/raid1/www/Hosts/bankrupt/TCR_Public/050422.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, April 22, 2005, Vol. 9, No. 94
Headlines
ABITIBI-CONSOLIDATED: Moody's Says Liquidity Is Improving
ADELPHIA COMMS: Selling Assets to Time Warner & Comcast for $12.7B
ADELPHIA COMMS: Court OKs $440M Time Warner & Comcast Break-Up Fee
ADELPHIA COMMS: Equity Committee Slams Bidding Protections
AIRCRAFT FINANCE: S&P Lowers Rating on Class A-1 1999-1 Notes
ALBERT MILLER: Case Summary & 20 Largest Unsecured Creditors
ALLIED HOLDINGS: Fourth Quarter Loss Cues S&P to Watch Ratings
ALOHA AIRLINES: Mechanics & Inspectors Agree to Ratify Labor Pacts
AMRESCO RESIDENTIAL: S&P Junks Class B-1F Mortgage Certificates
ANDERSON MOTEL: Case Summary & 20 Largest Unsecured Creditors
ARCHIMEDES FUNDING: Moody's Junks $62M 2nd Priority Sr. Sec. Notes
AUBURN FOUNDRY: Wants to File Second Amended Disclosure Statement
AVIANCA: Court Extends Claims Objection Deadline to May 9
BANC OF AMERICA: Moody's Holds Low-B Ratings on Four Cert. Classes
BARBARA MARY DERRICKSON: Case Summary & 20 Largest Creditors
BEARINGPOINT INC: Raising $250 Million in Private Debt Placement
BOWATER INC: Moody's Affirms Low-B Ratings; Outlook Remains Neg.
BROWN SHOE: Prices $150 Million of 8.75% Senior Notes Due 2012
CATHOLIC CHURCH: Portland Claimants Rep. Taps Scheflin as Counsel
CATHOLIC CHURCH: Spokane Bishop Denies Pastoral Center Sale Rumors
CDC MORTGAGE: S&P Holds Series 2004-HE3 Class B-4 Certs. at BB+
CHARLES GREMMELS: Case Summary & 20 Largest Unsecured Creditors
CMX/CENTURY: Case Summary & 5 Largest Unsecured Creditors
CONGOLEUM CORP: Wants Exclusive Period Extended Until Aug. 1
CONRAD MOSS: Voluntary Chapter 11 Case Summary
D & K STORES: Section 341(a) Meeting Slated for May 5
DDB DORRANCE: Case Summary & 20 Largest Unsecured Creditors
DECORA INDUSTRIES: Chapter 7 Trustee Objects to BNY's Legal Fees
DENVER CITY: Lack of Updated Information Cues S&P to Hack Rating
DESA HOLDINGS: Court Confirms 2nd Amended Joint Liquidating Plan
DOUGLAS CAUSEY: Case Summary & 20 Largest Unsecured Creditors
DOW JONES: Fitch Puts Low-B Ratings on Three CDX.NA.HY.4 Trusts
EAGLEPICHER: Chap. 11 Filing Cues S&P to Withdraw Default Ratings
ENRON CORP: Reorganized Debtors' 2nd Post-Confirmation Report
FEDERAL-MOGUL: March 31 Balance Sheet Upside-Down by $2.05 Billion
GAIL MATHES: Case Summary & 16 Largest Unsecured Creditors
GARDEN CITY: Moody's Reviews $22MM Bonds' Ba2 Rating & May Upgrade
GARDNER DENVER: Moody's Rates Planned $125M Sr. Sub. Notes at B2
GS MORTGAGE: S&P Rates $1 Million Class K-PR Certificates at BB+
HAWAIIAN TELCOM: Moody's Says Liquidity Is Adequate
HYTEK MICROSYSTEMS: Reduces Workforce by 10%
INTERSTATE BAKERIES: Can Pursue Class Action Settlement
INTERSTATE BAKERIES: Delays Filing of Annual & Quarterly Reports
KAISER ALUMINUM: Liverpool Wants Plan-Related Declarations Nixed
KEY ENERGY: Releases Select Financial Data & Updates Restatement
JOURNAL REGISTER: Planned Share Buyback Cues S&P to Cut Ratings
LACLEDE STEEL: Confirmation Hearing Scheduled for May 16
LAIDLAW INT'L: Discloses Contingent Liabilities from AMR Sale
LBACK DEVELOPMENT: Voluntary Chapter 11 Case Summary
LB-UBS COMMERCIAL: Fitch Puts Low-B Ratings on 3 Mortgage Certs.
LOEWEN GROUP: Paying $9 Mil. to Resolve U.S. Trustee Fee Dispute
LTC'S COMMERCIAL: Fitch Upgrades $4.5 Million Class F to BBB
MBIA INC: Lieff Cabraser Looks Into Alleged Wrongdoing
MCI INC: Qwest Increases Takeover Bid to $9.74 Billion
METROMEDIA INT'L: Dec. 31 Balance Sheet Upside-Down by $6.5 Mil.
NATIONAL ENERGY: Inks Settlement Pact Resolving Calif. DWR Claims
NORSKE SKOG: Moody's Affirms Low-B Ratings; Outlook Remains Neg.
NORTHWEST AIRLINES: Completes $148 Million Refinancing
NORTHWEST AIRLINES: Supports Senate's Pension Reform Legislation
NUMATICS: Moody's Withdraws Ratings Absent Financial Information
OMNI ENERGY: Secures $50 Million Senior Term Loan Commitments
RCN CORP: Court Awards AP Services $2 Million Success Fee
RELIANCE GROUP: Liquidator Asks Court to Okay PRS Settlement Pact
RICHARDSON ELECTRONICS: Receives Nasdaq Delisting Notice
RYLAND GROUP: Board Extends CEO Employment Term to Three Years
SALOMON BROTHERS: Moody's Places Low-B Ratings on 16 Cert. Classes
SPIEGEL INC: Wants Until June 30 to Decide on Leases
STEVE NGUYEN: Case Summary & 12 Largest Unsecured Creditors
SUMMIT NATIONAL: Case Summary & 11 Largest Unsecured Creditors
SUPPLY KING: Case Summary & 20 Largest Unsecured Creditors
TENNECO AUTOMOTIVE: Offering $500 Million 8-5/8% Sr. Sub. Notes
TNS INC.: S&P Rates New $240 Million Bank Loan at BB-
UAL CORP: Daniel Miller Asks Court for $4.3 Million Judgment
UAL CORPORATION: Wants to Enter Into UAX Agreement with SkyWest
US AIRWAYS: Expands J. Glass' & B. Trousdale's Executive Roles
U.S. ENERGY: Auditors Continue to Have Going Concern Doubt
USGEN NEW ENGLAND: Settles JPMorgan Letter of Credit Issues
VISTEON CORP.: Various Concerns Prompt S&P to Cut Rating to B+
WMG ACQUISITION: IPO Cues S&P to Watch Ratings
WORLDCOM INC: Intelsat Wants to Compel Delivery of 82,394 Shares
W.R. GRACE: March 31 Balance Sheet Upside-Down by $628.7 Million
YOUNG BROADCASTING: Moody's Puts B1 Rating on $295M Sr. Sec. Debts
* John Sarchio Returns to Chadbourne & Parke's Insurance Practice
* BOOK REVIEW: BEING THE BOSS - The Importance of Leadership
*********
ABITIBI-CONSOLIDATED: Moody's Says Liquidity Is Improving
---------------------------------------------------------
Moody's Investors Service upgraded Abitibi-Consolidated Inc.'s
Speculative-Grade Liquidity rating to SGL-3, indicating adequate
liquidity, from SGL-4, indicating weak liquidity. Abitibi's debt
is rated Ba3 and the outlook is negative.
Prior to launching a recently completed tender offer, Abitibi
had a US$401 million maturity in August of this year and a
US$300 million maturity in December of 2006. Using the proceeds
of a new US$450 million debt issue, Abitibi tendered for all but
$64 million of the 05's. The 06's were reduced to $200 million.
With the near term maturity substantially reduced, Moody's
upgraded the SGL rating. The SGL-3 rating is supported by the
company's availability under its revolving credit facility and
expectations of improving cash flow as the commodity price cycle
recovers from a prolonged trough. However, the SGL rating
continues to reflect Abitibi's recent trend of negative free cash
flow and uncertainties concerning the magnitude and sustainability
of the commodity price recovery. It should be noted that SGL
ratings are inherently more volatile than long-term debt ratings.
Whereas Moody's attempts to ensure that long-term debt ratings are
valid on a "through-the-cycle" basis, SGL ratings are expected to
change far more frequently. Given that Abitibi's revolving bank
credit facility matures in June of 2006, and given Moody's SGL
methodology and practice of reviewing SGL ratings on a quarterly
basis, in the event the credit facility's maturity is not extended
prior to Moody's next review, there is the potential of the SGL
rating being revised downwards at that time.
Rating Upgraded:
-- Abitibi-Consolidated Inc.
* Speculative Grade Liquidity Rating: to SGL-3 from SGL-4
Ratings affirmed:
-- Abitibi-Consolidated Inc.
* Outlook: negative
* Senior Implied: Ba3
* Issuer: Ba3
* Senior Unsecured: Ba3
* Senior Unsecured Shelf Registration: (P)Ba3
-- Abitibi-Consolidated Company of Canada
* Outlook: negative
* Bkd Senior Unsecured: Ba3
* Senior Unsecured Shelf Registration: (P)Ba3
-- Abitibi-Consolidated Finance L.P.
* Outlook: negative
* Bkd Senior Unsecured: Ba3
* Senior Unsecured Shelf Registration: (P) Ba3
-- Donohue Forest Products Inc.
* Outlook: negative
* Bkd Senior Unsecured: Ba3
Abitibi has adequate liquidity, and accordingly, has been assigned
an SGL-3 Speculative Grade Liquidity Rating. The company
maintains a C$816 million revolver that is largely un-drawn and a
US$500 million accounts receivable securitization vehicle that is
generally more fully utilized. The bank facility matures in June
2006. Moody's views it as adequate back-up for the approximately
C$400-to-C$500 million in outstanding receivables' financing.
However, with such a large proportion of the bank facility backing
up the receivables facility, Abitibi has little capacity to use
the bank facility to assist with repaying long-term debt
maturities in advance of cash flow from operations being
available. Abitibi is in compliance with its key financial
covenants (Maximum Debt-to-Capitalization (65.8% actual at
December 31, 2004 versus 70% threshold), and Minimum Interest
Coverage (2.1x actual versus 1.25x threshold; threshold increases
to 1.50x for each quarter-end in 2005, and 1.75x thereafter)).
Moody's estimates that Abitibi could access the entire unused
amount of the credit facility without violating its Debt-to-
Capitalization covenant. While the company is expected to be
modestly Free Cash Flow positive in 2005, it may not turn a
profit. Consequently, the cushion relative to this test may not
be as great going forward. However, so long as Abitibi is not
required to make material adjustments to the carrying value of
certain assets (idled assets whose carrying value has not been
written-off), and so long as additional price increases are
realized during the course of the year, Abitibi should be able to
manage this figure so that compliance is maintained. With Cash
Flow from Operations expected to display sequential improvement
over the next several quarters, Moody's also expects the Interest
Coverage test cushion to increase through 2005.
As noted, SGL ratings are inherently more volatile than long-term
debt ratings. Whereas Moody's attempts to ensure that long-term
debt ratings are valid on a "through-the-cycle" basis, SGL ratings
are expected to change far more frequently. Given that Abitibi's
revolving bank credit facility matures in June of 2006, and given
Moody's SGL methodology and practice of reviewing SGL ratings on a
quarterly basis, in the event the credit facility's maturity is
not extended prior to Moody's next review, there is the potential
of the SGL rating being revised downwards at that time. This
would result from two key components of Moody's liquidity
assessment methodology:
(1) Since Abitibi's accounts receivable securitization facility
is uncommitted (rather than committed for a term-to-
maturity beyond the forward looking rolling four quarter
SGL time horizon) and may be terminated (with prior notice)
by the service provider, Moody's deems that an
approximately equivalent portion of the company's bank
credit facility is reserved for back-up purposes; and
(2) Moody's SGL methodology would look at the worst case
scenario and assume Abitibi's bank credit cannot be rolled
over, and would therefore mature within 12 months.
The Ba3 ratings reflect Abitibi's very high financial leverage and
the resulting very poor credit protection measures observed over
the past three years. In addition, risks stemming from the
ongoing evolution of communication and advertising patterns, and
their consequent impact on the printing and writing papers market,
including the persistent decline of the North American newsprint
business, are an important influence. So too are risks related to
the company's exposure to further Canadian dollar appreciation,
and as well, pressure from other input costs such as wood,
electricity, chemicals and labor. The company's results have been
quite cyclical and are expected to remain so, with demand, price
and cash flow varying widely over short periods of time. Lastly,
Moody's anticipates that alternative uses of cash flow (pension
funding, selected investments) are likely to adversely affect debt
reduction. Despite the margin erosion caused by the above-noted
exchange rate dynamic, Abitibi continues to have relatively low
cash costs of production compared to its peer group. This is
supported by good backwards integration into fiber supply and good
energy self-sufficiency. The uncoated mechanical papers market
appears to have modest positive momentum, with six price increases
in past two-and-a-half years, and with capacity utilization in the
commercial printing sector improving from a very low base.
Despite its debt burden, the company has taken a leadership role
in managing supply in order to balance the market, and recently
announced an additional initiative that Moody's expects will
assist in improving both market fundamentals and the company's
position. Successive term debt maturities though 2011 provide an
opportunity to de-lever if cash flow is available. While the
company is not actively selling assets, it has significant
flexibility to reduce debt from asset sale proceeds.
The outlook is negative, and reflects Moody's assessment of the
challenges facing the company in normalizing the relationship
between its debt load and its cash flow at the Ba3 rating level.
The North American newsprint market is characterized by declining
demand, and is in the midst of a protracted restructuring with
participants removing capacity in order to better balance supply
with demand. With recent producer actions chasing a target that
moved much more quickly than was anticipated, it is uncertain when
they will catch-up, and when pricing will generate acceptable
returns. In addition, the sustainability of the pricing impact of
supply management initiatives is not yet proven. For a given
level of demand, Moody's is skeptical that consumers have to
accept pricing increases as a result of input price or exchange
rate induced cost-push pressures. In the context of gradually
declining demand, and with the potential of slowing economic
growth, it is not certain that margins can be expanded on a
sustainable basis, and consequently, margins may remain under
significant pressure. Accordingly, Moody's is concerned that
difficult North American market fundamentals may cause current
commodity pricing to be representative of near peak levels.
Therefore, while Moody's expects Abitibi's 2005 results to show
improvement over the dismal results posted for the past three
years, the magnitude and sustainability of the improvement are
uncertain. There are also risks that decreases in North American
demand may yet again accelerate, or that its relative cost
position will be further eroded by appreciation of the Canadian
dollar, both of which would augment the required debt-to-cash flow
adjustments.
Moody's expectations for a Ba3 rating include average through-the-
cycle RCF in excess of 10%, with the related FCF measure in excess
of 5%. Note that Moody's debt figures include adjustments for
off-Balance Sheet Accounts Receivable securitization vehicles.
Moody's also accounts for operating leases and unfunded pensions,
and while these are not included in the above benchmarks, they do
contribute incremental leverage that must be assessed. As noted
above, Abitibi has a significant pension funding deficit. Either
or both of the outlook and ratings could be upgraded if Abitibi
takes specific proactive steps to permanently reduce indebtedness
or increase profitability so as to ensure the above credit metrics
can, on average through the commodity price cycle, be exceeded.
In the absence of such proactive steps being implemented in the
very near term, and in the event either or both of 2005 results
and expectations for 2006 do not show dramatic improvement over
the recent past, a ratings downgrade becomes more likely. A
downgrade would also result from significant debt-financed
acquisition activity or were liquidity arrangements to
deteriorated significantly.
Abitibi-Consolidated Inc., headquartered in Montreal, Quebec, is
North America's leader in newsprint and uncoated mechanical paper
and also has a significant lumber business.
ADELPHIA COMMS: Selling Assets to Time Warner & Comcast for $12.7B
------------------------------------------------------------------
Adelphia Communications Corporation (OTC: ADELQ) reached
definitive agreements for Time Warner Inc. (NYSE: TWX) and Comcast
Corporation (Nasdaq: CMCSA, CMCSK) to acquire substantially all
the U.S. assets of Adelphia for $12.7 billion in cash and 16% of
the common stock of Time Warner's cable subsidiary, Time Warner
Cable Inc.
Under the terms of the transaction, approved by the boards of
directors of Adelphia, Time Warner and Comcast, Adelphia's
stakeholders will receive $9.2 billion in cash and 16 percent of
Time Warner Cable's common equity from Time Warner. In addition,
Comcast will pay Adelphia $3.5 billion in cash. Under proposed
transactions between Time Warner and Comcast, the two companies
will swap cable systems to enhance their respective geographic
clusters and unwind Comcast's investments in Time Warner Cable and
Time Warner Entertainment Company, L.P. in an efficient and
mutually beneficial way.
The transaction is subject to approval by the U.S. Bankruptcy
Court for the Southern District of New York and customary closing
conditions. Going forward, Adelphia will file a revised Plan of
Reorganization and Draft Disclosure Statement with the Bankruptcy
Court that reflects the terms of the transaction. A Disclosure
Statement hearing must be held, followed by creditor balloting on
the plan and ultimately a confirmation hearing before the
Bankruptcy Court leading to a confirmed Plan of Reorganization.
Parallel to the bankruptcy process, for the deal to close it will
require approvals of the FCC, the Justice Department (Hart-Scott-
Rodino) and, where required, local franchising authorities.
Subject to all necessary approvals, the deal is expected to close
in approximately nine to 12 months.
The Official Committee of the Unsecured Creditors supported
Adelphia in moving forward with this transaction.
Terms of Proposed Transactions
In the proposed transactions:
-- Time Warner Cable and Comcast will each acquire a portion of
Adelphia's assets, representing approximately 5.0 million
basic cable subscribers in the aggregate. Time Warner Cable
will pay $9.2 billion in cash and will issue common shares
representing 16% of Time Warner Cable's outstanding common
equity (taking into account the redemption transaction with
Comcast) to Adelphia stakeholders in connection with its
acquisition agreement. Comcast will pay $3.5 billion in
cash.
-- Time Warner Cable and Comcast have agreed to swap certain
cable systems to enhance their respective geographic
clusters of subscribers.
-- Time Warner Cable will redeem Comcast's 17.9% interest in
Time Warner Cable, now held in an FCC-mandated trust, in
exchange for a subsidiary holding Time Warner Cable systems
serving nearly 600,000 subscribers, as well as approximately
$1.856 billion in cash.
-- TWE will redeem Comcast's 4.7% interest in TWE, now held in
an FCC-mandated trust, in exchange for cable systems serving
more than 150,000 subscribers, as well as approximately
$133 million in cash.
-- Comcast's net cash investment in these transactions will be
$1.5 billion.
-- The purchase of the Adelphia assets is not dependent on the
occurrence of the system swaps and redemption transactions
between Time Warner and Comcast.
Bill Schleyer, chairman and CEO of Adelphia, said, "After
extensive review of all options for the company, Adelphia's Board
of Directors has determined that this transaction delivers the
maximum value to its bankruptcy constituents. We believe that
this option is superior to Adelphia emerging as a standalone
company. It is also a positive outcome for our cable customers,
who will benefit from continuing considerable investment in our
cable assets. The significant interest in Adelphia is a testament
to the dramatic improvements our employees have made to the
company and its assets during the past two years."
Mr. Schleyer added, "Over the past two years, the Adelphia team
has worked tirelessly to transform our business, enhance our
operations and improve our competitive position. Today, Adelphia
has a first class network, dramatically improved financial
performance with complete transparency, and improved service
offerings -- and this transaction clearly recognizes the
tremendous value of the Adelphia enterprise."
Time Warner's and Comcast's Statements
Time Warner Chairman and Chief Executive Officer Dick Parsons
said: "I'm very pleased that we're able to take full advantage of
this unique opportunity to grow our company at a fair price and
move it forward - strategically, operationally and financially.
Consistent with our strategy, these transactions will better
position us to compete, improve returns and create shareholder
value. At Time Warner Cable, we'll gain important scale, enhance
our subscriber clusters and accelerate growth. As we plan the
smooth integration of these new cable systems, we'll stay focused
on meeting all of Time Warner's financial and operational
objectives, while evaluating how to best employ our significant
remaining capacity to improve shareholder returns. My thanks to
Brian Roberts and his Comcast team for being such fine partners in
this process that produced beneficial results for both companies."
Brian L. Roberts, Chairman and Chief Executive Officer of Comcast,
said: "These transactions underscore our belief that there has
never been a better time to be in the cable business. Adding these
subscribers, many of whom are in high-growth, geographically
desirable areas, will allow us to roll out our new products and
services rapidly. Our vision remains to provide customers with
more choice and control of their entertainment and communication
services, and to generate superior shareholder returns. I would
like to thank Dick Parsons and everyone at Time Warner for helping
to achieve such a positive outcome for all parties."
Steve Burke, Chief Operating Officer of Comcast, said, "The
Adelphia transaction, the various system swaps, and the redemption
of our Time Warner Cable interests will allow us to enhance our
key clusters. It is truly a perfect fit. We look forward to
quickly integrating the 1.8 million additional subscribers just as
we did when we acquired AT&T Broadband and its 13 million
subscribers in 2002. Most importantly, we look forward to
providing all our subscribers, both old and new, with a complete
suite of integrated communications and entertainment products."
Don Logan, Chairman of Time Warner's Media & Communications Group,
said: "We like the cable business. It's the only platform today
that can deliver enhanced digital video, high-speed data and voice
services to consumers, and we have great confidence in its future.
Our newly acquired systems will give us a bigger and better-
clustered cable footprint, built around five large clusters,
including New York City and Los Angeles. Together with Glenn Britt
and the Time Warner Cable team, we'll bring our experience in
innovation and proven operating track record to improving and
growing the performance of these new systems."
Adelphia's Systems and Reach
Since early 2003, Adelphia has made significant investments in the
most advanced equipment and systems to upgrade its cable network.
