commonly known as a
"Dutch Auction."
Anderson's Plan
Anderson proposes to acquire the bulk of the Debtor's remaining
assets by a cash payment on the Effective Date and by a series of
periodic cash payments thereafter.
The Plan contemplates for the continuation of the Official
Committee of Unsecured Creditors to administer the claims and
resolve disputed claims and pursue causes of action on the
estate's behalf.
Holders of general unsecured claims who opt not to be treated as
administrative convenience claims are projected to receive 55% to
57% of the face amount of their claims.
Geneva's Plan
Geneva's Plan provides for the orderly liquidation of all of the
Debtor's remaining assets and for the distribution of the net
proceeds to the estate's creditors. The Debtor has sold in
February its major steel-making equipment to Qingdao Iron & Steel
Group Co., Ltd., for $40 million. Sale Proceeds from other
facilities and equipment amounted to approximately $46 million.
The Debtor's remaining assets include:
* a 1,750 acres of real property in Utah,
* 66 water rights from various sources such as wells,
springs, drains and the Provo River, and
* emission reduction credits
which are expected to generate not less than $166
million.
Under the terms of the Plan:
* administrative claims of about $4.8 million,
* priority tax claims amounting to 50$,00,
* secured bank claims with estimated allowed claims of
$128.3 million,
* other secured claims amounting to $228,000, and
* other priority claims of about $2 million
will recover 100% of their claims on or shortly after the
Effective Date.
General unsecured creditors electing to receive membership
interests will receive their pro rata share of 80% of the
membership interest in a new liquidating entity. That 80% equity
stake results in an estimated recovery from 44% to 57%.
Those unsecured creditors choosing to receive cash are expected to
recover about 20% of their claims.
On the Effective Date, Geneva Steel will be dissolved and
Liquidating LLC will be established to administer the liquidation
of the Debtor's assets.
Headquartered in Provo, Utah, Geneva Steel LLC, owns and operates
an integrated steel mill. The Company filed for chapter 11
protection on January 25, 2002 (Bankr. Utah Case No. 02-21455).
Andrew A. Kress, Esq., Keith R. Murphy, Esq., and Stephen E.
Garcia, Esq., at Kaye Scholer LLP represent the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $262 million in total assets and
$192 million in total debts.
GH RANCH LLC: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: GH Ranch, LLC
14606 Anderson Road
Klamath Falls, Oregon 97603
Bankruptcy Case No.: 05-61249
Chapter 11 Petition Date: February 25, 2005
Court: District of Oregon (Eugene)
Judge: Albert E. Radcliffe
Debtor's Counsel: Wilson C. Muhlheim, Esq.
Muhlheim Boyd
88 East Broadway
Eugene, OR 97401
Tel: 541-868-8005
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $500,000 to $1 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
SAIF Trade debt $69,299
400 High Street, SE
Salem, OR 97312
Ed Staub & Sons Petroleum Trade debt $55,694
Inc.
Texaco/Shell Trade debt $26,827
P.O. Box 9010
Des Moines, IA 50368
American Express Trade debt $24,574
PowerPlan Trade debt $18,846
Carson Oil Company Trade debt $14,873
Sterling Savings Bank Trade debt $14,782
Bank of America Trade debt $13,664
NAPA Trade debt $8,073
Elan Financial Services Trade debt $7,386
Pro Mac Manufacturing, Ltd. Trade debt $7,087
Platinum Plus for Business Trade debt $6,955
Capital One Trade debt $6,516
Bank One Trade debt $4,649
Basin Tire Trade debt $4,506
Aurora Trailer Leasing & Trade debt $4,500
Rental
Peterson Trade debt $4,498
Unicel Trade debt $4,388
ISCO, LLP Trade debt $4,327
Allied Washoe Trade debt $3,210
HOLLINGER INC: Releases Alternative Financial Information
---------------------------------------------------------
Hollinger Inc. (TSX:HLG.C)(TSX:HLG.PR.B) released financial
information in the form of an unaudited consolidated balance sheet
as at Sept. 30, 2004, together with notes thereto, prepared on an
alternative basis. The Alternative Financial Information was
prepared by management of Hollinger and has not been audited or
reviewed by Hollinger's auditors.
The Alternative Financial Information includes the accounts of
Hollinger and those wholly owned subsidiaries which carry out head
office functions and which do not represent investments.
Investments in other companies and subsidiaries, such as Hollinger
International Inc., are not consolidated but rather are carried as
investments and are accounted for at their market value. The
Alternative Financial Information has been prepared in accordance
with Hollinger's traditional accounting policies with the
exception that it has been prepared as though Hollinger had always
accounted for its assets and liabilities at their market values.
The alternative financial information is presented in lieu of the
filing by Hollinger of its statutory financial statements with
applicable Canadian securities regulatory authorities. Hollinger
has been unable to file its statutory financial statements as at
and for the year ended December 31, 2003, and the first three
quarters of 2004 as a result of a series of difficulties Hollinger
has experienced, including Hollinger's loss of control of
Hollinger International in or about November, 2003 and the
continued insufficient co-operation by Hollinger International and
Hollinger International's auditors.
Hollinger intends to continue to provide bi-weekly updates on its
affairs until such time as it is current with its filing
obligations under applicable Canadian securities laws.
At Sept. 30, 2004, Hollinger Inc.'s consolidated balance sheet
showed:
Total Current Assets C$103,397,000
Total Assets 493,433,000
Total Current Debts 67,187,000
Total Liabilities C$267,729,000
About the Company
Hollinger's principal asset is its interest in Hollinger
International which is a newspaper publisher, the assets of which
include the Chicago Sun-Times, a large number of community
newspapers in the Chicago area and a portfolio of news media
investments, and a portfolio of revenue-producing and other
commercial real estate in Canada, including its head office
building located at 10 Toronto Street, Toronto, Ontario.
* * *
As reported in the Troubled Company Reporter on August 31, 2004,
as a result of the delay in the filing of Hollinger's 2003 Form
20-F (which would include its 2003 audited annual financial
statements) with the United States Securities and Exchange
Commission by June 30, 2004, Hollinger is not in compliance with
its obligation to deliver to relevant parties its filings under
the indenture governing its senior secured notes due 2011.
Approximately $78 million principal amount of Notes is outstanding
under the Indenture. On August 19, 2004, Hollinger received a
Notice of Event of Default from the trustee under the Indenture
notifying Hollinger that an event of default has occurred under
the Indenture. As a result, pursuant to the terms of the
Indenture, the trustee under the Indenture or the holders of at
least 25 percent of the outstanding principal amount of the Notes
will have the right to accelerate the maturity of the Notes.
Approximately $5 million in interest on the Notes was due on
September 1, 2004. Hollinger has deposited the full amount of the
interest payment with the trustee under the Indenture and
noteholders will receive their interest payment in a timely
manner.
There was in excess of $267.4 million aggregate collateral
securing the $78 million principal amount of the Notes
outstanding.
Hollinger also received notice from the staff of the Midwest
Regional Office of the U.S. Securities and Exchange Commission
that they intend to recommend to the Commission that it authorize
civil injunctive proceedings against Hollinger for certain alleged
violations of the U.S. Securities Exchange Act of 1934 and the
Rules thereunder. The notice includes an offer to Hollinger to
make a "Wells Submission", which Hollinger will be making, setting
forth the reasons why it believes the injunctive action should not
be brought. A similar notice has been sent to some of Hollinger's
directors and officers.
HOST MARRIOTT: Launches $300 Million Sr. Debt Offering
------------------------------------------------------
Host Marriott Corporation (NYSE: HMT) said Host Marriott, L.P.,
for whom the Company acts as sole general partner, has commenced
an offer to purchase for cash any and all of its outstanding
8-3/8% Series E Senior Notes due 2006. The aggregate principal
amount of the Notes outstanding is $300 million. Host Marriott,
L.P. is also soliciting consents from the holders of the Notes to
approve certain proposed amendments to the Notes Indenture dated
as of August 5, 1998, as amended, under which the Notes were
issued. The proposed amendments eliminate substantially all of
the restrictive covenants, modify the events of default and modify
certain delivery obligations in the event of defeasance for the
Notes.
Holders who validly tender Notes and deliver consents prior to
5:00 p.m., New York City time, on March 16, 2005, unless extended,
will be eligible to receive the Total Consideration (which
includes a consent payment of $30 per $1,000 principal amount of
Notes tendered). Payment in such case will be made promptly after
the Host Marriott, L.P., accepts the Notes tendered prior to the
Consent Payment Deadline. Holders who validly tender Notes after
the Consent Payment Deadline but prior to 12:01am, New York City
time, on March 31, 2005, unless extended, will be eligible to
receive the Tender Offer Consideration, which is equal to the
Total Consideration less the consent payment. Payment in such
case will be made promptly after the Expiration Date. Tendered
Notes may be withdrawn and related consents may be revoked at any
time prior to the Consent Payment Deadline.
The Total Consideration will be the greater of:
i) a purchase price determined by reference to a fixed spread
of 50 basis points or 0.5% over the yield to maturity based
on the bid side price of the U.S. Treasury 1.875% Bond due
Jan. 31, 2006 as measured at 2:00 P.M., New York City time,
two days prior to the Consent Payment Deadline, or
ii) $1,020 per $1,000 principal amount of Notes tendered, plus
accrued and unpaid interest up to the applicable settlement
date.
Assuming a settlement date of March 17, 2005 and the Reference
Treasury Yield as of 5pm New York City Time on March 2, 2005, the
Total Consideration would be $1,041.54 per $1,000 principal amount
of Notes tendered, which includes the $30 consent payment.
The tender offer and consent solicitation are being made in
accordance with, and subject to, the terms stated in the Offer to
Purchase and Consent Solicitation Statement dated March 3, 2005,
and related documents, which include information regarding the
pricing, tender and delivery procedures and conditions of the
tender offer and consent solicitation. Copies of these documents
can be obtained by contacting D.F. King & Co., Inc., the
information agent at (800) 431-9643. Goldman, Sachs & Co. is the
exclusive dealer manager. Additional information concerning the
terms and conditions of the tender offer and consent solicitation
may be obtained by contacting Goldman, Sachs & Co., toll-free at
(888) 828-3182 or collect at (212) 357-8664.
This announcement is not an offer to purchase, a solicitation of
an offer to purchase or a solicitation of consents with respect to
the Notes. The tender offer and consent solicitation are being
made solely pursuant to the Offer Materials.
About the Company
Host Marriott Corporation owns 112 luxury and upscale, full-
service hotels, predominantly in urban, airport, and resort
locations in the U.S., Canada, and Mexico.
* * *
As reported in the Troubled Company Reporter on Sept. 17, 2004,
Standard & Poor's Ratings Services assigned its 'B+' rating to the
$575 million amended and restated credit facility of hotel owner
Host Marriott Corp. At the same time, Standard & Poor's affirmed
its other ratings, including the 'B+' corporate credit rating on
the company. The outlook is stable.
Approximately $5.6 billion in debt (including approximately
$475 million of convertible quarterly income preferred securities)
was outstanding on June 18, 2004.
The amended and restated credit facility will replace the
company's existing $300 million bank credit facility due in
June 2005. Under the amendment, the facility will mature in
September 2008 but can be extended an additional year under
certain conditions.
The new credit facility has a unique structure composed of two
parts: a revolving facility A and a revolving facility B. Maximum
borrowings under the revolving facility A may vary from
$0 to $385 million as determined by leverage as defined in the
loan agreement. Revolving facility A has similar covenant levels
to the existing credit facility, while the covenants governing
revolving facility B are more relaxed. For instance, maximum
leverage at the end of 2004 for revolving facility A is 7.0x,
whereas it is 7.5x for revolving facility B. Based on this
covenant differential, it is possible that there would be no
availability under revolving facility A, but Host could continue
to draw on revolving facility B. In return for the higher risk,
revolving facility B borrowings will be priced at a 50 basis point
premium to revolving facility A borrowings.
Both the revolving credit facilities A and B are initially secured
by a perfected first-priority security interest (on an equal and
ratable basis with amounts outstanding under the senior note
indenture) in all capital stock, partnership interests, and other
equity interests owned by Host Marriott and each guarantor (with
certain limitations). Guarantors consist of each direct and
indirect wholly owned subsidiary of Host with certain limitations
on foreign subsidiaries.
"The ratings on Host Marriott reflect the company's substantial
debt levels as well as credit measures that are somewhat weak for
the ratings," said Standard & Poor's credit analyst Sherry Cai.
However, Standard & Poor's expects an improvement in Host's credit
measures to result from a healthier operating environment and
management's focus on improving the balance sheet. The ratings
also consider the high quality of the company's hotels, the
geographic diversity of its portfolio, and its experienced
management team. Moreover, Host's good liquidity position and
historically good access to both debt and equity capital markets
are viewed favorably.
HOST MARRIOTT: Increases Proposed Private Debt Placement
--------------------------------------------------------
Host Marriott Corporation (NYSE: HMT) said Host Marriott, L.P.,
for whom the Company acts as sole general partner, increased its
offering in a private placement to $650 million aggregate
principal amount of 6-3/8% Series N Senior Notes due 2015. The
Notes generally may not be redeemed prior to 2010. As the
offering is a private placement, it will not be made to the
general public. Only qualified institutional buyers may
participate in the offering.
The net proceeds of the offering will be used to:
-- tender for Host Marriott L.P.'s existing 8-3/8% Series E
Senior Notes due 2006,
-- redeem a portion of its existing 7-7/8% Series B Senior
Notes due 2008, and
-- repay other indebtedness and to pay related fees and
expenses.
The Notes to be offered have not been registered under the United
States Securities Act of 1933 and may not be offered or sold in
the United States absent registration or an applicable exemption
from registration requirements. The issuance of the Notes will be
structured to allow secondary market trading under Rule 144A under
the Securities Act of 1933.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy any security and shall not
constitute an offer, solicitation or sale of any securities in any
jurisdiction where such an offering sold would be unlawful.
About the Company
Host Marriott Corporation owns 112 luxury and upscale, full-
service hotels, predominantly in urban, airport, and resort
locations in the U.S., Canada, and Mexico.
* * *
As reported in the Troubled Company Reporter on Sept. 17, 2004,
Standard & Poor's Ratings Services assigned its 'B+' rating to the
$575 million amended and restated credit facility of hotel owner
Host Marriott Corp. At the same time, Standard & Poor's affirmed
its other ratings, including the 'B+' corporate credit rating on
the company. The outlook is stable.
Approximately $5.6 billion in debt (including approximately
$475 million of convertible quarterly income preferred securities)
was outstanding on June 18, 2004.
The amended and restated credit facility will replace the
company's existing $300 million bank credit facility due in
June 2005. Under the amendment, the facility will mature in
September 2008 but can be extended an additional year under
certain conditions.
The new credit facility has a unique structure composed of two
parts: a revolving facility A and a revolving facility B. Maximum
borrowings under the revolving facility A may vary from
$0 to $385 million as determined by leverage as defined in the
loan agreement. Revolving facility A has similar covenant levels
to the existing credit facility, while the covenants governing
revolving facility B are more relaxed. For instance, maximum
leverage at the end of 2004 for revolving facility A is 7.0x,
whereas it is 7.5x for revolving facility B. Based on this
covenant differential, it is possible that there would be no
availability under revolving facility A, but Host could continue
to draw on revolving facility B. In return for the higher risk,
revolving facility B borrowings will be priced at a 50 basis point
premium to revolving facility A borrowings.
Both the revolving credit facilities A and B are initially secured
by a perfected first-priority security interest (on an equal and
ratable basis with amounts outstanding under the senior note
indenture) in all capital stock, partnership interests, and other
equity interests owned by Host Marriott and each guarantor (with
certain limitations). Guarantors consist of each direct and
indirect wholly owned subsidiary of Host with certain limitations
on foreign subsidiaries.
"The ratings on Host Marriott reflect the company's substantial
debt levels as well as credit measures that are somewhat weak for
the ratings," said Standard & Poor's credit analyst Sherry Cai.
However, Standard & Poor's expects an improvement in Host's credit
measures to result from a healthier operating environment and
management's focus on improving the balance sheet. The ratings
also consider the high quality of the company's hotels, the
geographic diversity of its portfolio, and its experienced
management team. Moreover, Host's good liquidity position and
historically good access to both debt and equity capital markets
are viewed favorably.
HOT 'N NOW: STEN Subsidiary Completes Franchisor Rights Purchase
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STEN Corporation's (Nasdaq: STEN) Burger Time Acquisition
Corporation subsidiary has completed the purchase of certain
assets of the former franchisor of Hot 'N Now restaurants in a
transaction approved by the United States Bankruptcy Court for the
Western District of Michigan. The assets acquired include The Hot
'N Now Franchise, all Hot 'N Now Franchise Agreements and all
royalties and other franchise fees now due and owing. Among other
things, the acquired rights also include the Hot 'N Now trade
name. There are currently 14 franchisee locations of Hot 'N Now.
All of the existing franchisees operate in the State of Michigan.
STEN Corp. CEO Kenneth Brimmer stated, "We are looking forward to
exploring further opportunities with the Hot 'N Now concept. The
concept is well-established in Michigan and offers several
immediate opportunities for our consideration."
STEN Corporation -- http://www.stencorporation.com/--
headquartered in Minnesota, is a diversified business. The
Company operates a chain of fast-food, drive-through restaurants
under the Burger Time name. Through its LifeSafe Services
subsidiary, the Company provides business customers emergency
oxygen equipment and related emergency- preparedness products and
services. In addition, the Company provides contract
manufacturing services.
Headquartered in Holt, Michigan, Hot 'n Now, LLC, owns a fast food
restaurant. The Company filed a voluntary chapter 11 petition on
Jan. 16, 2004 (Bankr. W.D. Mich. Case No. 04-00505). Daniel J.
Weiner, Esq., at Schafer and Weiner PLLC, represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it estimated between $500,000 to $1 Million in
total assets and between $1 Million to $10 Million in total debts.
INDUSTRY MORTGAGE: Fitch Junks Class B Series 1998-1 Certificates
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Fitch Ratings has taken rating actions on the following Industry
Mortgage Corp. -- IMC -- home equity loan pass-through
certificates:
Series 1997-3:
-- Class A6 affirmed at 'AAA';
-- Class A7 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA+';
-- Class M-2 affirmed at 'BB'.
Series 1997-5:
-- Class A9 affirmed at 'AAA';
-- Class A10 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA+';
-- Class M-2 affirmed at 'BB'.
Series 1998-1:
-- Class A5 affirmed at 'AAA';
-- Class A6 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA+';
-- Class M-2 affirmed at 'BBB-';
-- Class B downgraded to 'C' from 'CCC'.
Series 1998-5:
-- Class A5 affirmed at 'AAA';
-- Class A6 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A+';
-- Class B affirmed at 'BB-'.
The affirmations, affecting over $274.76 million of certificates,
are due to stable collateral performance and moderate growth in
credit enhancement.
The downgrade, affecting $13.2 million of the outstanding class B
certificates of series 1998-1, is a result of poor collateral
performance. Class B is experiencing monthly writedown as a
result of monthly loan losses. The high level of losses incurred
has resulted in the depletion of overcollateralization -- OC.
Monthly excess spread generated within the transaction is
generally decreasing over time. The monthly excess interest and
losses have averaged $345,275 and $611,665, respectively, over the
past six months.
The above IMC transactions are collateralized by a pool of fixed-
rate, closed-end home equity mortgage loans. The pools are
seasoned from a range of 76 to 93 months. The pool factors
(current principal balance as a percentage of original) range from
approximately 6.53% to 11.20% outstanding.
In October 1999, CitiFinancial Mortgage Company acquired IMC
Mortgage Company, which is located in Tampa, Florida.
Fitch will continue to closely monitor this deal.
Further information regarding delinquencies, losses, and credit
enhancement is available on the Fitch Ratings web site at
http://www.fitchratings.com/
INTERSTATE BAKERIES: Court Okays Key Employee Retention Plan
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The United States Bankruptcy Court for the Western District of
Missouri gave Interstate Bakeries Corporation and its debtor-
affiliates authority to implement a Key Employee Retention Plan.
As reported in the Troubled Company Reporter on Feb. 14, 2005,
the KERP covers 494 of the Debtors' 5,700 non-union employees.
The Key Employees are divided into seven tiers according to,
among other things, the relative seniority of their positions:
Tier Tier Participants
---- ------------------------------------------------
1st up to 5 executive vice presidents and senior vice
presidents, and 1 vice president
2nd up to 26 executive vice presidents, senior
vice presidents and directors and key employees
3rd up to 13 vice presidents, directors and managers
4th up to 88 vice presidents, directors and managers
5th up to 21 vice presidents, directors and managers
6th up to 48 plant managers
7th up to 292 other managers
Retention Bonuses
The KERP, Mr. Ivester says, provides for Retention Bonuses to
reward Senior Participants who remain employed by the Debtors
throughout their Chapter 11 cases. The Retention Bonuses equal
to:
-- 20% of base salary for Tier 6 Participants
-- 25% of base salary for Tier 5 Participants
-- 35% of base salary for Tier 4 Participants
-- 40% of base salary for Tier 3 Participants
-- 50% of base salary for Tier 2 Participants
-- 60% of base salary for Tier 1 Participants
The Debtors estimate that the maximum possible cost of the
Retention Bonuses would be $7,700,000.
On or before March 31, 2005, the Debtors will serve on the
Official Creditors' Committee, the Official Equityholders'
Committee and the agent under the pre-petition Credit Agreement
dated as of April 25, 2002, a notice regarding the Target EBITDAR
established by the Debtors' Board of Directors.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014,
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
IONICS INC: GE Acquisition Cues S&P to Withdraw 'BB-' Rating
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Standard & Poor's Ratings Services withdrew its 'BB-' corporate
credit and other ratings on Watertown, Massachusetts-based Ionics
Inc.
"The action followed the announcement by General Electric Co. (GE)
(AAA/A-1+/Stable) that it had completed its acquisition of the
water-purification company," said Standard & Poor's credit analyst
Paul Kurias.
The ratings on Ionics were placed on CreditWatch on Nov. 24, 2004,
after GE announced its acquisition plan.
IRON HORSE GRADING: Case Summary & 19 Largest Unsecured Creditors
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Debtor: Iron Horse Grading & Excavating
120 Lakeview Drive, Unit 114
Bloomingdale, Illinois 60108
Bankruptcy Case No.: 05-07838
Type of Business: The Debtor is engaged in excavating services.