As a result, Adelphia serves 97 percent of its homes passed with
an advanced network capable of delivering services like digital
video, high-speed Internet, high-definition television, video-on-
demand, digital video recorders, and eventually telephony. The
company has also completely overhauled its customer care
organization, consolidating more than 70 outmoded call centers
into 12 state of the art centers and repackaged its service
offerings for greater customer choice and value.
After a massive 20-month effort involving hundreds of accountants,
Adelphia restored credibility to its financial reporting last
December with the filing of its 2003 Annual Report on Form 10-K
and audited financial statements for the fiscal years 2003, 2002
and 2001. New financial reporting systems were put in place along
with a corporate-wide ethics policy signed by every employee.
Said Vanessa Wittman, Adelphia's executive vice president and
chief financial officer, "We have been working closely with
Adelphia's constituents and the Bankruptcy Court throughout this
process and will continue to do so in the coming months as we move
toward closing. I want to take this time to thank Adelphia's
employees for their unwavering commitment and diligence during the
past several years."
The agreement does not include Adelphia's cable system partnership
in Puerto Rico.
Outcome for Time Warner
When these transactions close, Time Warner will own 84% of Time
Warner Cable's common stock, which will continue to consist of
Class A shares and Class B super-voting shares. The remaining 16%
of Time Warner Cable's common equity initially will be owned by
Adelphia stakeholders and is expected to be publicly traded in the
form of Class A shares. In addition to its 84% stake in the
publicly traded Time Warner Cable, Time Warner also will own a
direct non-voting common equity interest of approximately
$2.9 billion in a subsidiary of Time Warner Cable. The
acquisition will be accounted for as an asset purchase. Time
Warner said that it expects to retain significant financial
flexibility, while maintaining its strong investment-grade debt
rating.
Taking into account the proposed acquisition, swaps and
redemptions, on a net basis, Time Warner Cable will gain
approximately 3.5 million basic video subscribers. Specifically,
Time Warner Cable will add around 3 million Adelphia subscribers
and more than 1 million Comcast subscribers, and will give Comcast
approximately 750,000 current Time Warner Cable subscribers. It
will then manage a total of approximately 14.4 million basic
subscribers - 12.9 million consolidated and 1.5 million in 50%-
owned continuing joint ventures with Comcast. That will make Time
Warner Cable the second-largest multi-channel video provider in
the U.S. - ahead of all other cable operators, except for Comcast,
and ahead of both major satellite companies.
Once these transactions are complete, 85% of Time Warner Cable's
managed subscribers will be located in five large clusters,
including (in round numbers):
* 3.1 million in New York,
* 2.6 million in Texas,
* 2.4 million in California,
* 2.3 million in Ohio, and
* 1.9 million in the Carolinas.
Time Warner Cable will be the largest cable provider in both New
York City and Los Angeles, cities which anchor the country's two
largest designated market areas -- DMAs.
As part of his current duties as Chairman of Time Warner's Media &
Communications Group, Mr. Logan will become non-executive Chairman
of Time Warner Cable's board of directors. Glenn Britt, who now
serves as Time Warner Cable's Chairman and Chief Executive
Officer, will remain Chief Executive Officer and also will be
named President.
Mr. Britt said: "We're very excited about this opportunity and
look forward to taking over the day-to-day management of these new
systems. Over the last few months, we've done extensive due
diligence on the Adelphia properties and have a very realistic
view of how we can create new value. We expect a smooth
integration, and we'll quickly bring greater choice to consumers
with our popular enhanced digital video and high-speed data
services. We also are well positioned to compete effectively for
telephone customers with our new Digital Phone service. We have
the technological, managerial and operational expertise that will
allow us to drive penetration rates and improve performance."
Outcome for Comcast
Taking into account the proposed acquisition, swaps and
redemptions, on a net basis, Comcast will gain approximately
1.8 million basic video subscribers. Specifically, Comcast will
add approximately 2.1 million Adelphia subscribers through the
acquisition and the swap, and approximately 750,000 Time Warner
cable subscribers through the redemptions of Comcast's interest in
Time Warner Cable and TWE and the swap. Comcast will give Time
Warner more than 1 million subscribers. Comcast will serve
approximately 23.3 million owned and operated subscribers and be
attributed with approximately 3.5 million additional subscribers
held in various partnerships. Comcast will remain the largest
multi-channel video provider in the U.S. and the nation's largest
high-speed Internet provider. As a result of these transactions,
Comcast will expand its presence in such key geographic areas as
Washington D.C., West Palm Beach, Boston and Pittsburgh.
Approvals and Advisors
These transactions between Time Warner Cable, Comcast and Adelphia
are subject to customary regulatory review and approvals,
including Hart-Scott-Rodino, FCC and local franchise approvals, as
well as the Adelphia bankruptcy process, which involves approvals
by the bankruptcy court having jurisdiction of Adelphia's Chapter
11 case and Adelphia's creditors. Closing is expected in about 9
to 12 months.
Bear Stearns and Lehman Brothers acted as financial advisors to
Time Warner. The Blackstone Group acted as financial advisor to
Comcast on the Adelphia transaction and assisted on Time Warner.
Morgan Stanley acted as financial advisor to Comcast on the Time
Warner transaction and assisted on Adelphia. Paul, Weiss,
Rifkind, Wharton & Garrison LLP is legal advisor to Time Warner.
Davis Polk & Wardwell is legal advisor to Comcast. Ballard Spahr
Andrews & Ingersoll, LLP advised Comcast on bankruptcy-related
issues.
UBS Investment Bank and Allen & Company LLC acted as financial
advisors to Adelphia. Sullivan & Cromwell acted as legal advisors
to Adelphia for the transaction. Willkie Farr & Gallagher LLP
acted as advisors to Adelphia for the bankruptcy process.
About Time Warner Inc.
Time Warner Inc. is a leading media and entertainment company,
whose businesses include interactive services, cable systems,
filmed entertainment, television networks and publishing.
About Comcast Corporation
Comcast Corporation is the nation's leading provider of cable,
entertainment and communications products and services. With 21.5
million cable customers and 7 million high-speed Internet
customers, Comcast is principally involved in the development,
management and operation of broadband cable networks and in the
delivery of programming content.
Comcast's content networks and investments include E!
Entertainment Television, Style Network, The Golf Channel, Outdoor
Life Network, G4, AZN Television, TV One and four Comcast
SportsNets. The Company also has a majority ownership in Comcast-
Spectacor, whose major holdings include the Philadelphia Flyers
NHL hockey team, the Philadelphia 76ers NBA basketball team and
two large multipurpose arenas in Philadelphia.
About Time Warner Cable Inc.
Time Warner Cable owns or manages cable systems serving 10.9
million subscribers in 27 states, which include some of the most
technologically advanced, best-clustered cable systems in the
country with more than 75% of the Company's customers in systems
of 300,000 subscribers or more. Utilizing a fully upgraded
advanced cable network and a steadfast commitment to providing
consumers with choice, value and world-class customer service,
Time Warner Cable is an industry leader in delivering advanced
products and services such as video on demand, high-definition
television, digital video recorders, high-speed data, wireless
home networking and Digital Phone. Time Warner Cable is a
majority-owned subsidiary of Time Warner Inc.
About Adelphia Communications
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 COMMS: Court OKs $440M Time Warner & Comcast Break-Up Fee
------------------------------------------------------------------
As previously reported, Adelphia Communications Corporation and
its debtor-affiliates made use of a two-phase process for the sale
of their assets:
* Phase I -- a solicitation of initial indications of interest
in the Debtors.
* Phase II -- a formal bid process in which the Debtors invite
the selected bidders from Phase I to submit final and
binding bids to purchase the Debtors' assets or stock.
At the conclusion of Phase I on October 20, 2004, the Debtors
received around 45 non-binding indications of preliminary
interest from 25 different potential bidders.
On October 22, 2004, the Court approved uniform bidding
procedures and bid protections, including:
-- procedures establishing the timing and method for the
submission of bids for all or a portion of the Debtors in a
one-step auction;
-- a no-shop requirement; and
-- the awarding of a break-up fee in certain limited
circumstances.
By this motion, the ACOM Debtors ask the Court to approve a
supplement to the Bidding Procedures Order. Marc Abrams, Esq.,
at Willkie Farr & Gallagher, in New York, tells the Court that
the Bidding Protections Supplement:
a. expands the events that would trigger payment of the
Breakup Fee;
b. authorizes the Debtors to agree to amend the No-Shop
Requirement and the related fiduciary out provision; and
c. approves certain contract termination rights.
The ACOM Debtors filed the motion to approve the Bidding
Protections Supplement on April 8, 2005, under seal. The Court
unsealed the motion this week.
Sale Process
Mr. Abrams relates that of the 25 parties that sent Interest
Notices to the Debtors, 22 were invited to continue to
participate in Phase II of the sale process. During the course
of Phase II, the Debtors provided bidders with extensive access
to management and a virtual data room. The diligence the Debtors
provided bidders included:
-- cluster level Web-based management presentations;
-- shared services conference calls for all bidders and
individual follow up calls to address questions;
-- multiple in-person meetings with regional management teams
for each cluster;
-- franchise and accounting meetings and teleconferences with
senior management;
-- tours of head-ends and call centers;
-- in-person meetings with select General Managers and
Assistant Vice Presidents;
-- access to the Debtors' 2005 budget and long range business
plan; and
-- accounting diligence regarding the audit and re-audit.
For whole-company bidders, the Debtors provided bidders with
senior management presentations in tax, legal, programming,
capital structure, accounting, technology, human resources and
other functional areas. In total, the Debtors conducted over 150
in-person meetings and over 700 individuals accessed the Debtors'
data room, which consisted of over 1,500 documents totaling
approximately 35,000 pages. The Debtors, through their advisors,
responded to more than 4,500 written questions.
Final bids were due on January 31, 2005, after which the Debtors
engaged in a process to clarify, refine and evaluate submitted
bids. The Debtors received 15 final bids.
To advance the stand-alone plan component of the dual track
process and to visibly reinforce existing alternatives to a sale
transaction, on February 4, 2005, the Debtors filed their First
Amended Joint Plan of Reorganization and the related disclosure
statement. The Debtors also took steps to extend the period
during which a stand-alone plan can serve as a viable exit
strategy. By order dated April 8, 2005, the Court approved the
Debtors' extension of the $8.8 billion exit commitment from
June 30, 2005, until at least December 31, 2005.
Time Warner-Comcast Bid
As of April 8, 2005, the Debtors believe that the Bid submitted
by Time Warner NY Cable LLC, in conjunction with Comcast
Corporation, is the Bid most likely to maximize the value of
distributable proceeds to the Debtors' stakeholders and compare
favorably to the value to be realized under the Amended Plan.
Time Warner and Comcast provided separate asset purchase
agreements, which in combination will result in the sale of
substantially all of the Debtors' assets to Time Warner and
Comcast pursuant to a plan of reorganization. The Debtors
concluded that the consummation of the Time Warner-Comcast
transaction would yield a more favorable mix of currency at a
premium over the hypothetical total enterprise value that would
be obtained under a stand-alone plan that issued publicly traded
equity securities to stakeholders. Each Asset Purchase Agreement
is in substantially final form, Mr. Abrams notes.
Modified Break-Up Fee Triggers
As previously reported, Judge Gerber approved a 2.5% Break-Up
Fee to protect Time Warner and Comcast's interests as stalking
horse bidders. Mr. Abrams makes it clear that the ACOM Debtors
do not seek to increase the maximum awardable Break-Up Fee.
The ACOM Debtors sought and obtained permission from Judge Gerber
to expand the list of events that could trigger payment of a
Break-Up Fee to Time Warner and Comcast. One or more of these
events will now trigger payment of the Break-Up Fee:
A. The APA is terminated by Buyer prior to the Closing because
either:
1. the Debtors have not, by October 15, 2005, filed all
motions reasonably necessary to obtain the Confirmation
Order; or
2. the Modified Bidding Procedures Order is vacated or
modified in any material respect,
and Buyer is not a Proximate Cause Party.
B. The Debtors terminate the APA prior to the Closing, the
Confirmation Order has not been entered, and:
1. Buyer is not a Proximate Cause Party as of the date of
the termination; and
2. the Closing will not have occurred by 15 months after
the date of the APA -- the Outside Date, provided that
that date may be extended:
(a) to a date not beyond three months after the
Outside Date, if any Governmental Antitrust
Entity has not completed its review of the
transactions that are the subject matter of the
APAs or either party determines that additional
time is necessary to forestall a Governmental
Antitrust Entity from enjoining the transaction;
(b) with respect to the Time Warner APA only, for an
additional six months beyond the date determined
under clause (a) if the Closing does not occur
because the closing of the Comcast APA has not
occurred due to actions by, or the failure to
obtain the necessary approvals from, any
Government Antitrust Entity or the FCC for the
transactions contemplated by the Comcast APA; or
(c) by a one-month period to allow for the closing of
certain transactions entered into between Time
Warner and Comcast in connection with the
transactions contemplated by the APAs.
C. The Debtors terminate the APA prior to commencement of the
Confirmation Hearing and:
1. as of the date of that termination, the Debtors are not
in breach of the No-Shop Requirement;
2. the Board of Directors of ACOM authorizes the Debtors to
enter into a binding written agreement concerning a
transaction that constitutes a Superior Proposal and the
Debtors notify the Buyer in writing that the
Debtors intend to enter into that agreement attaching
the agreement's most current version; and
3. Buyer does not make, within five business days of
receipt of the Debtors' written notification of their
intention to enter into a binding agreement for a
Superior Proposal, an offer which the ACOM Board
determines is at least as favorable to the stakeholders
of the Debtors as is the Superior Proposal.
D. The APA is terminated by the Debtors or Buyer:
1. at any time after the conclusion of the voting on the
Plan because the Debtors' stakeholders who are entitled
to vote on the Plan vote so that the Plan is not
otherwise capable of being confirmed; or
2. at any time after the expiration of 150 days after the
entry of an order, judgment or ruling denying entry of
(or vacating) a Confirmation Order satisfying the
conditions of the APA, if the Bankruptcy Court will not
have thereafter entered a Confirmation Order that
satisfied the conditions of the APA, provided that:
(a) the Debtors or Buyer may only terminate if, at
that time, it would not reasonably be expected
that a Confirmation Order satisfying the
conditions of the APA would be entered prior to
the Outside Date; and
(b) the party seeking to effect the termination must
have complied with the requirements of the APA to
prosecute the entry of a Confirmation Order
satisfying the conditions of the APA.
Buyer may not terminate the APA as if Buyer is a
Proximate Cause Party.
E. The Debtors terminate the APA prior to the commencement of
the Confirmation Hearing, if:
a. as of the date of the termination, the Debtors are not
in breach of the No-Shop Requirement;
b. the Board authorizes the Debtors to file a Superior
Alternate Plan and the Debtors notify Buyer in writing
that they intend to file the Superior Alternate Plan,
attaching the most current version of the Superior
Alternate Plan; and
c. Buyer does not make, within ten Business Days of receipt
of the Debtors' notification of their intention to file
a Superior Alternate Plan, an offer which the Board
determines is at least as favorable to the stakeholders
as is the Superior Alternate Plan.
F. The APA is terminated by Buyer because there has been a
willful breach of any representation or warranty made by or
any breach of any covenant or agreement made by the Debtors in
the APA so that an executive officer of the Debtors would be
unable to deliver the closing certificate to Buyer regarding
the Debtors' representation and warranties and their
performance of obligations and that breach is not curable or,
if curable, is not cured within 60 days of notice of the
breach being given by Buyer. Buyer is not a Proximate Cause
Party.
The Modified Breakup Fee Triggers can occur independently of one
another pursuant to each of the APAs.
The Modified Break-up Fee Triggers provide for the payment of the
Break-Up Fee upon the earlier of consummation of an Acquisition
or the effective date of the Debtors' plan of reorganization
approved by the Bankruptcy Court.
Upon entry into a definitive agreement or agreements with Time
Warner and Comcast, the Break-Up Fee will be a binding and joint
and several obligation of the Debtors.
Modified No-Shop Requirement
Pursuant to the Bidding Procedures Order, the Debtors were
authorized to agree to a No-Shop Requirement. The Debtors now
seek to modify the No-Shop Requirement in this manner:
Subject to the Modified Fiduciary Out, the Debtors, their
Subsidiaries and representatives are not permitted to
initiate, solicit or encourage any inquiries or the making of
any proposal or offer with respect to a merger, reorganization
(including an Alternate Plan), share exchange, consolidation
or similar transaction involving, or any purchase of 10% or
more of the Transferred Assets Related to the Business or of
the outstanding Equity Securities of the Debtors or their
Affiliates owning Assets Related to the Business -- an
Acquisition Proposal.
The Debtors, their subsidiaries and representatives are not
Permitted to engage in any negotiations, provide any
information or to have any discussions relating to an
Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal.
The Debtors or the Board are not prevented from:
(i) renewing the "exit" financing of the amounts of Assets
of Debtors on substantially the same terms as in effect
as of March 31, 2005;
(ii) complying with their disclosure obligations under the
Bankruptcy Code or applicable law with respect to an
Acquisition Proposal;
(iii) prior to commencement of the Confirmation Hearing, in
response to an unsolicited bona fide Acquisition
Proposal:
a. providing information to third parties with whom
the Debtors has entered into confidentiality
agreements at least as favorable to the Debtors
as that of Buyer, or
b. engaging in negotiations with any third party
that has made an Acquisition Proposal if and only
to the extent clause (i) and clause (ii) of the
Modified Fiduciary Out are satisfied;
(iv) prior to the commencement of the Confirmation Hearing,
engaging in any negotiations or discussions concerning
an Alternate Plan with the Committees, their
stakeholders, their affiliates or advisors with whom
the Debtors have a confidentiality agreement on
customary terms under circumstances that restricts the
stakeholder from disclosing or making public statements
regarding certain confidential information, provided
that any such action may be taken only to the extent
that clause (iii) of the Modified Fiduciary Out is
satisfied; or
(v) after entry of a Confirmation Order satisfying the
conditions of the APA, planning for an Alternate Plan
that involves the emergence of the Debtors as stand-
alone entities with no greater than a 10% additional
equity contribution, preparing (but not filing) a
disclosure statement with respect to that plan and
preparing and negotiating any inter-creditor
agreements, provided that the Alternate Plan provides
it can only be confirmed if the APA is terminated in
accordance with its terms. The planning cannot involve
any action or omission that is reasonably likely to
materially impair or delay the transactions
contemplated by the APA.
With respect to clause (iii), the Debtors are required to:
-- advise Buyer of the receipt of any Acquisition Proposal;
-- keep Buyer informed of the status of any Acquisition
proposal; and
-- provide to Buyer all information concerning the Debtors'
business provided to the party making the proposal that
was not previously provided to Buyer.
With respect to clauses (iv) and (v), the Debtors and their
affiliates:
-- are prohibited from making public statements or filings
in connection with the Superior Alternate Plan;
-- must keep Buyer informed of the status thereof, and
-- must use commercially reasonable efforts to enforce the
applicable confidentiality obligations.
Modified Fiduciary Out
The Modified Fiduciary Out applies if:
1. the Board determines in good faith, after consultation with
legal counsel that directors must take an action in order
to comply with clause (iii) or (iv) of the Modified No Shop
Requirement in order to comply with their fiduciary duties;
2. with respect to clause (iii) of the Modified No-Shop
Requirement:
a. the Acquisition Proposal includes at least 66-2/3%
of:
-- all Assets Related to the Business, or
-- the outstanding Equity Securities of Seller;
and
b. in the case of clause (iii)(b) of the Modified No-
Shop Requirement, the Board determines that the
Acquisition Proposal is reasonably likely to be
consummated and if consummated would result in a
transaction more favorable to the Debtors'
stakeholders from a financial point of view than the
transaction that is the subject of the APA; or
c. only with respect to clause (iv) of the Modified No
Shop Requirement, the Board determines that an
Alternate Plan, if pursued and assuming the support
of stakeholders, is reasonably likely to be
consummated and would result in a transaction more
favorable to the Debtors' stakeholders than the
Transaction.
In summary, the Modified No-Shop Requirement and the Modified
Fiduciary Out, among others:
a. require an Acquisition Proposal to be for at least 66-2/3%
of either all Assets Related to the Business or the
outstanding Equity Securities of the Debtors in order to
exercise the Modified Fiduciary Out;
b. require that the Confirmation Order not have been entered
or the Confirmation Hearing will not have commenced in
order to exercise the Modified Fiduciary Out; and
c. prevent the Debtors from filing a stand-alone plan of
reorganization in conjunction with the sales transaction as
currently contemplated by the "toggle" provisions of the
Amended Plan.
A full-text copy of the Modified No Shop Requirement and Modified
Break-Up Fee Triggers is available for free at:
http://bankrupt.com/misc/ModifiedNoShopBreakUpFeeTriggers.pdf
Termination Provisions
Under the Debtors' proposed termination provisions, only upon the
occurrence or non-occurrence of certain events, may these parties
terminate the applicable APA:
A. Buyer or the Debtors
Buyer or the Debtors may terminate the APA at any time prior
to Closing if:
1. Mutual Consent: Buyer and the Debtors agree to do so in
writing.
2. Drop Dead: The Closing will not have occurred by fifteen
months after the date of the APA, however that date may be
extended:
(a) To a date not beyond three months after the original
date, if any Governmental Antitrust Entity has not
completed its review of the transactions that are
the subject matter of the APAs or either party
determines that additional time is necessary to
forestall a Governmental Antitrust Entity from
enjoining the transaction;
(b) With respect to the Time Warner APA only, for an
additional six months beyond the date determined
under clause (a) if the Closing does not occur
because the closing of the Comcast APA has not
occurred due to actions by, or the failure to obtain
the necessary approvals from, any Government
Antitrust Entity or the FCC for the transactions
contemplated by the Comcast APA. The Debtors may
not terminate the APA under this scenario if it is a
Proximate Cause Party; or
(c) By a one-month period to allow for the closing of
certain transactions entered into between Time
Warner and Comcast in connection with the
transactions contemplated by the APAs.
3. Prohibited by Law: Any Law permanently restraining,
enjoining or otherwise prohibiting the transactions that
are the subject matter of the APA will become final and
non-appealable.
B. The Debtors
The Debtors may terminate the APA at any time prior to
Closing, through written notice to Buyer prior to entry of the
Confirmation Order, if:
1. Superior Proposal: The Debtors decide to enter into a
binding written agreement with respect to a Superior
Proposal.
2. Breach: Buyer breaches any representation, warranty,
covenant or agreement it made in the APA so that its
executive officer would be unable to deliver the closing
certificate to the Debtors regarding its representations
and warranties and its performance of its obligations, and
the breach is not curable or, if curable, is not cured
within 60 days. The Debtors may not terminate the APA
under this scenario if it is a Proximate Cause Party.
3. Pursuit of Superior Alternate Plan: The Debtors determine
to file a Superior Alternate Plan.
4. No Confirmation of Plan: The Debtors' stakeholders who are
entitled to vote on the Plan vote against the Plan and the
Plan is not otherwise capable of being confirmed.
5. Confirmation Order. At any time after the expiration of
150 days after the entry of an order, judgment or ruling
denying entry of (or vacating) a Confirmation Order
satisfying the conditions of the APA, the Court will not
have thereafter entered a Confirmation Order that satisfied
the conditions of the APA; provided that:
-- at that time, it would not reasonably be expected
that a Confirmation Order satisfying the conditions
of the APA would be entered prior to the Outside
Date; and
-- the Debtors must have complied with the requirements
of the APA to prosecute the entry of a Confirmation
Order satisfying the conditions of the APA.
C. Buyer
Buyer may terminate the APAs at any time prior to the Closing
if:
1. Breach: The Debtors breach any representation, warranty,
covenant or agreement they made in the APA so that they
would be unable to deliver the closing certificate to Buyer
regarding their representations and warranties and their
performance of obligations. The breach is not curable,
or if curable is not cured within 60 days. Buyer may not
terminate the APA under this scenario if it is a Proximate
Cause Party.
2. Failure to File Motions: The Debtors have not, by
October 15, 2005, filed all motions reasonably necessary to
obtain the Confirmation Order. Buyer may not terminate the
APA under this scenario if it is a Proximate Cause Party.
3. Vacating or Modifying Bidding Procedures Order: The
Modified Bidding Procedures Order is vacated or modified in
any material respect. Buyer may not terminate the APA if
it is a Proximate Cause Party.
4. No Confirmation of Plan: The Debtors' stakeholders who are
entitled to vote on the Plan vote against the Plan and the
Plan is not otherwise capable of being confirmed. Buyer
may not terminate the APA if it is a Proximate Cause Party.
5. Confirmation Order: At any time after the expiration of
150 days after the entry of an order, judgment or ruling
denying entry of (or vacating) a Confirmation Order
satisfying the conditions of the APA, the Court will not
have thereafter entered a Confirmation Order that satisfied
the conditions of the APA, provided that:
-- at that time, it would not reasonably be expected
that a Confirmation Order satisfying the conditions
of the APA would be entered prior to the Outside
Date; and
-- Buyer must have complied with the requirements of the
APA to prosecute the entry of a Confirmation Order
satisfying the conditions of the APA.
Buyer may not terminate the APA under this scenario if it
is a Proximate Cause Party.
6. Conversion or Appointment of Trustee: The Debtors'
Reorganization Cases is converted into one or more cases
under Chapter 7 or a Chapter 11 trustee is appointed in
these cases.
* * *
After a five-hour closed hearing, Judge Gerber approved a $440
million Break-Up Fee that ACOM would have to pay to Time Warner
and Comcast if their deal wouldn't be finalized, The Wall Street
Journal reports citing people familiar with the matter.
According to the Journal, Cablevision Systems Corp.'s counsel was
not able to convince Judge Gerber to delay his decision so that
ACOM will have time to consider Cablevision's $17.1 billion bid.
About Time Warner Inc.
Time Warner Inc. is a leading media and entertainment company,
whose businesses include interactive services, cable systems,
filmed entertainment, television networks and publishing.
About Comcast Corporation
Comcast Corporation is the nation's leading provider of cable,
entertainment and communications products and services. With 21.5
million cable customers and 7 million high-speed Internet
customers, Comcast is principally involved in the development,
management and operation of broadband cable networks and in the
delivery of programming content.
Comcast's content networks and investments include E!
Entertainment Television, Style Network, The Golf Channel, Outdoor
Life Network, G4, AZN Television, TV One and four Comcast
SportsNets. The Company also has a majority ownership in Comcast-
Spectacor, whose major holdings include the Philadelphia Flyers
NHL hockey team, the Philadelphia 76ers NBA basketball team and
two large multipurpose arenas in Philadelphia.
About Time Warner Cable Inc.
Time Warner Cable owns or manages cable systems serving 10.9
million subscribers in 27 states, which include some of the most
technologically advanced, best-clustered cable systems in the
country with more than 75% of the Company's customers in systems
of 300,000 subscribers or more. Utilizing a fully upgraded
advanced cable network and a steadfast commitment to providing
consumers with choice, value and world-class customer service,
Time Warner Cable is an industry leader in delivering advanced
products and services such as video on demand, high-definition
television, digital video recorders, high-speed data, wireless
home networking and Digital Phone. Time Warner Cable is a
majority-owned subsidiary of Time Warner Inc.
About Adelphia Communications
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. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ADELPHIA COMMS: Equity Committee Slams Bidding Protections
----------------------------------------------------------
The Official Committee of Equity Security Holders appointed in the
chapter 11 cases of Adelphia Communications Corporation and its
debtor-affiliates, which was instrumental in causing Adelphia to
pursue a sale of the Debtors' assets, objected to the proposed
deal protections provided for in the asset purchase agreement the
Debtors inked with Time Warner and Comcast. The deal protections
include a breakup fee and certain "no-shop" provisions.
The Equity Committee argues that the deal protections were too
restrictive and would interfere with Adelphia's ability to
continue to consider other potentially higher bids. In response
to the Equity Committee's objections, the Bankruptcy Court's
approval of certain of the "no-shop" provisions was made
contingent on Adelphia, Time Warner and Comcast agreeing to
certain changes that give Adelphia greater latitude to respond to
future unsolicited bids. The Equity Committee is considering
whether to take additional steps to challenge the approved deal
protections.
"While we are disappointed that the Bankruptcy Court authorized
what we consider to be excessive deal protections, and that the
current winning bid did not meet our expectations," said Peter D.
Morgenstern of Bragar Wexler Eagel & Morgenstern, P.C., attorneys
for the Equity Committee, "Adelphia's board of directors remains
bound by its fiduciary obligations to consider future unsolicited
offers that are superior to the Time Warner-Comcast transaction.
It is likely to be another eight to twelve months before
Adelphia's reorganization plan even comes up for a vote of
creditors and shareholders, and then still must be approved by the
Bankruptcy Court. This process is far from over."
According to the Equity Committee, the April 20 hearing did not
determine how proceeds will be distributed to Adelphia's
stakeholders. The amount of those distributions will not be known
until:
* Adelphia's plan of reorganization is considered by the
Bankruptcy Court;
* intercompany issues and government claims are resolved; and
* Adelphia's multi-billion dollar claims against members of the
Rigas family, and a number of banks, investment banks,
auditors and others are determined.
The Equity Committee is made up of major investors in Adelphia and
represents shareholders in the bankruptcy proceedings. None of
the Equity Committee members are affiliated with the Rigas family.
The Equity Committee is represented by Bragar Wexler Eagel &
Morgenstern, P.C., led by partners Peter D. Morgenstern, Esq. and
Gregory A. Blue, Esq.
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.
AIRCRAFT FINANCE: S&P Lowers Rating on Class A-1 1999-1 Notes
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on both
tranches of class A notes series 1999-1 issued by Aircraft Finance
Trust (AFT) and, at the same time, removed them from CreditWatch
with negative implications, where they were placed Feb. 16, 2005.
The outlook on the notes is stable.
Standard & Poor's has evaluated projections of future revenues and
amortization of the class A-1 and A-2 notes and concluded that the
maturity of both tranches will be extended, especially for the
class A-1 notes.
The transaction has come under severe stress in late 2004 and
early 2005. Rental incomes for 2004 were down approximately 40%
from 2001 levels. Recently, considerable amounts of cash have
been diverted for maintenance on several aircraft to enable the
servicer to re-lease them to other airlines.
In January 2005 and February 2005, these factors combined to cause
a depletion of the class C and D cash reserves, which resulted in
a deferral of interest to the class C and D noteholders. Based on
the management's expected lease operating budget for 2005, minimum
principal payments may be suspended on the senior notes, and cash
reserves for the class A notes may also be drawn.
Any delay in receiving principal at this stage will delay the
start of the class A-1 note amortization, which is not assumed to
begin until 2009 at the earliest. This reduces the likelihood of
full repayment of the class A-1 notes before the legal maturity of
this transaction.
Along with the downgrade, a stable outlook has been placed on the
class A notes based on expectations of a continued, moderate
industry recovery.
More information on the Aircraft Finance Trust transaction can be
found on RatingsDirect, Standard & Poor's Web-based credit
analysis system, at http://www.ratingsdirect.com/
Ratings Lowered And Removed From Creditwatch Negative
Aircraft Finance Trust
Rating
------
Class To From
----- -- ----
A-1 B+/Stable BBB/Watch Neg
A-2 BBB+/Stable A/Watch Neg
ALBERT MILLER: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Albert Maurice Miller
Wanda Gail Miller
7857 Highway 67 West
Mt. Pleasant, Texas 75455
Bankruptcy Case No.: 05-50117
Chapter 11 Petition Date: March 30, 2005
Court: Eastern District of Texas (Texarkana)
Judge: Honorable Brenda T. Rhoades
Debtor's Counsel: William Sheehy, Esq.
Wilson Law Firm
P.O. Box 7339
Tyler, Texas 75710
Tel: (903) 593-2561
Total Assets: $3,719,394
Total Debts: $776,210
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Michael M. Miller $55,000
P.O. Box 234
Winfield, TX 75493
NRG Petroleum $18,626
P.O. Box 839
Sulphur Springs, TX 75483
H E Spann $12,265
P.O. Box 1111
Mt. Pleasant, TX 75456
Connie Best $11,000
1122 Heather Lane
Longview, TX 75606
Titus Pump $7,653
P.O. Box 321
Mt. Pleasant, TX 75456
VISA $5,323
P.O. Box 569120
Dallas, TX 75356
Foxworth $5,032
17111 Waterway Pkwy.
Dallas, TX 75252
Willie Garrett $5,000
P.O. Box 48
Winfield, TX 75493
Meridan Alliance $4,500
3233 West 11th, Suite 400
Houston, TX 77008
Douglas Co. $4,012
2507 East 9th
Texarkana, Arkansas 71854
Sherwin Williams $4,000
606 North Jefferson
Mt. Pleasant, TX 75455
Jon-Wayne $3,217
P.O. Box 839
Mt. Vernon, Texas 75457
Western Foods $3,062
4717 Asher
P.O. Box 87
Little Rock, AR 72204
Billy Craig Mobile $2,624
214 West 1st Street
Mt. Pleasant, TX 75455
Guest Paper $2,116
1110 Washington
Paris, TX 75460
Mario Reyes $1,500
308 Quille
Mt. Pleasant, TX 75455
Gene Robinson $1,200
310 East 9th
Mt. Pleasant, TX 75455
GMAC Purchase Money $824
P.O. Box 78369
Phoenix, AZ 85061
Verizon $559
P.O. Box 6058
Inglewood, CA 90313
Manifest Leasing $0
1310 Madrid Street
Marshall, MN 56258
Attn: Debbie Stibbie
ALLIED HOLDINGS: Fourth Quarter Loss Cues S&P to Watch Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
its 'B' corporate credit rating, on vehicle transporter Allied
Holdings Inc. on CreditWatch with negative implications.
"The CreditWatch placement reflects Allied Holdings' worse-than-
expected fourth-quarter loss and continuing deterioration of
credit measures," said Standard & Poor's credit analyst Kenneth L.
Farer. Allied's financial results have been weak for the current
rating category, which anticipates improvements in margins, cash
generation, and liquidity, and continued compliance with covenants
under its debt agreements.
To resolve the CreditWatch, Standard & Poor's will meet with
management and assess:
(1) the business outlook for 2005 and beyond,
(2) management's financial policies, and
(3) potential challenges,
including:
(1) auto production levels;
(2) cost management;
(3) covenant compliance; and
(4) refinancing plans.
At Dec. 31, 2004, Allied had $281 million in lease-adjusted debt.
Ratings on Decatur, Georgia-based Allied reflect its weak
financial flexibility, aggressively leveraged capital structure,
concentrated end-customer base, and participation in the capital-
intensive trucking industry. Although Allied's specialized fleet
delivers approximately 60% of new vehicles in North America, it
faces competition from other specialty carriers for short-distance
trips and major railroads for long-distance trips. The next
largest provider of these services in North America is Performance
Logistics Group Inc., which has annual revenues of roughly one-
third of Allied and one-fourth the number of terminal locations.
Despite some recent price increases, the car hauling industry
faces continued pricing pressure from the large auto
manufacturers, which represent a majority of the company's
revenues. Generally, revenues for the industry trend closely with
North American vehicle production figures. Additional
consolidation is possible in this segment of the trucking industry
as larger networks provide back-haul opportunities and economies
of scale. New entrants are not expected due to the substantial
capital required for trucks, car-hauling trailers, and terminals.
Allied reported 2004 revenues of $895 million, $30 million higher
than 2003. The increase in revenues was due to:
(1) higher revenue per unit,
(2) increased fuel surcharges, and
(3) improved foreign exchange rates.
Nonetheless, margins continue to be negatively affected by:
(1) reduced vehicle production,
(2) continued high fuel prices,
(3) higher-than-expected maintenance costs,
(4) insurance, and
(5) the contractual increase in benefit contributions.
The company also recorded a $9 million goodwill impairment related
to its Axis subsidiary, and a review of idle equipment resulted in
a $4.2 million increase to depreciation expense. These higher
costs resulted in a reported operating loss of $13 million for
2004, compared with an operating profit of $18 million for 2003.
At Dec. 31, 2004, key credit measures continued to deteriorate,
including trailing 12-month EBITDA interest coverage of only 1.2x,
funds from operations to debt of 7%, and debt to EBITDA of 6.9x.
The current ratios remain appropriate for the 'B' rating category,
although lower compared with the 2.1x, 20%, and 4.2x,
respectively, reported for 2003.
ALOHA AIRLINES: Mechanics & Inspectors Agree to Ratify Labor Pacts
------------------------------------------------------------------
Aloha Airlines wrapped up new agreements with all five of its
employee bargaining units after the ratification of a new
contract by mechanics and inspectors who are members of the
International Association of Machinists and Aerospace Workers
District Lodge 142.
District Lodge 142, representing 250 Aloha mechanics and
inspectors, ratified a new 28-month contract that is effective
January 1, 2005, through April 30, 2007.
"This decisive action by Aloha's mechanics and inspectors brings
to a close an important chapter in our reorganization," said David
A. Banmiller, Aloha's president and chief executive officer.
"With the support of all of our employees, Aloha can move quickly
toward its goal of emerging from bankruptcy as a stronger, more
competitive airline."
The new contract is subject to Bankruptcy Court approval. The
U.S. Bankruptcy Court for the District of Hawaii has already
accepted new collective-bargaining agreements with:
-- the International Association of Machinists and Aerospace
Workers District Lodge 141 representing ticket agents,
reservations agents, commissary, clerical, ramp cargo and
contract services workers,
-- the Association of Flight Attendants,
-- the Air Line Pilots Association, and
-- the Transport Workers Union representing dispatchers and
schedulers.
Aloha Airlines is one of Hawaii's largest employers with about
3,700 employees.
Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. --
http://www.alohaairlines.com/-- provides air carrier service
connecting the five major airports in the State of Hawaii. Aloha
Airgroup and its subsidiary Aloha Airlines, Inc., filed for
chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No.
04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and
Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky
represent the Debtors in their restructuring efforts. When the
Debtor filed for protection from its creditors it listed more than
$50 million in estimated assets and debts.
AMRESCO RESIDENTIAL: S&P Junks Class B-1F Mortgage Certificates
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on class B-1A
of AMRESCO Residential Securities Corp. Mortgage Loan Trust 1997-
3's (AMRESCO 1997-3) pass-through certificates to 'BBB' from
'BBB-'. Concurrently, the rating on class B-1F from AMRESCO 1997-
3 is lowered to 'CCC' from 'B'. Additionally, ratings are
affirmed on six other classes from this transaction.
The raised rating reflects an increase in the credit support
percentage to the mezzanine class due to the paydown of the senior
classes, combined with the shifting interest feature of the
transaction.
The lowered rating reflects a decrease in credit support to the
subordinate class due to continued net losses resulting in an
erosion of credit support. Cumulative losses have consistently
exceeded excess interest, thereby exhausting overcollateralization
and reducing subordination.
The affirmations reflect adequate credit support percentages.
Credit support for the transaction is provided by subordination,
overcollateralization, and excess interest.
As of the March 2005 distribution date, total delinquencies were:
(1) 18.20% (group 1), and
(2) 32.81% (group 2),
and serious delinquencies were:
(1) 17.73% (group1), and
(2) 27.66% (group 2).
Cumulative losses were:
(1) 4.52% (group 2), and
(2) 5.64% (group 1).
At issuance, the mortgage collateral backing AMRESCO 1997-3
consisted of 15- to 30-year, fixed-rate, subprime loans secured by
first liens on owner-occupied, single-family detached residential
properties.
Rating Raised
AMRESCO Residential Securities Corp.
Mortgage Loan Trust 1997-3
Rating
------
Class To From
----- -- ----
B-1A BBB BBB-
Rating Lowered
AMRESCO Residential Securities Corp.
Mortgage Loan Trust 1997-3
Rating
------
Class To From
----- -- ----
B-1F CCC B
Ratings Affirmed
AMRESCO Residential Securities Corp.
Mortgage Loan Trust 1997-3
Series Class Rating
------ ----- ------
1997-3 A-8, A-9, M-1A AAA
1997-3 M-1F AA+
1997-3 M-2A AA
1997-3 M-2F A
ANDERSON MOTEL: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Anderson Motel Developers, Inc.- II
aka Anderson Holiday Inn
9904 North by Northeast Boulevard
Fishers, Indiana 46038
Bankruptcy Case No.: 05-07342
Type of Business: The Debtor is a hotel operator.
Chapter 11 Petition Date: April 21, 2005
Court: Southern District of Indiana (Indianapolis)
Debtor's Counsel: Edward R. Cardoza, Esq.
Rubin & Levin, P.C.
342 Massachusetts Avenue, Suite 500
Indianapolis, Indiana 46204
Tel: (317) 860-2931
Fax: (317) 263-9411
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Robert S. Koor, Trustee Adversary proceeding $113,000
117 N. High St. No. 03-00366
P.O. Box 428 Preferential transfer
Muncie, IN 473080428
Intercontinental Hotels Franchise fees $17,217
Group
P.O. Box 101074
Atlanta, GA 30392
Sysco Food Services Food vendor $15,777
P.O. Box 7137
Indianapolis, IN 46206
Clark Foodservice Food vendor $9,441
Breckenridge/Guest Supplies Trade Vendor $5,313
Best Kitchen Service Trade vendor $2,670
& Parts
Alsco, Inc. Trade vendor $2,584
Hotel SalesPro Contract $1,800
Coca-Cola Bottling Company Trade vendor $1,272
Venture Management Contract $1,180
A.S. Hospitality Trade vendor $1,108
Reagan Roofing Co. Trade vendor $1,088
Mister Ice of Indianapolis Contract $958
Office Depot, Inc. Trade vendor $828
HP Products Trade vendor $731
Markey's Audio Visual Trade vendor $722
Good's Donuts Food vendor $677
A1 Whitaker's Sewer & Trade vendor $675
Septic
Signature, Inc. Contract $655
Arrow Pest Control Trade vendor $646
ARCHIMEDES FUNDING: Moody's Junks $62M 2nd Priority Sr. Sec. Notes
------------------------------------------------------------------
Moody's Investors Service downgraded two classes of notes issued
by Archimedes Funding, L.L.C.:
(1) the U.S. $ 36,000,000 Class B-1 Floating Rate Second
Priority Senior Secured Notes due 2009 (currently rated B2
on watch for downgrade) and
(2) the U.S. $ 36,000,000 Class B-2 Fixed Rate Second Priority
Senior Secured Notes due 2009 (currently rated B2 on watch
for downgrade).
Moody's noted that the Trustee report dated March 31, 2005, showed
the Class B Overcollateralization Ratio was well below the Class B
Overcollateralization Ratio Test level and that the reported
Rating Factor was well in excess of the Test level of 2720.
Rating Action: Downgrade
Tranche Description: U.S. $ 36,000,000 Class B-1 Floating Rate
Second Priority Senior Secured Notes due 2009
Prior Rating: B2 (on watch for possible downgrade)
Current Rating: Ca
Tranche Description: U.S. $ 36,000,000 Class B-2 Floating Rate
Second Priority Senior Secured Notes due 2009
Prior Rating: B2 (on watch for possible downgrade)
Current Rating: Ca
AUBURN FOUNDRY: Wants to File Second Amended Disclosure Statement
-----------------------------------------------------------------
Auburn Foundry, Inc., asks for permission to file a Second Amended
Disclosure Statement from the U.S. Bankruptcy Court for the
Northern District of Indiana, Fort Wayne Division.
Before a confirmation hearing is set on the Amended Plan, the
Debtor wants to file a Second Amended Disclosure Statement to
clarify that the Plan to which it relates is the Amended Plan and
not the original Plan. The Debtor believes this will minimize any
confusion for creditors and parties-in-interest.
Background
On January 20, 2005, Auburn Foundry filed a Plan of Reorganization
and Disclosure Statement. The Court set February 16, 2005, to
consider the Disclosure Statement.
Three parties timely filed objections to the Disclosure Statement:
(1) the Official Committee of Unsecured Creditors,
(2) the Glass, Molders, Pottery and Allied Workers
International Union, and
(3) the Indiana Department of Environmental Management.
At the hearing to approve the Disclosure Statement on February 16,
2005, at the Debtor's request, the Court instructed the Debtor to
file an amended and supplemented Disclosure Statement within seven
days. On February 23, 2005, the Debtor filed an Amended
Disclosure Statement and an Amended Chapter 11 Plan.
On February 25, 2005, the Court approved the Amended Disclosure
Statement. The three objecting parties filed Statements of No
Objection with the Court indicating the absence of further
objections to the Disclosure Statement.