Chapter 11 Petition Date: March 4, 2005
Court: Northern District of Illinois (Chicago)
Judge: A. Benjamin Goldgar
Debtor's Counsel: Chester H. Foster, Jr., Esq.
Foster & Kallen
3825 West 192nd Street
Homewood, Illinois 60430
Tel: (708) 799-6300
Fax: (708) 799-6339
Total Assets: $5,143,198
Total Debts: $4,260,779
Debtor's 19 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Vulcan Materials Company Note/Loan $964,763
Attn: Dave Muno
747 East 22nd Street, Suite 200
Lombard, IL 60148
Palatine Oil Trade Debt $381,292
Attn: Ron Cox
PO Box 985
Palatine, IL 60078
Millerbradford & Riseburg Trade Debt $184,274
Attn: Michael J. Soley, Jr.
3737 11th Street
Rockford, IL 61109
Midwest Operating Engineers $120,694
Fringe Benefit Funds
6150 Joliet Road
Countryside, IL 60525-3994
McAllister Equipment Company $112,226
12500 South Cicero Avenue
Alsip, IL 60658
Howell Tractor Trade Debt $92,000
American Midwest Equipment $92,000
Center Capital Trade Debt $30,000
Catom Trucking, Inc. Unsecured $30,000
Manetti & Griffith Ltd. $24,510
Illinois Department Employment $22,316
Security
Howell Tractor & Equipment $15,979
Amerisure Companies $8,415
Jarsco $7,309
Steven K. Smith $6,061
Advanta Business Systems $5,454
Illinois Department of Revenue $3,245
DK Contracting Inc. $2,947
Roland Machinery $2,581
LA QUINTA: Declares 9% Preferred Stock Dividend
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La Quinta Properties, Inc.'s Board of Directors declared a
dividend of $0.5625 per depositary share on its 9% Series A
Cumulative Redeemable Preferred Stock for the period from Jan. 1,
2005 to March 31, 2005. Shareholders of record on March 15, 2005,
will be paid the dividend of $0.5625 per depositary share of
Preferred Stock on March 31, 2005.
Dividends on the Series A Preferred Stock are cumulative from the
date of original issuance and are payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year (or,
if not a business date, on the next succeeding business day) at
the rate of 9% of the liquidation preference per annum (equivalent
to an annual rate of $2.25 per depositary share).
About the Company
La Quinta Corporation -- http://www.LQ.com/-- and its controlled
subsidiary, La Quinta Properties, Inc. (NYSE: LQI), is one of the
largest owner/operators of limited-service hotels in the United
States. Based in Dallas, Texas, the Company owns, operates or
franchises more than 590 hotels in 39 states under the La Quinta
Inns(R), La Quinta Inn & Suites(R), Baymont Inns & Suites(R),
Woodfield Suites(R) and Budgetel(R) brands.
* * *
La Quinta's 7% senior notes due 2012 currently holds Moody's Ba3
rating, Standard & Poor's 'BB-' rating, and Fitch's 'BB-' rating.
LA QUINTA CORP: S&P Says Outlook on BB- Credit Rating Now Positive
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Standard & Poor's Ratings Services revised its outlook on hotel
owner and operator La Quinta Corporation to positive from stable.
At the same time, Standard & Poor's affirmed its ratings,
including its 'BB-' corporate credit rating, on the company. As
of Dec. 31, 2004, the Irving, Texas-based company has
approximately $926 million in debt outstanding.
"The outlook revision reflects La Quinta's good operating
performance in 2004, driven by the healthy lodging environment,
and the company's meaningful progress in integrating the Baymont-
hotel portfolio, which was acquired in September 2004," said
Standard & Poor's credit analyst Sherry Cai.
The outlook revision also incorporates Standard & Poor's
expectation that credit measures will improve in the next several
quarters, driven by both debt reduction and further earnings
growth. Standard & Poor's expects that proceeds from asset
sales (which La Quinta estimates will be in the $40 million area)
and surplus cash balances will primarily be used to reduce debt in
2005.
The company currently expects that La Quinta's systems will be
installed in every Baymont property by the end of March 2005. As
a result, Baymont-branded hotels will operate using the same
property management system, reservation system, and loyalty
program as La Quinta. This is expected to help drive reservations
between the brands, and provide an enhanced foundation for
franchise sales.
La Quinta's franchise portfolio continues to grow, offering a
stable source of cash flow for the company. The franchise
portfolio has grown to 218 hotels at the end of 2004 from zero in
2000. In 2005, La Quinta expects to open at least 50 La Quinta
branded hotels and at least 25 Baymont branded hotels. Although
the franchise business currently contributes only a small
portion of La Quinta's revenue and earnings, Standard & Poor's
views the company's franchise strategy favorably because it is an
effective way of rapidly expanding a brand with a limited
investment of capital.
LORAL SPACE: Selling Television Assets to dbsXMedia for $400,000+
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Loral Space & Communications Ltd. and its debtor-affiliates ask
the U.S. Bankruptcy Court for the Southern District of New York
for authority to sell their television services business and
related assets to dbsXMedia Inc. free and clear of liens. The
purchase price for the property and equipment consists of $400,000
in cash and 300,000 shares of common stock at dbsXMedia's parent
company -- Ariel Way Inc.
Loral and dbsXMedia will also enter into a Teleport Services
Agreement giving dbsXMedia access to Loral's satellites for a
monthly fee of $150,000 for the next two years.
In early 2004, Loral shifted from traditional digital video
technology to an Internet-based broadcasting technology. As a
result, the television unit is no longer a core business and, in
fact, is burdensome to Loral's estate. Loral concluded that it
will be best for the estates and its creditors to sell these non-
performing assets.
Loral says the ownership transition will leave unchanged the
services for current customers under an agreement that maintains
the existing teleport and satellite infrastructure provided by
Loral Skynet. dbsXmedia has agreed that some of the employees of
Loral Skynet's BTV group will transfer to dbsXmedia's new offices
in Plymouth, England and Frederick, Maryland. This highly
experienced team will take over the daily operations of customers'
corporate communications networks, ensuring seamless, high quality
service.
Soundbites
"dbsXmedia's management team, dedication to effective corporate
communications networks, and financial backing make it the ideal
partner for both Loral Skynet and our BTV customers," said Patrick
Brant, president, Loral Skynet. "And, the divesture of the BTV
business allows Loral Skynet to focus on its core fixed satellite
and network services businesses."
"We aim to provide the BTV client base with both continuity and
rapid improvements to the overall service offer," said David
Howgill, CEO, dbsXmedia. "Loral Skynet will provide the core of
our services infrastructure; we will provide the know-how,
technology and service -- the combination of which allows us to
provide state-of-the-art solutions for video, radio and digital
signage solutions for the corporate and retail world."
About dbsXmedia
dbsXmedia aims to provide communication infrastructure and
integrated multimedia services to corporations throughout the
United States and Europe. dbsXmedia is part of the Ariel Way,
Inc. group of companies (OTCBB:NFDV). dbsXmedia's executive
management has over 25 years of experience in the video and
transmission industry. dbsXmedia will operate from offices in the
United States and United Kingdom, providing industry leading
solutions for BTV, digital signage and interactive media delivered
over a combination of satellite, terrestrial and wireless
networks.
Ariel Way is a technology and services company providing highly
secure global communications solutions. The company is focused on
developing innovative and secure technologies, acquiring and
growing advanced emerging technology companies and national and
global communications service providers. The company also intends
to create strategic alliances with companies offering
complementary product lines and services. Ariel Way's technology
development effort includes highly secure communications solutions
and services. For more information, visit
http://www.dbsXmedia.com/or http://www.arielway.com/
About Loral
Loral Space & Communications is a satellite communications
company. It owns and operates a fleet of telecommunications
satellites used to broadcast video entertainment programming,
distribute broadband data, and provide access to Internet services
and other value-added communications services. Loral also is a
world-class leader in the design and manufacture of satellites and
satellite systems for commercial and government applications
including direct- to-home television, broadband communications,
wireless telephony, weather monitoring and air traffic management.
The Company and various affiliates filed for chapter 11 protection
(Bankr. S.D.N.Y. Case No. 03-41710) on July 15, 2003. Stephen
Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal & Manges
LLP, represent the Debtors in their restructuring efforts. When
the company filed for bankruptcy, it listed total assets of
$2,654,000,000 and total debts of $3,061,000,000.
MAGUIRE PROPERTIES: Moody's Puts (P)Ba2 Rating on $450MM Notes
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Moody's Investors Service has assigned a (P)Ba2 rating to the
proposed issuance of $450 million by Maguire Properties Holdings
I, LLC of secured notes due in 2010 and a proposed $100 million
bank loan facility to be closed by Maguire Properties, L.P., both
subsidiaries of Maguire Properties, Inc.
The rating outlook for Maguire Properties is stable. This is the
first time Moody's has rated the REIT. Maguire Properties Inc.,
has 10 million shares of 7.625% Series A Cumulative Redeemable
Preferred Stock outstanding that is not rated by Moody's.
Moody's stated that the Ba2 rating reflects Maguire Properties'
defensible position as a leading owner and operator of class A
high-rise office properties in Southern California -- especially
in the Los Angeles CBD -- as well as the property collateral
directly pledged to the loan debt. Other creditworthiness
positives include solid and stable occupancy levels in Maguire's
office properties, as well as a laddered lease roll-over schedule.
The loans are cross-guaranteed by Maguire Properties, L.P., and
Maguire Properties, Inc.
The rating agency said that Maguire Properties' challenges include
its significant geographic concentration in Southern California --
especially in downtown Los Angeles at 49% of GLA-- low fixed
charge coverage of 1.8X, as well as high leverage (78% debt to
gross assets) and secured debt. The REIT is also entering new
markets in Southern California. The stable outlook reflects
Moody's expectation of a successful integration of the $1.54
billion CommonWealth office property portfolio Maguire is now
acquiring in order to deepen its asset diversity and market
leadership in downtown Los Angeles, and continued stable financial
performance. The median leverage for Ba2 rated REITs is 67% (debt
and preferred as a percentage of gross assets) as of September 30,
2004 while the median secured debt is 53% for the same period.
Maguire Properties is the largest owner and operator of Class A
office properties in the Los Angeles CBD, and is focused on
operating high quality office properties in Southern California.
On January 28, 2005, Maguire Properties announced the acquisition
of nine properties from CommonWealth Fifth Street Properties, a
portfolio of office properties owned through a partnership with
Rockefeller Group International, Inc. and the California Public
Employees Retirement System.
The properties pledged to the loans being rated include Plaza Las
Fuentes in Pasadena, California, and Cerritos Center, Cerritos,
California, as well as several parcels of land; their value is
somewhat less than the amount of the loans. Nevertheless, Moody's
sees these assets providing support to loan investors in the form
of a lower loss severity than would a purely unsecured loan of the
REIT.
Moody's expects the REIT to improve its credit metrics over the
next two years. In specific, the rating agency expects fixed
coverage to increase to 2.0X, and leverage to decline below 70%.
Secured debt will likely continue to play a leading role in the
REIT's funding.
Fixed charge coverage above 2.1X and reductions in secured debt
below 50% (secured debt over gross assets) would result in upward
rating pressure. Continued progress in diversifying the REIT's
assets and geographic focus -- especially into markets other than
downtown Los Angeles -- would also be a clear plus. A downgrade
could result from declines in operating performance including
fixed coverage below 1.5X, as well a significant increase in
secured debt. Material value deterioration at the pledged
properties would be another factor. In addition, shortly after
the funding of the term loan, Moody's expects the REIT to reduce
that loan's outstanding balance while maintaining the same
collateral level.
The ratings assigned by Moody's are:
-- Maguire Properties Holdings I, LLC -- Senior secured bank
loan at (P)Ba2
-- Maguire Properties, L.P. - Revolving bank loan facility at
(P)Ba2
Maguire Properties, Inc., (NYSE: MPG), based in Los Angeles,
California, USA, is a REIT specializing in class A office
properties in Southern California. As of December 31, 2004, the
REIT had $2.6 billion in assets.
MILLENNIUM PHARMACEUTICALS: S&P Withdraws 'B' Corp. Credit Rating
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Standard & Poor's Ratings Services withdrew its ratings on
Cambridge, Massachusetts-based Millennium Pharmaceuticals Inc.,
including the 'B' corporate credit rating, citing a lack
of investor interest.
MIRANT CORP: Equity Panel Wants Interest Rate Under Plan Fixed
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The Official Committee of Equity Security Holders appointed in the
chapter 11 cases of Mirant Cororation and its debtor-affiliates
asks the U.S. Bankruptcy Court for the Northern District of Texas
to fix any postpetition interest to be paid to creditors under any
plan of reorganization for the Debtors at the Federal Judgment
Rate of interest of 1.07%, and compounded yearly, as set forth in
Section 1961 of the Judiciary Procedures Code. The Federal
Judgment Rate is calculated from the date of entry of judgment at
a rate equal to the weekly average one-year constant maturity
"Treasury" yield, as published by the Board of Governors of the
Federal Reserve System, for the calendar week preceding the date
of the judgment.
Eric J. Taube, Esq., at Hohmann, Taube & Summers, LLP, in Austin,
Texas, states that in a Chapter 11 context, an allowed claim is
tantamount to a federal judgment.
Where, as the Equity Committee will establish at the valuation
hearing, an estate proves solvent, the right of unsecured
creditors to receive postpetition interest arises under Sections
1129(a)(7)(A)(ii) and 726(a)(5).
As condition to confirmation, Section 1129(a)(7)(A)(ii) requires
that impaired creditors receive value that is not less than what
they would receive in a Chapter 7 liquidation.
Pursuant to Section 726(a)(5), which governs distribution under
Chapter 7, once all administrative claims, general unsecured
claims, tardily filed general unsecured claims, and fines or
penalties are paid, there is a fifth-priority payment of "interest
at the legal rate from the date of the filing of the petition."
Given that a debtor is solvent, impaired creditors are entitled to
postpetition interest "at the legal rate".
The Equity Committee insists that in addition to promoting
fairness among creditors, application of the Federal Judgment Rate
is the "most judicially efficient" and "practical manner" of
allocating the Debtors' estate.
In contrast, calculating the appropriate rate and amount of
interest to be paid to a myriad of creditors with potentially
varying contract rates has the potential to overwhelm courts with
what could otherwise be a relatively simple process pursuant to
Section 726(a)(5), warns Mr. Taube.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/--togetherwith 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. 55; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
MIRANT CORP: Alstom Power Holds Allowed $3.8 Mil. Unsecured Claim
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On January 28, 1999, predecessors of Alstom Power, Inc., and
Mirant Canal, LLC, entered into an Engineering, Procurement and
Construction Agreement. Mirant Canal hired Alstom to perform
certain construction services in regards to the Mirant Canal power
plant. Disputes arose concerning Alstom's performance under the
EPC Agreement. Specifically, these disputes concerned whether
Alstom:
-- caused excessive outage at the Plant;
-- failed to meet "substantial completion" milestones set
forth in the EPC Agreement;
-- failed to meet "final completion" milestones set forth in
the EPC Agreement;
-- failed to meet opacity requirements set forth in the EPC
Agreement; and
-- failed to meet other requirements of the EPC Agreement.
Alstom, which is in the power generating construction business,
provided goods and services to Debtor affiliates, including,
Mirant Bowline, LLC, Mirant California, LLC, and Mirant Mid-
Atlantic.
On December 16, 2003, Alstom filed four proofs of claim:
(1) Proof of Claim No. 7222 against Mirant California for
goods and services in the liquidated and non-contingent
amount of $20,034.97;
(2) Proof of Claim No. 7223 against Mirant Bowline for goods
and services in the liquidated and non-contingent amount
of $10,304.00;
(3) Proof of Claim No. 7228 against MIRMA for goods and
services in the liquidated and non-contingent amount of
$75,510.83; and
(4) Proof of Claim No. 7229 against Mirant Canal for work
performed under the EPC Agreement in the liquidated and
non-contingent amount of $6,722,000.
The Debtors objected to the claims. Regarding the first two
claims, the Debtors argued that its books and records did not show
any liability owed by Mirant California or Mirant Bowline to
Alstom. Regarding the third claim, the Debtors' books and records
showed a liability owed by MIRMA to Alstom of no greater than
$15,040.54. Regarding the fourth claim, the Debtors argued that
the damages owed to them as a result of Alstom's breach of the EPC
Agreement exceed the amount that the Debtors allegedly owed Alstom
under the EPC Agreement.
The parties have successfully reached a compromise, and ask the
Court to approve their Stipulation, which provides that:
(a) Alstom is granted and allowed general prepetition
unsecured claims against:
Debtor Allowed Claim Amount
------ --------------------
Mirant California $20,034.97
Mirant Bowline 10,304.00
MIRMA 75,510.83
Mirant Canal 3,650,000.00
(b) The allowance of the claims does not release or affect any
current or previous claims allowed in favor of Alstom
against the Debtors;
(c) Alstom and the Debtors release and waives all current and
future claims against, under the EPC Agreement or
otherwise, with respect to the Units; and
(d) To the extent that the EPC Agreement is an executory
contract under Section 365 of the Bankruptcy Code, it is
rejected, and Alstom releases and waives any and all
claims as to any rejection or termination of the EPC
Agreement.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/--togetherwith 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. 54; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
MIRANT CORP: Approves 2005 Base Salaries of Five Executives
-----------------------------------------------------------
In a regulatory filing with the Securities and Exchange Commission
dated February 23, 2005, Dan Streek, Vice-President and Controller
of Mirant Corporation, discloses that effective February 22, the
Compensation Committee of Mirant's Board of Directors approved the
2005 base salaries of five executive officers:
Officer Position 2005 Base Salary
------- -------- ----------------
M. Michele Burns EVP, CFO & CRO $600,000
Curtis A. Morgan EVP & COO $500,000
Douglas L. Miller SVP & Gen Counsel $380,000
Vance N. Booker SVP, Administration $295,000
L. Alderman Warnock SVP, Governmental & $250,000
Regulatory Affairs
The Compensation Committee did not take any action with respect to
the salary of S. Marce Fuller, the Company's Chief Executive
Officer.
The Compensation Committee also approved annual cash bonus awards
earned during 2004 and paid in 2005 for the executive officers
under the Company's short-term incentive program. Mr. Streek says
the bonus awards were earned based on the achievement of
performance goals established early in 2004, which were reviewed
and approved by the Compensation Committee.
The amounts of the bonus awards are:
Officer Position Bonus Awards
------- -------- ------------
M. Michele Burns EVP, CFO & CRO $686,100
Curtis A. Morgan EVP & COO $443,483
Douglas L. Miller SVP & Gen Counsel $298,313
Vance N. Booker SVP, Administration $229,740
L. Alderman Warnock SVP, Governmental & $198,875
Regulatory Affairs
Ms. Fuller's 2004 cash bonus of $850,000 was paid at target as
established by order of the U.S. Bankruptcy Court for the Northern
District of Texas, which oversees Mirant's bankruptcy proceedings.
Mr. Streek also discloses that under Mirant's short-term incentive
plan, annual cash bonuses are awarded taking into account an
individual's "target bonus percentage", individual performance and
the Company's performance against established business or
financial goals. Each of the executive officers is a participant
in the short-term incentive program.
For 2005, Mr. Streek relates that the Compensation Committee
established (i) earnings before interest, taxes, depreciation and
amortization and (ii) cash from operations less capital
expenditures as the two financial performance measures under the
program, each of which is weighted equally. Under the plan, a
bonus equal to a multiple of the executive officer's target bonus
percentage will be paid depending on the level of performance
achieved by the Company with respect to the financial performance
measures in accordance with these matrix:
Performance Measure
---------------------------------------------
Cash from Operations Corporate
EBITDA less CapEx Payout Factor
--------------------- --------------------- -------------
Threshold Threshold
85% of Business Plan 55% of Business Plan 0%
Target Target
100% of Business Plan 100% of Business Plan 100%
Maximum Maximum
110% of Business Plan 135% of Business Plan 200%
The bonus factor is interpolated between threshold and target and
target and maximum based on actual performance.
In addition, the Compensation Committee approved these short-term
incentive target bonus percentages for the executive officers for
2005 under the short-term incentive program, expressed as a
percentage of base salary:
Officer Position Percentages
------- -------- -----------
M. Michele Burns EVP, CFO & CRO 75%
Curtis A. Morgan EVP & COO 75%
Douglas L. Miller SVP & Gen Counsel 55%
Vance N. Booker SVP, Administration 55%
L. Alderman Warnock SVP, Governmental & 55%
Regulatory Affairs
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/--togetherwith 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. 55; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
MOSAIC INFOFORCE: KPMG Files Section 304 Petition in N.D. Texas
---------------------------------------------------------------
KPMG, Inc. -- the Receiver appointed in the CCAA proceedings of
Mosaic InfoForce GP Holdco, Inc., and Mosaic InfoForce LP Holdco,
Inc., by the Ontario Court of Justice, Commercial List of the
Province of Ontario, Canada -- filed a Section 304 petition in the
U.S. Bankruptcy Court for the Northern District of Texas asking
the Court to, among other things:
(1) establish the Receiver as Mosaic's exclusive representative
in the United States;
(2) grant comity to and enforce the terms of the orders of
the Ontario Court with respect to the Mosaic's interests
and affairs; and
(3) provide that all orders issued in the Canadian CCAA
Proceeding will be read and interpreted consistently with
orders issued in the bankruptcy case of Mosaic Group (US)
Inc., et al., Case No. 02-81440, pending in the United
States Bankruptcy Court for the Northern District of Texas,
Dallas Division, including the order approving the cross-
border protocol of Mosaic Group, Inc., and its affiliates.
Mosaic Group, Inc., and some of its affiliates, filed for
protection from their creditors in Canada under the Companies'
Creditors Arrangement Act on Dec. 17, 2002. Mosaic's U.S.-based
affiliates also filed for chapter 11 protection in the U.S.
Bankruptcy Court for the Northern District of Texas. The two
holding companies guaranteed Mosaic Group's indebtedness to a
consortium of lenders comprised of:
* the Canadian Imperial Bank of Commerce;
* the Bank of Nova Scotia;
* JP Morgan Chase Bank, N.A. as successor by merger to
Bank One, NA, Canada Branch,
* Bank of Montreal;
* the Toronto-Dominion Bank;
* HSBC Bank Canada;
* Jackson National Life Insurance Company;
* Jackson National Life Insurance Company of New York;
* Northern Life Insurance Company; and
* the Prudential Life Insurance Company of America
for Cdn. $50.3 million and US$146.6 million.