Headquartered in Auburn, Indiana, Auburn Foundry, Inc. --
http://www.auburnfoundry.com/-- produces iron castings for the
automotive industry and automotive aftermarket industry. The
Company filed for chapter 11 protection on February 8, 2004
(Bankr. N.D. Ind. Case No. 04-10427). John R. Burns, Esq.,
and Mark A. Werling, Esq., at Baker & Daniels, represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it estimated assets and debts from
$10 million to $50 million.
AVIANCA: Court Extends Claims Objection Deadline to May 9
---------------------------------------------------------
Aerovias Nacionales de Colombia S.A. Avianca and Avianca Inc.
sought and obtained an extension from the U.S. Bankruptcy
Court for the District of Southern New York of their time to
object to creditors' claims. The new claim objection deadline,
pursuant to Sec. 6.1.1(a) of their confirmed chapter 11 Plan is
May 9, 2005.
The Debtors and the Creditors Representative agreed that the
deadline for objecting to claims should be extended to permit the
Debtors and the Creditors Representative:
-- to finalize their review of all Claims filed in these
proceedings,
-- to prepare and file additional objections to Claims and,
-- attempt to consensually resolve Claims.
Founded in 1919, Aerovias Nacionales de Colombia S.A. Avianca is
one of the oldest airlines in the world. The Colombian carrier
provided scheduled passenger and cargo services throughout South
America, the Caribbean and the US. The Company, along with
Avianca Inc., filed for chapter 11 protection on March 21, 2003
(Bankr. S.D.N.Y. Case No. 03-11678). Ronald E. Barab, Esq., at
Smith, Gambrell & Russell, LLP and Howard D. Ressler, Esq., at
Anderson, Kill & Olick, P.C., represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they estimated assets and debts of more than $100
million each. The Honorable Judge Allan L. Groper confirmed the
Debtors' Third Modified and Restated Joint Plan of Reorganization
on November 24, 2004, and the Plan took effect on December 10,
2004.
BANC OF AMERICA: Moody's Holds Low-B Ratings on Four Cert. Classes
------------------------------------------------------------------
Moody's Investors Service upgraded the ratings of six classes and
affirmed the ratings of nine classes of Banc of America Commercial
Mortgage Inc., Commercial Mortgage Pass-Through Certificates,
Series 2000-1 as follows:
-- Class A-1A, $77,904,913, Fixed, affirmed at Aaa
-- Class A-2A, $299,000,640, Fixed, affirmed at Aaa
-- Class A-2B, $28,967,348, Fixed, affirmed at Aaa
-- Class A-3B, $19,967,220, Fixed, affirmed at Aaa
-- Class X, Notional, affirmed at Aaa
-- Class B, $40,999,766, Fixed, upgraded to Aaa from Aa2
-- Class C, $35,142,657, Fixed, upgraded to Aa2 from A2
-- Class D, $11,714,219, WAC, upgraded to Aa3 from A3
-- Class E, $27,333,177, WAC, upgraded to A3 from Baa2
-- Class F, $11,714,219, WAC, upgraded to Baa1 from Baa3
-- Class G, $11,714,219, Fixed, upgraded to Baa3 from Ba1
-- Class H, $19,523,698, Fixed, affirmed at Ba2
-- Class K, $3,904,740, Fixed, affirmed at Ba3
-- Class L, $15,618,958, Fixed, affirmed at B2
-- Class M, $7,809,479, Fixed, affirmed at B3
As of the April 15, 2005 distribution date, the transaction's
aggregate balance has decreased by approximately 18.3% to
$629.9 million from $771.2 million at closing. The Certificates
are collateralized by 129 mortgage loans secured by commercial and
multifamily properties. The loans range in size from less than
1.0% to 8.8% of the pool, with the top 10 loans representing 37.7%
of the pool. Eight loans representing 6.5% of the pool have
defeased and been replaced by U.S. Government securities. Four
loans have been liquidated from the pool, resulting in an
aggregate realized loss of approximately $1.0 million.
Two loans, representing 1.4% of the pool, are in special
servicing. Moody's has estimated aggregate losses of $1.4 million
for all of the specially serviced loans. Sixteen loans,
representing 10.2% of the pool, are on the master servicer's
watchlist.
Moody's was provided with year-end 2003 operating results for
91.4% of the performing loans and partial year 2004 operating
results for 54.3% of the performing loans. Moody's loan to value
ratio is 77.4%, compared to 85.1% at securitization. Based on
Moody's analysis, 9.8% of the pool has a LTV greater than 100.0%,
compared to 7.1% at securitization. The upgrade of Classes B, C,
D, E, F and G is due to increased subordination levels and
improved overall pool performance.
The top three loans represent 17.2% of the outstanding pool
balance. The largest loan in the pool is the Innkeepers Portfolio
Loan ($55.2 million - 8.8%), which is secured by a portfolio of
seven extended stay hotels comprising 896 rooms. The properties
are flagged as:
* Residence Inn (4), and
* Summerfield Suites (3), and
are located in:
* Washington (3),
* California (2),
* Texas and Oregon.
One property has been released since securitization. The
portfolio's performance has declined since securitization due to a
decline in overall occupancy. Moody's LTV is 57.0%, compared to
52.7% at securitization.
The second largest loan is the Worth Avenue Retail Portfolio Loan
($28.2 million - 4.5%), which consists of two cross collateralized
loans secured by two retail properties located on Worth Avenue in
Palm Beach, Florida. The two properties total 66,300 square feet
and are 100.0% occupied, the same as at securitization. The
largest tenants include:
* Gucci (9,200 square feet; expiration October 2011), and
* Giorgio's (4,100 square feet; expiration June 2006).
Performance has been stable since securitization. Moody's LTV is
80.6%, compared to 82.7% at securitization.
The third largest loan is the SCI Portfolio -- 411 N. Akard Loan
($24.7 million - 3.9%), which is secured by a 350,000 square foot
office building located in downtown Dallas, Texas. The property
is 100.0% occupied, the same as at securitization. Bank of
America occupies 99.3% of the building on a lease expiring in
December 2009. Moody's LTV is 84.1%, compared to 95.0% at
securitization.
The pool's collateral is a mix of:
* retail (36.1%),
* multifamily (22.0%),
* lodging (13.4%),
* office (13.4%),
* U.S. Government securities (6.5%),
* industrial and self storage (4.9%), and
* healthcare (3.7%).
The collateral properties are located in 27 states. The highest
state concentrations are:
* California (21.7%),
* Texas (14.1%),
* Washington (9.4%),
* Florida (6.7%), and
* South Carolina (5.6%).
All of the loans are fixed rate.
BARBARA MARY DERRICKSON: Case Summary & 20 Largest Creditors
------------------------------------------------------------
Debtor: Barbara Mary Derrickson
fka Barbara M. Mattson
fka Barbara M. Gentile
1275 Chadbourne
Davis, Illinois 61019
Bankruptcy Case No.: 05-71947
Type of Business: The Debtor has interests in three companies:
* Best Properties XXII,
* Best Property Management, and
* DuKane Realty, Inc.
Chapter 11 Petition Date: April 20, 2005
Court: Northern District of Illinois (Rockford)
Judge: Manuel Barbosa
Debtor's Counsel: Daniel A Dunn, Esq.
Williams & McCarthy
P.O. Box 219
Rockford, Illinois 61105
Tel: (815) 987-8900
Total Assets: $5,969,700
Total Debts: $5,180,836
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Sandra Adams $250,000
12804 Ventura Boulevard
Machesney Park, IL 61115
Pat Cole $102,000
c/o Kim M. Casey, Esq.
Holmstrom & Kennedy, P.C.
800 North Church Street
Rockford, IL 61105
Rockford Local Development $25,000
Corporation
120 West State Street, #301
Rockford, IL 61101
American Express $24,500
P.O. Box 360002
Fort Lauderdale, FL 33336-0002
MBNA $13,500
Home Depot Credit Card Credit Card $10,000
City of Rockford $7,777
Rock River Water Reclamation $5,497
District
Ford Motor Credit Value of Security: $5,000
$15,000
Lindstrom Sorenson & Associates $4,815
Ford Motor Credit Value of Security: $4,317
$6,700
L S A Durand State Bank $3,300
Rob & Jennifer Addis $3,000
Saint Anthony Medical Center $2,341
Suburban Gastroenterology $1,960
Melissa Cooney $1,891
Nicor Gas Company $1,783
Central DuPage Hospital $1,438
Lake Tobak $1,233
Ritz & Laughlin $1,103
BEARINGPOINT INC: Raising $250 Million in Private Debt Placement
----------------------------------------------------------------
BearingPoint, Inc. (NYSE: BE) is planning a private offering of
$250 million in aggregate principal amount of Series C Convertible
Subordinated Debentures to accredited investors that are also
qualified institutional buyers. The Company intends to use the
net proceeds from the offering to collateralize and/or replace
letters of credit under its existing credit facility (which may
involve terminating the credit facility), to support letters of
credit or surety bonds otherwise in respect to its state and local
business, to pay related expenses of the offering, and for general
corporate purposes.
The Series C Debentures will not be registered under the
Securities Act of 1933 and may not be offered or sold in the
United States absent registration under the Securities Act of 1933
or an applicable exemption from the registration requirements.
This announcement does not constitute an offer to sell, or the
solicitation of an offer to buy, any securities and shall not
constitute an offer, solicitation or sale in any jurisdiction in
which such offer, solicitation or sale would be unlawful.
About the Company
BearingPoint, Inc., headquartered in McLean, Virginia, is a global
business consulting, systems integration and managed services
firms serving government and commercial clients with revenue of
$3.2 billion in 2003.
* * *
As reported in the Troubled Company Reporter on March 23, 2005,
Moody's Investors Service lowered the ratings for BearingPoint,
Inc. (senior implied at Ba2). Moody's said the outlook is
negative. The rating action follows the company's announcement of
a significant delay in filing its 2004 Form 10-K related to likely
material weaknesses in its internal control and financial
reporting, probable adjustments to prior period reported results
and probable impairment of goodwill for the European, Middle East
and Africa business segment.
Ratings lowered include:
* Senior Implied Rating to Ba2 from Ba1
* Interim senior secured credit facility to Ba1 from Baa3
* Senior unsecured Issuer Rating to Ba3 from Ba2
* Series A and Series B convertible subordinated debentures to
B1 from Ba3
* Shelf registration for senior unsecured, subordinated, and
preferred stock to (P)Ba3, (P)B1 and (P)B2, respectively
BOWATER INC: Moody's Affirms Low-B Ratings; Outlook Remains Neg.
----------------------------------------------------------------
Moody's Investors Service affirmed Bowater Incorporated's senior
implied, senior unsecured and issuer ratings at Ba3, and
concurrently, also affirmed the speculative grade liquidity rating
as SGL-2 (indicating good liquidity). The outlook remains
negative.
Moody's overall assessment of Bowater's credit profile reflects
risks that the company's financial performance will continue to be
adversely affected by difficult fundamentals in the North American
newsprint market, and by the recent strengthening of the exchange
value of the Canadian versus the US dollar, and, as a result, de-
levering activities will continue to be retarded.
Moody's has noted in recent communications that the company's
credit protection metrics lagged its rating, and that proactive
steps were required so as to more appropriately balance cash flow
to debt. However, it is noted that Bowater has significant
timberland and non-core assets that could be monetized with the
proceeds used to repay debt, and that market leaders continue to
implement supply management initiatives to balance North American
newsprint supply with demand.
While Moody's is encouraged that efforts to restructure the North
American newsprint sector will have a positive impact on newsprint
market fundamentals, given the measured pace with which pricing
increases are being implemented, and given the potential of
slowing economic growth in 2006/2007, Moody's remains concerned
that Bowater's cash flow will not reach adequate levels relative
to its debt load in advance of a potential cyclical demand
decrease and pricing retreat. Accordingly, Moody's will closely
monitor Bowater's markets and financial performance over the near
term to assess progress.
Ratings affirmed:
-- Bowater Incorporated
* Outlook: negative
* Senior Implied: Ba3
* Senior Unsecured: Ba3
* Industrial and PC revenue bonds: Ba3
* Issuer: Ba3
* Speculative Grade Liquidity Rating: SGL-2
-- Bowater Canada Finance Corp.
* Outlook: negative
* Senior unsecured guaranteed notes: Ba3
Bowater's Ba3 rating results primarily from its very high
financial leverage and the very poor credit protection measures
observed over the past three years. The company is exposed to the
printing and writing papers market that is subject to an ongoing
evolution. This includes a persistent decline in North American
newsprint market, as well as the commercial printing sector
experiencing 15-year low capacity utilization rates. With some
44% of its asset base located in Canada, Bowater has significant
exposure to further appreciation of the Canadian dollar.
In addition, and similar to nearly all companies in the paper and
forest products sector, Bowater faces uncertain near-term cash
flow because of rising input costs and the questionable
sustainability of the commodity price recovery. Further, the
company's results have been quite cyclical and are expected to
remain so, with demand, price and cash flow varying widely over
short periods of time. There is also the potential that North
American newsprint market supply management activities may cause
alternative markets, such as coated and uncoated mechanical
papers, to become saturated with poor pricing and margins
resulting. Lastly, alternative uses of cash, such as pension
funding and asset conversions may restrict debt reduction.
The most significant off-setting factor in Bowater's favor is its
flexibility to divest of timberlands and non-core assets to reduce
its debt load. As well, with improving commodity prices, in
particular, based on the company's exposure to coated and uncoated
mechanical papers and market pulp, near term cash flow is expected
to increase sequentially. Bowater also has good liquidity
arrangements, and a resolution of softwood lumber dispute could
return cash while also improving margins.
Bowater also has good capital markets access. In the current
environment, this is an important consideration. So too is
Moody's observation that ongoing efforts to restructure North
American newsprint market appear to be making progress towards
improving pricing and margins. As this occurs, Bowater's good
cost position, supported by significant backwards integration into
fiber supply and very strong energy self-sufficiency, should
benefit.
Bowater has good liquidity, and accordingly, an SGL-2 Speculative
Grade Liquidity Rating. With Bowater's exposure to pulp and
coated mechanical paper, where favorable pricing conditions
currently prevail, Moody's expects the company's quarterly results
to improve sequentially through 2005. Since Bowater does not have
significant debt maturities to address over the next year, the
combination of its cash flow and revolving credit facilities
provides good liquidity relative to its needs. The company
maintains a $435 million revolving credit facility that is largely
un-drawn and a $200 million accounts receivable securitization
vehicle that is partially utilized.
The bank facility matures in April 2007. As well as providing for
operating needs, Moody's believes the credit facility is good
back-up for the approximately US$200 million in outstanding
receivables' financing. Bowater is in compliance with its key
financial covenants (Maximum Debt-to-Capitalization of 62.5%
(59.1% at December 31, 2004), and Minimum Net Worth of $1.5
billion ($1.6 billion at December 31, 2004)). Beginning with the
quarter-ending March 2005, Bowater will also have to comply with a
rolling four quarters' Minimum EBITDA covenant. The initial
threshold is $250 million, but steps-up to $400 million after
2005.
While this is not expected to be an issue for the near term, given
Bowater's recent performance, in order to remain compliant through
future troughs, either the company's performance will have to be
markedly superior to what was observed in the recent past, or the
then prevailing cycle will have to be less severe. Moody's
estimates that Bowater could access the entire unused amount of
the credit facility without violating its Debt-to-Capitalization
covenant.
With Cash Flow from Operations expected to display sequential
improvement over the next several quarters, neither the Maximum
Debt-to-Capitalization nor the Minimum Net Worth covenants are
expected to be constraints. However, since Bowater has only $120
million of cushion relative the Minimum Net Worth covenant, much
depends on asset valuation. So long as Bowater is not required to
make material adjustments to the carrying value of significant
assets, neither covenant should prove to be a constraint for the
foreseeable future.
The outlook is negative, and despite the benefits of higher pulp
and coated mechanical paper prices, reflects Moody's assessment of
the challenges facing the company in normalizing the relationship
between its debt load and cash flow at the Ba3 rating level. The
North American newsprint market is characterized by declining
demand, and there are longer-term concerns for the entire
communication papers segment. The North American newsprint market
is in the midst of a protracted restructuring with participants
removing capacity in order to better balance supply with demand.
However, the sustainability of the pricing impact of supply
management initiatives is not yet proven. Communication paper
demand is not price inelastic. Accordingly, Moody's is skeptical
that consumers will accept pricing increases as a result of input
price or exchange rate induced cost-push pressures without a
commensurate decrease in consumption. Therefore, in the context
of gradually declining demand, and with the potential of slowing
economic growth, it is not certain that margins can be expanded on
a sustainable basis, and consequently, margins may remain under
significant pressure. Accordingly, Moody's is concerned that
difficult North American market fundamentals may cause current
commodity pricing to be representative of near peak levels.
Therefore, while Moody's expects Bowater's 2005 results to show
improvement over the dismal results posted for the past three
years, the magnitude and sustainability of the improvement are
uncertain. There are also risks that decreases in North American
demand may yet again accelerate, or that the company's relative
cost position will be further eroded by appreciation of the
Canadian dollar, both of which would augment the required debt-to-
cash flow adjustments.
Moody's expectations for a Ba3 rating include average through-the-
cycle RCF in excess of 10%, with the related FCF measure in excess
of 5%. Note that Moody's debt figures account for guaranteed
debt, operating leases and unfunded pensions. Bowater has a
significant pension funding deficit of $500 million (25%), has
$37 million of guaranteed debt, and makes minimal use of operating
leases. In aggregate, the impact of this additional leverage is
significant. Until conclusive evidence of the benefits of the
market structure revisions the company is participating in are
observed on a sustained basis, a ratings upgrade is unlikely.
The most positive near-to-mid term rating action would involve the
outlook being revised to stable from negative. In absence of near
term progress in permanently improving credit metrics, or in the
event either or both of 2005 results and expectations for 2006 do
not show dramatic improvement over the recent past, a ratings
downgrade becomes more likely. A downgrade would also result from
significant debt-financed acquisition activity or were liquidity
arrangements to deteriorate significantly.
Bowater Incorporated, headquartered in Greenville, South Carolina
is a global leader in newsprint, with additional operations in
coated and uncoated groundwood papers, bleached kraft pulp, and
lumber products.
BROWN SHOE: Prices $150 Million of 8.75% Senior Notes Due 2012
--------------------------------------------------------------
Brown Shoe Company, Inc. (NYSE: BWS), a footwear retailer and
wholesaler in the United States, priced $150 million aggregate
principal amount of its 8.75% Senior Notes due 2012 in a private
placement. The offering is expected to close today, April 22,
2005. The issuance of the notes is conditioned upon the
consummation of the previously announced acquisition of Bennett
Footwear Holdings, LLC, and is subject to other customary closing
conditions. The net proceeds of the offering will to be used to
finance a portion of the acquisition price of Bennett and to pay
related fees and expenses.
The notes will be offered and sold only to qualified institutional
buyers in reliance on Rule 144A and outside the United States to
non-U.S. persons in reliance on Regulation S. The notes have not
been registered under the Securities Act of 1933 or applicable
state securities or blue sky laws, and, unless so registered, may
not be offered or sold in the United States except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933 and
applicable state securities laws.
About the Company
Brown Shoe Company, Inc., headquartered in St. Louis, Missouri, is
a retailer and wholesaler of footwear that owns approximately
1,300 Famous Footwear, Naturalizer, and F.X. LaSalle stores in the
U.S. and Canada. FY 2004 revenues were approximately
$1.9 billion.
* * *
As reported in the Troubled Company Reporter on Apr. 18, 2005,
Standard & Poor's Ratings Services affirmed its 'BB' corporate
credit rating on specialty footwear retailer and wholesaler Brown
Shoe Co. Inc. The rating was removed from CreditWatch, where it
was placed with negative implications on March 16, 2005. S&P said
the outlook is negative.
At the same time, Standard & Poor's assigned its 'BB-' rating to
Brown Shoe's proposed $150 million senior unsecured notes due
2012. These notes, to be offered pursuant to Rule 144A with
registration rights, are rated one notch below the corporate
credit rating due to the substantial amount of priority debt in
the capital structure (including borrowings from the company's
$350 million secured revolving credit facility) relative to total
assets. Pro forma for the transaction, total funded debt reaches
about $307 million.
At the same time, Moody's Investors Service assigned these ratings
to Brown Shoe Company, Inc.:
* Senior Implied of Ba3;
* $150 Million guaranteed senior unsecured notes due 2012 of
B1;
* Issuer Rating of B2;
* Speculative Grade Liquidity Rating of SGL-2.
Moody's said the outlook is stable.
CATHOLIC CHURCH: Portland Claimants Rep. Taps Scheflin as Counsel
-----------------------------------------------------------------
David A. Foraker, the Future Claimants Representative in the
Archdiocese of Portland in Oregon's Chapter 11 case, sought and
obtained authority to retain Alan W. Scheflin as his special
counsel and consulting expert on legal and scientific issues
relating to trauma and memory (including repressed memory and
memory recovery). Mr. Foraker wants Mr. Scheflin to assist him in
estimating the "future" claims of the child abuse victims for
which he is the legal representative.
The professional services to be provided by Professor Scheflin
will include:
(1) scientific advisory services;
(2) the translation of scientific issues relating to trauma
and memory into a legal framework for Mr. Foraker; and
(3) litigation consultation services, if necessary.
Mr. Foraker relates that he chose Prof. Scheflin because Prof.
Scheflin is a leading expert and scholar in the field of trauma
and memory. Prof. Scheflin holds an LL.M. from Harvard
University Law School and an M.A. in Counseling Psychology from
Santa Clara University. He is a Professor of Law at Santa Clara
University Law School; the immediate Past-Chair of the Section on
Law & Mental Disability, Association of American Law Schools; a
Fellow of the American Society of Clinical Hypnosis; and Vice-
President-Justice of The Leadership Council on Child Abuse and
Interpersonal Violence. Prof. Scheflin has authored many legal,
scientific and academic works, and has testified as an expert and
served as a consultant in numerous cases involving sexual abuse,
repressed memory and related issues.
Compensation and reimbursement of expenses will be awarded and
paid to Prof. Scheflin as an administrative expense of the
Debtor's estate. Compensation will be limited to $25,000. Prof.
Scheflin's current hourly rate is $400.