Section 304 of the U.S. Bankruptcy Code was specifically designed
to assist foreign representatives like a receiver in the
performance of its duties. It provides that a U.S. bankruptcy
court, upon the filing of a petition by a foreign representative,
may enjoin the commencement or continuation of any action against
the debtor in a foreign proceeding or its property, and may order
the turnover of the foreign debtor's property to a foreign
representative.
On March 4, 2005, the Ontario Court ordered that:
(1) the Lenders' security interest is ranked first in priority
to all other liens, claims and encumbrances of any kind;
and
(2) CIBC as Agent for the Bank Lenders and Collateral Agent for
the Noteholders will recover net sale proceeds as defined
in the Distribution Order; and
The holding companies hold a 51% partnership interest in a joint
venture known as Mosaic InfoForce, L.P., a U.S. company.
According to KPMG, the holding companies do not have any
substantial non-contingent creditors in the United States other
than the Lenders and unpaid state corporate income and franchise
taxes of a maximum 600,000 for Illinois, Pennsylvania, New York,
California, Florida and any other state taxing authorities.
Mosaic InfoForce GP Holdco, Inc., and Mosaic InfoForce LP Holdco,
Inc., are affiliates of Mosaic Group, Inc. KMPG, Inc., in its
capacity as the Canadian Receiver in CCAA pending proceedings,
filed a Section 304 petition (Bankr. N.D. Tex. Case Nos. 05-32558
and 05-32559) to give full force and effect to the Ontario Court's
order dated March 4, 2005, to distribute Mosaic Group's assets.
Joseph M. Coleman, Esq., Joseph A. Friedman, Esq., and David D.
Ritter, Esq., at Kane, Russell, Coleman & Logan, P.C represent the
petitioner. The Mosaic Holding Companies report assets of $10
million to $50 million and debts of more than $100 million.
Headquartered in Irving, Texas, Mosaic Group (US) Inc., a world-
leading provider of results-driven, measurable marketing solutions
for global brands, filed for chapter 11 relief on December 17,
2002 (Bankr. N.D. Tex. Case No. 02-81440). Charles R. Gibbs,
Esq., David H. Botter, Esq., and Kevin D. Rice, Esq., at Akin,
Gump, Strauss, Hauer & Feld, represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it estimated debts and assets of over $100 million
each. Mosaic Group, Inc. -- http://www.mosaic.com/--also sought
and obtained protection under the Companies' Creditors Arrangement
Act in Canada. On June 15, 2004, Jeffrey H. Mims was appointed as
chapter 11 Trustee in the U.S. proceeding.
MOSAIC INFOFORCE GP HOLDCO: Section 304 Petition Summary
--------------------------------------------------------
Petitioner: KPMG Inc., as Receiver
Debtors: Mosaic InfoForce GP Holdco, Inc.
Mosaic InfoForce LP Holdco, Inc.
40 Pleasant Boulevard, Suite 801
Toronto, Ontario M4T 1J9
Case Nos.: 05-32558 & 05-32559
Type of Business: The Debtors are affiliates of Mosaic Group,
Inc. See http://www.mosaic.com/
Section 304 Petition Date: March 4, 2005
Court: Northern District of Texas (Dallas)
Petitioner's Counsel: Joseph M. Coleman, Esq.
Joseph A. Friedman, Esq.
David D. Ritter, Esq.
Kane, Russell, Coleman & Logan, P.C.
1601 Elm Street, Suite 3700
Dallas, Texas 75201
Tel: (214) 777-4200
Fax: (214) 777-0049
Total Assets Total Debts
------------ -----------
Mosaic InfoForce GP Holdco, Inc. $10M to $50M More than $100M
Mosaic InfoForce LP Holdco, Inc. $10M to $50M More than $100M
NATIONAL MEDICAL: Involuntary Chapter 11 Case Summary
-----------------------------------------------------
Alleged Debtors: National Medical Imaging, L.L.C.
National Medical Imaging Holding Company, L.L.C.
1919 Walnut Street
Philadelphia, PA 19103
Involuntary Petition Date: March 3, 2005
Case Numbers: 05-12714 and 05-12719
Chapter: 11
Court: Eastern District of Pennsylvania (Philadelphia)
Judge: Diane W. Sigmund
Petitioners' Counsel: Joshua Thomas Klein, Esq.
Michael G. Menkowitz, Esq.
Fox Rothschild LLP
2000 Market Street, tenth floor
Philadelphia, PA 19103
Tel: 215-299-2723
- and -
Brian Grady, Esq.
Grady & Falcone LLP
1500 Sansom Street, 2nd Floor
Philadelphia, PA 19102
Tel: 215-940-9450
- and -
Jay Gottlieb, Esq.
Brown Raysman Milstein Felder & Steiner
900 Third Avenue
New York, NY 10022
Tel: 212-895-2000
A. National Medical Imaging Petitioners:
Petitioner Nature of Claim Claim Amount
---------- --------------- ------------
DVI Receivables XVII, LLC Commercial Loans: $5,249,774
c/o U.S. Bank Portfolio $52,525
Services Commercial Guarantees:
1310 Madrid Street, Ste. 103 $5,197,249
Attn: Jane Fox
Marshall, MN 56258
DVI Receivables XIX, LLC Commercial Loans: $4,823,986
c/o U.S. Bank Portfolio $365,246(partially
Services secured)
1310 Madrid Street, Ste. 103 Commercial Guarantees:
Attn: Jane Fox $4,458,740
Marshall, MN 56258
DVI Receivables XVIII, LLC Commercial Loans: $2,492,073
c/o US Bank Portfolio $240,682 (partially
Services secured)
1310 Madrid Street, Ste. 103 Commercial Guarantees:
Attn: Jane Fox $2,252,391
Marshall, MN 56258
General Electric Capital Commercial Guarantees $1,569,066
Corporation
20225 Watertower Boulevard
Brookfield, WI 53045
Universal Shielding Breach of Commercial $220,188
Corporation Contracts for Goods
20 W. Jefryn Corporation and Services
Deer Park, NY 11729
B. National Medical Imaging Holding Company Petitioners:
Petitioner Nature of Claim Claim Amount
---------- --------------- ------------
DVI Receivables XIX, LLC Commercial Guarantees $5,144,724
c/o U.S. Bank Portfolio
Services
1310 Madrid Street, Ste. 103
Attn: Jane Fox
Marshall, MN 56258
DVI Receivables XVII, LLC Commercial Guarantees $4,823,986
c/o U.S. Bank Portfolio
Services
1310 Madrid Street, Ste. 103
Attn: Jane Fox
Marshall, MN 56258
DVI Receivables XVIII, LLC Commercial Guarantees $2,492,073
c/o US Bank Portfolio
Services
1310 Madrid Street, Ste. 103
Attn: Jane Fox
Marshall, MN 56258
General Electric Capital Unsecured commercial $2,336,988
Corporation loans, exclusive of
20225 Watertower Boulevard deficiency
Brookfield, WI 53045 amounts attributable
to secured commercial
loans
NORTEL NETWORKS: Names Bill Owens Vice Chairman & CEO
-----------------------------------------------------
Nortel Networks Corporation's (NYSE:NT) (TSX:NT) Board of
Directors has made senior management changes designed to
strengthen the Company's leadership team, drive global operational
excellence and position Nortel for the future. Bill Owens,
president and chief executive officer, will continue to drive the
strategic direction of the Company while dedicating new senior
executive talent to Nortel's global operations and related
functions.
To that end, Mr. Owens will become the vice chairman and CEO
effective March 14, 2005. The Company further announced the
appointment of Gary Daichendt to the position of president and
chief operating officer reporting to Mr. Owens. Mr. Daichendt is
a senior executive with more than 30 years of experience in the
global technology industry and was previously executive vice
president, Worldwide Operations, Cisco Systems. Mr. Daichendt's
appointment is also effective March 14, 2005.
Peter Currie, who was appointed chief financial officer effective
Feb. 14, 2005, will become executive vice president and CFO
effective March 14, 2005. This appointment reinforces the
critical importance of Mr. Currie's role in the transformation of
Nortel's financial organization.
"We are playing to win," Mr. Owens said, "and Gary will play a
critical role in our doing so. He is a world class leader with
unquestioned integrity and one of the top technology executives in
the world. Gary's deep involvement in the spectacular growth of
some of the world's leading technology powerhouses and his unique
track record have given him a special perspective and experience
that will optimally position our great Company for our customers,
shareholders and employees. All of us at Nortel are very pleased
with his decision to join us."
In his new role Mr. Daichendt will be responsible for leading
Nortel's carrier and enterprise businesses, research and
development, services and supply chain functions and global sales
and operations. In addition to Mr. Daichendt, the Company's
senior strategy team including the executive vice president and
CFO, chief legal officer and chief strategy officer will continue
to report directly to Owens. Pascal Debon, currently president,
Carrier Networks, will assume the role of special advisor to the
vice chairman and CEO effective March 14, 2005.
"The telecom market is now beginning another tremendous and
exciting evolution and Nortel is a leading global player that I
have long admired over my years in the industry," Mr. Daichendt
said. "Throughout my career I have had a focus on operational
excellence and business growth. I am very excited about being
part of the new Nortel and working hard to bring additional value
to this very strong team."
During his tenure at Cisco Systems, Mr. Daichendt had increasing
responsibility for overseeing the company's sales force, services,
manufacturing facilities, integration execution and strategic
alliances. Under his leadership, Cisco's international business
grew significantly as he was the principal operating executive
during that company's growth in the 1990s. Prior to joining Cisco
Systems, Mr. Daichendt held senior marketing, sales and operations
positions at System Software Associates, Inc., Wang Laboratories,
Inc., and IBM Corporation. He holds a Master's of Science from
Ohio State University and a Bachelor of Arts from Youngstown State
University.
Mr. Daichendt's appointment is the latest in a series of senior
management additions to the Nortel leadership team made by Owens
over the past several months. These recent appointments have
included the new roles of chief marketing officer, chief strategy
officer and chief ethics and compliance officer. These
appointments are intended to enhance and complement the already
strong experience and track record of Nortel's longtime senior
executive team members. This is part of Nortel's ongoing
commitment to ensuring it is well-positioned to drive future
growth.
Mr. Owens has also been appointed vice chairman and CEO of Nortel
Networks Limited, the Company's principal operating subsidiary.
Mr. Daichendt and Mr. Currie have been appointed president and COO
and executive vice president and CFO, respectively, of Nortel
Networks Limited.
About Nortel
Nortel Networks Ltd. 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.
* * *
As reported in the Troubled Company Reporter on Jan. 31, 2005,
Standard & Poor's Ratings Services affirmed its 'B-' credit rating
on Nortel Networks Lease Pass-Through Trust certificates series
2001-1 and removed it from CreditWatch with negative implications,
where it was placed Dec. 8, 2004.
The affirmation is based on a valuation analysis of properties
that provide security for the two notes that serve as collateral
for the pass through trust certificates.
The initial rating on the securities relied upon the ratings
assigned to both Nortel Networks Ltd. and ZC Specialty Insurance
Co. The Dec. 8, 2004, CreditWatch placement followed the
Dec. 3, 2004 withdrawal of the rating assigned to ZC.
The properties are secured by five single-tenant, office/R&D
buildings in Research Triangle Park, North Carolina that are
leased to Nortel (B-/Watch Developing), which guarantees the
payment and performance of all obligations of the leases. The
lease payments do not fully amortize the notes. A surety bond
from ZC insures the balloon amount.
Due to the withdrawal of the rating on ZC, Standard & Poor's
current analysis incorporates the rating on Nortel and internal
valuations of the properties, including balloon risk. The
valuations factored in current market data. The rating will not
necessarily be in alignment with Nortel's due to the balloon risk,
which is no longer mitigated by a rated entity.
A balloon payment of $74.7 million is due at maturity in
August 2016. If this amount is not repaid, the indenture trustee
can obtain payment from the surety, provided certain conditions
are met.
NORTHWEST AIRLINES: Nominates R. Bostock & J. Katz as Directors
---------------------------------------------------------------
Northwest Airlines Corp. (Nasdaq: NWAC) disclosed that Roy J.
Bostock and Jeffrey G. Katz have been nominated to stand for
election to its Board of Directors at the company's annual
stockholders meeting on April 29.
If elected by the stockholders, they will fill two open positions
on the Board of Directors. Also, Alfred A. Checchi has informed
the board that he does not intend to stand for re-election as a
director of the company.
"We are pleased that Roy and Jeff have agreed to join our board,"
said Gary L. Wilson, chairman of the Board of Directors. "Roy
brings to our board a strong background in marketing and a proven
record of strategic thinking. Jeff has 20 years of experience in
the airline business, is a noted expert in distribution technology
and offers our board a unique and varied entrepreneurial
background. Together, they increase the breadth and talent of our
board."
Mr. Bostock, former chairman and chief executive officer of D'Arcy
Masius Benton & Bowles Inc., one of the world's leading
advertising firms, is principal of Sealedge Investments LLC, a
diversified private investment company. He also serves as
chairman of the Partnership for a Drug-Free America, a non-profit
organization based in New York City. Mr. Bostock attended Duke
University and received an MBA from Harvard University.
Mr. Katz served as chairman, president and chief executive officer
of Orbitz Inc., a leading online travel distribution company
founded by five major airlines, including Northwest, from July
2000 to November 2004. Mr. Katz previously served as president
and chief executive officer of Swissair after a 17-year career at
American Airlines. He attended the University of California-Davis
and received master's degrees from Stanford University and the
Massachusetts Institute of Technology.
"I also want to thank Al Checchi for his 16 years of service to
Northwest and his leadership during a period of tremendous change
for our company and the airline industry. He will be missed," Mr.
Wilson added.
About the Company
Northwest Airlines is the world's fourth largest airline with hubs
at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam,
and approximately 1,500 daily departures. Northwest is a member
of SkyTeam, an airline alliance that offers customers one of the
world's most extensive global networks. Northwest and its travel
partners serve more than 900 cities in excess of 160 countries on
six continents. A 2004 J.D. Power and Associates study of
airports ranked Minneapolis/St. Paul, one of Northwest's largest
hubs, fourth among large domestic airports in overall customer
satisfaction.
At Dec. 31, 2004, Northwest Airlines' balance sheet showed a
$3.09 billion stockholders' deficit, compared to a $2.01 billion
deficit at Dec. 31, 2003.
ORIGEN: Moody's Junks Rating on 8.30% Class M-2 Certificates
------------------------------------------------------------
Moody's Investors Service has placed under review for possible
downgrade the ratings of two mezzanine certificates of Origen's
manufactured housing 2001-A securitization.
Moody's previously downgraded the ratings of several senior,
mezzanine and subordinate certificates of Origen's manufacturing
housing securitizations in September 2004. The ratings actions
were primarily based on the weaker-than-anticipated performance of
the manufactured housing loans.
The current review is prompted by the continued weaker-than
anticipated performance of the pool and the resulting erosion in
credit support. Delinquencies and repossessions have exceeded
original expectations, leading to high cumulative losses. As of
the Feb 14, 2005 remittance report, cumulative losses and
cumulative repossessions for the 2001-A transaction were 17.30%
and 23.23%, respectively, with 50.13% of the pool outstanding.
Average loss severity for the last six months on liquidated
collateral is approximately 84%. Since losses have exceeded the
available amount of excess spread, the overcollateralization has
been completely eroded. As a result, the Class B Certificates are
currently experiencing losses and close to being completely
written down.
The complete ratings review are:
-- Issuer: Origen Manufactured Housing Contract
Senior/Subordinate Asset-Backed Certificates, Series
2001-A
* 7.82%Class M-1 Certificates, rated Ba2, on review for
possible downgrade
* 8.30% Class M-2 Certificates, rated Caa2, on review for
possible downgrade
Origen is a Delaware limited liability company with its
headquarters in Southfield, Michigan. The company is primarily
engaged in the business of underwriting, originating and servicing
manufactured housing contracts.
OWENS CORNING: Court Names Lawrence Watson Asbestos PD Mediator
---------------------------------------------------------------
To facilitate the resolution of asbestos property damage claims,
Judge Fitzgerald of the U.S. Bankruptcy Court for the District of
Delaware appoints Lawrence M. Watson, Jr., as Mediator. The
mediation, as an alternative dispute resolution mechanism, will be
conducted in accordance with Del. Bankr. LR 9019-1 through 9019-5
or as agreed to by the parties.
Mr. Watson will report periodically to the Bankruptcy Court on the
status of the parties' negotiations, or as may be determined by
the circumstances or by future Court orders. Judge Fitzgerald
requires Mr. Watson to comply with Del. Bankr. LR 9019-3(d)
governing confidentiality of mediation proceedings and information
disclosed therein.
Mr. Watson should not hold or represent an interest adverse to the
estate, and must be a "disinterested person" as defined in Section
101(14) of the Bankruptcy Code. In the event that Mr. Watson
learns that he is no longer qualified to serve as Mediator, he
must file a notice of withdrawal in accordance with Del. Bankr. LR
9019-4(e)(iii)(B).
The Debtors will pay Mr. Watson's reasonable fees and
disbursements in connection with his services at $500 per hour,
plus out-of-pocket costs along with an administrative fee assessed
at a value for one hour, for all time incurred by him in
preparation for the mediation.
The Debtors and the Asbestos Property Damage Claimants have the
right to terminate the mediation process and the appointment of
the Mediator at any time, subject to Court approval.
Judge Fitzgerald will further consider the Debtors' request to
establish a case management order for asbestos property damage
claims on March 21, 2005, at 10:00 a.m. The Court will address
the Debtors' objections to various asbestos property damage claims
at that time.
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.
100; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PARKER COUNTY: S&P Cuts Bond Rating to BB from BBB-
---------------------------------------------------
Standard & Poor's Ratings Services lowered its rating two notches
to 'BB' from 'BBB-' on Parker County Hospital District, Texas'
$10.7 million series 1999 bonds, issued for Campbell Health
System. The outlook is negative.
The lower rating and negative outlook reflect:
-- Campbell's extremely low liquidity, highlighted by just
6.7 days' cash on hand and unrestricted cash that is only
9.6% of long-term debt;
-- Campbell's reliance on short-term borrowings to fund
operational deficits; and
-- its use of cash funds to meet the financial needs of day-
to-day operations.
In addition, the rating and outlook reflect persistent, though
diminishing operating losses, combined with the district's
historical reticence to raise the tax levy in the face of
dwindling liquidity and ongoing operating losses, and the rising
average age of plant, combined with capital needs, recent capacity
constraints, and a potential expansion project planned for the
near term, although the funding source is unclear.
An even lower rating is currently precluded by:
-- the hospital district's tax levy capacity, highlighted by
the district's strong tax base and ability to raise the levy
as needed to meet operating needs;
-- the maintenance of adequate debt service coverage despite
persistent operating losses;
-- improving adjusted operating and excess incomes in fiscal
2004;
-- favorable inpatient utilization trends, which are the result
of population growth and the October 2004 closure of the
nearby Fort Worth Osteopathic Hospital; and
-- a solid relationship with the 'A+' rated Parker County,
which is a potential funding source for desired capital
improvements.
"The negative outlook reflects the expectation of ongoing
operational challenges and weak financial performance through the
remainder of fiscal 2005," said Standard & Poor's credit analyst
Kevin Holloran.
The bonds are secured by a pledge of district revenues. Tax
revenues are not solely pledged to pay debt service and they can
be, and are currently being used, to pay the operation and
maintenance expenses of the system.
Campbell's total debt outstanding is $11.3 million, which includes
capital lease obligations. Campbell has no swaps on its existing
debt.
Parker County Hospital District owns and operates Campbell Health
System, which consists of a 99-licensed-bed acute-care hospital in
Weatherford, Texas and one rural health clinic. Campbell Hospital
is the only acute-care facility in Parker County, Texas, which has
a population of about 100,000 and has experienced significant
population growth of about 37% during the past 10 years. Campbell
does have limited service offerings and out-migration to the
greater Fort Worth and Dallas markets does occur for tertiary-
level services.
PARMALAT USA: Court Okays Plan; GE Gets 70% Equity on Dairy Unit
----------------------------------------------------------------
The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York confirmed on March 7, 2005, the Plan
of Reorganization filed by Parmalat USA Corporation, Milk Products
of Alabama, LLC, and Farmland Dairies, LLC.
As previously reported, the cornerstone of the plan is an
agreement between GE Commercial Finance, the lessor of a majority
of Farmland's manufacturing equipment at its New Jersey and
Michigan production facilities, and the Unsecured Creditors
Committee.
The plan calls for the satisfaction of the company's prepetition
liabilities through the distributions of cash, notes, stock and
rights to pursue certain causes of action. Specifically,
Farmland's unsecured creditors will receive cash, a note, and
preferential rights of recovery from causes of action pursued by a
litigation trust.
"I think the Plan is a terrific example of how chapter 11 is
supposed to work," Gary Holtzer, Esq., counsel for New York-based
Parmalat, told Tom Becker at Bloomberg News. "This Plan is a
product of negotiations with all of the major creditor
constituents and has received their overwhelming supprot."
What GE Capital Gets
Parmalat USA's plan will transfer to GE Capital 70% of the new
common stock in Farmland, 100% of a new preferred stock issue,
about $11.6 million in litigation proceeds and up to $2 million in
additional payments to satisfy the $39 million financing GE
extended to Parmalat.
Unsecured Creditors Recovery
Parmalat USA's Unsecured Creditors will receive 62 cents on the
dollar for their claims totaling $27 million. Farmland's
unsecured creditors are expected to recover 29 cents on the
dollar. Farmland's unsecured creditors receive a $2.8 million
cash payment, a $7 million note and approximately $6.5 million
from the litigation trust.
Farmland has obtained $55 million of exit financing from Wachovia
Corp. and $45 million from GE to fund its operations upon
emergence from bankruptcy.
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 USA: Wells Fargo Wants $2.9M Claim Allowed for Voting
--------------------------------------------------------------
Prior to filing for chapter 11 protection, Farmland Dairies, LLC,
entered into two equipment lease agreements with Wells Fargo
Equipment Finance, Inc. In addition, Parmalat USA Corp. entered
into an equipment lease with Wells Fargo for Farmland's use and
benefit. All of the Leases were guaranteed by Parmalat USA.
Wells Fargo has previously moved to compel the U.S. Debtors to
assume or reject the Leases. The request has been adjourned
several times and is currently scheduled to be heard on March 8,
2005. Wells Fargo and Farmland are still in negotiations for a
global resolution with respect to the Leases and to cure the
defaults.