To the best of Mr. Foraker's knowledge, Prof. Scheflin does not
represent any entity that has an interest materially adverse to
the class of creditors being represented by Mr. Foraker, or have
any connection with the Debtor, creditors or any other party-in-
interest.
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., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts. In its 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: Spokane Bishop Denies Pastoral Center Sale Rumors
------------------------------------------------------------------
In a letter posted on the Diocese of Spokane's Web site on
April 11, 2005, Bishop William S. Skylstad denied news reports
that the Diocese of Spokane is selling the Catholic Pastoral
Center in downtown Spokane, as well as his residence. "This is
not true," Bishop Skylstad wrote. "As the Diocese of Spokane
works through the Chapter 11 Reorganization process, and as we try
to reach settlements of claims, we will be determining the value
of the assets, which we hold. As I've said before, the list is
not long. Among the major assets are the bishop's house -- my
residence at the moment -- and the Catholic Pastoral Center.
There are a few other pieces of land, which the diocese owns."
Bishop Skylstad relates that there may come a time when the
Diocese will need to sell some or all of its assets in order to
settle claims, or as part of the Chapter 11 reorganization
proceedings. "That time has not yet come. When that time does
come, I will let everyone know. I continue to be committed to
transparency."
On Staff Layoffs
Bishop Skylstad notes that there's another rumor circulating that
there will be staff layoffs at the Catholic Pastoral Center. "The
equivalent of eight full-time positions are proposed to be
eliminated. Some of those positions are currently vacant, some
are part time positions, some are reduction in hours and some are
linked to specific actions or proposals that must be approved.
All these individuals have been notified that their positions will
be effected, and we have offered whatever assistance we can with
helping them find employment elsewhere," Bishop Skylstad relates.
According to the bishop, the loss of income-producing assets has
severely curtailed the cash the Diocese has available for
ministry, including staff positions.
The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts. (Catholic Church Bankruptcy News,
Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CDC MORTGAGE: S&P Holds Series 2004-HE3 Class B-4 Certs. at BB+
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 81
classes of mortgage-backed securities from 11 transactions issued
by CDC Mortgage Capital Trust. Approximately $3.10 billion in
certificates are affected.
The rating affirmations are based on pool performances that have
allowed credit support percentages to remain at levels that are
sufficient to maintain the current ratings. Cumulative losses
range from 0.00% to 1.26% of the original pool balances.
Ninety-plus day delinquencies range from 2.08% to 18.03% of the
current pool balances.
These transactions are protected from losses by a combination of:
(1) overcollateralization,
(2) excess spread, and
(2) subordination.
In addition, several classes have bond insurance policies from
Financial Security Assurance Inc. (FSR 'AAA'). These classes are
noted with an asterisk in the rating list below.
The underlying collateral in all of these transactions includes
pools of fixed- and adjustable-rate, fully amortizing mortgage
loans secured by first- and second-liens on one- to four-family
residential properties.
Ratings Affirmed
CDC Mortgage Capital Trust
Series Class Rating
------ ----- ------
2001-HE1 M-1 AA+
2001-HE1 M-2 A
2001-HE1 B BBB-
2002-HE1 A* AAA
2002-HE1 M A
2002-HE1 B BBB-
2002-HE2 A*, A-IO AAA
2002-HE2 M-1 AA
2002-HE2 M-2 A
2002-HE2 B-1 BBB
2002-HE2 B-2 BBB-
2002-HE3 A* AAA
2002-HE3 M-1 AA
2002-HE3 M-2 A
2002-HE3 B-1 BBB
2002-HE3 B-2 BBB-
2003-HE1 A-1*, A-2 AAA
2003-HE1 M-1 AA
2003-HE1 M-2 A
2003-HE1 M-3 A-
2003-HE1 B-1 BBB
2003-HE1 B-2 BBB-
2003-HE2 A AAA
2003-HE2 M-1 AA
2003-HE2 M-2 A
2003-HE2 M-3 A-
2003-HE2 B-1 BBB+
2003-HE2 B-2 BBB
2003-HE2 B-3 BBB-
2003-HE3 A-1*, A-2, A-3*, A-4, A-5 AAA
2003-HE3 M-1 AA
2003-HE3 M-2 A
2003-HE3 M-3 A-
2003-HE3 B-1 BBB+
2003-HE3 B-2 BBB
2003-HE3 B-3 BBB-
2003-HE4 A-1*, A-2, A-3 AAA
2003-HE4 M-1 AA
2003-HE4 M-2 A
2003-HE4 M-3 A-
2003-HE4 B-1 BBB+
2003-HE4 B-2 BBB
2003-HE4 B-3 BBB-
2004-HE1 A-1*, A-2, A-3, A-4 AAA
2004-HE1 M-1 AA
2004-HE1 M-2 A
2004-HE1 M-3 A-
2004-HE1 B-1 BBB+
2004-HE1 B-2 BBB
2004-HE1 B-3 BBB-
2004-HE2 A-1*, A-2, A-3, A-4 AAA
2004-HE2 M-1 AA
2004-HE2 M-2 A
2004-HE2 M-3 A-
2004-HE2 B-1 BBB+
2004-HE2 B-2 BBB
2004-HE2 B-3 BBB-
2004-HE2 B-4 BB+
2004-HE3 A-1*, A-2 AAA
2004-HE3 M-1 AA
2004-HE3 M-2 A
2004-HE3 M-3 A-
2004-HE3 B-1 BBB+
2004-HE3 B-2 BBB
2004-HE3 B-3 BBB-
2004-HE3 B-4 BB+
*Denotes class has additional support from a bond insurance policy
issued by Financial Security Assurance Inc.
CHARLES GREMMELS: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Charles David Gremmels
16 Summit Chase
Cedar Grove, Tennessee 38321
Bankruptcy Case No.: 05-11585
Type of Business: The debtor operates several golf courses in
Tennessee.
Chapter 11 Petition Date: April 5, 2005
Court: Western District of Tennessee (Jackson)
Judge: G. Harvey Boswell
Debtor's Counsel: Michael T. Tabor
203 South Shannon
P.O. Box 2877
Jackson, Tennessee 38302-2877
Tel: (731) 424-3074
Total Assets: $3,211,069
Total Debts: $5,010,009
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Farmers & Merchants Bank 18 hole golf $1,270,000
119 East Main St. course, clubhouse,
P.O. Box 408 swimming pool -
Adamsville, TN 38310 Shiloh Golf Course
Hardin Co., TN
Value of security:
$1,000,000
First Bank 18 hole golf course $1,200,000
Bankruptcy Dept known as Falcon
200 Main Street Ridge Golf Club
P.O. Box 388 Henderson Co., TN
Lexington, TN 38351 (approx. 214 acres)
Value of security:
$700,000
SBA 18 hole golf course $800,000
120 Margin Street known as Falcon
Brownsville, TN 38012 Ridge Golf Club
Henderson Co., TN
(approx. 214 acres)
Value of security:
$700,000
Senior lien value:
$1,200,000
First Bank Approx. 22 lots $700,000
Bankruptcy Dept adjacent to Falcon
200 Main St. Ridge Golf Course
P.O. Box 388 FMV $385,000
Lexington, TN 38351 5 tracts totalling
approx. 40 acres in
Henderson Co. TN
(near Falcon Ridge)
FMV $1
Value of security:
$505,000
Karen Young Divorce property $283,500
114 McIntosh
Jackson, TN 38305
Maureen Snow Part of approx. 303 $71,331
598 Main Street acres in Henderson
Lexington, TN 38351 Co., TN (near
Falcon Ridge Golf
Course and partly
on Falcon Ridge
Golf Course)
Value of security:
$303,000
Senior lien value:
$239,672
Wells Fargo $46,853
Business Payment Processing
P.O. Box 29491
Phoenix, AZ 850389491
David Frizzell $29,839
Henderson County Trustee
Henderson County Courthouse
Lexington, TN 38351
Wells Fargo $18,285
Business Payment Processing
P.O. Box 29491
Phoenix, AZ 850389491
Hardin County Trustee $15,830
601 Main Street
Savannah, TN 38372
City of Adamsville $15,473
City Hall - Main Street
Adamsville, TN 38310
Chase Visa $9,289
P.O. Box 94017
Palatine, IL 60094-4017
Textron financial $9,233
E-Z-Go Division of Textron
Atlanta, GA 303848040
Regal Chemical Co. $8,808
P.O. Box 900
Alpharetta, GA 30009
Regal Chemical Co. $8,102
P.O. Box 900
Alpharetta, GA 30009
E-Z-Go $6,954
Textron
Drawer CS 198040
Atlanta, GA 303848040
City Business $3,630
P.O. Box 44230
Jacksonville, FL 322314230
Chase Visa Gold $3,359
P.O. Box 52095
Phoenix, AZ 850722095
Tennessee Dept. of Revenue $2,860
500 Deadrick Street
Nashville, TN 37242
Tennessee Dept. of Revenue $2,487
Bankruptcy Unit
500 Deaderick Street
Nashville, TN 37242
CMX/CENTURY: Case Summary & 5 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: CMX/Century Productions, Inc.
5320 South Procyon
Las Vegas, Nevada 89118
Bankruptcy Case No.: 05-13435
Type of Business: The Debtor produces motion pictures, TV shows
and films, and specializes in video coverage of
commercials, conventions, and special events.
See http://www.cmxcentury.com/
Chapter 11 Petition Date: April 20, 2005
Court: District of Nevada (Las Vegas)
Judge: Bruce A. Markell
Debtor's Counsel: Gregory E. Garman, Esq.
Gordon & Silver, Ltd.
3960 Howard Hughes Parkway, 9th Floor
Las Vegas, Nevada 89109
Tel: (702) 796-5555
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 5 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Century Advertising Promissory Note Unknown
Production, Inc. #1
5210 South Procyon Avenue
Las Vegas, NV 89118
Century Advertising Promissory Note Unknown
Production, Inc. #2
5210 South Procyon Avenue
Las Vegas, NV 89118
Robert Half International, Inc. Litigation Unknown
c/o McCarthy & Associates
Brian R. McCarthy, Esq.
530 South Fourth Street
Las Vegas, NV 89101
U.S. Bank National Association Revolving Loan Unknown
ABA 091000022
Special Assets Clearing Account
Minneapolis, MN
Attn: David Kopolow
Senior Vice President
U.S. Bank National Association Term Loan Unknown
ABA 091000022
Special Assets Clearing Account
Minneapolis, MN
Attn: David Kopolow
Senior Vice President
CONGOLEUM CORP: Wants Exclusive Period Extended Until Aug. 1
------------------------------------------------------------
Congoleum Corporation and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of New Jersey for an extension,
through and including Aug. 1, 2005, of the time within which they
alone can file a chapter 11 plan. The Debtors also ask the Court
for more time to solicit acceptances of that plan from their
creditors through Sept. 1, 2005.
The Debtors give the Court four reasons militating in favor of
their request for more time to file a chapter 11 plan without
interference from other parties in interest:
a) the Debtors' chapter 11 case is large and complex, involving
over 900 employees;
b) the primary structure of the Plan relates to the channeling
of over 100,000 asbestos claims to a trust and the
implementation of trust distribution procedures;
c) the Debtors have made good faith progress toward confirming
a consensual Plan; and
d) the Debtors' request is intended to facilitate an orderly,
efficient and cost-effective plan process for the benefit of
all creditors.
The Court will convene a hearing at 2:30 p.m., on Monday, Apr. 25,
2005, to consider the merits of the Debtors' request.
Headquartered in Mercerville, New Jersey, Congoleum Corporation --
http://www.congoluem.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The Company filed for
chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No.
03-51524). Domenic Pacitti, Esq., at Saul Ewing, LLP, represents
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed $187,126,000 in
total assets and $205,940,000 in total debts.
At Dec. 31, 2004, Congoleum's balance sheet showed a $20,860,000
stockholders' deficit, compared to a $25,777,000 deficit at
Dec. 31, 2003.
CONRAD MOSS: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Conrad O. Moss
9018 Jenna Road
Germantown, Tennessee 38138-8435
Bankruptcy Case No.: 05-24313
Chapter 11 Petition Date: March 23, 2005
Court: Western District of Tennessee (Memphis)
Judge: William Houston Brown
Debtor's Counsel: Felix H. Bean, III, Esq.
100 North Main Bldg., Suite 2519
Memphis, Tennessee 38103
Tel: (901) 525-7648
Total Assets: $5,250,880
Total Debts: $2,462,187
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
D & K STORES: Section 341(a) Meeting Slated for May 5
-----------------------------------------------------
The U.S. Trustee for Region 3 will convene a meeting of D & K
Stores, Inc.'s creditors at 12:00 p.m., on May 5, 2005, at
Clarkson S. Fisher Federal Courthouse, Room 129, 402 East State
St., Trenton, New Jersey 08608-1507. This is the first meeting of
creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy
cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Eatontown, New Jersey, D & K Stores, Inc., filed
for chapter 11 protection on April 8, 2005 (Bankr. D.N.J. Case No.
05-21445). Timothy P. Neumann, Esq., at Broege, Neumann, Fischer
& Shaver, LLC, represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it
estimated assets and debts from $10 million to $50 million.
DDB DORRANCE: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: DDB Dorrance, LLC
dba Dunkin Donuts
76 Dorrance Street, Suite 212
Providence, Rhode Island 02903
Bankruptcy Case No.: 05-10427
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
DDB Empire, LLC 05-10428
DDB Fountain LLC 05-10429
DDB Weybosset, LLC 05-10430
DDB Westminster, LLC 05-10431
DDB Warwick Mall LLC 05-10432
DDB Burrillville LLC 05-10433
Type of Business: The Debtor operates Dunkin' Donuts franchises.
Chapter 11 Petition Date: February 14, 2005
Court: District of Rhode Island (Providence)
Judge: Arthur N. Votolato
Debtors' Counsel: Mary C. Dunn, Esq.
Stephen J. Reid, Jr., Esq.
Blish & Cavanagh LLP
30 Exchange Terrace
Providence, Rhode Island 02903
Tel: (401) 831-8900
Fax: (401) 751-7542
--and--
Warren E. Agin, Esq.
Swiggart & Agin, LLC
Two Center Plaza, Suite 510
Boston, Massachusetts 02108
Tel: (617) 742-0110
Fax: (617) 723-0230
Estimated Assets Estimated Debts
---------------- ---------------
DDB Dorrance, LLC $100,000 to $100,000 to
$500,000 $500,000
DDB Empire, LLC $100,000 to $100,000 to
$500,000 $500,000
DDB Fountain LLC Less than $50,000 $100,000 to
$500,000
DDB Weybosset, LLC $50,000 to $50,000 to
$100,000 $100,000
DDB Westminster, LLC $100,000 to $100,000 to
$500,000 $500,000
DDB Warwick Mall LLC $100,000 to $100,000 to
$500,000 $500,000
DDB Burrillville LLC $100,000 to $100,000 to
$500,000 $500,000
Consolidated List of Debtors' 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
State of Rhode Island Meals taxes $305,185
Dept of Admin, Tax
Collections
One Capitol Hill
Providence, RI 02908
Ron Griffin Seller financing $165,000
3 Desoto Way
Manville, RI 02838
66 Fountain Street Judgment by prior $46,229
Associates landlord
c/o Poor & Rosenbaum
30 Exchange Street
Providence, RI 02903
New England Distribution Goods & services $35,019
Center
D.M.B. Construction Inc. Goods & services $24,304
Dunkin Donuts, Inc. Franchise fees $16,096
Zarrella Plumbing & Heating Goods & services $11,000
Rouse Providence LLC Goods & services $9,040
Narragansett Electric Goods & services $8,024
NCR Goods & services $7,732
Colby Development Corp. Landlord $6,943
Lemos Alarm Goods & services $6,890
DMX Music - Boston $6,175
Verizon Goods & services $3,648
Muzak - Hartford Goods & services $3,321
Roberts, Carroll, Legal services $3,235
Feldstein & Pierce
Kaitz & Fellman , LLP Professional services $2,806
Decco Inc. Goods & services $2,588
Homeland Builders Goods & services $2,302
Pepsi Cola Goods & services $2,102
DECORA INDUSTRIES: Chapter 7 Trustee Objects to BNY's Legal Fees
----------------------------------------------------------------
Michael B. Joseph, the Chapter 7 Trustee overseeing the
liquidation of Decora Industries, Inc., and Decora Inc., objects
to two Proofs of Claim, numbers 241 and 242, filed by the Bank of
New York in its capacity as the Successor Indenture Trustee to
United States Trust Company of New York. BNY serves as the
Indenture Trustee for the holders of Decora's 11% Senior Secured
Notes due 2005.
On March 30, 2005, BNY filed an administrative expense Proof of
Claim for at least $279,914.36, on account of postpetition legal
fees for services rendered by BNY's counsel. These fees, BNY
says, were incurred in connection with its service on the Official
Committee of Unsecured Creditors and should be paid pursuant to 11
U.S.C. Sec. 503(b)(3)(F).
The Chapter 7 Trustee objects to the Claims because BNY:
-- fails to explain the nature of the legal fees,
-- does not explain why the legal fees were necessary,
-- doesn't explain how the Estate benefited from the legal
fees,
-- didn't disclose the reason why BNY, as a member of the
Creditors' Committee represented by Sidley Austin Brown &
Wood LLP, required its own separate counsel.
Duplicate Claim
The Chapter 7 Trustee believes that Claim number 242 for $279,914
is an exact duplicate of Claim number 241. Accordingly, the
Chapter 7 Trustee wants that duplicative claim expunged in its
entirety pursuant to Section 503(b) of the U.S. Bankruptcy Code
and Rule 3007 of the Federal Rules of Bankruptcy Procedure.
Hearing
The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the
District of Delaware will convene a hearing at 9:30 a.m., on May
20, 2005, to consider the Chapter 7 Trustee's protest. Objections
to the Chapter 7 Trustee's move to disallow BNY's claims, if any,
must be submitted by May 13, 2005, at 4:00 p.m.
Joseph Samet, Esq., at Baker & McKenzie LLP, represents The Bank
of New York in this matter.
Decora Industries, Inc., was a leading manufacturer and marketer
of self-adhesive consumer surface-covering products including the
prominent Con-Tact(R) and d-c-fix(R) brands. Decora Industries
and its Decora Inc., subsidiary filed for chapter 11 bankruptcy
protection on December 5, 2000 (Bankr. D. Del. Case No.
00-04459), listing $105,710,204 in assets and $120,149,512 in
debts. Robert A. Klyman, Esq., Gregory O. Lunt, Esq., and
Jonathan S. Shenson, Esq., at Latham & Watkins, represent Decora.
The case converted to a chapter 7 liquidation on October 21, 2002.
Bradford J. Sandier, Esq., and Jonathan M. Stemerman, Esq., at
Adelman Lavine Gold and Levin, P.C., represent Michael B. Joseph,
the Chapter 7 Trustee.
DENVER CITY: Lack of Updated Information Cues S&P to Hack Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on Denver
City and County (The Boston Lofts Project), Colo.'s $16.2 million
multifamily housing revenue bonds series 1997A and taxable
multifamily housing revenue bonds series 1997B to 'BB' from 'AAA'
and removed its rating from CreditWatch with negative implications
where it was placed on Dec. 15, 2004.
The downgrade reflects the lack of updated information. The
original information that Standard & Poor's received that resulted
in the CreditWatch placement showed that there would be a credit
and liquidity shortfall if the mortgagee defaulted on the mortgage
note or did not make the full payment on the mortgage note.
As of Sept. 30, 2004, The Boston Lofts Project had an asset-to-
liability parity of 99.96%.
Total assets included:
(1) a $15.4 million FHA-insured mortgage note,
(2) a $430,590 bond fund,
(3) a $743,000 debt service reserve fund,
(5) a $81,500 mortgage loan reserve fund, and
(6) $26,782 accrued interest on investments.
The bond fund, the mortgage loan reserve fund, and 74% of the debt
service reserve fund is invested in a MBIA Inc. ('AA') guaranteed
investment contract, while the remaining 26% of the debt service
reserve fund is invested incredit issued by Bank of America N.A.
('AA-/A-1+') maturing on June 27, 2005. The liabilities are
composed of $14.5 million series 1997A term bonds and $1.7 million
series 1997B term bonds, plus accrued yet unpaid interest of
$481,929.
Bond proceeds were used to rehabilitate two adjoining buildings
located in Denver, Colorado. The project consists of 32 low-
income units and 126 market-rate units.
In total there are:
(1) 136 one-bedroom units and 22 two-bedroom units,
(2) retail and commercial space, and
(3) a 259-space parking facility.
The mortgage loan is insured by FHA under section 220 of the
national housing act.
DESA HOLDINGS: Court Confirms 2nd Amended Joint Liquidating Plan
----------------------------------------------------------------
The Honorable Walter Shapero of the United States Bankruptcy Court
for the District of Delaware confirmed the Second Amended Joint
Plan of Liquidation of DESA Holdings Corporation and its debtor-
affiliate -- DESA International LLC. The Court confirmed the Plan
on April 1, 2005, and Plan took effect the same day.
Judge Shapero found that the Debtors' Plan met all 13 conditions
required under Section 1129(a) of the U.S. Bankruptcy Code and
complied with the absolute priority rule in Section 1129(b).
Creditor Recoveries & Treatment of Claims
Bank of America, N.A., as administrative agent for the Prepetition
Lenders under the Credit Agreement, will receive $25,000 in full
satisfaction of the Prepetition Lenders' Claim.
Secured Claims will receive either:
* the full amount of their claim in cash or the property;
* sale proceeds of the property securing the claim; or
* the property.
Holders of other priority claims will receive the full amount of
their claims.
Holders of general unsecured claims and subordinated notes will
receive a pro rata share of the amount remaining after:
* holders of allowed administrative claims,
* holders of allowed priority tax claims,
* prepetition lenders,
* other secured claimants,
* holders of other priority claims,
are paid and after a certain amount of cash is set aside to fund
administration of the Debtors cases' until full winding-up of the
Debtors' affairs.
Holders of:
* intercompany claims; and
* equity interests
will not receive anything.
Appointment of Plan Administrator
James E. Ashton and Joseph J. Incandela are appointed as Plan
Administrators, and they will administer all Claims and make
distributions required under the Plan.
The Plan Administrators will hold back an amount equal to the Pro
Rata Distribution to which Deng would be entitled under the Plan
as a Holder of a General Unsecured Claim in the event that its $75
million Claim subsequently becomes an Allowed General Unsecured
Claim. The Plan Administrator will hold back the Deng Reserve
until the Deng Claim is either:
(a) resolved consensually by the parties,
(b) estimated at zero or some other amount, or
(c) actually objected to and disallowed in full or in part.
The payments made pursuant to the Plan will be funded by the Post
Confirmation Estate Assets, including:
(a) cash on hand on April 1, 2005, and
(b) funds available after April 1, 2005, from the prosecution
and enforcement of the Plan.
Full-text copies of the Disclosure Statement and Plan are
available for a fee at:
http://www.researcharchives.com/bin/download?id=050421225741
Headquartered in Bowling Green, Kentucky, DESA International,
Inc., manufactured and marketed high-quality zone heating
products, hearth products, security lighting and specialty tools
for use in homes and commercial buildings. The Company and its
affiliate filed for chapter 11 protection (Bankr. Del. Case No.
02-11672) on June 8, 2002. James H.M. Sprayregen, Esq., James W.
Kapp, III, Esq., and Scott R. Zemnick, Esq., at Kirkland & Ellis,
LLP, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young
Jones & Weintraub, P.C., represent the Company. When the Company
filed for protection from its creditors, it listed $50 million in
assets and $100 million in debts. On April 1, 2005, the Second
Amended Joint Plan of Liquidation was confirmed and became
effective.
DOUGLAS CAUSEY: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Douglas Clifton Causey
aka Doug Causey
aka Douglas C. Causey, Jr.
dba Hernando Food Services, LLC
dba Restar, LLC
242 Delta Road
Memphis, Tennessee 38109
Tel: (901) 239-3714
Bankruptcy Case No.: 05-25727
Chapter 11 Petition Date: April 19, 2005
Court: Western District of Tennessee (Memphis)
Judge: William Houston Brown
Debtor's Counsel: Larry D. Austin
Austin & Walker, PLLC
60 Germantown Court, Suite 200
Cordova, Tennessee 38018
Tel: (901) 761-7777
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bankcorp South Bank loan $1,402,356
2910 West Jackson St. Value of collateral:
Tupelo, MS 38801 $500,000
Unsecured value:
$902,356
Bankcorp South Bank loan $149,825
2910 West Jackson Street Value of collateral:
Tupelo, MS 38801 $220,000
Unsecured value:
$3,825
Tennessee Department Of Revenue $52,000
500 Deaderick Street
Nashville, TN 37242
Don Causey Loan $32,000
197 Highway 51, Suite A
Ridgeland, MS 39157
Internal Revenue Service Taxes $22,000
P.O. Box 1107 Unsecured value:
Nashville, TN 37202 $22,000
Tennessee Department Of Revenue $16,000
500 Deaderick Street
Nashville, TN 37242
PFD Supply $15,801
P.O. Box 901510
Kansas City, MO 64190-1510
Stokes Bartholomew $14,372
1000 Ridgeway Loop Road, Suite 200
Memphis, TN 38120
Performance Food Group Trade debt $10,000
12500 West Creek Parkway
Richmond, VA 23238
Church's Chicken Trade debt $8,400
C/O Jennifer S. Sickler, Esq.
1000 Louisiana, Suite 3400
Houston, TX 77002-5007
State Of Connecticut Taxes $5,876
P.O. Box 5088
Hartford, CT 06102-5088
Wasserstrom $4,366
47 South Front Street
Columbus, OH 43215
Hanna & Associates Trade debt $2,317
10864 Gulfdale
San Antonio, TX 78216
Tri-State Signs $2,264
2235 First Commercial Drive
Southaven, MS 38671
Arkansas Department of Revenue $1,700
801 Barrow Road, Suite 13-15
Little Rock, AR 72204
Bridgeforth & Buntin $1,294
P.O. Box 241
Southaven, MS 38671
City Of Memphis $1,241
P.O. Box 185
Memphis, TN 38101-0185
Mississippi Hospitality Trust $1,239
P.O. Box 3100
Naperville, IL 60566-7099
H&R Block Services $800
975 Goodman Road
Southaven, MS 38671
Mississippi Tax Commission Taxes $761
P.O. Box 1033
Jackson, MS 39215-1033
DOW JONES: Fitch Puts Low-B Ratings on Three CDX.NA.HY.4 Trusts
---------------------------------------------------------------
Fitch Ratings has assigned bond fund credit and volatility ratings
to three of the Dow Jones CDX.NA.HY.4 trusts. The credit linked
certificates of each trust enable investors to gain funded
nonlevered exposure to the reference entities of the current Dow
Jones CDX.NA.HY.4 credit default swap index of non-investment-
grade corporations. The exposure to the index constituents is
obtained via credit default swaps between the trust and nine major
financial institutions. The obligations of the trust under the
credit default swaps are collateralized via a reverse repurchase
agreement.
Fitch assigns these ratings to the trusts:
-- Dow Jones CDX.NA.HY.4 Trust 1 June 2010 'B+/V4';
-- Dow Jones CDX.NA.HY.4 Trust 2 June 2010 'BB/V4';
-- Dow Jones CDX.NA.HY.4 Trust 3 June 2010 'B/V4'.
Fitch's bond fund credit rating is based on the weighted average
credit rating of the underlying reference entities. The bond fund
volatility rating reflects the relative sensitivity of the fund's
total return and market price to changes in interest rates and
other market conditions.
Funds rated in the 'V4' category are considered to have moderate
market risk. Total returns perform consistently over
intermediate- to long-term holding periods but will exhibit some
variability over shorter periods due to greater exposure to
interest rates and changing market conditions. Fund volatility
ratings are assigned on a scale of 'V1' (least volatile) through
'V10' (most volatile).
Fitch's bond fund credit and volatility ratings do not address the
likelihood of a timely or ultimate payment of interest or
principal of the securities issued by the trust and should not be
considered as a substitute for Fitch's international long or
short-term credit ratings. Fitch's rating also does not address
the risk associated with the ability of the Credit Default Swap
Counterparties, the Repo Counterparty, and the Trust Property to
provide payment to the trust.
EAGLEPICHER: Chap. 11 Filing Cues S&P to Withdraw Default Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'D' ratings on
EaglePicher Inc. and EaglePicher Holdings Inc., including its 'D'
corporate credit rating that was assigned when the company filed
Chapter 11 bankruptcy protection on April 11, 2005.
"The withdrawal follows the company's default upon its bankruptcy
filing," said Standard & Poor's credit analyst John Sico.
At Nov. 30, 2004, the Phoenix, Arizona-based industrial
manufacturer had about $426 million of total debt outstanding.
EaglePicher provides products to the automotive, aerospace,
defense, telecommunications, and pharmaceutical markets.
ENRON CORP: Reorganized Debtors' 2nd Post-Confirmation Report
-------------------------------------------------------------
On April 15, 2005, Reorganized Enron Corporation and its debtor-
affiliates delivered to the U.S. Bankruptcy Court for the Southern
District of New York their Second Post-Confirmation Report.
Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York,
relates that since the filing of the Reorganized Debtors' first
post-confirmation report, they have taken these additional
actions to consummate their Chapter 11 Plan:
A. Distributions
In February 2005, holders of Allowed Administrative, Priority,
Secured and Convenience Claims received cash distributions
aggregating around $3 million. In April 2005, holders of
Allowed Administrative, Priority, Secured, Convenience and
General Unsecured Claims received cash distributions totaling
in excess of $580 million, which includes about $570 million
distributed for Allowed General Unsecured Claims. As of
April 15, 2005, the aggregate amount of distributions to
creditors exceeds $600 million.
B. Claims Resolution Process
For the quarter ending March 31, 2005, the Reorganized Debtors
filed:
-- 20 omnibus objections,
-- 24 claims estimation objections, and
-- over 100 objections to individual proofs of claim.
In the same quarter, around 590 claims have been disallowed,
1,250 have been allowed, and 430 claims are withdrawn.
C. Denial of PGE Sale
With the Public Utility Commission of Oregon's denial of the
the proposed sale of Portland General Electric Company, the
Reorganized Debtors are now considering other options. In any
event, PGE Common Stock would not have been distributed to
holders of General Unsecured Claims because the requirements
of the Plan have not been met.
D. Appeals of Confirmation Order
With respect to the two pending appeals filed by Upstream
Energy Services and American Electric Power Company, Inc., the
Reorganized Debtors filed motions to dismiss each appeal. The
parties are awaiting decisions by the District Court.
Headquartered in Houston, Texas, Enron Corporation is in the midst
of restructuring various businesses for distribution as ongoing
companies to its creditors and liquidating its remaining
operations. Before the company agreed to be acquired, controversy
over accounting procedures had caused Enron's stock price and
credit rating to drop sharply.
Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed. The Confirmed Plan took effect on
Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,
Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in
their restructuring efforts. (Enron Bankruptcy News, Issue No.
141; Bankruptcy Creditors' Service, Inc., 15/945-7000)
FEDERAL-MOGUL: March 31 Balance Sheet Upside-Down by $2.05 Billion
------------------------------------------------------------------
Federal-Mogul Corporation (OTCBB:FDMLQ) reported its financial
results for the three-month period ended March 31, 2005. During
the first quarter of 2005 Federal-Mogul recognized a net loss of
$48 million on sales of $1.633 billion.
First quarter 2005 net sales of $1,633 million represents an
increase of $86 million or 6% when compared to net sales of
$1.547 billion for the same period in 2004. New business in the
OE and Aftermarket sectors accounted for $37 million of this
increase, while foreign currency contributed $39 million and
increased volumes, primarily from the North American Aftermarket,
contributed $10 million.
Gross margin decreased $22 million or 2% as a percentage of sales
during the three- month period ended March 31, 2005, as compared
with the same period of 2004. Raw material cost inflation,
primarily related to ferrous metals and hydrocarbon-based
materials continued to adversely impact the Company's gross margin
during the first quarter of 2005, resulting in a $21 million
decrease as compared to the same period of 2004. Increased
employee costs associated with the Company's United Kingdom
pension plan of $13 million also contributed to the decrease.
Increased volumes and favorable foreign currency of $8 million and
$4 million, respectively, partially offset the adverse gross
margin factors.
The Company reported a loss from continuing operations before
income taxes of $22 million during the first quarter of 2005,
compared with earnings from continuing operations before income
taxes of $1 million for the same period in 2004. Including
discontinued operations and excluding impairment charges,
Chapter 11 and Administration expenses, restructuring costs,
income tax expense, interest expense, depreciation and
amortization, the Company recognized Operational EBITDA of
$127 million for the three month period ended March 31, 2005,
representing a decrease of $11 million as compared to Operational
EBITDA for the same period of 2004. The decrease in Operational
EBITDA is attributable to the $22 million decrease in gross margin
and an $8 million increase in selling, general and administrative
expenses resulting from increased pension costs. These factors
were partially offset by the favorable Operational EBITDA impact
of productivity and foreign exchange. Management believes that
Operational EBITDA provides useful information as it most closely
approximates the cash flow associated with the operational
earnings of the Company. Additionally, management uses
Operational EBITDA to measure the profitability performance of its
operations. A reconciliation of Operational EBITDA to the
Company's loss from continuing operations before income taxes for
the three-months ended March 31, 2005 has been provided.
The Company recorded income tax expense of $27 million on a loss
from continuing operations before income taxes of $22 million.
Income tax expense resulted primarily from taxable income
generated by certain international subsidiaries, non-recognition
of income tax benefits on United Kingdom operating losses and
certain non-deductible items in various jurisdictions.
Executive Appointment
On February 2, 2005 the Company announced the appointment of Jose
Maria Alapont to the position of President and Chief Executive
Officer which became effective on March 28, 2005. Mr. Alapont
brings to Federal-Mogul more than 30 years of strong leadership
experience in both the automotive manufacturer and supplier
industries. Since joining the Company, Mr. Alapont has been
actively engaged in assessing the challenges facing the Company on
business strategy, technological innovation, customer satisfaction
and global profitable growth.
Headquartered in Southfield, Michigan, Federal-Mogul was founded
in Detroit in 1899 and today employs approximately 45,000 people
and conducts operations in 31 countries. On October 1, 2001,
Federal-Mogul decided to separate its asbestos liabilities from
its true operating potential by voluntarily filing for financial
restructuring under Chapter 11 of the Bankruptcy Code in the
United States and Administration in the United Kingdom. For more
information on Federal-Mogul, visit the company's Web site at
http://www.federal-mogul.com/
At Mar. 31, 2005, Federal-Mogul's balance sheet showed a
$2.048 billion stockholders' deficit, compared to a $1.926 billion
deficit at Dec. 31, 2004.
GAIL MATHES: Case Summary & 16 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Gail O. Mathes
876 River Park Drive
Memphis, Tennessee 38103
Bankruptcy Case No.: 05-25786
Type of Business: The Debtor has a law office in Memphis,
Tennessee, and owns two retail furniture
companies.
Chapter 11 Petition Date: April 20, 2005
Court: Western District of Tennessee (Memphis)
Judge: Jennie D. Latta
Debtor's Counsel: James W. Surprise, Esq.
JG Law Firm
780 Ridge Lake Blvd., Suite 202
Memphis, Tennessee 38119
Tel: (901) 682-3450
Total Assets: $1,747,000
Total Debts: $1,666,934
Debtor's 16 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
John Pettey $400,000
[Address not provided]
Aurora Loan Services Inc. Unsecured value: $340,839
P.O. Box 1706 $340,839
Scottsbluff, NE 69363
Internal Revenue Service Unsecured value: $100,000
$100,000
Trinity Ridge Partners $98,000
7751 Wolf River Blvd.
Germantown, TN 38138
Citi Cards $36,524
P.O. Box 8117
S Hackensack, NJ 07606-8117
George Flynn Unsecured value: $30,000
188 South Bellevue, Suite 222 $30,000
Memphis, TN 38104
Lynn Davis $25,000
4451 No State Street
Jackson, MS 39206
Otis Ostby $25,000
204 Hudson Street
Maryville, TN 37821
Jeanne Richardson $25,000
860 River Park Drive
Memphis, TN 38103
Cavalry Portfolio Services Inc. $17,633
P.O. Box 105816
Atlanta, GA 30348
Atlantic Credit & Finance Inc. $8,078
P.O. Box 13386
Roanoke, VA 24033
Capitol One $5,271
C/O Viking Collection Service
P.O. Box 59207
Minneapolis, MN 55459
BankOne $4,457
P.O. Box 94014
Palatine, IL 60094-4014
Bank of America $3,027
P.O. Box 53132
Phoenix, AZ
Goldsmith - Macy $849
P.O. Box 4592
Carol Stream, IL
BP Amoco $149
Processing Center
Des Moines, IA 50360
GARDEN CITY: Moody's Reviews $22MM Bonds' Ba2 Rating & May Upgrade
------------------------------------------------------------------
Moody's Investors Service has placed Garden City Hospital's Ba2
rating on Watchlist for possible upgrade, affecting $22 million of
outstanding Series 1998A bonds issued through the Garden City
Hospital Finance Authority. This action follows receipt of six-
month interim fiscal year 2005 financial statements and audited FY
2004 financial statements that reflect a continuation of operating
profits and improved liquidity since FY 2002. Moody's anticipates
rendering a rating decision within the next 90 days.
GARDNER DENVER: Moody's Rates Planned $125M Sr. Sub. Notes at B2
----------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to the proposed
$125 million of senior subordinated notes to be issued by Gardner
Denver, Inc., in connection with an acquisition and refinancing.
Moody's also assigned the company a Ba3 senior implied rating and
an SGL-2 liquidity rating. The rating outlook is stable.
GDI is acquiring Thomas Industries, Inc., for a net purchase price
of $476.6 million, or 9.1 times adjusted EBITDA. GDI is a leading
producer of engineered air compressors, liquid ring pumps, blowers
and certain fluid transfer products and TII is a manufacturer of
precision engineered pumps and compressors. Senior subordinated
note proceeds, together with approximately $230 million from a GDI
secondary stock offering (including a 15% over allotment option)
as well as a new $230 million term loan, will be used to fund the
purchase of TII, to refinance some of GDI's existing debt, and to
pay associated fees and expenses.
These ratings were assigned:
* B2 to the proposed $125 million of senior secured notes, due
2013,
* Ba3 senior implied rating,
* B1 issuer rating, and
* SGL-2 speculative grade liquidity rating.
Moody's does not rate GDI's new $605 million senior secured credit
facility.
The ratings are supported by GDI's leading niche market position
and strong brand recognition in the compressed air products and
specialty pump markets, increasing product offering and end-market
diversification as a result of the TII acquisition, as well as
GDI's moderate financial leverage and a track record of good cash
flow generation. GDI is the second largest manufacturer of
compressed air products in the United States and the third largest
in the world. It is also one of the world's two largest
manufacturers of pumps used for oil and natural gas well servicing
and drilling. Over the years, it has built strong brand
recognition for many of the products it sells. The TII
acquisition is expected to provide access to higher growth
industries and end markets such as the medical and environmental
equipment markets. TII's strong international presence and recent
expansion in China also complements GDI's strategy to more
aggressively pursue growth in the international markets.
On the other hand, the credit ratings are constrained by GDI's
acquisition-dependent growth strategy and the associated
integration and execution risks, the cyclicality of the end-
markets it serves, as well as the highly competitive and mature
nature of the industry. Since 1996, GDI has grown its revenue
base significantly to $1.3 billion pro forma for the TII
acquisition. However, the growth has been achieved primarily
through 18 acquisitions, including TII, with total acquired
revenues of approximately $1 billion. As the company's revenue
base grows, it is taking on increasingly larger acquisitions in
order to have a meaningful impact on its performance, thus raising
integration and execution risks. Given the limited organic growth
potentials of GDI's products, acquisitions are likely to continue
to drive future growth. In addition, many of the major end-
markets that both GDI and TII serve, e.g. the general industrial,
manufacturing, transportation, energy and chemical markets, are
cyclical in nature. As a result, revenue and earnings will likely
come under pressure in a down cycle.
Pro forma for the acquisition, GDI's total sales will be
around $1.3 billion and total gross debt will be approximately
$642.2 million, or 3.8 times adjusted EBITDA of $167.7 million.
Adjusted EBITDA will cover pro forma interest 4.4 times. Both GDI
and TII have a track record of generating good free cash flow on a
standalone basis, and Moody's expects the trend to continue when
the two combine. Over the near term, however, free cash flow
generation is likely to be impacted by higher capital spending and
increased working capital to support revenue growth.
Nevertheless, Moody's expects free cash flow in 2005 to represent
mid to high single digit of outstanding debt.
The stable outlook reflects favorable current market conditions
and some potential cost and manufacturing synergies stemming from
the TII acquisition over the near term, balanced by a potential
slowdown in end-market activities over the medium term. The
ratings or outlook could be favorably impacted by continued strong
earnings and cash flow generation, a more conservative financial
posture, and evidence that recent results can be sustained
throughout a business cycle. Conversely, the ratings or outlook
could be pressured by difficulties in integrating the TII
acquisition, a substantial decline in end-market conditions, or
the pursuit of additional large-sized debt-financed acquisitions.
The B2 rating on the senior subordinated notes reflects their
unsecured nature, contractual and effective subordination to
senior debt. The notes will be guaranteed by the issuer's
domestic subsidiaries.
The SGL-2 rating, indicating good liquidity, reflects Moody's
expectation that GDI's internally generated cash flow should be
sufficient to cover its capital expenditure, amortizations under
the credit facility, and other operational needs over the next
12 months. Liquidity is further bolstered by an estimated
$92 million of cash on hand at closing, although a sizable portion
of which is overseas. GDI has a $225 million committed revolving
credit facility that matures in September 2009. Availability
under the revolver is approximately $90 million after around
$105 million outstanding and $25 million of LC usage. The credit
agreement contains three financial covenants: a maximum
debt/EBITDA leverage ratio, a minimum interest expense coverage
ratio, and minimum consolidated net worth. Moody's expects the
company to be in compliance with the covenants over the next 12
months. The senior credit facility is secured by a pledge of the
stock of certain GDI's subsidiaries, but not by company assets.
As such, GDI may have the option to raise additional funding
against the assets should such a need arise although the credit
agreement limits the amount of additional debt it can incur.
Gardner Denver, Inc., based in Quincy, Illinois, is a leading
producer of engineered air compressors, liquid ring pumps, blowers
and certain fluid transfer products.
GS MORTGAGE: S&P Rates $1 Million Class K-PR Certificates at BB+
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to GS Mortgage Securities Corp. II's $656 million
commercial mortgage pass-through certificates series 2005-GSFL
VII.
The preliminary ratings are based on information as of April 18,
2005. Subsequent information may result in the assignment of
final ratings that differ from the preliminary ratings.
The preliminary ratings reflect:
(1) the credit support provided by the subordinate classes of
certificates,
(2) the liquidity provided by the fiscal agent,
(3) the economics of the underlying loans, and
(4) the transaction structure of the loans.
Standard & Poor's analysis determined that, on a weighted average
basis, the pool has a debt service coverage of 1.51x based on an
assumed 10.0% refinance constant, and a beginning and ending LTV
of 62.8%.
A copy of Standard & Poor's complete presale report for this
transaction can be found on RatingsDirect, Standard & Poor's Web-
based credit analysis system, at http://www.ratingsdirect.com/
The presale can also be found on the Standard & Poor's Web site at
http://www.standardandpoors.com/
Preliminary Ratings Assigned
GS Mortgage Securities Corp. II
Class Rating Preliminary amount($)
----- ------ ---------------------
A-1 AAA 359,037,000
A-2 AAA 119,679,000
B AA+ 54,619,000
C AA- 32,128,000
D A+ 16,065,000
E A- 26,538,000
F BBB 20,429,000
G BBB- 14,077,396
G-MV BBB- 9,457,345
H-WG BBB 600,000
J-WG BBB- 2,400,000
K-PR BB+ 1,000,000
HAWAIIAN TELCOM: Moody's Says Liquidity Is Adequate
---------------------------------------------------
Moody's Investors Service assigns a speculative grade liquidity
rating of SGL-3 to Hawaiian Telcom Communications, Inc. Moody's
believes that HI-Telco has adequate liquidity derived from cash
flow from operations and availability under its revolving credit
facility to meet its near term obligations. Moody's expects Hi-
Telco to rely heavily on its revolving credit facility in the near
term, however, to finance extraordinary capital expenditures
associated with its back office buildout.