By an order dated May 20, 2004, the U.S. Bankruptcy Court for the
Southern District of New York, inter alia, set July 9, 2004, as
the deadline for non-governmental entities to file proofs of claim
against the U.S. Debtors. Accordingly, on July 7, 2004, Wells
Fargo filed these claims:
* In the Parmalat USA case, an unsecured claim for
$2,895,804.57, plus costs and attorney's fees, based on
Parmalat USA's guaranty of all obligations under the Leases;
and
* In the Farmland case, a claim for $2,895,804.57, plus costs
and attorney's fees, based on the Leases and secured by the
Equipment. All deficiency and rejection damages are
unsecured claims.
Pursuant to the Court's order approving the U.S. Debtors'
Disclosure Statement, Wells Fargo was sent a solicitation package
containing one ballot for voting on Parmalat USA's Plan. Despite
the fact that it has filed claims in the U.S. Debtors' bankruptcy
case exceeding $3,200,000 in total, Wells Fargo has only been
issued one ballot in the Parmalat USA's case valuing Claims at
$1.00. Moreover, Wells Fargo has not received a solicitation
package with respect to Farmland, despite the fact that Wells
Fargo also filed a claim against it.
Bruce H. Babbitt, Esq., at Wolman, Babitt & King, L.L.P., in New
York, tells Judge Drain that attempts to resolve those mistakes
were fruitless. Thus, Wells Fargo asks the Court, pursuant to
Sections 502 and 1126 of the Bankruptcy Code and Rule 3018(a) of
the Federal Rules of Bankruptcy Procedure, to enter an order:
-- correcting the ballot issued to Wells Fargo in connection
with Parmalat USA's Plan of Liquidation to reflect the
actual claim value, amounting to $2,895,804.57; and
-- directing Farmland to issue Wells Fargo a ballot and,
temporarily allowing its Claims for $1,000,000 for purposes
of voting on both Farmland's and Parmalat USA's Chapter 11
Plans.
The right to vote on a plan of reorganization is one of the most
basic and fundamental protections afforded to creditors under
Chapter 11. Mr. Babbitt, however, acknowledges that the U.S.
Debtors have not denied the validity of Wells Fargo's Claims and
no objection has been filed against those Claims. Accordingly, on
that basis alone, Wells Fargo is entitled to vote the full value
of its Claims in the Parmalat USA case as well as to be issued a
ballot in Farmland's case and temporarily allowing an amount that
would represent, at a minimum, Wells Fargo's deficiency and
rejection damages.
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. 45; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PIKE COUNTY: S&P Puts Junk Rating on $15.3 Million Bonds
--------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on Pike
County Industrial and Commercial Development Authority,
Pennsylvania's $15.3 million of outstanding bonds -- Mountain
Laurel Center for Performing Arts -- 17 notches to 'CCC' from
'AAApr' and removed the provisional designation on the rating.
The outlook is developing.
"The rating could be raised depending on the execution of a
federal guarantee, or lowered if revenues decline further or the
bonds default," said Standard & Poor's credit analyst Richard
Marino.
The provisional rating was based on the expectation that the
federal government, acting through the Rural Housing Service of
the U.S. Department of Agriculture, would implement a payment
guarantee on the bonds upon satisfaction of certain conditions
precedent.
Construction delays, overruns, and other problems, however,
affected the project and the federal guarantee was not implemented
as originally anticipated. By its terms, the two-year
guarantee commitment expired Feb. 22, 2002. The federal
government extended the commitment for one year on Feb. 2, 2004,
and the commitment has recently been extended once more through
March 31, 2006.
At present, debt service payments are required under the terms of
the bonds and the trust indenture. As the guarantee is not yet in
force, there are no federal funds committed to support debt
service on the bonds. As a result, the March 1 debt service
payment was made from the debt service reserve fund.
"There is no federal obligation to replenish the debt service
reserve," said Mr. Marino. "The lowering of the rating,
therefore, reflects the uncertainty of the source, if any, of
replenishment prior to the federal payments being made and the
possibility that no replenishment will occur, thus causing a
default on subsequent payments."
PNM RESOURCES: Moody's Puts (P)Ba2 Rating on Pref. Stock Issues
---------------------------------------------------------------
Moody's Investors Service has assigned a rating of Baa3 to PNM
Resources, Inc.'s (PNMR) $400 million five-year unsecured bank
credit facility. Moody's also assigned prospective ratings of
(P)Baa3 and (P)Ba2 for PNM Resources' shelf registration for the
issuance of senior unsecured debt and preferred stock. This is
the first time that Moody's has assigned ratings to PNM Resources.
The ratings incorporate the expectation that PNM Resources will
complete its planned acquisition of TNP Enterprises, Inc. (TNP: B1
senior unsecured, under review for possible upgrade). The rating
outlook is stable. PNM Resources is the parent company of Public
Service Company of New Mexico (PNM: Baa2 senior unsecured, stable
outlook).
The ratings for PNM Resources consider the strengths of:
1) the stability provided by its primary utility subsidiary
PNM Resources;
2) the predominantly regulated operations of the company;
3) the expectation that the company will execute its plan to
reduce leverage at TNP;
4) a high level of rate certainty for the next few years as a
result of the regulatory approval process in New Mexico and
Texas; and
5) cash flow coverage ratios that are consistent with the
rating category.
The ratings also consider the challenges of:
1) anticipated merger related synergies may not materialize;
2) potential challenges in incorporating the unregulated
operations of First Choice Power; and
3) PNM Resources' continuing strategy of selected growth that
may include additional acquisitions.
The rating outlook is stable, reflecting the low volatility of the
company's underlying utility operations. Positive rating action
could result from a sustainable improvement in cash flow coverage
ratios, such that FFO as a percentage of total adjusted debt in
the 18% to 20% range. A downward revision of the rating could
result from significant operating difficulties, adverse regulatory
rulings, or acquisitions that are not conservatively financed or
which increase the company's business risk profile.
Cash flow stability is provided by PNM Resources's primary
subsidiary Public Service of New Mexico, (PNM). PNM's funds from
operations (FFO) are expected to be about $240 million per year
and should represent in excess of 20% of its total adjusted debt.
PNM's FFO is expected to cover interest and lease expense by more
than four times over the next several years. The rating
recognizes that cash flows should be relatively predictable due to
PNM's retail rate certainty over the medium term, contracts
covering about 80% of its wholesale power portfolio, its
competitive cost structure, and its relatively stable operating
performance. PNM is projected to contribute over 75% of the new
consolidated entity's funds from operations.
Going forward approximately 75% of PNM Resources' consolidated
cash flows are expected to come from the regulated operations of
PNM and TNMP. TNMP has a relatively low risk transmission and
distribution utility business. Regulatory settlements reached in
conjunction with the pending acquisition, if approved, will
establish rates through 2010.
Following the acquisition, PNM Resources' consolidated FFO to
adjusted debt is expected to be in the mid-to-upper teens, and FFO
interest coverage should be over three times. These financial
metrics are consistent with the rating category.
Earnings at First Choice Power, a Texas retail energy provider,
are likely to be more volatile than PNM Resources' utility
operations. PNMR has a long history of successful management of
its wholesale power sales business. However, the company has not
previously managed a retail provider operating in the fairly
recently deregulated Texas market.
PNM Resources is likely to continue to seek growth via
opportunistic acquisitions of generation facilities or
transmission and distribution facilities. The ratings assume any
additional acquisitions would be prudently financed and would not
materially alter the company's business profile. We also assume
that post acquisition dividend policies will be supportive of the
financial strength of PNMR and its subsidiaries.
The $400 million unsecured bank credit facility matures in
November 2009 and ranks pari-passu with the other senior unsecured
debt obligations of PNMR. Covenants include a minimum debt to
capital ratio (as defined) of 65% and a minimum cash interest
coverage (as defined) of 2.75 times. New money borrowings under
the facility require a representation that there has not been a
material adverse change, with the exception of new money
borrowings for commercial paper.
PNM Resources announced in July 2004 that it had agreed to acquire
TNP for about $1.0 billion, including the assumption of
approximately $800 million of debt and $200 million of preferred
stock obligations. The transaction is expected to be financed via
a combination of debt, cash, and equity securities. PNM now
expects to issue approximately $200 million of equity and
approximately $250 million of debt securities that have a
mandatory equity conversion feature.
Along with debt financing, these amounts will be used to repay
approximately $600 million of debt and preferred obligations at
TNP, pay transaction costs, and provide for working capital and
the payment of approximately $190 million to TNP shareholders.
The transaction is subject to certain closing conditions and
regulatory approvals, including the New Mexico Public Regulation
Commission, the Public Utility Commission of Texas, and the U.S.
Securities and Exchange Commission. Unopposed settlements have
been reached in Texas and New Mexico, and votes on final approval
are pending at both state regulatory commissions. Federal Energy
and Regulatory Commission approval has been obtained and antitrust
review under the Hart-Scott-Rodino Act has been completed. PNMR
anticipates the transaction will be concluded by mid-year.
Headquartered in Albuquerque, New Mexico, PNM Resources, Inc., is
a holding company which has Public Service Company of New Mexico,
an electric and gas utility, as its primary subsidiary.
PORTUS ALTERNATIVE: Ontario Court Appoints KPMG as Receiver
-----------------------------------------------------------
The Ontario Superior Court of Justice, on application of the
Ontario Securities Commission, appointed KPMG Inc. Receiver of
Portus Alternative Asset Management Inc., Portus Asset Management
Inc., and BancNote Corp.
As Receiver, KPMG will take control immediately of the assets and
records of the Portus Group. KPMG will also begin an assessment
of Portus and its associated companies and report back to the
Ontario Superior Court of Justice within 15 days.
Mr. Robert Rusko, Senior Vice President of KPMG, who is leading
this receivership and assessment, said, "During the last two
months investigators at the OSC have gathered a significant amount
of information which will be available to us. In the short period
available the Receiver will attempt to gather sufficient
information to permit it to make recommendations to the Court on
the next steps to be taken in order to protect investors and other
stakeholders of the Portus Group."
KPMG set up an information Web site at http://www.kpmg.ca/portus
and opened a call center for investors yesterday, March 7, 2005.
KPMG LLP is the Canadian member firm of KPMG International, the
global network of professional services firms that aim to turn
knowledge into value for the benefit of their clients, people and
capital markets. With nearly 100,000 people worldwide, KPMG
member firms provide audit, tax and advisory services from more
than 715 cities in 148 countries. In Canada, KPMG delivers
corporate restructuring and other insolvency-related services
through KPMG Inc.
RAVENEAUX LTD: Section 341(a) Meeting Slated for March 31
---------------------------------------------------------
The U.S. Trustee for Region 7 will convene a meeting of Raveneaux,
Ltd.'s creditors at 1:00 p.m., on March 29, 2005, at Suite 3401,
515 Rusk Avenue, Houston, Texas 77002. This is the first meeting
of creditors required under U.S.C. Sec. 341(a) in all bankruptcy
cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Spring, Texas, Raveneaux, Ltd., --
http://www.raveneaux.com/-- operates a country club, a golf
course and tennis courts. The Company filed for chapter 11
protection on Feb. 24, 2005 (Bankr. S.D. Tex. Case No. 05-32734).
Edward L. Rothberg, Esq., Hugh M. Ray, III, Esq., and Melissa Anne
Haselden, Esq., at Weycer Kaplan Pulaski & Zuber, P.C., represent
the Debtor in its restructuring efforts. When the Debtor filed
for protection from its creditors, it listed total assets of $15
million and total debts of $11 million.
RAVENEAUX LTD: Hires Weycer Kaplan as Bankruptcy Counsel
--------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas gave
Raveneaux, Ltd., permission to employ Weycer, Kaplan, Pulaski &
Zuber, P.C., as its general bankruptcy counsel.
Weycer Kaplan will:
a) advise the Debtor in its duties and responsibilities as a
debtor-in-possession with regards to the continued operation
and management of its business;
b) assist the Debtor in the analysis of its financial situation
and in the preparation and filing of its schedules of assets
and liabilities and statements of financial affairs;
c) represent the Debtor in the first meeting of creditors and
assist in negotiations with its secured and unsecured
creditors;
d) assist and advise the Debtor in the defense of any stay
litigation and in the preparation for a disclosure statement
and plan of reorganization; and
e) provide all other legal services that are necessary in the
Debtor's bankruptcy proceedings.
Edward L. Rothberg, Esq., a Shareholder at Weycer Kaplan, is the
lead attorney for the Debtor. Mr. Rothberg discloses that the
Firm received a $35,000 retainer. Mr. Rothberg will bill the
Debtor $300 per hour for his services.
Other lead attorneys for the Debtor are Hugh M. Ray, III, Esq.,
and Melissa Anne Haselden, Esq. Mr. Ray charges at $210 per hour,
while Ms. Haselden charges $200 per hour. Legal Assistants and
Paralegals who will perform services to the Debtor will charge
$100 per hour.
Weycer Kaplan assures the Court that it does not represent any
interest adverse to the Debtor or its estate.
Headquartered in Spring, Texas, Raveneaux, Ltd., --
http://www.raveneaux.com/-- operates a country club, a golf
course and tennis courts. The Company filed for chapter 11
protection on Feb. 24, 2005 (Bankr. S.D. Tex. Case No. 05-32734).
When the Debtor filed for protection from its creditors, it listed
total assets of $15 million and total debts of $11 million.
RURAL/METRO: 92% of Noteholders Tender 7-7/8% Senior Notes
----------------------------------------------------------
Rural/Metro Corporation (Nasdaq/SC: RURL) successfully completed
its tender offer and consent solicitation relating to its 7-7/8%
senior notes due 2008, pursuant to which the company accepted
tenders of approximately 92% of the $150 million aggregate
principal amount outstanding of its senior notes. Also, the
company announced its intention to redeem all the remaining senior
notes still outstanding.
Rural/Metro Operating Company, LLC, a newly formed wholly owned
subsidiary of the company, and its wholly owned subsidiary,
Rural/Metro (Delaware) Inc., also newly formed, offered and sold
$125 million aggregate principal amount of their 97/8% Senior
Subordinated Notes due 2015, and the company offered and sold its
123/4% Senior Discount Notes due 2016, for gross approximate
proceeds of $50.2 million.
The company also refinanced its existing credit facilities, using
proceeds from the offering of the notes and borrowings under new
credit facilities. The former credit facility carried an interest
rate of LIBOR + 7%. The new facilities include a $135 million
term loan B facility priced at LIBOR + 2.50% maturing in 2011, and
a $35 million letter of credit facility also maturing in 2011.
The new facilities also include a $20 million revolving credit
facility priced at LIBOR + 3.25% maturing in 2010. The borrower
under the facilities is Rural/Metro Operating Company, LLC.
The new notes have not been registered in the United States under
the Securities Act or in any other jurisdiction and may not be
offered or sold in the United States absent registration or an
applicable exemption from the registration requirements.
About the Company
Rural/Metro Corporation -- http://www.ruralmetro.com/-- provides
emergency and non-emergency medical transportation, fire
protection, and other safety services in 23 states and
approximately 365 communities throughout the United States.
* * *
As reported in the Troubled Company Reporter on Feb. 11, 2005,
Moody's Investors Service assigned ratings to the proposed debt of
Rural/Metro Corporation and Rural/Metro LLC, a newly created
subsidiary of Rural/ Metro Corporation. The proceeds from the
proposed transactions will be used to refinance the existing debt
of Rural/Metro.
Concurrently, Moody's upgraded Rural/Metro Corp.'s senior implied
rating to B2 from B3 reflecting improved operations and its return
to profitability over the past few years. The change in the
ratings outlook to stable, from negative, reflects the expectation
of continued enhancement of the ratio of free cash flow relative
to total debt to the middle - upper single digits.
At the same time, Standard & Poor's Ratings Services assigned its
'B' corporate credit rating to Rural/Metro Corp. Standard &
Poor's has also assigned its 'B' senior secured debt rating and
'2' recovery rating to Rural/Metro LLC's proposed $20 million
senior secured revolving credit facility maturing in 2010 and a
$120 million senior secured term loan B maturing in 2011.
Standard & Poor's also assigned its 'CCC+' subordinated debt
rating to Rural/Metro LLC's proposed $140 million senior
subordinated notes due 2015 and to Rural/Metro Corporation's
proposed $50 million paid-in-kind notes maturing in 2016. As part
of this transaction, the company is also establishing a $15
million letter-of-credit facility, with a $30 million accordion
feature, maturing in 2011. This facility is primarily for
insurance purposes and is not rated by Standard & Poor's.
The company is expected to use the proceeds from the term,
subordinated, and holding company debt, in addition to about
$7 million of on-hand cash, to refinance $150 million of existing
senior notes, repay approximately $153 million of outstanding
revolving credit facility borrowings, and fund $15 million of
related transaction fees and tender premiums. Pro forma for the
transaction, Rural/Metro will have $313 million of total debt
outstanding (including the $50 million of holding company debt).
S&P's outlook on Rural/Metro is stable.
"The low-speculative-grade ratings reflect the company's exposure
to government reimbursement combined with its relatively thin
operating margins, as well as concerns regarding the
sustainability of price increases from its commercial payors,"
said Standard & Poor's credit analyst Jesse Juliano. "The ratings
also reflect Rural/Metro's large debt burden. These issues are
only partially offset by the company's diverse and long-standing
client list, and the improvement in the Medicare reimbursement
environment."
S AND S PORK: Case Summary & 14 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: S and S Pork, L.L.C.
P.O. Box 754
Sioux Falls, South Dakota 57101
Bankruptcy Case No.: 05-40250
Chapter 11 Petition Date: March 2, 2005
Court: South Dakota (Sioux Falls)
Judge: Irvin N. Hoyt
Debtor's Counsel: Clair R. Gerry, Esq.
Stuart, Gerry & Schlimgen, LLP
P.O. Box 966
Sioux Falls, SD 57101
Tel: 605-336-6400
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 14 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wes Van Daalen Trade debt $110,000
480 West 9th Street
Dell Rapids, SD 57022
Sioux Nation of Sioux Falls Trade debt $20,155
1812 North Cliff Avenue
Sioux Falls, SD 57103
First Dakota National Bank Bank loan $20,000
P.O. Box 100
Salem, SD 57058
Central Farmers Cooperative Trade debt $19,313
Brian Bauer Trade debt $2,035
Salem Veterinary Service Trade debt $1,959
Rick Haupt Trucking Trade debt $1,164
Chester Hardware, Inc. Trade debt $341
Betty Streff Trade debt $200
Karen Streff Trade debt $78
McCook Cooperative Trade debt $59
Zapp Hardware Trade debt $56
Ecolab Pest Elim. Div. Trade debt $40
J&J's Sinclair Trade debt $36
SALOMON BROTHERS: Fitch Downgrades Class MF-3 Rating to 'C'
-----------------------------------------------------------
Fitch Ratings has taken rating actions on the following Salomon
Brothers Mortgage Securities -- SBMS -- VII, Inc. issue:
Salomon Home Equity Loan Trust asset-backed pass-through
certificates, series 2001-1 group 1:
-- Class AF-3 affirmed at 'AAA';
-- Class MF-1 downgraded to 'A' from 'AA';
-- Class MF-2 downgraded to 'BB-' from 'BBB-';
-- Class MF-3 downgraded to 'C' from 'CC'.
Salomon Home Equity Loan Trust asset-backed pass-through
certificates, series 2001-1 group 2:
-- Class AV-1 affirmed at 'AAA';
-- Class MV-1 affirmed at 'AA';
-- Class MV-2 affirmed at 'A';
-- Class MV-3 affirmed at 'A-';
-- Class MV-4 affirmed at 'BBB'.
The affirmations of the above classes reflect credit enhancement
consistent with future loss expectations and affect about $16
million in outstanding certificates.
The negative rating actions are due to the decline in enhancement
relative to applicable credit support levels and affect about $7
million in outstanding certificates.
As of the Feb. 25, 2005 distribution date, the
overcollateralization -- OC -- for Group 1 was reduced to zero,
versus a target of $710,204 and the MF-3 bond took a write down of
$163,260 as a result of current month's losses exceeding excess
spread. The net monthly losses (gross losses minus excess spread
available) have averaged $78,000 approximately, over the past
three months for Group 1. The OC was at target for Group 2 at
$885,812. The pool factor (current mortgage loans outstanding as
a percentage of the initial pool) is currently at 24.07%.
Further information regarding current delinquency, loss, and
credit enhancement statistics is available on the Fitch Ratings
web site at http://www.fitchratings.com/
SHADOW CREEK: Court OKs Hiring Kutner Miller as Bankruptcy Counsel
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Colorado gave Shadow
Creek Partners, LLC, permission to employ Kutner Miller, P.C., as
its general bankruptcy counsel.
Kutner Miller will:
a) provide the Debtor with legal advice with respect to its
powers and duties as debtor-in-possession in the continued
operation and management of its business;
b) assist the Debtor in filing the necessary petitions,
pleadings, reports, and actions that are required in the
continued administration of the Debtor's property under
chapter 11;
c) assist the Debtor in the development of a disclosure
statement and plan of reorganization;
d) take necessary actions to enjoin and enjoin and stay under
final decree the continuation of pending proceedings and to
enjoin and stay until final decree of commencement of lien
proceedings and all its related matters as may be provided
under Section 362 of the Bankruptcy Code; and
e) perform all other legal services for the Debtor that are
necessary in its chapter 11 case.
Lee M. Kutner, Esq., a Shareholder at Kutner Miller, is the lead
attorney for the Debtor. Mr. Kutner discloses that the Firm
received a $26,159.75 retainer. Mr. Kutner will bill the Debtor
$340 per hour for his services.
Mr. Kutner reports Kutner Miller's professionals' bill:
Professional Designation Hourly Rate
------------ ----------- -----------
David M. Miller Partner $260
Jeffrey S. Brinen Counsel $235
Aaron A. Garber Counsel $230
Jenny M.F. Fujii Associate $220
Kutner Miller assures the Court that it does not represent any
interest adverse to the Debtor or its estate.
Headquartered in Eden Prairie, Minnesota, Shadow Creek Partners,
LLC, filed for chapter 11 protection on Feb. 23, 2005 (Bankr. D.
Colo. Case No. 05-13099). When the Debtor filed for protection
from its creditors, it listed estimated assets of $10 million to
$50 million and estimated debts of $100,000 to $500,000.
SHOWTIME ENTERPRISES: Court Okay Asset Sale to Sparks for $7.5M
---------------------------------------------------------------
The United States Bankruptcy Court for the District of New Jersey
approved the Purchase Agreement between Showtime Enterprises,
Inc., and Sparks Exhibits & Environments Corp., and authorized
Showtime to consummate the transactions contemplated by the
Purchase Agreement. The Court's action allows Showtime and Sparks
to proceed in accordance with the Purchase Agreement, which
currently provides for a closing by March 15, 2005. Closing is
subject to satisfaction or waiver of the remaining conditions
contained in the Purchase Agreement.
As reported in the Troubled Company Reporter on January 17, 2005,
Marlton Technologies, Inc.'s (AMEX:MTY) subsidiary Sparks Exhibits
signed an agreement to acquire substantially all of Showtime
Enterprises' assets and acquired an option to purchase from
Showtime investors Showtime's secured subordinated debt.
The purchase price is equal to $7,501,801, consisting of:
(a) $2,100,000 earmarked to pay Showtime's creditors having
perfected liens on the purchased assets,
(b) $100,000 earmarked to pay administrative claims,
(c) $50,000 earmarked to pay Showtime's unsecured
creditors,
(d) $601,801 earmarked to pay for Showtime's outstanding
obligations to the U.S. Small Business Administration, and
(e) $4,650,000 earmarked to pay for Showtime's outstanding
obligations to Argosy Investment Partners II, LP.
About Marlton Technologies
Marlton Technologies, Inc., through its Sparks Exhibits &
Environments and DMS Store Fixtures subsidiaries, is engaged in
the design, marketing and production of trade show, museum, theme
park and themed interior exhibits, store fixtures and point of
purchase displays.
Headquartered in Paulsboro, New Jersey, Showtime Enterprises, Inc.
-- http://www.showtimeinc.com/--provides creative design and high
quality fabrication. The Debtor's full-service portfolio includes
trade show and museum exhibits, corporate interiors, event
management, retail merchandising displays and environments as well
as corporate gifts & incentives. The Company and its debtor-
affiliates filed for chapter 11 protection on Jan. 12, 2005
(Bankr. D. N.J. Case No. 05-11089). Rocco A. Cavaliere, Esq., at
Blank Rome LLP, represents the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they each estimated between $1 million to $10 million
in total assets and debts.
SOLUTIA INC: Taps Colliers Turley as Real Estate Broker Until June
------------------------------------------------------------------
At the request of Solutia Inc., and its debtor-affiliates, the
U.S. Bankruptcy Court for the Southern District of New York
extends the term of Solutia's retention of Colliers Turley Martin
Tucker Company as real estate broker to June 30, 2005, under the
terms and conditions of the Representation Agreement, as amended.
Solutia employed Colliers Turley Martin Tucker since June 30,
2004, to serve as its exclusive real estate broker.
Colliers is a leading real estate brokerage firm in the central
United States that has a strong local presence in many cities,
including St. Louis, Missouri. Colliers represents numerous
corporations and other entities with respect to their real estate
requirements, including office brokerage, move management and
construction supervision services. Colliers handles transactions
whose aggregate annual worth is more than $2.5 billion, manages
10 million square feet of office, industrial and retail space, and
employs more than 400 licensed real estate professionals and
900 associates throughout its seven regional offices. Worldwide,
Colliers International Network has 8,800 employees in 247 offices
in 50 countries.
On June 30, 2004, Solutia and Colliers entered into an Exclusive
Tenant Representation Agreement. Colliers will serve as Solutia's
exclusive real estate broker under the Retention Agreement to
locate about 75,000 square feet of new office space for Solutia's
headquarters or to renegotiate the Headquarters Lease. Colliers
will also perform brokerage services, construction supervision
services and move management services as required.
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/--with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. (Solutia Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SOLUTIA INC: FMR Corporation Discloses 11.919% Equity Stake
-----------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission, FMR Corp. discloses that it is deemed to beneficially
own 12,452,080 of Solutia, Inc. common stock, along with Edward C.
Johnson 3d and Abigail P. Johnson:
No. of Shares Percentage
Beneficially Outstanding
Reporting Person Owned of Shares
---------------- ------------- -----------
FMR Corp. 12,452,080 11.919%
Edward C. Johnson 3d 12,452,080 11.919%
Abigail P. Johnson 12,452,080 11.919%
Mr. Johnson 3d is the Chairman of FMR Corp. while Ms. Johnson is a
Director at FMR Corp.
Fidelity Management & Research Company, a wholly owned subsidiary
of FMR Corp., is the beneficial owner of 12,452,080 shares of
Solutia Common Stock as a result of acting as investment adviser
to various investment companies registered under Section 8 of the
Investment Company Act of 1940. Fidelity is registered under
Section 203 of the Investment Advisers Act.
Mr. Johnson 3d, FMR Corp., through its control of Fidelity, and
the funds each has sole power to dispose of the 12,452,080 shares
owned by the Funds.
Eric D. Roiter, Senior Vice-President and General Counsel of
Fidelity, relates that neither FMR Corp. nor Mr. Johnson 3d has
the sole power to vote or direct the voting of the shares owned
directly by the Fidelity Funds, which power resides with the
Funds' Boards of Trustees. Fidelity carries out the voting of the
shares under written guidelines established by the Funds' Boards
of Trustees.
There are 104,474,694 shares of Solutia Common Stock issued and
outstanding as of September 30, 2004.
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/--with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. (Solutia Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SOUTHEASTERN TRANSPORT: Case Summary & Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Southeastern Transport, Inc.
668 Poor's Ford Road
P.O. Box 391
Rutherfordton, North Carolina 28139
Bankruptcy Case No.: 05-40241
Type of Business: The Debtor provides carrier services.
Chapter 11 Petition Date: March 4, 2005
Court: Western District of North Carolina (Shelby)
Judge: Marvin R. Wooten
Debtor's Counsel: Travis W. Moon, Esq.
Hamilton, Gaskins, Fay & Moon, PLLC
2020 Charlotte Plaza
201 S. College Street
Charlotte, NC 28244
Tel: 704-344-1117
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
TAB Bank $625,000
P.O. Box 150290
Ogden, UT 84415
TAB Bank $592,604
P.O. Box 150290
Ogden, UT 84415
S.E.T. Freight Services, Inc. $450,000
P.O. Box 391
Rutherfordton, NC 28139
Gary Morgan $212,513
Penn Western $75,711
US Treasury $73,255
Carolina First Bank $22,000
Fleetpride $20,939
Integrate Decision Support $19,096
Lowdermilk, Church and Co. $15,158
Consolidated Tires, Inc. $12,998
DWS Fleet Management $6,385
Tom McLeod Software $5,361
TIP $5,324
BTI $4,901
Rutherford County $4,270
Richard Davis $3,099
Richard Ray & Consultants $3,035
Cintas Corp. $2,513
UPS $1,766
SPX CORP: Moody's Places Ratings on Review for Possible Upgrade
---------------------------------------------------------------
Moody's Investors Service has placed the ratings of SPX
Corporation on review for possible upgrade, in response to the
company's plan to significantly reduce its debt, adopt a more
conservative financial policy, and strengthen its operational
focus and corporate governance practices.
The placed on review are:
* Ba2 senior implied rating,
* Ba3 senior unsecured issuer rating,
* Ba2 for the senior secured credit facility, due 2009,
* Ba3 for the 7.5% and 6.25% senior notes, due 2013 and 2011
respectively, and
* Ba3 for the Liquid Yield Option Notes (LYONs), due 2021,
The rating review was prompted by SPX Corp.'s announcement
yesterday that it plans to reduce its gross debt from $2.5 billion
at year-end 2004 to approximately $800 million over the next
several months and that on a go-forward basis, it is committed to
maintaining a more conservative capital structure that it defines
as a gross debt to adjusted EBITDA ratio of between 1.5 to 2
times.
Moody's said that the planned debt reduction is part of a broader
restructuring that SPX Corp. is undertaking to revamp its
financial, operating, and corporate governance strategies in order
to address concerns over its performance deterioration and
governance practices in recent years.
The approximately $1.7 billion debt paydown will be financed with
proceeds from the recent divestitures of three business units, and
includes the currently open tender offer for the 7.5% and 6.25%
senior notes and the $400 million of term loans paid down in
January 2005. SPX Corp. also plans to repurchase 10 million
shares of its stock over the near term.
In Moody's view, the planned debt reduction, when completed, will
measurably decrease SPX Corp.'s financial risk and thus contribute
to its improving credit profile. However, Moody's cautions that
despite a more conservative financial posture, SPX faces
considerable challenges in executing its new operating strategy
and turning around the weakening performance of its remaining
businesses. Measures aimed at enhancing internal controls and
improving corporate governance practices and the quality of board
oversight also will take time to show their effect.
In addition, over the next twelve months, SPX Corp. will need to
address the potential redemption of approximately $660 million
(estimated total payment of $780 million including tax recapture)
of Liquid Yield Option Notes (LYONs) that will become puttable on
February 6, 2006. The funding plan to address this liquidity
event is unclear at this point.
As such, Moody's rating review will focus on:
1) monitoring the implementation of the debt reduction plan
over the next few months;
2) evaluating the company's new operating strategy and
restructuring plan;
3) assessing the effectiveness of measures taken to improve
corporate governance as well as any issues that may arise
from its Section 404 reporting; and
4) evaluating the feasibility of its funding plan for the
potential LYONs put as well as broader financial flexibility
issues.
SPX Corporation, headquarters in Charlotte, North Carolina, is a
diversified manufacturing and service company. The company
reported total revenue for continuing businesses of $4.37 billion
in 2004.
TRUMP HOTELS: Equity Committee Wants to Retain HVS as Appraiser
---------------------------------------------------------------
The Official Committee of Equity Security Holders appointed in
Trump Hotels & Casino Resorts, Inc., and its debtor-affiliates'
cases seek the permission of the U.S. Bankruptcy Court for the
District of New Jersey to retain HVS International as its
appraiser, nunc pro tunc to February 17, 2005.
The Equity Committee is familiar with the professional standing
and reputation of HVS and recognizes HVS' extensive experience in
providing appraisals in the gaming industry.
As the Equity Committee's appraiser HVS will conduct an appraisal
of, among others, the "as is" market value of:
-- The Pier at Trump Taj Mahal;
-- The Site of the Former Trump World's Fair Casino; and
-- Potential additional assets currently retained by Trump
Hotels & Casino Resorts, Inc., including Trump Marina Hotel
and Casino, Trump Taj Mahal Casino Resort, Trump Plaza
Hotel and Casino, and Trump Casino Hotel.
The Equity Committee contends that HVS' services are necessary to
enable it to properly value certain of the Debtors' real property
assets, thus maximizing value for its constituency and all
parties-in-interest. In particular, the Equity Committee will
need the appraisals to prosecute its opposition to the Plan and
prepare for a contested confirmation hearing.
Pursuant to the Plan, the Debtors have used book value to
evaluate certain of their real property assets, the Equity
Committee observes. The valuation does not take into account the
appreciation or depreciation of the real property assets, nor
does it take into account the replacement cost of the assets.
The information HVS will provide will be vital to the Equity
Committee to evaluate the assets being transferred to Donald J.
Trump under the Plan in the context of a contested confirmation
hearing.
HVS will be paid pursuant to its hourly basis:
Managing Director $400
Director $300
Senior Vice President $275
Vice President $250
Assistant Vice President $225
Senior Associate $200
Associate $175
Consulting and Valuation Analyst $150
Editor $100
HVS will also be reimbursed for all out-of-pocket expenses.
According to Suzanne R. Mellen, Managing Director of HVS, the
firm does not represent any other entity having an interest
adverse to the Equity Committee in connection with the Debtors'
Chapter 11 cases. HVS will conduct an ongoing review of its
files to ensure that no conflicts or other disqualifying
circumstances exist or arise.
HVS and all of its partners and principals are "disinterested
persons" as that term is defined in Section 101(14) of the
Bankruptcy Code, Ms. Mellen says.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc. -- http://www.thcrrecap.com/ -- through its
subsidiaries, owns and operates four properties and manages one
property under the Trump brand name. The Company and its
debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004
(Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A.
Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at
Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey
T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia,
Stanziale, Sedita & Campisano, P.A., represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed more than
$500 million in total assets and more than $1 billion in total
debts.
TRUMP HOTELS: Court Approves Increase in Cooper's Compensation Cap
------------------------------------------------------------------
In November 2004, the U.S. Bankruptcy Court for the District of
New Jersey authorized Trump Hotels & Casino Resorts, Inc., and its
debtor-affiliates to employ ordinary course professionals.
Pursuant to the November 2004 Order, the Court set a compensation
cap for each individual professional or professional firm at:
(i) $30,000 per month, or
(ii) $200,000, during the pendency of the Debtors' bankruptcy
cases.
One of the Professionals employed in ordinary course is Cooper
Levenson April Niedelman Wagenheim, P.A.
Cooper Levenson provides a wide range of legal services to the
Debtors relating to Trump Plaza, Trump Taj Mahal and Marina. The
firm's services are unrelated to core bankruptcy matters involved
in the Debtors' recapitalization, and would be required even if
the Debtors had not commenced their bankruptcy cases.
Charles A. Stanziale, Jr., Esq., at Schwartz Tobia Stanziale
Sedita & Campisano, in Montclair, New Jersey, relates that during
the pendency of the Debtors' cases, the Debtors found that they
require services from Cooper Levenson in excess of those which
would fall within the current compensation caps under the
November 2004 Order. In particular, the Debtors require the
firm's services relating to regulatory, litigation and employment
matters as well as on real estate and expansion issues that
necessitate a higher level of compensation than that currently
allowed.
According to Mr. Stanziale, the Debtors regularly consult Cooper
Levenson regarding alleged regulatory violations. Moreover, the
firm frequently acts as counsel to the Debtors with regard to
potential compliance issues that are not the subject of a
complaint but which may require discussions with the Casino
Control Commission or the Department of Gaming Enforcement.
Cooper Levenson also represents the Debtors in a number of
litigation matters including an ongoing case in which Trump Taj
Mahal as plaintiff is seeking to collect $1,700,000 remaining
unpaid of a partial summary judgment award of $2,550,000. The
defendant in that case is seeking to stay the collection of the
outstanding amount, and vacate the partial Summary Judgment
award. Cooper Levenson also regularly acts as counsel to the
Debtors in cases where personal injuries have occurred on the
Debtors' properties and where litigation may result in the
future.
With regard to employment matters, the Debtors frequently consult
Cooper Levenson concerning cases of employee discipline,
termination and workers' compensation in order to avoid future
litigation. Furthermore, the firm advises the Debtors on matters
relating to the security and monitoring of the casino properties.
Cooper Levenson advises the Debtors on real estate and expansion
matters. The Debtors anticipate that the time spent on real
estate and expansion matters will increase substantially in the
coming months and will involve meetings and negotiations with
various state and local agencies. All of these legal services
are critical for the Debtors' ongoing business operations,
including their continued compliance with non-bankruptcy law.
At the Debtors' request, the Court amends its November 2004 Order
and allows the Debtors to compensate Cooper Levenson in excess of
the monthly aggregate caps. Specifically, the Court permits the
Debtors to increase the monthly aggregate caps applicable to
Cooper Levenson, effective as of December 1, 2004, to:
(a) $50,000 per month; and
(b) $250,000 during the pendency of the Debtors' cases.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc. -- http://www.thcrrecap.com/ -- through its
subsidiaries, owns and operates four properties and manages one
property under the Trump brand name. The Company and its
debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004
(Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A.
Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at
Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey
T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia,
Stanziale, Sedita & Campisano, P.A., represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed more than
$500 million in total assets and more than $1 billion in total
debts.
TRUMP HOTELS: Court Approves CRDA Parking Fee & Donation Agreement
------------------------------------------------------------------
The Casino Reinvestment Development Authority of the state of New
Jersey is responsible for maintaining public confidence in the
casino gaming industry in New Jersey through the reinvestment of
a portion of gaming industry revenues to revitalize Atlantic City
and other areas throughout the state. Among others, the CRDA's
activities are financed through investment alternative tax
obligations -- IATs -- equal to 1.25% of the gross revenues of
each New Jersey casino licensee.
Charles A. Stanziale, Jr., Esq., at Schwartz Tobia Stanziale
Sedita & Campisano, in Montclair, New Jersey, relates that
beginning in the 26th year after a casino licensee is issued a
gaming license, a portion of the licensee's IATs are to be
devoted to a fund established by the CRDA for economic
development projects that foster the redevelopment of Atlantic
City. In addition to the IATs, the CRDA is currently entitled to
use for redevelopment projects $1.50 of every $3 per day fee
collected by the New Jersey Treasurer for each motor vehicle
parked in an Atlantic City casino hotel parking facility.
Beginning in the state's fiscal year 2007, the CRDA will be
entitled to use $2.50 of every Parking Fee.
To accomplish its purposes, the CRDA is authorized from time to
time to issue bonds, which are secured by and payable from, among
others, proceeds of the IATs and Parking Fees. Currently, the
CRDA is authorized to issue the Bonds in early March 2005.
The CRDA will use around $49 million of the net proceeds of the
Bonds for revitalization projects on or related to the Atlantic
City Boardwalk. The boardwalk fronts two of the Debtors' casinos
-- the Trump Taj Mahal and the Trump Plaza. Another $49 million
of the net proceeds will be allocated among eligible economic
development or boardwalk revitalization projects recommended by,
or in a geographic area proximate to, each participating casino.
Thus, Trump Hotels & Casino Resorts, Inc., and its debtor-
affiliates believe that issuance of the Bonds will provide
significant benefits to their Atlantic City properties.
However, because of the size of the Bond issuance, the CRDA must
provide for additional sources of repayment and security for the
Bonds.
Consequently, the CRDA is asking casino licensees in Atlantic
City to enter into certain agreements that allocate IATs and
certain parking fees to provide debt service coverage and
security for the Bonds. Since Debtors Trump Plaza Associates,
Trump Taj Mahal Associates and Trump Marina Associates, L.P.,
operate casinos in Atlantic City, they are also asked to enter
into these agreements with the CRDA.
Accordingly, the Debtors ask the Court to authorize the three
Atlantic City Debtors to enter into a Parking Fee Agreement with
CRDA.
The Parking Fee Agreement requires Atlantic City casino operators
to:
1. pay an additional $1 per day parking fee for each vehicle
parked in their parking facilities beginning on July 1,
2006, and continuing through the final maturity of the
Bonds;
2. pledge the Additional Parking Fees for the repayment of the
Bonds; and
3. remit the Additional Parking Fees to the CRDA or the
trustee under the indenture governing the Bond.
All 12 Atlantic City casino hotels have agreed to enter into the
Parking Fee Agreement.
The Bond Indenture and the Parking Fee Agreement provide that any
Additional Parking Fees that are not utilized for debt service on
the Bonds and other amounts required to be paid under the Bond
Indenture will be released back each year and distributed to the
casino hotels pro rata in proportion to the amount of Additional
Parking Fees that each casino hotel contributed during the
relevant period. At this time, the CRDA does not anticipate that
it will actually need to use any of the Additional Parking Fees
for debt service on the Bonds.
Under the Parking Fee Agreement, the Additional Parking Fee can
be charged to those customers using the parking facilities of the
three Atlantic City Debtors. In addition, the Additional Parking
Fees are being provided to the CRDA for debt coverage purposes
and are not expected to be needed for debt service payments and
other amounts required to be paid under the Bond Indenture. To
the extent that the Additional Parking Fees are not needed for
debt service payments and other amounts required to be paid under
the Bond Indenture, they will be returned to the Debtors
annually.
While granting a pledge in the Additional Parking Fees is
technically a violation of the orders approving the Debtors'
postpetition financing and authorizing the Debtors to use the
cash collateral of their prepetition bond holders, counsel to the
Informal Committee of TAC Noteholders and counsel to the Informal
Committee of TCH Noteholders have informally consented to the
pledge because the three Atlantic City Debtors will begin
collecting the Additional Parking Fees after the Cash Collateral
and DIP Financing Orders have expired.
* * *
Judge Wizmur grants the Debtors' request.
CRDA Donation Agreements
The Casino Reinvestment Development Authority is asking certain
Atlantic City hotel casinos, including casino operators Trump
Plaza Associates, Trump Taj Mahal Associates and Trump Marina
Associates, L.P., to enter into a donation and credit agreement.
Pursuant to the Donation Agreement, the casino will devote its
investment alternative tax obligations to a fund established by
CRDA to foster redevelopment of Atlantic City, so as to be used
to provide a source for the repayment of, and security for, CRDA
bonds.
Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code,
Trump Hotels & Casino Resorts, Inc., and its debtor-affiliates
sought and obtained the authority of the U.S. Bankruptcy Court for
the District of New Jersey for each of Trump Plaza Associates,
Trump Taj Mahal Associates and Trump Marina Associates, L.P., to
enter into and execute the Donation Agreement.
According to Charles A. Stanziale, Jr., Esq., at Schwartz Tobia
Stanziale Sedita & Campisano, in Montclair, New Jersey, the
portion of donated IATs not used each year for the payment of
annual debt service on the Bonds will be recovered and held pro
rata in the Atlantic City Fund account of each casino. The
Donation Agreement does not increase the rate of the IATs or the
amount that the hotel casinos are required to devote to the
Atlantic City Fund.
The Debtors believe that the Donation Agreements will provide
significant benefits to their estates and further their on-going
business operations without subjecting them to any additional
risk or financial burden. The proceeds of the Bonds will be used
for capital improvements and infrastructure that will revitalize
the Debtors' casinos and the areas of Atlantic City where they
are located.
All amounts payable under the Donation Agreement constitute
statutory charges that the Debtors are required to pay in any
event. The sole function of the Donation Agreement is to
dedicate the statutory charges to the repayment of the Bonds and
other amounts required to be paid under the Bond Indenture.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc. -- http://www.thcrrecap.com/ -- through its
subsidiaries, owns and operates four properties and manages one
property under the Trump brand name. The Company and its
debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004
(Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A.
Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at
Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey
T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia,
Stanziale, Sedita & Campisano, P.A., represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed more than
$500 million in total assets and more than $1 billion in total
debts.
UAL CORP: District Court Certifies ESOP Plaintiff Class
-------------------------------------------------------
In 2003, Jerry R. Summers, George T. Lenormand, Jeffrey D.
Crites, Louise Van Rensburg and James E. Shambo, former employees
of United Air Lines, individually and on behalf of all others
similarly situated, commenced a lawsuit before the U.S. District
Court for the Northern District of Illinois, Eastern Division,
against the UAL Corporation Employee Stock Ownership Plan, UAL
Corporation ESOP Committee and its members, Marty Torres, Barry
Wilson, Doug Walsh, Ira Levy, Don Clements, Craig Musa, and State
Street Bank and Trust Company, for violation of the Employee
Retirement Income Security Act, 29 U.S.C. Section 1302. The
Plaintiffs seek to recover up to $2,000,000,000 for all past
members of the UAL ESOP Plan.