As reported in the Troubled Company Reporter on Apr. 18, 2005,
Moody's Investors Services assigned:
* a B1 senior implied rating to Hawaiian Telcom Communications,
Inc.,
* a B1 to its proposed senior secured debt,
* a B3 to its proposed senior unsecured notes, and
* a Caa1 to its proposed senior subordinated notes.
The wireline segment produces strong operating cash flow. Moody's
believes these cash flows are sufficient to fund the increased
interest burden associated with the LBO and maintenance capital
needs. To further support its liquidity, the company will enter
into a $175 million revolving credit facility that will mature in
2012. The company will need to meet leverage and coverage
covenants to maintain orderly access to the facility. In 2006,
the company will need to maintain a minimum interest coverage
ratio of 1.8x, a maximum senior secured leverage ratio of 4.0x,
and a maximum total leverage of 6.75x. The covenants will step
down in 2007 and beyond. Moody's believes that at these covenant
levels, the company will be able to fully access the facility
despite potential operational shortfalls or unforeseen capital
needs.
Moody's expects the company to draw $135 million under the
revolver to finance its back office buildout and early stage
operating expenses. Upon completion of the back office
investment, Moody's expects the company to quickly reduce debt
through operating cash flow and restore the availability under the
facility. In the meantime, Moody's believes that the $40 million
peak revolver availability only provides a modest cushion, should
the back office build out prove to be significantly more expensive
than anticipated, particularly given cost escalation clauses in
the transition services agreement with Verizon.
Over the next fifteen months, HI-Telco faces $300 million in debt
maturity. As part of the proposed LBO transaction, HI-Telco will
obtain $300 million in committed financing, in the form of a
delayed draw term loan A maturing in 2012. Moody's believes that
the company intends to use the proceeds from this borrowing to
redeem the $300 million notes at maturity. Moody's, therefore,
does not believe that these pending obligations place pressure on
Hi-Telco liquidity.
Substantially all of the company's assets are encumbered.
Therefore in the event of a liquidity crisis, Hi-Telco would have
only limited means of alternate liquidity.
HI-Telco is the incumbent wireline telecommunication provider in
Hawaii. Its senior implied rating is a B1 and the rating outlook
is stable.
HYTEK MICROSYSTEMS: Reduces Workforce by 10%
--------------------------------------------
Hytek Microsystems, Inc. (OTC Bulletin Board: HTEK) reduced its
work force by nine employees or approximately 10% of its work
force. This reduction was consistent with the discontinuation of
the Medtronic product purchases as previously announced and
summarized below.
John F. Cole, President and CEO, said, "The majority of the
terminated employees were dedicated to the Medtronic work cell.
Although several of these same dedicated work cell employees were
reassigned, we could not absorb all of them into our current
organizational structure."
On January 24, 2005, Hytek received notice from Medtronic that it
would place no further purchase orders with Hytek. Medtronic had
indicated previously that it intended to develop an internal
source of supply for one of our products based upon its own
business considerations. Medtronic confirmed to Hytek that its
discontinuation of purchases from Hytek was not based upon any
dissatisfaction with the quality of the products manufactured by
Hytek for Medtronic.
On February 14, 2005, Hytek Microsystems, Inc., said Hytek had
entered into a merger agreement with Natel Engineering Co., Inc.
The pending merger transaction is conditioned on obtaining
requisite shareholder approval from the shareholders of Hytek and
other customary closing conditions. The companies expect to close
the transaction during the second quarter of 2005.
Going Concern Doubt
The report of independent auditors on Hytek's January 1, 2005,
financial statements includes an explanatory paragraph indicating
there is substantial doubt about Hytek's ability to continue as a
going concern.
About the Company
Founded in 1974 and headquartered in Carson City, Nevada, Hytek
Microsystems, Inc., specializes in hybrid microelectronic circuits
that are used in military applications, geophysical exploration,
medical instrumentation, satellite systems, industrial
electronics, opto-electronics and other OEM applications.
INTERSTATE BAKERIES: Can Pursue Class Action Settlement
-------------------------------------------------------
The Honorable Jerry W. Venters of the U.S. Bankruptcy Court for
the Western District of Missouri lifts the automatic stay to allow
Interstate Bakeries Corporation and its debtor-affiliates to
proceed in the case captioned Smith, et al. v. Interstate Bakeries
Corp., et al., No. 03-0142-CV-W-FJG (W.D. Mo. pending), to seek
approval for and implementation of a Stipulation of Settlement
dated September 21, 2004, with these modifications:
(a) For purposes of distribution under the Bankruptcy Code,
whether under a Chapter 11 plan or otherwise, the
$3,000,000 contribution to the settlement by the Debtors
will be subordinated, pursuant to Section 510(b) of the
Code, to all allowed claims, including, but not limited
to, all allowed general unsecured claims;
(b) Nothing contained in the Settlement Agreement, Order
Approving Settlement Agreement, Final Judgment, Complete
Bar Order, Release Agreement or any other release will
release, interfere with, or bar the investigation,
assertion, or prosecution of any and all claims of any
kind or nature that:
(i) the Debtors directly or indirectly through an entity
or an assignee;
(ii) any of its creditors; or
(iii) any entity or trust established for the benefit of
creditors, as the Debtors' representatives or
assignees,
may hold against any of the Debtors' current or former
officers, directors or employees, except for any claims
that the Debtors may assert to seek recovery, from any
current or former officer or director, of all or any part
of the $3,000,000 payment that may be paid pursuant to the
terms of the Settlement Agreement; and
(c) The release granted under the Settlement Documents will be
binding on any of the Debtors' creditors that are also
Class Members to the same extent the release is binding on
any other member of the class, provided that that person
or entity does not opt out of the Settlement Agreement and
the Settlement Agreement is approved.
Judge Venters authorizes the insurance carriers to pay the
proceeds of the Settlement Agreement.
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. 17; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
INTERSTATE BAKERIES: Delays Filing of Annual & Quarterly Reports
----------------------------------------------------------------
Interstate Bakeries Corporation (OTC: IBCIQ.PK) delays the filing
of its Fiscal 2004 Form 10-K, and fiscal 2005 Form 10-Qs with the
Securities and Exchange Commission. The Company is continuing its
review of the proper accounting treatment for a defined benefit
pension plan to which it contributes, newly discovered issues with
respect to the setting of the Company's workers' compensation and
auto/general liability reserves and an unrelated charge related to
obsolete and abandoned capital assets.
The Company said it does not expect to file its Annual Report for
the fiscal year ended May 29, 2004, until its assessment of these
issues is complete and its independent auditors complete their
audit of the Company's financial statements for the fiscal year
ended May 28, 2005, which is not expected to be completed prior to
August of 2005. IBC remains uncertain when it will file Quarterly
Reports for the quarters ended August 21, 2004; November 13, 2004
and March 5, 2005 and amended Quarterly Reports for the quarters
ended November 15, 2003 and March 6, 2004.
Possible Restatements
IBC said its preliminary unaudited financial information, and
prior period financial statements may require correction or
restatement depending on the results of the Company's ongoing
review. As previously disclosed, IBC has been reviewing the
historical accounting treatment of a defined benefit pension plan
to which it contributes on behalf of approximately 900 of its
approximately 32,000 employees. As a result of a re-examination
of the manner in which IBC has historically accounted for the
plan, a preliminary determination has been made that the plan
should have been accounted for by IBC as a single-employer pension
plan.
IBC has always accounted for the plan as a multi-employer pension
plan. However, the plan is neither a multi-employer pension plan
nor a typical single-employer pension plan. Instead, the plan is
a unique type of pension plan to which multiple unaffiliated
employers make contributions. Prior to the date that IBC became a
contributing employer in 1989, the plan was granted a
"grandfather" exemption by the federal regulatory agencies
responsible for regulating pension plans, which permits the plan
to treat itself as an aggregate of single-employer pension plans.
As part of this "grandfather" exemption, federal regulatory
agencies have not required the plan to regularly report the type
of information necessary to allow IBC to account for it as a
typical single-employer defined benefit plan.
IBC is attempting to obtain the necessary information from the
plan to assess the impact of the change in accounting treatment on
the Company's financial statements. To date, IBC has not been
able to obtain information deemed reliable and accurate by IBC
that would enable it to account for the plan as a single-employer
plan due to, among other things, a lack of historical data
available to the plan. While there can be no assurance when, and
if, the Company will be able to obtain this information, IBC
believes that its earnings and equity will be negatively impacted
as a result of the change in accounting treatment and additional
assets and/or liabilities will be reflected in its monthly
consolidated operating reports filed with the bankruptcy court,
its preliminary unaudited financial information for its fiscal
2005 first quarter and 2004 fiscal year and, potentially, other
prior periods. While IBC cannot predict with accuracy the amount
of any impact on earnings, any potential net liability that is
expected or any potential reduction in equity, any such earnings
impact, net liability or reduction in equity could be significant
and could adversely affect the Company's financial condition and
results of operations.
Also, as a result of an ongoing internal review, IBC has
determined that it understated certain estimated liabilities in
connection with setting the proper accrual for workers'
compensation and auto/general liability reserves for the fiscal
year ended May 29, 2004, and the fiscal 2005 first quarter. Based
on the Company's review to date, IBC estimates that it may have to
increase its current reserves for workers' compensation and
auto/general liability by approximately $5 million, some of which
may be related to prior periods, in addition to the previously
announced approximately $40 million increase to workers'
compensation reserves. Any increase in reserves will result in a
corresponding charge to pre-tax income.
IBC also will incur a non-cash charge of approximately $8 million
to pre-tax income in fiscal 2005 related to the book value of its
capital assets, resulting primarily from obsolete and abandoned
equipment identified as a result of its annual capital asset
inventory process. The Company is working to determine whether
any portion of this non-cash charge should be taken in prior
periods.
Sarbanes-Oxley Act
IBC expects that management's annual report on internal control
over financial reporting, to be included in its fiscal 2005
Form 10-K, as required by Section 404 of the Sarbanes-Oxley Act,
will likely not be completed at the time the fiscal 2005 Form 10-K
is filed. It is likely that even a preliminary report on internal
controls will identify significant deficiencies and potentially
material weaknesses in internal controls, particularly in the
areas of:
-- the Company's newly implemented financial reporting system;
-- the proper accounting for the defined benefit pension;
-- the setting of its workers' compensation and auto/general
liability reserves;
-- the maintenance of proper capital asset accounts; and
-- its ability to prepare accurate and timely financial
statements.
As it completes its assessment, management may identify additional
control deficiencies that result in material weaknesses. In the
event that IBC identifies material weaknesses, management's
assessment will conclude that the Company's internal control over
financial reporting is ineffective.
IBC remains uncertain when it will file Quarterly Reports for the
quarters ended August 21, 2004, November 13, 2004 and March 5,
2005 and amended Quarterly Reports for the quarters ended
November 15, 2003 and March 6, 2004. As previously disclosed, IBC
expects that its fiscal 2005 reports would reflect significant
asset impairment charges recognized as the result of its
bankruptcy filing and its fiscal 2005 financial performance as
well as the impact of the change in accounting treatment for the
defined benefit pension plan and the issues discussed above.
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.
KAISER ALUMINUM: Liverpool Wants Plan-Related Declarations Nixed
----------------------------------------------------------------
The Liverpool Limited Partnership asks Judge Fitzgerald to strike
several declarations delivered to the Court:
1. Declaration of John T. La Duc, filed with the Debtors'
brief in support of confirmation of the Liquidation Plans;
2. Declaration of Christine P. Hsu, filed with the joint brief
of U.S. Bank National Association, as Indenture Trustee,
and certain holders of senior notes in support of
Liquidation Plans confirmation and full subordination of
the 1993 Senior Subordinated Notes and Guarantees;
3. Declaration of Theodore D. Sands, filed with the Debtors'
Confirmation Brief;
4. Declaration of Martin Balsam, filed with the Debtors'
Confirmation Brief;
5. Affidavit of Paul Steven Greenberg, filed with the Hsu
Declaration; and
6. Declaration of Kenneth D. Gartrell, filed the Hsu
Declaration.
According to David J. Baldwin, Esq., at Potter Anderson & Corroon
LLP, in Wilmington, Delaware, each of the Declarations violates
the parol-evidence rule. The Declarations seek to introduce
extrinsic evidence about what certain parties purportedly intended
an indenture for publicly held debt to mean when Kaiser Aluminum &
Chemical Corporation issued its 12-3/4% Notes more than a decade
ago.
Furthermore, Mr. Baldwin insists each Declaration should be
stricken in its entirety unless the Debtors produce the declarant
in open court so that the declarant may be cross-examined by any
party-in-interest and the Court.
Even if the Court were not to strike each Declaration in its
entirety, Liverpool alternatively requests that the Court strike
certain portions of those Declarations, which does not comply with
the Federal Rules of Evidence.
Debtors Object
The Debtors warns that Liverpool's Motion to Strike is yet another
effort by Liverpool to advance its unique economic interests with
little regard for the factual record or the applicable law.
Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, tells the Court that the best way to
understand the surrounding circumstances is from testimony of
those individuals directly involved in the drafting, negotiation,
and marketing of the Subordinated Notes, the Senior Notes, and
their operative documents.
Mr. Newmarch explains that the Declarations and depositions
confirm that the subordination scheme recently constructed by Law
Debenture and Liverpool is not only highly unorthodox within the
capital markets, but even more critically it is a structure that
was never contemplated by the economic constituencies at the time
of the various debt issuances, and that economic realities could
not support. Liverpool's belated effort to unilaterally exclude
the totality of surrounding circumstance evidence from those
individuals most involved in the Debtors' complex transactions
must fail.
Headquartered in Houston, Texas, Kaiser Aluminum Corporation --
http://www.kaiseral.com/-- operates in all principal aspects of
the aluminum industry, including mining bauxite; refining bauxite
into alumina; production of primary aluminum from alumina; and
manufacturing fabricated and semi-fabricated aluminum products.
The Company filed for chapter 11 protection on February 12, 2002
(Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones
Day, represents the Debtors in their restructuring efforts. On
June 30, 2004, the Debtors listed $1.619 billion in assets and
$3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 67;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
KEY ENERGY: Releases Select Financial Data & Updates Restatement
----------------------------------------------------------------
Key Energy Services, Inc. (OTC Pink Sheets: KEGS) disclosed rig
hours for the month of March 2005. The Company also announced
select financial data for the month ended February 28, 2005. The
Company is providing this information to investors as part of the
consent from the holders of the Company's 6-3/8% senior notes due
2013 and its 8-3/8% senior notes due 2008. The Company also
provided an update on its restatement process.
Activity Update
During the month of March, activity levels improved over all
business lines, which management attributes to better weather
conditions and increased daylight hours. The Company has recently
authorized the purchase of an additional 3,000 hydraulic
horsepower of pumping equipment and related support equipment to
expand the cementing capabilities of the Company's pressure
pumping division. This equipment, which costs approximately $6
million, is expected to be delivered this fall and is in addition
to the Company's February 2005 order of 10,000 additional
hydraulic horsepower of new pumping equipment. The Company
anticipates it will begin demobilizing and relocating its Egyptian
rigs and related equipment in the coming weeks. The Company
anticipates that it will relocate these rigs to the United States.
Under the terms of the contract, the customer is responsible for
paying the demobilization costs.
Restatement Update
The Company has made substantial progress with regard to the
restatement process since March 31, 2005. The Company's
independent accountants are auditing the Company's financial
records for the period of the restatement. While the Company
continues to diligently pursue the restatement work, it cannot
predict when the process will be completed. The Company has
contacted its bank group for its senior credit facility regarding
a waiver to extend, should it be necessary, to May 31, 2005, the
date by which the 2003 annual report on Form 10-K is due and to
extend the financial reporting deadline for its quarterly and
annual reports for 2004.
Select Financial Data
Month Ended
2/28/05
(In thousands
- Unaudited)
Select Operating Data (A):
Revenues
Well servicing $81,838
Contract drilling 1,579
Other (264)
Total revenues $83,153
Costs and Expenses
Well servicing $57,156
Contract drilling 1,067
General and administrative 10,292
Interest (B) 4,264
2/28/05
(In thousands
- Unaudited)
Select Balance Sheet Data:
Current Assets
Cash and cash equivalents (C), (D) $99,564
Accounts receivable, net of
allowance for doubtful accounts 198,611
Inventories 18,337
Prepaid expenses and other current assets 23,939
Total current assets $340,451
Current Liabilities
Accounts payable 61,405
Other accrued liabilities 75,106
Accrued interest 15,273
Current portion of long-term debt
and capital lease obligations 3,988
Total current liabilities $155,772
Long-term debt, less current portion (E) $473,836
Capital lease obligations,
less current portion 7,976
Deferred Revenue 536
Non-current accrued expenses 39,728
NOTES
(A) The Company anticipates it will begin reporting financial
results for its pressure pumping and fishing and rental
services' divisions separately during 2005 and intends to
provide this detail in its select financial data releases
commencing next month. As a result of the sale of the
majority of the Company's contract drilling assets in
January 2005, the Company will begin reporting the financial
results for its remaining contract drilling assets in the
Well Servicing category beginning next month.
(B) Interest expense includes amortization of deferred debt
issue costs, discount and premium of approximately $165,000
for the month ended February 28, 2005.
(C) Cash at April 18, 2005 totaled approximately
$103.8 million.
(D) Capital expenditures were approximately $9.9 million for the
month ended February 28, 2005.
(E) Outstanding borrowings under the Company's revolving credit
facility at April 18, 2005 totaled approximately
$48,000,000.
The information herein represents the results for only one month;
ordinarily the Company reports financial information on a
quarterly basis, and the information herein is not necessarily
indicative of the results that may be reported for the full
quarter ended March 31, 2005, or the fiscal year ended Dec. 31,
2005. The information herein is selected financial data and does
not represent a complete set of financial statements, which would
include additional financial data and notes to financial
statements. Until the restatement of the Company's prior year
financial statements is completed, the unaudited information
herein may differ from its restated financial statements. It is
possible that the process of restating the prior year financial
statements could require additional changes to the Company's
financial statements for 2005 that individually or in the
aggregate could be material to the Company's financial position,
results of operations or liquidity.
About the Company
Key Energy Services, Inc. is the world's largest rig-based well
service company. The Company provides oilfield services including
well servicing, contract drilling, pressure pumping, fishing and
rental tools and other oilfield services. The Company has
operations in all major onshore oil and gas producing regions of
the continental United States and internationally in Argentina and
Egypt.
* * *
As reported in the Troubled Company Reporter on April 1, 2005, the
Company obtained a waiver from the lenders under its revolving
credit facility:
(x) extending to April 30, 2005, the date by which the Company
must deliver audited financial statements for 2003,
(y) extending until June 30, 2005, the date by which the Company
must deliver quarterly financial statements and audited
financial statements for 2004, and
(z) extending until August 31, 2005, the date by which the
Company must deliver quarterly financial statements for the
quarters ended March 31, 2005, and June 30, 2005.
In late-March, the company said last week that it was talking to a
representative of the bondholders for a waiver of the financial
reporting delay. The Company has not said whether it obtained a
waiver from that representative. The company has two public bond
issues outstanding:
* $150,000,000 of 6-3/8% Senior Notes due May 1, 2013; and
* $275,000,000 of 8-3/4% Senior Notes due March 1, 2008.
The Company also said it received waivers from three of its
primary equipment lessors.
JOURNAL REGISTER: Planned Share Buyback Cues S&P to Cut Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior secured debt ratings on Trenton, New Jersey-
headquartered newspaper publisher Journal Register Co. to 'BB'
from 'BB+'.
The outlook is stable. About $762 million of debt was outstanding
at March 2005.
The lower ratings are attributable to Journal Register's plan to
start repurchasing its common stock again, in an aggregate amount
of up to $30 million. This share buyback program comes at a time
when the company's overall financial profile was already weak for
the former ratings, reflecting the $415 million debt-financed
acquisition of 21st Century Newspapers Inc. in August 2004.
Standard & Poor's had previously anticipated that Journal Register
would use its free cash flow for debt reduction over the
intermediate term to restore its financial position to levels more
appropriate for the former ratings.
"Ratings stability reflects the expectation that Journal
Register's financial profile will gradually strengthen in the
intermediate term as the company uses a portion of its free
operating cash flow for debt reduction. However, the degree of
improvement will depend on the timing of Journal Register's share
repurchases and acquisition opportunities," said Standard & Poor's
credit analyst Donald Wong.
LACLEDE STEEL: Confirmation Hearing Scheduled for May 16
--------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Missouri
approved the First Amended Disclosure Statement explaining Laclede
Steel Company's First Amended Liquidating Plan of Reorganization.
The Honorable Barry S. Schermer determined that the Disclosure
Statement contained the right amount of the right kind of
information necessary for Laclede's creditors to make informed
decisions about the Plan.
The Court authorized the Debtors to distribute the Disclosure
Statement and solicit acceptances to the Plan.
Terms of the Plan
The Plan proposes that after confirmation, the Debtor's assets
which have not previously been liquidated will be transferred to
and administered by the Plan Committee consisting of the members
of the Official Unsecured Creditors Committee. The Plan Committee
will complete the liquidation and will administer all
Distributions to be made under the Plan. The Plan Committee will
also file objections to Claims.
The Official Unsecured Creditors Committee is currently comprised
of:
* Terry L. Freeman of Metals USA, Inc.;
* Mike Horn of Ameren UE;
* David R. Jury of the United Steelworkers of America;
* Daniel Brennen of PSC Metals, Inc.;
* David J. Krozier of Sharon Tube Company; and
* Joseph Kerola of P.I.I. Motor Express, Inc.
Mr. Freeman chairs the Committee. Under Section 5.1 of the Plan,
the Plan Committee may add members or remove members in its
reasonable discretion.
Unless the Plan Committee otherwise elects, it will continue to be
represented by Steven Goldstein, Esq., and the law firm of
Goldstein & Pressman, P.C., which currently serves as counsel to
the Official Committee of Unsecured Creditors.
From and after the Effective Date of the Plan, the Debtor will
remain in existence only to the extent necessary to allow the Plan
Committee to liquidate the Debtor's remaining estate, make
Distributions under the Plan, and wind up the Debtor's affairs.
Upon confirmation of the Plan, all of the Debtor's outstanding
stock will be cancelled. The Debtor will be dissolved.