The UAL ESOP Plan was established on July 12, 1994, as part of a
transaction that transferred a majority ownership stake in UAL to
its employees. A UAL ESOP Committee was established, which had
the rights, duties and obligations of a "Plan Administrator."
The ESOP Committee consisted of six members:
-- three from the Air Line Pilots Association;
-- two from the International Association of Machinists and
Aerospace Workers; and
-- one from UAL.
The Plaintiffs argued before District Court Judge Samuel
Der-Yeghiayan that the Defendants breached their fiduciary duties
by imprudently maintaining virtually all of the Plan assets in
UAL stock when it was known that the Debtors faced extraordinary
financial strain and an imminent risk of bankruptcy. The
fiduciaries' failure to diversify out of UAL common stock under
these circumstances caused the Plan to lose approximately
$2,000,000,000.
The Defendants alleged that they followed the principals set
forth in the Department of Labor's Field Assistance Bulletin and
adhered to fiduciary responsibilities as directed trustees and
committee members by attending the ESOP Committee meetings,
monitoring UAL's stock and taking action on the UAL investment.
Neither a directed trustee nor a named fiduciary can be held
liable for holding a plan company's stock simply because it
failed to predict bankruptcy.
The Plaintiffs asked Judge Der-Yeghiayan to certify as a Class
the ESOP Plan and all persons who were participants in or
beneficiaries of the Plan from July 19, 2001, to the Plan's
termination in July 2003.
Steve Berman, Esq., at Hagens, Berman, Sobol & Shapiro, argued
that the Class should be certified because the Plaintiffs sue on
behalf of the Plan, its participants and beneficiaries. All of
the Defendants' alleged breaches of fiduciary duty impacted the
Plan, its participants and beneficiaries in the same manner -- by
causing losses as the stock price of UAL dropped.
Any relief will be recovered on behalf of the Plan. Resolution
of the Plaintiffs' claims will resolve all claims of the Class
members. Denying class certification will engender the risk of
inconsistent adjudications.
The Court allowed the ESOP Committee to keep its rebuttal to the
Class Certification Motion under seal. According to Howard
Shapiro, Esq., at Proskauer Rose, in New Orleans, Louisiana, the
document contained sample releases from UAL Corporation's legal
department and other confidential material.
State Street argued that it was merely the directed Trustee for
the Plan, not an active committee member. In this role, it had
little responsibility for investment strategy or Plan
performance. State Street cannot be held liable for failing to
predict UAL Corporation's bankruptcy.
Class-Action Status Granted
Judge Der-Yeghiayan finds that the Plaintiffs satisfied the
requirements of Rule 23(a) of the Federal Rules of Civil
Procedure for class certification:
1) The class is so numerous that joinder of all members is
impracticable;
2) There are questions of law or fact common to the class;
3) The claims or defenses of the representative parties are
typical of the claims or defenses of the class; and
4) The representative parties will fairly and adequately
protect the interest of the class.
Judge Der-Yeghiayan holds that "a class action would be the
superior method and would promote the most efficient and
effective resolution of the class member's claims."
Accordingly, the Plaintiffs' request for Class Certification is
granted.
* * *
CHICAGO, Illinois -- February 22, 2005 -- A U.S. Federal
Court judge has cleared the way for United Airlines (OTC Bulletin
Board: UALAQ) employees to move forward with a nationwide class-
action lawsuit against the airline's employee stock ownership
plan (ESOP) and its trustees, claiming those charged with
protecting the interests of the employee-owners failed in their
duties, costing the employee-owners billions of dollars.
On Thursday, February 17, U.S. District Court Judge Samuel
Der-Yeghiayan agreed with the attorneys representing the
estimated 70,000 employees and granted class-action status to the
lawsuit, which was originally filed on February 28, 2003.
The suit claims that the UAL ESOP committee and the plan
trustee, State Street Bank, were aware that UAL's stock was
unstable and State Street Bank had even placed it on a watch list
due to its volatility. Regardless, the ESOP committee and State
Street held on to the stock as it plummeted in value even before
the September 11, 2001 attack, which further weakened the stock
price, the complaint states.
The suit also calls into question the committee members'
objectivity in protecting the interests of the ESOP members.
According to the complaint, several committee members also served
as UAL union representatives.
"ESOP committee members have a strict and absolute duty to
represent the interests of the ESOP investors," said Steve
Berman, managing partner of Hagens Berman Sobol Shapiro, the law
firm representing the plaintiffs. "We believe that these union
members could have had their objectivity clouded by things such
as union negotiations with the company, for example. We believe
an inherent conflict existed."
"Well before September 11, UAL stock was in a free-fall,"
added Berman. "We intend to show that had State Street and the
plan trustees done their jobs responsibly, employees would have
escaped financial devastation."
The complaint cites a statement from UAL CEO James Goodwin
in which he states: "Before September 11, we were not in a
comfortable financial state, with costs exceeding our revenue on
a daily basis . . . Clearly this bleeding has to be stopped --
and soon -- or United will perish sometime next year."
"UAL's CEO was telling the world that UAL was in trouble,
painting a vivid picture of the stock's unsuitability for the
ESOP," said Berman. "Even with these predictions, the ESOP
trustees did not make the obvious conclusion that the stock was
not an appropriate investment for the employee-owners, many of
which were looking to their ESOP investment for retirement."
According to the complaint, it took many more months after
Goodwin's statement before the ESOP committee and State Street
began diversifying the ESOP.
"It is our belief that by the time State Street and the
committee began fulfilling their responsibility, UAL stock had
fallen through the floor," Berman said. "Thousands of employees
found their retirement funds demolished."
According to Berman, the class certification decision buoys
the hopes of the current and former UAL employees. "These people
feel -- justifiably I believe -- that they have been victimized
by State Street Bank and the ESOP committee. They want their day
in court and Judge Der-Yeghiayan has given them that."
The ruling allows the plaintiff's attorneys to continue with
the discovery process. The attorneys have already deposed many
of the players in the case. No trial date has been set.
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. 77; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
UNITED AIRLINES: Reports 74.8% Load Factor in February 2005
-----------------------------------------------------------
With its flights averaging 74.8% full in February, United Airlines
has recorded its highest-ever February load-factor. United's
total scheduled revenue passenger miles (RPMs) decreased in
February 2005 by 1.8% on a capacity decrease of 4.0% available
seat miles (ASMs) vs. the same period in 2004.
2005 2004 YOY
February February Change
Scheduled Service Only:
Revenue Plane Miles 56,988,000 60,572,000 -5.9%
Number Of Departures 42,277 47,269 -10.6%
Revenue Passengers 4,724,000 4,974,000 -5.0%
Revenue Passenger Miles (000):
North America 4,764,838 5,040,019 -5.5%
Pacific 1,797,699 1,721,670 4.4%
Atlantic 985,954 964,280 2.2%
Latin America 347,912 313,965 10.8%
System 7,896,403 8,039,934 -1.8%
Available Seat Miles (000):
North America 6,283,820 7,086,831 -11.3%
Pacific 2,374,541 2,099,439 13.1%
Atlantic 1,433,831 1,408,590 1.8%
Latin America 458,985 395,693 16.0%
System 10,551,177 10,990,553 -4.0%
Passenger Load Factor (Percent):
North America 75.8 71.1 4.7 Pts
Pacific 75.7 82.0 -6.3 Pts
Atlantic 68.8 68.5 0.3 Pts
Latin America 75.8 79.3 -3.5 Pts
System 74.8 73.2 1.6 Pts
Cargo Ton Miles (000):
Freight 129,617 112,501 15.2%
Mail 32,235 29,943 7.7%
System 161,852 142,444 13.6%
Total System Including Charter
(000):
Revenue Passenger Miles 7,960,898 8,125,967 -2.0%
Available Seat Miles 10,640,888 11,091,921 -4.1%
Revenue Psgr. Km. 12,811,473 13,077,119 -2.0%
Available Seat Km. 17,124,381 17,850,228 -4.1%
Total Revenue Ton Miles 960,974 955,051 0.6%
Total Avail. Ton Miles 1,567,174 1,751,710 -10.5%
Total Rev. Ton Km. 1,393,764 1,384,910 0.6%
Total Avail. Ton Km. 2,288,074 2,557,497 -10.5%
YEAR TO DATE YEAR TO DATE YOY
2005 2004 Change
Scheduled Service Only:
Revenue Plane Miles 119,424,000 124,789,000 -4.3%
Number Of Departures 88,655 97,318 -8.9%
Revenue Passengers 9,883,000 9,984,000 -1.0%
Revenue Passenger Miles (000):
North America 9,924,198 10,091,084 -1.7%
Pacific 3,906,755 3,636,116 7.4%
Atlantic 2,143,129 2,076,962 3.2%
Latin America 741,990 649,960 14.2%
System 16,716,072 16,454,122 1.6%
Available Seat Miles (000):
North America 13,137,937 14,552,527 -9.7%
Pacific 5,007,889 4,358,537 14.9%
Atlantic 3,017,610 2,929,392 3.0%
Latin America 970,888 819,001 18.5%
System 22,134,324 22,659,457 -2.3%
Passenger Load Factor (Percent):
North America 75.5 69.3 6.2 Pts
Pacific 78.0 83.4 -5.4 Pts
Atlantic 71.0 70.9 0.1 Pts
Latin America 76.4 79.4 -3.0 Pts
System 75.5 72.6 2.9 Pts
Cargo Ton Miles (000):
Freight 248,561 209,339 18.7%
Mail 66,667 63,716 4.6%
System 315,228 273,055 15.4%
Total System Including
Charter (000):
Revenue Passenger Miles 16,889,534 16,579,493 1.9%
Available Seat Miles 22,351,939 22,811,926 -2.0%
Revenue Psgr. Km. 27,180,327 26,681,378 1.9%
Available Seat Km. 35,970,975 36,711,233 -2.0%
Total Revenue Ton Miles 2,007,210 1,931,021 3.9%
Total Avail. Ton Miles 3,440,078 3,602,232 -4.5%
Total Rev. Ton Km. 2,910,890 2,799,984 3.9%
Total Avail. Ton Km. 5,022,514 5,259,259 -4.5%
* Measured by revenue passenger miles as reported to the U.S. Department
of Transportation for 12 months ending September 2004, the most recent
comparison data available.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/--throughUnitedAir 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 DEFENSE: Fitch Affirms 'BB+' Rating on Senior Secured Loan
-----------------------------------------------------------------
Fitch Ratings has affirmed United Defense Industries' BB+ credit
rating for the company's senior secured bank facility. The Rating
Outlook is revised to Positive from Stable. Approximately $525
million in debt is affected.
The Outlook revision is based on UDI's sustained solid operating
performance and cash flow generation, which have translated into
favorable credit metrics for the rating. UDI continues to benefit
from strong defense spending in general and the high tempo of
operations in Iraq and Afghanistan in particular, along with its
position as a significant player in the U.S. Army's transformation
and the placement of its medium-caliber guns on a number of U.S.
Navy and Coast Guard vessels.
UDI should benefit from the recent supplemental budget request,
which includes $2.4 billion for weapons and tracked combat
vehicles including UDI's Bradley Fighting Vehicle -- BFV -- and
M88 armored recovery vehicle. If approved, this request should
enhance both UDI's top and bottom line through 2007.
Additionally, the requested funds should result in extending
production work for the BFV, reducing concerns about the potential
for a gap between BFV production work and Future Combat Systems
vehicle production.
Concerns focus on cash deployment as the company has identified
its free cash utilization goals in the following order:
* acquisitions,
* share repurchases,
* dividends, and
* finally debt repayment.
This year UDI extended its share repurchase program by 12 months
and increased it by $100 million. The company also announced its
first dividend, which will utilize approximately $25 million per
year at current rates. Fitch's rating and Outlook incorporate in
excess of $600 million in acquisitions, share repurchases, or
dividends over the next two years. Although UDI has not engaged
in a major acquisition since United States Marine Repair in 2002,
the size of potential acquisitions going forward and the success
UDI will have in integrating them remains a concern. In addition,
the company still relies on a relatively limited number of
programs for much of its revenues, making UDI more vulnerable to
changes in Dept. of Defense -- DoD -- priorities as compared to
more diversified defense contractors. Partially offsetting this
concern is the company's placement in both existing programs and
next-generation programs, allowing UDI's existing programs to
benefit if and when a next-generation program is delayed or
cancelled.
At year-end 2004, UDI had a liquidity position of $379 million,
consisting of $307 million of cash and $124 million of
availability under its $200 million credit line, offset by $52
million of current debt maturities. UDI saw its key ratios
improve in the 12 months ending Sept. 30, 2004, as the result of
improving sales and margins aided by a $39 million reduction in
debt to $538 million. For the 12 months ending Sep. 30, 2004,
UDI's leverage, as defined by debt to EBITDAP and adjusted debt to
EBITDAPR, decreased to 1.6 times and 2x from 1.9x and 2.3x for the
12 months ending Dec. 31 2003. Interest coverage, as defined by
EBITDAP/interest and EBITDAPR/(interest plus rents) increased to
13.3x and 7.4x from 10.7x and 6.5x over the same periods,
respectively.
W.R. GRACE: Equity Panel Gets Court Nod on Lexecon Engagement
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
the Official Committee of Equity Security Holders of the chapter
11 cases of W.R. Grace & Co., and its debtor-affiliates, to hire
Lexecon, LLP, to provide asbestos claims consulting services for
the remainder of the Debtors' Chapter 11 cases and to act, if
necessary, as an expert witness for the Equity Committee in the
estimation of claims in contemplation of or in connection with the
Chapter 11 plan litigation.
Lexecon is a leading consulting firm that specializes in the
analysis of complex economic and statistical issues in connection
with legal and regulatory proceedings and other business
activities. Lexecon often serves as an expert on these issues and
has been retained by national and international companies to
assist with litigation in numerous forms. Thus, Lexecon is
well-qualified to provide the asbestos claims consulting services
and expertise that are required by the Equity Committee.
To date, the Debtors have taken the lead in contesting the
asbestos claims asserted against their estate. The Equity
Committee believes that it is appropriate to retain its own
asbestos valuation expert so that it is in a position to conduct
its own evaluation of any proposed settlement, to participate in
settlement negotiation, and, if necessary, undertake its own
challenge to the allowability and amount of the asbestos claims.
Lexecon is tasked with:
(a) estimating costs associated with liquidating present and
future asbestos claims and resulting allocation of value
to holders of claims and interests;
(b) estimating the costs under a plan of resolving the claims;
(c) testifying on the Equity Committee's behalf, if
necessary; and
(d) performing any other necessary services as the Equity
Committee may request from time to time pertaining to any
asbestos-related issue.
As set forth in the Retention Agreement, Lexecon will be paid
according to its current hourly rates:
Gustavo E. Bamberger, Ph.D. $525
Lynette R. Neumann, Ph.D. $450
Senior Professionals $450 to $530
Consultants $325 to $415
Analysts/Data Analysis Research/Support Staff $100 to $295
Lexecon will also be reimbursed for necessary out-of-pocket
expenses.
In addition to testifying as an expert witness in the Western
Asbestos Company bankruptcy and submitting an expert report in the
Congleum bankruptcy, Gustavo E. Bamberger, Ph.D., a Senior Vice
President of Lexecon who will take the lead role in Lexecon's
services to the Equity Committee, has provided expert witness
testimony on economic issues before the United States Senate and
numerous federal courts and regulatory agencies.
Dr. Bamberger attests that Lexecon is a "disinterested person," as
defined in Section 101(14) and as required by Section 328(c) of
the Bankruptcy Code, and holds no interest adverse to the Debtors
and their estates for the matters for which the firm is to be
engaged.
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. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WADDINGTON NORTH: Moody's Junks Senior Unsecured Issuer Rating
--------------------------------------------------------------
Moody's Investors Service lowered the ratings of Waddington North
America, Inc., a privately held manufacturer of disposable plastic
food and beverage products, reflecting the cumulative effects of
operating disruptions during the recent past and rising raw
material costs on the company's already strained financial
position.
Credit statistics are materially short of expectations at initial
rating (March 2004) as Moody's estimates that financial leverage,
before adjusting for the redeemable preferred stock, has ballooned
to over 10 times EBIT (over 6 times EBITDA) with deficit free cash
flow. There is likely minimal EBIT coverage of interest expense.
Although Waddington North's liquidity position is impaired,
Moody's anticipates that the company should have sufficient
funding to meet the upcoming mandatory term amortization
(approximately $1.25 million quarterly) and quarterly interest
payments.
The rating downgraded by Moody's are:
* B3 from B1, $150 million secured credit facility consisting
of a $30 million revolver, maturing in 2009, and
approximately $120 million term loan, maturing in 2011
* B3 from B1, senior implied rating
* Caa3 from B3, senior unsecured issuer rating (non-guaranteed
exposure)
The ratings outlook is negative.
The downgrade of the senior implied rating to B3 from B1 also
incorporates the expectation of prolonged financial weakness as
the company struggles to realign its faltering thermoforming
business while balancing capacity needs and liquidity. The two
notch downgrade of Waddington North's senior secured facility to
B3 expresses Moody's expectation of collateral coverage in
default, however with significantly decreased recovery cushion
given the decrease in run-rate enterprise value.
The negative ratings outlook reflects continued concern about the
adequacy of the company's near term liquidity given the likely
absence of net cash generated by operations on a quarterly basis
going forward coupled with the violation of existing bank
financial covenants and likely modest cushion under revised
hurdles, in the event that a revised agreement can be reached with
Waddington North's lending institutions.
At the time of Moody's review, Waddington North had not yet
received covenant waivers from its lender. The negative ratings
outlook also reflects the limited visibility into Waddington
North's thermoforming earnings, which upon further investigation
could be insufficient to support the ratings. Additional concerns
include possible impairment charges, further increases in
production and operating costs, and potential for customer losses
in thermoforming (of particular concern given high
concentrations). More positively, Waddington North has engaged an
outside consulting firm to review its troubled operations.
Headquartered in Covington, Kentucky, Waddington North America,
Inc., services quick service restaurants, supermarket deli and
mass merchandisers, club and cash-n-carry stores, and food service
distributors with injection molded and thermoformed disposable
plastic products such as plates, cups, trays, cutlery, and
customized packaging products. The company's stock is held by an
investor group consisting of Code Hennessy & Simmons, LLC and its
partners. Annual revenue is roughly $180 million.
WESTPOINT STEVENS: Bidding Procedures for Sale of All Assets
------------------------------------------------------------
The procedures governing the submission and acceptance of
competing bids for the sale of WestPoint Stevens, Inc. and its
debtor-affiliates' assets are:
(a) Within 3 business days after the Bidding Procedures is
approved, the Debtors' financial advisor, Rothschild,
Inc., will distribute to all persons that have expressed
an interest in a transaction and all other strategic and
financial investors it determines may have an interest in
a possible transaction a due diligence package consisting
of an informational memorandum containing various
financial data and other relevant information in
connection with the Assets, as well as a copy of the Asset
Purchase Agreement.
(b) A Potential Bidder must deliver to the Debtors:
(i) an executed confidentiality agreement,
(ii) a non-binding expression of interest, and
(iii) its most current audited and latest unaudited
financial statements or, if the Potential Bidder is
an entity formed for the purpose of acquiring the
Assets:
(x) Financials of the equity holder(s) of the
Potential Bidder, and
(y) the written commitment acceptable to the
Debtors of the equity holder(s) of the
Potential Bidder to be responsible for the
Potential Bidder's obligations in connection
with a Sale Transaction.
(c) A Qualified Bidder is a Potential Bidder whose Financials
demonstrate the financial capability to consummate a Sale
Transaction and who the Debtors determine is likely to
consummate a Sale Transaction.
(d) To obtain due diligence access or additional information
regarding the Assets or the Debtors, a Qualified Bidder
must first provide the Debtors with a written non-binding
expression of interest regarding:
(i) a Sale Transaction,
(ii) the purchase price composition and range,
(iii) the structure and financing of the Sale
Transaction,
(iv) any conditions to closing that it may wish to
impose, and
(v) the nature and extent of additional due diligence
it may wish to conduct.
(e) The Debtors and their advisors will be entitled to due
diligence from a Qualified Bidder, upon execution of a
confidentiality agreement.
(f) Bids must be a written irrevocable offer from a Qualified
Bidder not contingent upon any event. Bids must be
accompanied by a deposit in an amount equal to 10% of the
cash bid amount or, if greater, 110% of the amount of New
Textile's most recent deposit and be received by the
Debtors at least two days prior to the Auction. If any
bid is conditioned upon the assumption and assignment of
executory contracts or unexpired leases, then that bidder
will be required to identify those contracts or leases to
be assumed and assigned and provide evidence of its
ability to provide adequate assurance of future
performance of those contracts or leases along with the
bid.
(g) Bids and Adequate Assurance Packages must be submitted so
that they are actually received by no later than 12:00
noon prevailing Eastern Time on ____________, by:
WestPoint Stevens Inc.
P.O. Box 71
507 West Tenth Street
West Point, Georgia 31833
Attn: Clay Humphries, Esq.
with copies to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153-0119
Attn: Michael F. Walsh, Esq. and
John J. Rapisardi, Esq.
Rothschild Inc.
1251 Avenue of the Americas, 51st Floor
New York, New York 10020
Attn: Neil Augustine
The Debtors will provide New Textile with a summary of the
material terms of any bids received within two business
days after each bid is received.
(h) A bid received from a Qualified Bidder that meets the
requirements set forth will be considered a "Qualified
Bid" if the Debtors reasonably believe that that bid would
be consummated if selected as the Successful Bid. New
Textile's offer to acquire the Assets pursuant to the
Asset Purchase Agreement will constitute a Qualified Bid.
(i) Only a Qualified Bidder that has submitted a Qualified Bid
is eligible to participate in the Auction. At least three
business days prior to the Auction, the Debtors will
select the highest or best Qualified Bid to serve as the
starting point for the Auction. The Baseline Bid will be
either:
(i) the bid set forth in the Asset Purchase Agreement,
or
(ii) one or more Qualified Bids that in the aggregate
involve the purchase of substantially all the
assets and the assumption of substantially all the
liabilities contemplated to be purchased and
assumed pursuant to the Asset Purchase Agreement
and are determined to be a higher or better bid
than that set forth in the Asset Purchase Agreement
and that proposes a purchase price that is at least
$5,000,000 greater than the sum of:
(a) the Debtors' determination of the value to
its estates of the aggregate consideration
provided pursuant the Asset Purchase
Agreement, and
(b) the Break-Up Fee set forth in the Asset
Purchase Agreement.
(j) If at least two Qualified Bids have been received, the
Debtors will conduct an Auction. The Auction will be
conducted at the offices of Weil, Gotshal & Manges LLP,
767 Fifth Avenue, New York, New York 10153 on ___________
at 11:00 a.m, or such later time or other place as the
Debtors will notify all Qualified Bidders. Only the
authorized representatives of each of the Qualified
Bidders, the agent for the First Lien Lenders and Second
Lien Lenders, the Creditors' Committee, New Textile, and
the Debtors will be permitted to attend the Auction.
For purposes of bidding at the Auction, Bank of America,
N.A. as collateral trustee under the Second Amended and
Restated Collateral Trust Agreement, dated as of June 9,
1998, will be authorized to credit bid at the Auction on
behalf of the First Lien Lenders and New Textile up to the
full amount of the obligations owing to the First Lien
Lenders under the First Lien Credit Agreement.
If no Qualified Bids are received by the Bidding Deadline,
then the Auction will not be held, New Textile will be the
Successful Bidder, the Asset Purchase Agreement will be
the Successful Bid, and at the Sale Hearing, the Debtors
will seek approval of and authority to consummate the Sale
Transaction contemplated by the Asset Purchase Agreement.
(k) For purposes of comparing any bids by New Textile at the
Auction that are higher than the bid set forth in the
Asset Purchase Agreement against any other bids that are
made by a Qualified Bidder (other than New Textile), each
Higher New Textile Bid will include the amount of the
Break-Up Fee. In the event that a Higher New Textile Bid
is the Successful Bid at the Auction, the purchase price
amount finally payable by New Textile in respect of the
Successful Bid will be reduced by the Break-Up Fee
Increment.
(l) After the conclusion of the Auction, the Debtors, in
consultation with their advisors, will review each
Qualified Bid and identify the highest or otherwise best
offer. The winning bidder(s) will be required to enter
into a definitive agreement before the Auction is
adjourned. The Debtors will file a notice with the Court
identifying the winning bidder(s). Within two business
days of the conclusion of the Auction, the Debtors will
file a report of the results of the Auction and serve the
Auction Report on all parties-in-interest and each
Qualified Bidder.
(m) Within 24 hours after the Auction, any Successful Bidder
and any party submitting the second highest or otherwise
best bid must supplement the Good Faith Deposit, so that
the total deposit equals 10% of the cash portion of its
winning or second highest bid or, if greater, 110% of the
amount of New Textile's most recent deposit.
(n) The Sale Hearing will be held before the Honorable Robert
D. Drain, United States Bankruptcy Judge, at the United
States Bankruptcy Court for the Southern District of New
York, One Bowling Green, New York, New York 10001, on
__________ at 10:00 a.m. or such other date and time that
the Court establishes. Objections must be in writing and
filed so as to be actually received by 12:00 Noon on
__________.
(o) If for any reason the entity or entities that submit(s)
the highest or otherwise best bid(s) fails to consummate
the purchase of the Assets, the offeror of the second
highest or otherwise best bid will automatically be deemed
to have submitted the highest or otherwise best bid. If
that failure to consummate the purchase is the result of a
breach by the winning bidder, the Good Faith Deposit will
be forfeited to the Debtors and the Debtors specifically
reserve the right to seek all available damages from the
defaulting bidder.
Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on
June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J.
Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the
Debtors in their restructuring efforts. (WestPoint Bankruptcy
News, Issue No. 40; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
WHEELING-PITTSBURGH: Coal Supplier Says Contract Can't be Assigned
------------------------------------------------------------------
Central West Virginia Energy Company objects to Wheeling-
Pittsburgh Steel Corp.'s attempt to assign a Coal Supply Agreement
to a joint venture with flat rolled sheet steel producer Severstal
North America Inc. CWVEC reminds Judge Woods that WPSC sought and
obtained confirmation of a Plan of Reorganization in June 2003,
and declared that Plan effective on August 1, 2003. Because WPSC
is no longer a debtor-in-possession under 11 U.S.C. Sec. 1107, it
doesn't have the rights or powers of a trustee under 11 U.S.C.
Sec. 365 to assume, assume and assign, or reject pre-petition
contracts.
CWVEC tells the Court that the Agreement can be assigned by its
own terms, but that requires WPSC to demonstrate that the assignee
has the financial wherewithal to perform its obligations under the
contract. CWVEC has asked WPSC for that information but WPSC
hasn't responded.
If CWVEC is assured that WPSC, Severstal, and the joint venture
will be jointly and severally liable for all of WPSC's current and
future obligations under the Contract, and that they are
financially able to meet these obligations, CEVEC says it can deal
with the transfer of the contract.
A review of WPSC's motion to assume and assign the Coal Supply
Contract appeared in the Troubled Company Reporter on Feb. 16,
2005. The Honorable Kay Woods will review the Debtor's request
and CWVEC's objection at a hearing in Youngstown on Tuesday,
March 15, 2005.
Central West Virginia Energy Company is represented by:
Michael D. Buzulencia, Esq.
150 E. Market St., 3rd Floor
Warren, OH 44481
Telephone (330) 392-8551
Fax (330) 392-7030
- and -
Benjamin C. Ackerly, Esq.
Jesse N. Silverman, Esq.
HUNTON & WILLIAMS LLP
Riverfront Plaza, East Tower
951 East Byrd St.
Richmond, VA 23219
Telephone (804) 788-8200
Fax (804) 788-8218
Wheeling-Pittsburgh Steel Corporation and eight debtor-affiliates
filed for Chapter 11 protection on Nov. 16, 2000 (Bankr. N.D. Ohio
Case No. 00-43394). WPSC was the nation's seventh largest
integrated steelmaker at the time, reporting $1.3 billion in
assets and liabilities exceeding $1.1 billion. In September 2002,
Royal Bank of Canada filed an application on behalf of the company
with the Emergency Steel Loan Guarantee Board to obtain a $250
million federal steel loan guarantee. The application for the
loan guarantee was approved in March 2003. The Debtors' plan of
reorganization was confirmed on June 18, 2003, and the plan became
effective on August 1, 2003. Michael E Wiles, Esq., at Debevoise
& Plimpton LLP, and James M. Lawniczak, Esq., at Calfee, Halter &
Griswold LLP, represent the Debtor.
WINN-DIXIE: Look for Bankruptcy Schedules on April 7
----------------------------------------------------
Winn-Dixie Stores, Inc., and its 23 debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to extend
the deadline by which they must file their Schedules of Assets and
Liabilities and Statements of Financial Affairs to April 7, 2005.
Rule 1007(c) of the Federal Rules of Bankruptcy Procedure
requires debtors to file these documents within 15 days after the
filing of a chapter 11 petition. Due to the substantial size and
complexity of their operations, Winn-Dixie tells the Bankruptcy
Court that they are unable to compile all the information
necessary to prepare and file their Schedules and Statements
before the 15-day deadline.
D. J. Baker, Esq., at Skadden, Arps, Meagher & Flom, LLP, in New
York, relates that to prepare the Schedules and Statements, the
Debtors must gather information from books, records, and
documents housed at various locations and relating to a multitude
of transactions. Consequently, collecting the necessary
information requires substantial time and effort on the part of
the Debtors' already over-burdened employees. The Debtors
believe that employee efforts during the initial stages of their
Chapter 11 cases are critical and should be focused on attending
to the Debtors' businesses and operations to maximize the value
of the estates.
The Debtors currently have several employees working diligently
to assemble and collate the necessary information for the
Schedules and Statements. The Debtors anticipate that they will
need a minimum of 45 days within which to prepare and file their
Schedules and Statements in the appropriate format.
Mr. Baker assures the Court that an extension will not prejudice
any party-in-interest.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. --
http://www.winn-dixie.com/ -- is one of the nation's largest food
retailers. The Company operates stores across the Southeastern
United States and in the Bahamas and employs approximately 90,000
people. The Company, along with 23 of its U.S. subsidiaries,
filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y.
Case No. 05-11063). David J. Baker, Esq., at Skadden Arps Slate
Meagher & Flom, LLP, and Sarah Robinson Borders, Esq., and Brian
C. Walsh, Esq., at King & Spalding LLP represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $2,235,557,000 in
total assets and $1,870,785,000 in total debts. (Winn-Dixie
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WINN-DIXIE: Wants to Employ Smith Gambrell as Special Counsel
-------------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York for
authority to employ Smith, Gambrell & Russell, LLP, as special
counsel in their Chapter 11 cases. The firm will advise the
Debtors regarding their real property lease arrangements,
including the review and analysis of existing real property leases
and fee- owned properties, and existing financing arrangements.
The Debtors selected Smith Gambrell because of its extensive
knowledge of the Debtors' businesses, financial affairs,
facilities, real property leasehold and fee-owned property
interests, and its recognized expertise in the field of real
property leasing, acquisitions and dispositions. The Debtors
believe that the firm is well qualified and able to represent
them in their Chapter 11 cases in a most efficient and timely
manner.
The Debtors will pay Smith Gambrell based on the firm's hourly
rates:
Name Designation Rate
---- ----------- ----
Douglas G. Stanford Partner $290
Andrew K. Daw Associate $260
Diana Ross-Butler Associate $195
Simone S. Kenyon Associate $180
Walter C. Little Associate $180
Cheree Bennett Paralegal $130
Jeane Dempsey Paralegal $125
Kristiana VanCleve Paralegal $120
The Debtors will also reimburse Smith Gambrell's reasonable
expenses.
Since January 1, 2004, the Debtors have paid Smith Gambrell
$1,165,892 in fees and costs. On the Petition Date, the Debtors
will owe the firm less than $20,000 for prepetition fees and
costs incurred by the firm in connection with the preparation of
the Debtors' Chapter 11 cases.
Douglas G. Stanford, a partner at Smith Gambrell, assures the
Court that the firm:
(a) neither holds nor represents any interest adverse to the
Debtors' estates with respect to the services for which it
will be employed; and
(b) has had no affiliation with the Debtors, their creditors,
or any party-in-interest, or their attorneys and
accountants, the United States Trustee, any person
employed in the office of the United States Trustee, or
the Bankruptcy Judge presiding over the Debtors' cases.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. --
http://www.winn-dixie.com/ -- is one of the nation's largest food
retailers. The Company operates stores across the Southeastern
United States and in the Bahamas and employs approximately 90,000
people. The Company, along with 23 of its U.S. subsidiaries,
filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y.
Case No. 05-11063). David J. Baker, Esq., at Skadden Arps Slate
Meagher & Flom, LLP, and Sarah Robinson Borders, Esq., and Brian
C. Walsh, Esq., at King & Spalding LLP represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $2,235,557,000 in
total assets and $1,870,785,000 in total debts. (Winn-Dixie
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
YELLOW ROADWAY: Holding Investors & Analysts' Meeting Today
-----------------------------------------------------------
Yellow Roadway Corporation (Nasdaq: YELL) will host a meeting for
investors and analysts today, March 8, 2005, at 4:30 p.m. ET.
The meeting will be held at the Barclay Intercontinental Hotel,
Astor Ballroom, 111 East 48th Street, New York, New York 10017.
Bill Zollars, Chairman, President and Chief Executive Officer of
Yellow Roadway, will make a presentation and be available to
answer questions from those in attendance.
Investors and analysts may listen to the presentation by dialing
888.578.6632 or 719.955.1564 at least 10 minutes prior to the
start of the presentation. Other listeners may access the
presentation via live webcasts through links at either
http://www.yellowroadway.com/or http://www.usfc.com/orthe
special website established for the USFC acquisition at
http://www.transportationupdate.com/ The presentation material
will also be available on these websites.
An audio replay of the presentation will be available beginning
three hours after the presentation ends until March 15 by calling
888.203.1112 or 719.457.0820 and entering the access code 7574414.
A webcast replay will be available for 30 days after the
presentation via the websites provided above.
About the Company
Yellow Roadway Corporation is one of the largest transportation
service providers in the world. Through its subsidiaries
including Yellow Transportation, Roadway Express, New Penn Motor
Express, Reimer Express, Meridian IQ and Yellow Roadway
Technologies, Yellow Roadway provides a wide range of asset and
non-asset-based transportation services integrated by technology.
The portfolio of brands provided through Yellow Roadway
Corporation subsidiaries represents a comprehensive array of
services for the shipment of industrial, commercial and retail
goods domestically and internationally. Headquartered in Overland
Park, Kansas, Yellow Roadway Corporation employs over 50,000
people.
USF Corporation -- http://www.usfc.com/-- a $2.4 billion leader
in the transportation industry, specializes in delivering
comprehensive supply chain management solutions, including high-
value next-day, regional and national LTL transportation, third-
party logistics, and premium regional and national truckload
transportation. The company serves the North American market,
including the United States, Canada and Mexico, as well as the
U.S. territories of Puerto Rico and Guam.
* * *
As reported in the Troubled Company Reporter on March 2, 2005,
Moody's Investors Service placed the debt ratings of Yellow
Roadway Corporation and USF Corporation under review for possible
downgrade.
The ratings placed under review are:
* Yellow Roadway Corporation senior unsecured, issuer and
senior implied ratings at Ba1. Roadway LLC, guaranteed by
Yellow Roadway Corporation, senior unsecured at Ba1
* USF Corporation senior unsecured at Baa1
The review is prompted by the announcement that Yellow Roadway
would acquire the stock of USF Corporation for approximately
$1.37 billion and assume USF Corp.'s debt. The transaction is
expected to be financed with approximately 50% new stock and 50%
cash/debt, and expected to close over the summer following
regulatory review and shareholder approval.
Moody's review will focus on the particular challenges of managing
the two trucking companies, which have traditionally operated in
different market segments, in addition to management's plan for
near-term debt reduction and the target capital structure over
time. The review will also consider the ability to generate
incremental cash flow from margin expansion in the near-term under
a strong, but not sharply expanding economy, as well as the
prospects for the merger synergies proposed by management.
The implications of the large representation by the Teamsters
union at both companies will also be considered in the review.
Moody's will also evaluate the impact of any rationalization of
terminals and trucks to meet required returns or to satisfy
anti-trust requirements. Moody's will consider the position of
the USF Corporation debt in the capital structure of the new
company and the type of support for that debt.
The new company will have considerable size and scale as the
largest operator in the highly fragmented trucking market, with a
particularly broad product offering. Yellow Roadway is the
largest national less-than-truckload operator, formed through the
2003 merger of Roadway Corporation and Yellow Corporation, and USF
is one of the largest regional LTL operators. Pro-forma for fiscal
year 2004, the newly combined company would have had revenue of
approximately $9.2 billion and EBITDA of $700 million.
ZIFF DAVIS: Dec. 31 Balance Sheet Upside-Down by $948.5 Million
---------------------------------------------------------------
Ziff Davis Holdings Inc., the ultimate parent company of Ziff
Davis Media Inc., reported operating results for its fourth
quarter ended Dec. 31, 2004. The Company's consolidated revenues
totaled $65.0 million, representing a 9% increase compared to
revenues of $59.7 million for the fourth quarter ended Dec. 31,
2003. Consolidated revenues for the year ended December 31, 2004
totaled $204.5 million, representing a 5% increase as compared to
revenues of $194.1 million for the year ended December 31, 2003.
The Company reported consolidated earnings before interest
expense, provision for income taxes, depreciation, amortization
and non-recurring and certain non-cash charges including non-cash
compensation of $15.9 million for the quarter ended Dec. 31, 2004,
compared to EBITDA of $17.3 million for the prior year period.
Consolidated EBITDA for the year ended December 31, 2004 was
$34.9 million, compared to consolidated EBITDA of $34.5 million
for the year ended December 31, 2003.
The fourth quarter and full year 2004 EBITDA results include
losses for three growth initiatives (Sync(TM) magazine, 1UP(R).com
and DigitalLife(TM)) of $1.7 million and $9.9 million,
respectively, compared to losses for these businesses of
$1.2 million and $1.7 million for the fourth quarter and full year
2003, respectively.
"The Company's revenue performance this quarter was generally
positive, despite continued softness in the videogame and consumer
technology sectors of our business," said Robert F. Callahan,
Chairman and CEO, Ziff Davis Holdings Inc. "We posted solid top-
line revenue growth in our Enterprise and Consumer Tech segments
led by impressive results from our online, conference and event
products. In sum, we've made steady progress throughout 2004
implementing our strategic plans and diversifying our business so
that we can better serve our growing client base. Our primary
objective continues to be investing for the future in order to
drive increased value for our customers, shareholders and
employees."
Consumer Tech Group
The Consumer Tech Group is principally comprised of three of the
Company's magazine publications, PC Magazine(R), Sync and
ExtremeTech; a number of consumer-focused websites, including
pcmag.com and extremetech.com; and the Company's new consumer
electronics event, DigitalLife.
Revenue for the Consumer Tech Group for the fourth quarter ended
December 31, 2004 was $26.8 million, reflecting an increase of
$3.1 million or 13% compared to the $23.7 million reported in the
same period last year. The increase was primarily related to
higher advertising and e-commerce revenue for the Company's
Internet operations, and incremental revenue for Sync and
ExtremeTech magazines and DigitalLife, all three of which debuted
in 2004. These gains were partially offset by lower advertising
revenues for PC Magazine despite a change in the publishing
calendar in which one additional issue was published during the
quarter ended December 31, 2004 compared to the same prior year
period. The total number of issues for the year remained the
same.
Cost of production for the Consumer Tech Group for the fourth
quarter ended December 31, 2004 was $7.5 million, reflecting an
increase of $1.7 million or 29% compared to $5.8 million in the
prior year period. The increase primarily related to incremental
costs associated with Sync, ExtremeTech and DigitalLife and
increased manufacturing, paper and distribution costs as a result
of publishing the one additional issue of PC Magazine for the
quarter ended December 31, 2004. This increase was partially
offset by savings achieved through the implementation of a number
of new production and distribution initiatives and the impact of
more favorable supplier contracts.
Selling, general and administrative expenses for the Consumer Tech
Group were $11.9 million for the fourth quarter ended December 31,
2004, reflecting an increase of $3.0 million or 34% from $8.9
million in the same prior year period. The increase was primarily
due to incremental costs associated with Sync, ExtremeTech and
DigitalLife, and increased Internet promotion, content and sales
costs due to higher sales volume.
Enterprise Group
The Enterprise Group is comprised of several businesses in the
magazine, Internet, event, research and marketing tools areas. The
three magazine publications in this segment are eWEEK(R), CIO
Insight(R) and Baseline(R). The Internet properties in this
segment are primarily those affiliated with the Company's magazine
brands, including eweek.com, cioinsight.com and baselinemag.com,
but also include over 20 weekly eNewsletters and the eSeminars(TM)
area, which produces sponsored interactive webcasts. This segment
also includes the Company's market-leading Custom Conference Group
(CCG), which creates and manages face-to-face events for marketing
clients; Baseline Business Information Services (BBIS), a research
and marketing tools unit launched in 2003; and Contract
Publishing, which produces custom magazines, white papers, case
studies and other sales and marketing collateral for customers.
Revenue for the Enterprise Group for the fourth quarter ended
December 31, 2004 was $21.1 million compared to $16.9 million in
the same period last year, reflecting a $4.2 million or 25%
improvement. The increase was primarily related to higher
advertising revenue from Internet operations, increased CCG event
revenues, higher revenue from Contract Publishing and incremental
revenue from the BBIS business in the fourth quarter of 2004.
There was also one additional issue of Baseline and CIO Insight
published during the quarter and year ended December 31, 2004
compared to the same prior year periods.
Cost of production for the Enterprise Group for the fourth quarter
ended December 31, 2004 was $3.5 million, reflecting an increase
of $0.3 million or 9% compared to $3.2 million in the prior year
period. The increase primarily related to higher manufacturing,
paper and distribution costs as a result of publishing the one
additional issue of Baseline and CIO Insight for the quarter ended
December 31, 2004, increased costs associated with Contract
Publishing sales volume and higher Internet costs due to more
eSeminars. These increases were partially offset by savings
achieved through the implementation of a number of new production
and distribution initiatives and the impact of more favorable
supplier contracts.
Selling, general and administrative expenses for the Enterprise
Group were $12.3 million for the fourth quarter ended December 31,
2004, reflecting an increase of $1.4 million or 13% from $10.9
million in the same prior year period. The increase was primarily
due to higher sales volumes for CCG events, Contract Publishing,
BBIS and Internet advertising. These higher costs were partially
offset by lower circulation and other overhead costs as a result
of the Company's continued cost management efforts.
Game Group
The Game Group is focused on the videogame market and is now
principally comprised of three publications (Electronic Gaming
Monthly(R), Computer Gaming World(TM) and Official U.S.
PlayStation Magazine) and 1UP.com, the online destination for
gaming enthusiasts. The Game Group discontinued publishing GMR
Magazine and reduced the frequency of Xbox Nation during the
fourth quarter of 2004, and the results of these publications are
included in the 2004 and 2003 results.
Revenue for the Game Group for the fourth quarter ended December
31, 2004 was $17.1 million, down $2.0 million or 10% compared to
$19.1 million in the same period last year. The decrease was
primarily due to softness in the videogame magazine advertising
sector which resulted in significant advertising page declines for
the total market, which was down 23% for the fourth quarter ended
December 31, 2004 versus the same period last year. There was also
one fewer issue for the Game Group published during the quarter
ended December 31, 2004, compared to the same prior year period.
The print advertising decrease was partially offset by increased
advertising revenue for 1UP.com and slight increases in newsstand
and subscription circulation revenues which were helped by several
major videogame title releases during the fourth quarter of 2004.
Cost of production for the Game Group for the fourth quarters
ended December 31, 2004 and 2003 was $7.8 million. The savings
realized by producing one fewer issue in the fourth quarter of
2004 and the decrease in the total number of advertising pages
were offset by additional costs incurred for retail partner fees
and premiums (e.g., posters, CDs, etc.) used to stimulate
newsstand and subscriber sales.
Selling, general and administrative expenses for the Game Group
were $6.1 million for the fourth quarter ended December 31, 2004,
reflecting an increase of $0.3 million or 5% from $5.8 million in
the same prior year period. The increase was primarily due to
higher overhead costs.
Cash Position and Payment of Senior Debt
As of December 31, 2004, the Company had $32.6 million of cash and
cash equivalents, representing an increase of $800,000 versus the
$31.8 million cash balance as of September 30, 2004. The
increased cash balance primarily reflects the expected seasonal
fourth quarter improvement in consolidated EBITDA versus the third
quarter and continued improvement in the Company's collection of
accounts receivable, as Days Sales Outstanding (DSO) for
advertising receivables at December 31, 2004 were 40 DSO compared
to 44 DSO at September 30, 2004. These increases in cash were
partially offset by the impact of two acquisitions completed
during the fourth quarter of 2004 and $4.3 million of scheduled
principal payments made in connection with the Company's Senior
Credit Facility.
Fourth Quarter Restructuring Charge
Due to current marketplace conditions in the consumer technology
and videogame markets, the Company recorded a pre-tax
restructuring charge of $5.5 million during the fourth quarter
ended December 31, 2004. This charge primarily relates to
discontinuing the publication of GMR magazine and the Business
4Site event, reducing the frequency of Xbox Nation and reducing
certain other selling, general and administrative expenses. The
charge amount represents the future cash expenses associated with
employee severance and office consolidation. As a result of the
fourth quarter 2004 charge, the Company's total accrued
restructuring charges at December 31, 2004 were $23.0 million,
approximately $8.0 million of which will result in cash payments
in 2005 and the remainder of which will be paid out over the next
14 years due to the long-term nature of related real estate
leases.
Fourth Quarter Highlights and Milestones
Consumer Tech Group
* PC Magazine
-- Ranked #1, increasing its ad page market share(2) to
65% versus 63% year ago
-- Published a special 23rd issue, "The Essential Guide
to Your Digital Home"
-- Held the "Digital U" and "Business Tech Summit"
events, a 6-city road tour for PC Magazine readers and
tech enthusiasts
* Sync Magazine
-- The December issue featured a first-of-its-kind CD-ROM
containing trailers of holiday feature films, DVDs, TV
shows, music and video
-- Developed a content partnership with Spike TV to
showcase technology products from every issue on their
Gamer Gadget Guide, a 30-minute television program
* ExtremeTech Magazine
-- Launched ExtremeTech magazine, a newsstand-only
publication, in October 2004
* Internet Sites
-- Consumer Tech websites increased total traffic 22%
versus year ago
-- Redesigned PCMag.com to drive additional e-commerce
revenue; resulting in a 24% increase in unique
visitors
* DigitalLife
-- Over 30,000 consumers, retailers and members of the
media attended the inaugural DigitalLife event at New
York's Jacobs Javits center in October
-- Created the annual DigitalLife Holiday Shopping Guides
to coincide with key shopping periods
Enterprise Group
* Increased ad page market share(2) to 22% versus 17% year
ago
* eWEEK
-- Increased ad page market share(2) to 24% versus 19%
year ago
-- Launched the eWEEK solutions series - 11 different
supplements organized around technology topics,
professions and vertical industries
-- Won the Carnegie Mellon Cylab 2004 National Journalism
award for editorial excellence and comprehensive Labs
analysis
-- Held two eWEEK Security Summits featuring such
renowned speakers as Richard Clarke, former White
House Cybersecurity Advisor, and Darwin John, former
CIO of the FBI
* Baseline
-- Launched the premier issue of the Baseline 500, which
honored the top 500 companies achieving optimum return
on investment from their information technology
-- Introduced the Baseline Business Information Services
Field Reports, which are detailed reports on specific
technology topics such as Network Security
* CIO Insight
-- Significantly increased ad page market share(2) to 44%
versus 29% year ago
-- Voted one of the top 10 magazines of the year in 2004
for the second year in a row by the American Society
of Business Publication Editors
* Custom Conference Group
-- Increased the number of custom and branded events by
38% versus year ago
* Internet Sites
-- Enterprise websites increased total traffic 77% versus
year ago
-- More than doubled the number of eSeminars(TM) events
versus year ago
-- e-commerce and business development revenue more than
doubled versus year ago
-- PDFzone.com launched the Adobe Resource Center,
sponsored by Adobe Systems
-- Launched the Company's first virtual tradeshow
-- Acquired Connexus Media, adding several prominent b-
to-b, vertical and tech specific websites,
eNewsletters and list rental databases in the
enterprise and consumer electronics market
-- Acquired DeviceForge, with several leading websites
covering the developer and software for embedded
devices markets
Game Group
* Publications
-- Ranked #1, increasing its ad page market share(2) to
43% versus 42% year ago
-- Computer Gaming World won a Gold Ozzie Award for best
redesign of a publication in the 250,000+ circulation
category
* Internet Site
-- 1UP.com revenue more than doubled versus year ago and
page views increased by 25%
-- 1UP.com launched an interactive holiday buying guide
for gamers
Other
* Increased licensing, rights and permissions revenue 38%
versus year ago
* Increased list rental revenue 12% versus year ago
Business Outlook
Reflecting normal seasonality plus the impact of continued
investment in funding the three growth initiatives, the Company
anticipates that consolidated EBITDA for the first quarter of 2005
will be in the range of $4.0 million to $5.0 million compared to
$3.0 million of consolidated EBITDA for the first quarter ended
March 31, 2004. The Company estimates that the losses for its
three new business initiatives (Sync magazine, 1UP.com and
DigitalLife) will be in the range of $1.5 million to $2.0 million
for the first quarter of 2005.
About the Company
Ziff Davis Holdings Inc. -- http://www.ziffdavis.com/-- is the
ultimate parent company of Ziff Davis Media Inc. Ziff Davis Media
is a leading integrated media company focusing on the technology,
videogame and consumer lifestyle markets. The Company is an
information services and marketing solutions provider of
technology media including publications, websites, conferences,
events, eSeminars, eNewsletters, custom publishing, list rentals,
research and market intelligence. In the United States, the
Company publishes 9 magazines including PC Magazine, Sync,
ExtremeTech, eWEEK, CIO Insight, Baseline, Electronic Gaming
Monthly, Computer Gaming World and Official U.S. PlayStation
Magazine. The Company exports the power of its brands
internationally, with publications in 41 countries and 20
languages. Ziff Davis leverages its content on the Internet with
16 highly-targeted technology and gaming sites including
PCMag.com, eWEEK.com, ExtremeTech.com and 1UP.com. The Company
also produces highly-targeted b-to-b events through its Custom
Conference Group and large-scale consumer technology events
including DigitalLife. With its main headquarters and PC Magazine
Labs based in New York, Ziff Davis Media also has offices and lab
facilities in the San Francisco and Boston markets.
At Dec. 31, 2004, Ziff Davis' balance sheet showed a $948,524,000
stockholders' deficit, compared to a $863,351,000 deficit at
Dec. 31, 2003.
* 5th Circuit Limits Shareholder Suits Over Public Reg. Statements
------------------------------------------------------------------
The United States Court of Appeals for the Fifth Circuit issued a
decision last week that limits how public companies may be sued
for shareholder losses arising from allegedly false registration
statements that accompany public stock offerings.
The opinion by Circuit Judge Patrick E. Higginbotham affirms a
lower court's dismissal of claims by shareholders who could not
show that the shares they bought in the stock market could be
traced to an offering that had an allegedly false registration
statement.
The record in the case focused on the modern securities market in
which the origin of an individual share of company stock cannot be
identified once it mixes in the market with shares from other
sources. The Court also held that shareholders who purchase in
the "aftermarket" of mixed securities cannot use mere statistical
probabilities to gain standing to sue on a public offering.
This ruling substantially limits the potential scope of a
shareholder class complaining of offering registration statements
under Section 11 of the Securities Act of 1933. It is the first
ruling by a Federal Court of Appeals providing a detailed
examination of the requirement that shares be directly traced to
the challenged offering shares and rejects the use of statistics
to trace these shares.
A claim under Section 11 avoids the actual high burdens of
pleading and proof applicable in other federal securities laws,
and imposes virtually "strict liability" on companies even for
innocent misstatements in offering registration statements.
Recovery may still be available for aftermarket purchasers under
other provisions of the federal securities laws which, unlike
provision, require a demonstration of intent to defraud and
shareholder reliance on a purported misstatement.
"The ruling forecloses a potential significant loophole for
lawsuits that try to use this statute to create a large class
action of those who did not buy shares directly from a public
offering but instead simply bought in the open market," according
to Noel Hensley of Haynes and Boone, LLP, lead defense attorney in
the case.
In the case (styled Jerry Krim vs. pcOrder.com, Inc.), plaintiffs
were shareholders who had claimed losses from two registration
statements of pcOrder.com for a March 1999 initial public offering
and a secondary offering nine months later. Because stock from
the offerings was mixed in the market with stock from other
sources, there was no reliable way to show that the plaintiffs
bought stock from those offerings, the Court of Appeals held.
The plaintiffs had acknowledged they could not trace shares but
instead offered statistical probabilities to argue that purchasers
of shares had likely bought at least one share of stock from each
offering. Both the district judge and the Court of Appeals ruled
that statistics were inadequate. Mere probabilities "cannot be
squared with the statutory language -- that is, with what Congress
intended," the Court said. "We decline the invitation to reach
further than the statute."
"Had statistics been accepted as sufficient proof that an
individual bought offering shares, every time a share of stock was
flipped in the market, virtually every later purchaser could have
made a Section 11 claim."
A copy of the opinion is available at:
http://www.ca5.uscourts.gov/opinions/pub/03/03-50737-CV0.wpd.pdf
* Former European Commissioner David Byrne Joins Wilmer Cutler
--------------------------------------------------------------
Wilmer Cutler Pickering Hale and Dorr LLP disclosed that David
Byrne SC, former EU Commissioner for Health and Consumer
Protection, has joined the firm effective March 1, 2005. Mr.
Byrne will be available to counsel and represent the firm and its
clients, in Washington and London as well as in Brussels, on
issues of European and international law and policy, particularly
in relation to regulatory and enforcement issues in respect to
science and technology.
The firm boasts many practitioners who have moved to and from
government service in the US -- from the White House to the
Securities and Exchange Commission to the Department of Defense.
With the arrival of Mr. Byrne, the firm expands a growing list of
lawyers who have served in European and international governing
and regulatory bodies, including the European Commission and the
World Trade Organization. The depth and breadth of his experience
-- as the first EU Commissioner for Health and Consumer
Protection, as the Attorney General of Ireland, and as a
practicing barrister for 30 years -- can provide our multinational
clients a front-line perspective on doing business in Europe.
As the EU's first Commissioner for Health and Consumer Protection,
Mr. Byrne was instrumental in the formation of several EU
agencies, including the European Food Safety Authority (EFSA) and
the European Centre for Disease Control (ECDC). Mr. Byrne had
overall responsibility for developing policies concerning food
safety, public health and consumer protection. He also brought
forward several major legislative initiatives in these areas to
the European Parliament and the Council of Ministers of the
European Union. Although he will be returning to the private
practice of law, Mr. Byrne will continue to serve the public
interest by acting as Special Envoy to the Director-General of the
World Health Organization (WHO) on a project to amend the
International Health Regulations dealing with the monitoring,
surveillance and response to global communicable diseases such as
SARS and Avian influenza. This project will continue through mid-
2005.
This month, Mr. Byrne will take up an appointment as an adjunct
Professor of Law at University College, Dublin - Ireland. He has
also agreed to take up, on a pro bono basis, various advisory
roles in health.
Prior to serving as EU Commissioner, Mr. Byrne was Attorney
General of Ireland. As the Constitutional Law Officer of the
State, he was responsible for legal advice to the Government and
for all litigation involving the State before the Irish and
European Courts. All legislation submitted by the Government to
Parliament during Mr. Byrne's term was drafted under his
supervision. During his tenure as Attorney General, Mr. Byrne
established the first independent Food Safety Agency in Europe
responsible to the Minister of Health.
David Byrne practiced law as a barrister for 30 years before
beginning his public service work, specializing in constitutional,
civil and European law. He became a Senior Counsel in 1985 and
was Leader of the Irish Bar from 1997 until his appointment as
European Commissioner in 1999.
Mr. Byrne was a Member of the International Court of Commercial
Arbitration of the International Chamber of Commerce in Paris from
1990-1997. In 1998 he became a Fellow of the Chartered Institute
of Arbitrators of England and Ireland.
Mr. Byrne received his B.A. at University College Dublin and
studied law and qualified as a Barrister at King's Inns, Dublin.
Among other honours, Mr. Byrne was awarded an honorary Doctorate
in Law by U.C.D. in 2004 and honorary Fellowships of the Royal
Colleges of Physicians in London and Dublin.
About Wilmer Cutler
Wilmer Cutler Pickering Hale and Dorr LLP is nationally and
internationally recognized for its preeminent practices in
antitrust and competition; bankruptcy; civil and criminal trial
and appellate litigation (including white collar defense);
corporate (including public offerings, public company counselling,
start-up companies, venture capital, mergers and acquisitions, and
licensing); financial services; intellectual property counselling
and litigation; international arbitration; life sciences;
securities regulation, enforcement and litigation; tax;
telecommunications; and trade. Wilmer Cutler Pickering Hale and
Dorr LLP was formed in May 2004 through the merger of two of the
nation's leading law firms, Hale and Dorr LLP and Wilmer Cutler
Pickering LLP. With a staunch commitment to public service, the
firm is renowned as a national leader in pro bono representation.
The firm has more than 1,000 lawyers and offices in Baltimore,
Beijing, Berlin, Boston, Brussels, London, Munich, New York,
Northern Virginia, Oxford, Waltham and Washington, DC. For more
information, visit http://WilmerHale.com/
* Bridge Associates Names Gary Burns Senior Consultant
------------------------------------------------------
Bridge Associates, LLC, a leading turnaround, crisis and interim
management firm, disclosed the appointment of Gary W. Burns as a
Senior Consultant in its New York office.
Mr. Burns previously served as the partner in charge of KPMG's
corporate recovery practice, where he focused on advising debtors,
secured creditors, unsecured creditors and other parties in
troubled company and Chapter 11 situations. In this capacity he
has developed expertise in the evaluation of business plans,
operational concerns, cost improvement, complex debt
restructurings, complex negotiations and bankruptcy related
litigation.
"We are delighted to welcome Gary Burns to Bridge Associates,"
said Anthony H.N. Schnelling, Managing Director. "He is
extraordinarily talented and brings years of senior-level
experience that will be invaluable to our firm and our clients.
We look forward to his involvement with Bridge and having his
input into the overall strategic direction of our firm."
Mr. Burns stated, "I am honored to be joining Bridge Associates,
which I consider to be a premier turnaround firm in our business.
Under Tony Schnelling's leadership, Bridge has developed a
reputation for professionalism and for getting the job done. They
have provided advisory and interim management services in a number
of high-profile assignments, including UAL Corporation, Wickes
Inc., Conseco Finance and ABFS. I am very much looking forward to
working with their team of professionals and serving the needs of
our clients."
Prior to his work at KPMG, Mr. Burns was employed by Ernst & Young
where his practice included auditing companies, evaluating
business plans, developing information for financing and public
offerings and forensic accounting investigations for potential
fraud. He holds a Bachelor of Arts degree from Michigan State
University in Accounting, and a Masters of Business Administration
from Michigan State University in Finance.
Mr. Burns has taught at Michigan State University and has been an
adjunct professor at the University of North Texas and Southern
Methodist University. He was a member of the Board of Directors
of the American Bankruptcy Institute. He currently serves on the
Board of Directors of the Chicago Youth Symphony Orchestra. He
has also been published in the Journal of Accounting, the
publication of the American Institute of Certified Public
Accountants.
About Bridge Associates
Bridge Associates, LLC -- http://www.bridgellc.com/-- is a
leading turnaround, crisis and interim management firm, providing
a wide range of professional services to troubled enterprises.
Headquartered in New York City, Bridge professionals operate
nationwide from offices located in Tampa, Cleveland, Tulsa and
Houston.
* Roderick Walston Joins Best Best & Krieger as Of Counsel
----------------------------------------------------------
Roderick E. Walston, former acting solicitor of the U.S.
Department of the Interior, has joined the California law firm of
Best Best & Krieger as of counsel, resident in the firm's Walnut
Creek office. Mr. Walston has extensive experience in the areas
of natural resources and environmental law, having served both as
a litigator for state regulatory agencies and as a manager of
litigation for federal and state agencies in these areas. He has
particular expertise in water rights and water quality law, and on
issues arising under various federal and state environmental
statutes such as the Clean Water Act and the Endangered Species
Act.
Mr. Walston has argued several cases in the U.S. Supreme Court and
other federal and state appellate courts addressing natural
resources and environmental issues. He supervised a department of
400 lawyers as deputy solicitor and acting solicitor of the U.S.
Department of the Interior from 2002 to 2004, and served as
general counsel of the Metropolitan Water District of Southern
California from 2000 to 2002. Prior to that, Mr. Walston served
for eight years as California's chief assistant attorney general
for the Public Rights Division, where he oversaw all litigation
involving the state in the fields of natural resources, land,
environmental, antitrust, consumer and civil rights law. Before
that, he served for many years as a senior deputy attorney
general, focusing on natural resources and water law matters and
appellate litigation. Mr. Walston received the prestigious
"Public Lawyer of the Year Award" from the California State Bar
last year.
"Rod's addition to our Walnut Creek team solidifies our water law
presence in Northern California, as well as complementing our
already highly regarded statewide water law practice," said Gene
Tanaka, managing partner of BB&K's Walnut Creek office. "This
brings us one step closer to our ultimate goal of operating a
full-service office in the Bay Area."
BB&K's Environmental and Natural Resources Practice Group provides
a full range of legal services to both public and private
entities, with special focus on water rights and habitat
conservation plans. The firm's senior partner, Arthur
Littleworth, has been appointed by the U.S. Supreme Court as
Special Master to hear a water rights case between two states.
Last year, Practice Group chair Michelle Ouellette was
instrumental in guiding to approval the nation's largest habitat
conservation plan: the Western Riverside County Multiple Species
Habitat Conservation Plan.
BB&K's Walnut Creek office was established in 2004. Today it
houses two partners, one of counsel and one associate practicing
in the areas of environmental and natural resources law, municipal
and redevelopment law, and litigation. The firm plans to expand
this office to best serve existing and new clients in Northern
California.
Best Best & Krieger -- http://www.bbklaw.com/-- is a full-service
law firm with more than 160 attorneys in seven California offices.
The firm offers unique experience in handling complex, multi-
disciplinary issues and providing solutions of common interest to
leaders of both government and business. BB&K's legal service
areas include: bankruptcy, business planning and transactions,
eminent domain, employee benefits, environmental and natural
resources, intellectual property, labor and employment,
litigation, municipal law, public finance, real estate,
redevelopment and housing, schools and special education, special
districts, and tax, estate and trust administration.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Airgate PCS Inc. PCSA (94) 299 86
Akamai Tech. AKAM (126) 183 62
Alaska Comm. Syst. ALSK (12) 650 85
Alliance Imaging AIQ (41) 654 36
Amazon.com AMZN (227) 3,249 919
AMR Corp. AMR (581) 28,773 (2,047)
Amylin Pharm. Inc. AMLN (87) 358 282
Arbinet-Thexchan. ARBX (1) 70 11
Atherogenics Inc. AGIX (19) 93 77
Blount International BLT (283) 423 103
CableVision System CVC (1,669) 11,795 223
CCC Information CCCG (131) 80 (8)
Cell Therapeutic CTIC (52) 174 87
Centennial Comm CYCL (516) 1,608 168
Choice Hotels CHH (203) 262 (32)
Cincinnati Bell CBB (600) 1,987 (20)
Clorox Co. CLX (457) 3,710 (422)
Compass Minerals CMP (109) 642 99
Conjuchem Inc. CJC (25) 30 22
Cotherix Inc. CTRX (44) 25 20
Cubist Pharmacy CBST (75) 155 (6)
Delta Air Lines DAL (3,297) 23,526 (2,614)
Deluxe Corp DLX (179) 1,533 (337)
Denny's Corporation DNYY (246) 730 (80)
Dollar Financial DLLR (47) 335 82
Domino Pizza DPZ (575) 421 (16)
Eagle Hospitality EHP (26) 177 N.A.
Echostar Comm-A DISH (1,711) 6,170 (503)
Emeritus Corp ESC (102) 693 (53)
Empire Resorts NYNY (13) 61 7
Fairpoint Comm. FRP (53) 828 (33)
Foster Wheeler FWHLF (441) 2,268 (212)
Foxhollow Tech. FOXH (60) 28 16
Graftech International GTI (44) 1,036 284
Hawaiian Holding HA (160) 236 (60)
Hercules Inc. HPC (40) 2,658 362
I2 Technologies ITWH (180) 385 85
IMAX Corp IMX (49) 222 9
Indevus Pharm. IDEV (84) 149 108
Int'l Wire Group ITWG (80) 410 97
Isis Pharm. ISIS (18) 255 116
Life Sciences LSRI (5) 173 1
Lodgenet Entertainment LNET (68) 301 20
Lucent Tech. Inc. LU (717) 16,687 3,921
Majesco Holdings MJES (41) 26 9
Maxxam Inc. MXM (649) 1,017 72
Maytag Corp. MYG (75) 3,020 535
McDermott Int'l MDR (338) 1,245 (33)
McMoran Exploration MMR (85) 156 29
Northwest Airline NWAC (2,166) 14,450 (431)
Northwestern Corp. NWEC (603) 2,445 (692)
ON Semiconductor ONNN (381) 1,110 215
Pegasus Comm PGTV (203) 235 52
Per-se Tech. Inc. PSTI (25) 169 31
Phosphate Res. PLP (484) 280 6
Pinnacle Airline PNCL (18) 147 26
Primedia Inc. PRM (1,163) 1,577 (203)
Quality Distribution QLTY (26) 377 9
Qwest Communication Q (2,612) 24,324 (68)
Riviera Holdings RIV (31) 224 1
Rural/Metro Corp. RURL (181) 207 21
SBA Comm. Corp. SBAC (27) 915 11
Sepracor Inc. SEPR (331) 1,039 707
St. John Knits Inc. SJKI (57) 208 73
Syntroleum Corp. SYNM (8) 48 11
Triton PCS Holding A TPC (254) 1,443 62
US Unwired Inc. UNWR (263) 640 (335)
U-Store-It Trust YSI (34) 536 N.A.
Vector Group Ltd. VGR (48) 528 110
Vertrue Inc. VTRU (33) 486 31
WR Grace & Co. GRA (118) 3,087 774
Young Broadcasting YBTVA (12) 798 85
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo and Peter A. Chapman, Editors.
Copyright 2005. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
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for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***