Creditor Recoveries & Treatment of Claims
Holders of general unsecured claims will receive a pro rata share
of what's left of the Debtor's estate after:
* administrative claims,
* secured claims, and
* unsecured priority claims
are paid in full.
Holders of equity interests will not receive anything.
Dates & Deadlines
Creditors must return their Ballots by May 5, 2005, to:
Steven Goldstein, Esq.
Goldstein & Pressman, P.C.
121 Hunter Avenue, Suite 101
St. Louis, MO 63124
Objections to plan confirmation must be filed and served by
May 5, 2005.
Judge Schermer will consider confirmation of the First Amended
Liquidating Plan of Reorganization on May 16, 2005, at 9:00 a.m.
One of only three full-line producers of continuous-weld pipe in
the United States at the time, Laclede Steel Company sought
chapter 11 protection for a second time on July 27, 2001 (Bankr.
E.D. Mo. Case No. 01-48321). The company disclosed more and
$100 million in assets and liabilities at the time of the filing.
Over the past three and half years, the Company has closed its
facilities, conducted going concern sales and liquidated most of
its real property and other assets for the benefit of its
creditors.
LAIDLAW INT'L: Discloses Contingent Liabilities from AMR Sale
-------------------------------------------------------------
On February 10, 2005, Laidlaw International, Inc., completed the
sale of American Medical Response, Inc., to an affiliate of Onex
Corporation in accordance with the Stock Purchase Agreement dated
December 6, 2004.
Pursuant to the terms of the Stock Purchase Agreement, Laidlaw
may be subject to indemnification obligations related to certain
investigations and matters previously disclosed relating to AMR,
including potentially the matters concerning:
(a) the subpoena duces tecum from the Office of Inspector
General for the United States Department of Health and
Human Services which requested copies of documents from
AMR for the period January 1993 through May 2002. The
requested documents include those relating to Regional
Emergency Services contracts in Georgia and Colorado. The
government investigations in Georgia and Colorado are
continuing; and
(b) the U.S. Department of Justice's investigation of certain
business practices at AMR, specifically (i) whether
ambulance transports involving Medicare eligible patients
complied with the "medically necessary" requirement
imposed by Medicare regulations, (ii) whether patient
signatures, when required, were properly obtained from
Medicare eligible patients, and (iii) whether discounts in
violation of the Federal Anti-Kickback Act were provided
by AMR in exchange for referrals involving Medicare
eligible patients.
At this juncture, Laidlaw Senior Vice-President and Chief
Financial Officer Douglas A. Carty says it is not possible to
predict the ultimate conclusion of these investigations, nor is
it possible to calculate any possible financial exposure, if any,
to Laidlaw, pursuant to the terms of the Stock Purchase
Agreement.
Headquartered in Arlington, Texas, Laidlaw, Inc., now known as
Laidlaw International, Inc. -- http://www.laidlaw.com/-- is
North America's #1 bus operator. Laidlaw's school buses transport
more than 2 million students daily, and its Transit and Tour
Services division provides daily city transportation through more
than 200 contracts in the US and Canada. Laidlaw filed for
chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No.
01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents
the Debtors. Laidlaw International emerged from bankruptcy on
June 23, 2003.
* * *
As reported in the Troubled Company Reporter on Dec. 27, 2004,
Moody's Investors Service has placed the long-term debt ratings of
Laidlaw International, Inc., under review for possible upgrade.
The review is prompted by the recent announcement by the company
that it had entered into a definitive agreement to sell both of
its healthcare businesses to Onex Partners LP, an affiliate of
Onex Corporation, for $820 million. Net proceeds after fees and
assumption of a small amount of debt by the buyer is estimated at
$775 million, with a majority of the proceeds intended to be used
to repay substantial levels of Laidlaw's existing debt. Moody's
has also assigned a Speculative Grade Liquidity Rating of SGL-2 to
Laidlaw International, Inc. As part of the rating action, Moody's
has reassigned to Laidlaw International, Inc., certain ratings,
including the senior implied and senior unsecured issuer ratings,
originally assigned at Laidlaw, Inc., in order to reflect more
appropriately the company's current organizational structure.
As reported in the Troubled Company Reporter on Dec. 9, 2004,
Standard & Poor's Ratings Services placed its ratings, including
its 'BB' corporate credit rating, on Laidlaw International, Inc.,
on CreditWatch with positive implications. The rating action
follows Laidlaw's announcement that it has entered into definitive
agreements to sell both of its health care companies, American
Medical Response and Emcare, to Onex Partners L.P. for
$820 million. Laidlaw expects to receive net cash proceeds of
$775 million upon closing of the transaction, which is expected by
the end of March 2005. Naperville, Illinois-based Laidlaw
currently has about $1.5 billion of lease-adjusted debt.
LBACK DEVELOPMENT: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: LBack Development, L.P.
6401 West Park
Plano, Texas 75093
Bankruptcy Case No.: 05-41537
Chapter 11 Petition Date: March 31, 2005
Court: Eastern District of Texas (Sherman)
Judge: Honorable Brenda T. Rhoades
Debtor's Counsel: Charles R. Chesnutt, Esq.
18333 Preston Road, Suite 500
Dallas, Texas 75252
Tel: (972) 735-0757
Fax: (214) 965-0256
Estimated Assets: $1 to $50,000
Estimated Debts: $10 Million to $50 Million
The Debtor has no unsecured creditors who are not insiders.
LB-UBS COMMERCIAL: Fitch Puts Low-B Ratings on 3 Mortgage Certs.
----------------------------------------------------------------
LB-UBS Commercial Mortgage Trust 2005-C2, commercial mortgage
pass-through certificates are rated by Fitch Ratings:
-- $70,000,000 class A-1 'AAA';
-- $551,000,000 class A-2 'AAA';
-- $81,000,000 class A-3 'AAA';
-- $304,700,000 class A-4 'AAA';
-- $76,000,000 class A-AB 'AAA';
-- $470,704,000 class A-5 'AAA';
-- $121,684,000 class A-J 'AAA';
-- $13,941,000 class B 'AA+';
-- $29,204,000 class C 'AA';
-- $38,939,000 class D 'AA-';
-- $41,372,000 class E 'A';
-- $1,767,673,000 class X-CP* 'AAA';
-- $1,942,131,018 class X-CL* 'AAA';
-- $17,036,000 class F 'A-';
-- $17,036,000 class G 'BBB+';
-- $17,035,000 class H 'BBB';
-- $29,204,000 class J 'BBB-';
-- $17,036,000 class K 'BB+';
-- $7,301,000 class L 'BB';
-- $2,434,000 class M 'BB-';
-- $4,867,000 class N 'NR';
-- $4,867,000 class P 'NR';
-- $4,868,000 class Q 'NR';
-- $21,903,018 class S 'NR'.
* Notional amount and interest only.
Classes A-1, A-2, A-3, A-4, A-AB, A-5, A-J, B, C, D, E, and X-CP
are offered publicly, while classes X-CL, F, G, H, J, K, L, M, N,
P, Q, and S are privately placed pursuant to rule 144A of the
Securities Act of 1933. Classes N, P, Q, and S are not rated by
Fitch. The certificates represent beneficial ownership interest
in the trust, primary assets of which are 106 fixed-rate loans
having an aggregate principal balance of approximately
$1,942,131,018 as of the cutoff date.
For a detailed description of Fitch's rating analysis, please see
the report titled 'LB-UBS Commercial Mortgage Trust 2005-C2' dated
April 7, 2005, available on the Fitch Ratings web site at
http://www.fitchratings.com/
LOEWEN GROUP: Paying $9 Mil. to Resolve U.S. Trustee Fee Dispute
----------------------------------------------------------------
Loewen Group International, Inc., and its debtor-affiliates ask
the U.S. Bankruptcy Court for the District of Delaware to approve
a Stipulation with the Office of the U.S. Trustee settling a long-
standing dispute over quarterly fees payable to the U.S. Trustee.
The Court confirmed the Loewen's Fourth Amended Joint Plan of
Reorganization on Sept. 10, 2001, and the Plan took effect on
Jan. 2, 2002.
In 2001, the U.S. Trustee advised Loewen that its methodology for
calculating the amount of Quarterly Fees to be paid was incorrect.
The U.S. Trustee asserted that disbursements for purposes of
calculating Quarterly Fees should be attributed to the Debtor on
whose behalf a payment was made, as distinguished from the Debtor
that actually made the payment.
The U.S. Trustee says that Loewen owes more than $10 million for
Quarterly Fees calculated on a debtor-by-debtor basis. The
Reorganized Debtors say the amount is much lower. Prior to the
Plan's confirmation, the Debtors and the U.S. Trustee started
negotiations to resolve the Quarterly Fee disputes.
The Reorganized Debtors and the U.S. Trustee reached a settlement
on April 14, 2005, and memorialized their agreement in a
Stipulation and Agreed Order Resolving United States Trustee
Quarterly Fee Dispute. A full text copy of the Stipulation is
available at no charge at:
http://bankrupt.com/misc/LoewenGroupMotionOKStipulation.pdf
The Reorganized Debtors agree to pay the U.S. Trustee $9,040,000
to settle the matter.
The Reorganized Debtors give Judge Walsh four reasons he should
approve their request:
a) approval of the Stipulation will provide several benefits to
the Debtors' estates and creditors, including removing the
uncertainty and risk that the Trustee will prevail in its
position that the Debtors owe more than $10 million of
Quarterly Fees;
b) approval is warranted due to the potential high costs of
continued litigation with the Trustee, substantial
attorneys' fees and expenses, and significant time and
effort on the part of the Debtors' senior management;
c) there is no assurance that the results of a continued
litigation with the Trustee will be any more favorable that
the terms of the Stipulation; and
d) the settlement resolves the most significant remaining
economic dispute in the Debtors' chapter 11 cases, and the
settlement is fair, reasonable and in the best interests of
the Debtors' estates and creditors.
Judge Walsh will convene a hearing today, Friday, April 22, 2005,
at 1:30 p.m., to consider the Reorganized Debtors' request.
Formerly The Loewen Group International Inc., Alderwoods Group is
North America's #2 funeral services company. Alderwoods Group
owns or operates about 750 funeral homes and some 170 cemeteries
in the US and Canada. The firm's funeral services include casket
sales, remains collection, death registration, embalming,
transportation, and the use of funeral home facilities. The
Debtors filed for chapter 11 protection in the United States and
CCAA protection in Canada on June 1, 1999 after the Debtors failed
to make debt payments after its aggressive acquisition phase.
Loewen became Alderwoods Group when it emerged from bankruptcy on
January 2, 2002.
LTC'S COMMERCIAL: Fitch Upgrades $4.5 Million Class F to BBB
------------------------------------------------------------
LTC's Commercial Mortgage Pass-Through Trust certificates, series
1996-1, are upgraded by Fitch Ratings:
-- $2.6 million class E to 'AA' from 'BB+';
-- $4.5 million class F to 'BBB' from 'CCC'.
These classes are affirmed by Fitch:
-- $107 class LR at 'AAA';
-- $106 class R at 'AAA'.
Fitch does not rate the $4.7 million class G. Classes A, B, C, and
D have paid in full.
The rating upgrades reflect the increase in credit enhancement
levels attributed to faster than expected loan payoffs. As of the
April 2005 distribution date, the pool's aggregate collateral
balance has been reduced 90% to $11.8 million from $112.5 million
at issuance.
Since Fitch's last upgrade in October 2004, the deal has paid down
$24.8 million, or 68%. Currently, there are no loans that are
delinquent or with the special servicer. Since issuance, only one
loan has suffered a principal loss, totaling $1.37 million.
MBIA INC: Lieff Cabraser Looks Into Alleged Wrongdoing
------------------------------------------------------
Lieff, Cabraser, Heimann & Bernstein, LLP announces commenced an
investigation into recently disclosed events at MBIA, Inc., in
preparation for filing a complaint in the United States District
Court for the Southern District of New York on behalf of
shareholders who purchased or otherwise acquired publicly traded
shares of MBIA, Inc. between August 5, 2003 and March 30, 2005
(NYSE:MBI).
On November 18, 2004, MBIA received subpoenas from the Securities
and Exchange Commission and the New York Attorney General's Office
requesting information with respect to non-traditional or loss
mitigation insurance products developed, offered or sold by MBIA
to third parties from January 1, 1998 to the present.
On March 8, 2005, MBIA announced that it had decided to restate
its financial statements for 1998 through 2003 to correct the
accounting treatment for two reinsurance agreements that MBIA
entered into in 1998 with Zurich Reinsurance North America, which
later was re-named Converium Re upon its divesture by Zurich
Financial Services in 2001. The restated transactions overstated
net income by $54 million during the period 1998 through 2003 by
failing to record a loss related to MBIA's insurance of bonds
issued by the Allegheny Health, Education and Research Foundation.
On March 9, 2005, MBIA announced that the U.S. Attorney's Office
for the Southern District of New York was conducting its own
investigation into losses suffered by MBIA as a result of its
insurance of the Allegheny bonds.
On March 30, 2005, the SEC and NYAG supplemented the November 2004
subpoenas with requests for documents related to MBIA's accounting
treatment of advisory fees, its methodology for determining loss
reserves and case reserves, instances of purchase of credit
default protection in itself, and documents relating to Channel
Reinsurance Ltd. ("Channel Re"), a reinsurance company launched in
2004 by MBIA, PartnerRe Ltd., RenaissanceRe Holdings Ltd., and
Koch Financial Corporation. On April 8, 2005, PartnerRe Ltd. and
RenaissanceRe Holdings Ltd. announced that they had received
subpoenas from the SEC and NYAG seeking information relating to
Channel Re.
News of these events have caused MBIA's common stock price to drop
from a class period high of $67.34 on March 3, 2004 to $52.28 on
March 31, 2005, one day after MBIA announced that the SEC and NYAG
had supplemented the subpoenas served on MBIA in November 2004.
This decline in stock price represents a $2.0 billion reduction of
MBIA's market capitalization from its high point in the class
period. Shares of MBIA closed at $53.02 per share on April 18,
2005.
Lieff Cabraser Heimann & Bernstein, LLP, is a national law firm of
over 60 lawyers with offices in San Francisco, New York,
Washington, D.C., Beverly Hills and Nashville. Our attorneys are
recognized for the successful prosecution of lawsuits involving
violations of the federal securities laws by major corporations
and their directors and officers. For more detailed information
about Lieff Cabraser Heimann & Bernstein, LLP, visit our website
at http://www.lieffcabrasersecurities.com/
* * *
As reported in the Troubled Company Reporter on Apr. 13, 2005,
the law firm of Milberg Weiss Bershad & Schulman LLP filed a class
action lawsuit on behalf of all persons who purchased or otherwise
acquired the securities of MBIA Inc. between August 5, 2003 and
March 30, 2005, inclusive, seeking to pursue remedies under the
Securities Exchange Act of 1934.
A copy of the complaint filed in this action is available from the
Court, or can be viewed on Milberg Weiss's website at
http://www.milbergweiss.com/
MCI INC: Qwest Increases Takeover Bid to $9.74 Billion
------------------------------------------------------
Qwest Communications International submitted a revised offer to
acquire MCI Inc. for $9.74 billion in cash and stock. MCI
previously rejected Qwest's $8.9 billion offer over Verizon's $7.5
billion bid.
As reported in the Troubled Company Reporter on Apr. 7, 2005,
MCI's Board of Directors voted to reject, for the third time,
Qwest Communications International Inc.'s offer to acquire MCI in
a stock and cash transaction. The Company's directors said that
Qwest's proposal was not superior to its merger agreement with
Verizon.
Qwest's revised offer now comprises:
-- $16.00 in cash (excluding MCI's March 15 dividend payment of
$0.40 per share); and
-- 3.373 Qwest shares (subject to adjustment under a collar
which fixes the value of the Qwest shares at $14.00 provided
Qwest's share price is between $3.32 and $4.15) per MCI
share.
Detailed Economic Terms
Consideration: Qwest common stock and cash to MCI stockholders
Value: Offer Value: $30.40 per share consideration to MCI
stockholders (this includes MCI's March 15 dividend
payment of $.40 per share). This Offer consists of:
(i) $16.00 (excludes MCI's March 15 dividend payment
of $.40 per share) in cash; and
(ii) $14 of Qwest common stock based on an exchange
ratio of 3.373 Qwest shares per MCI share, subject
to the Value Protection Mechanism described in
"Value Protection Mechanism Regarding Qwest Stock
Component" below.
In addition, prior to the mailing of proxy
statement/prospectus to MCI shareholders, Qwest may
substitute up to $1.2 billion in cash for up to $1.2
billion of the aggregate Stock Consideration.
Pro forma ownership split of approximately 35% MCI/65%
Qwest, subject to the cash substitution provision and
the Value Protection Mechanism.
Value Protection
Mechanism
Regarding Qwest
Stock
Component: In the event that the weighted average trading price
for Qwest common stock during a period of 20 trading
days prior to the third trading day preceding the
closing of the transaction (the "Qwest Share Price")
does not equal $4.15 per share, then the exchange
ratio shall be adjusted as follows:
-- If the Qwest Share Price is between and inclusive
of $3.32 and $4.14, then the exchange ratio shall
be adjusted upward to deliver value of $14 in
Stock Consideration to MCI stockholders.
However, Qwest may at its option deliver all or a
portion of this value protection in cash in lieu
of common stock.
-- If the Qwest Share Price is below $3.32, then the
exchange ratio shall be 4.217. However, Qwest may
at its option deliver all or a portion of this
value protection in cash in lieu of Qwest common
stock, provided that the exchange ratio will under
no circumstances be less than 3.373.
-- If the Qwest Share Price is above $4.15, then the
exchange ratio shall be 3.373.
As a result of this Value Protection Mechanism, the
value of the Stock Consideration is protected against
a decline of up to 20% in the stock price of Qwest.
In addition, MCI shareholders will participate in 100%
appreciation of the Qwest share price above $4.15.
Cash
Consideration: Approximately $5.60 (excluding the dividend of $.40
per share paid on March 15) of the $16.00 cash
consideration will be paid as a special dividend to be
declared and paid as soon as practicable following MCI
stockholder approval of the transaction. The $5.60
special dividend will be reduced by the amount of any
dividends declared by MCI during the period from March
16, 2005 to the consummation of the merger (subject to
any limitations imposed by MCI debt covenants). The
remaining $10.40 of cash consideration will be paid at
closing.
Specified
Included
Liabilities: The cash and stock consideration outlined herein will
be subject to adjustment with respect to the specified
included liabilities on substantially the same terms
as provided in the Amended Verizon agreement (i.e.,
the adjustment threshold is $1.775 billion).
Example of
Overall
Potential Value
to MCI
Stockholders: For clarity, given the above and assuming a Dec. 31,
2005 closing, each MCI stockholder would receive
between signing and closing:
-- $5.60 in cash in quarterly and special dividends;
-- $10.40 in cash at closing;
-- 3.373 Qwest shares in Stock Consideration at
closing subject to the cash substitution provision
and the Value Protection Mechanism; and
-- Assuming MCI stockholders own 35% or more of the
combined company, they would also likely realize
approximately $16.00 per share of value from
synergies -- yielding a total value to MCI
stockholders in a merger with Qwest in excess of
$45 per share.
MCI's Board of Directors will review Qwest's revised proposal.
To avoid the issue MCI currently has with the two-tier offer from
Verizon, Qwest confirmed that the revised proposal will be
extended to Verizon with respect to the MCI shares the company has
contracted to purchase from Mr. Carlos Slim.
Qwest also said that it has secured equity commitments totaling
$800 million from some of MCI's major shareholders. Qwest
understands that the MCI shareholders that have agreed to
participate in the equity commitments hold in excess of 13 percent
of MCI's outstanding shares.
Qwest's previous proposal contained $13.50 in cash (excluding
MCI's March 15 dividend payment of $0.40 per share) and 3.373
Qwest shares (subject to adjustment under a collar which fixes the
value of the Qwest shares at $14.00 provided Qwest's share price
is between $3.32 and $4.15) per MCI share.
MCI/Verizon Merger Agreement
On March 29, 2005, MCI and Verizon amended their joint merger
agreement. Under that agreement, each MCI share would receive
cash and stock worth at least $23.10, comprising $8.35 (excluding
MCI's March 15 dividend payment of $0.40 per share) as well as the
greater of 0.4062 Verizon shares for every share of MCI Common
Stock or Verizon shares valued at $14.75.
Verizon Responds to New Offer
"Notwithstanding the latest Qwest proposal," Verizon said, "we
continue to believe Verizon is the best partner for MCI. As we
move through the proxy process, we will continue to assess the
situation and intend to take the necessary steps at the
appropriate time to secure shareholder approval and complete our
pending transaction."
About Qwest
Qwest Communications International Inc. (NYSE:Q) --
http://www.qwest.com/-- is a leading provider of voice, video and
data services. With more than 40,000 employees, Qwest is
committed to the "Spirit of Service" and providing world-class
services that exceed customers' expectations for quality, value
and reliability.
At Dec. 31, 2004, Qwest Communications' balance sheet showed a
$2,612,000,000 stockholders' deficit, compared to a $1,016,000,000
deficit at Dec. 31, 2003.
About MCI
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on
October 31, 2003, and on April 20, 2004, the company formally
emerged from U.S. Chapter 11 protection as MCI, Inc.
* * *
As reported in the Troubled Company Reporter on March 1, 2005,
Standard & Poor's Ratings Services placed its ratings on Denver,
Co.-based diversified telecommunications carrier Qwest
Communications International, Inc., and subsidiaries, including
the 'BB-' corporate credit rating, on CreditWatch with negative
implications. This follows the company's counter bid to Verizon
Communications, Inc., for long-distance carrier MCI, Inc., for
$3 billion in cash and $5 billion in stock. MCI also has about
$6 billion of debt outstanding.
The ratings on MCI, including the 'B+' corporate credit rating,
remain on CreditWatch with positive implications, where they were
placed Feb. 14, 2005 following Verizon's announced agreement to
acquire the company. The positive CreditWatch listing for the MCI
ratings reflects the company's potential acquisition by either
Verizon or Qwest, both of which are more creditworthy entities.
However, the positive CreditWatch listing of the 'B+' rating on
MCI's senior unsecured debt assumes no change to the current MCI
corporate and capital structure under an assumed acquisition by
Qwest, such that this debt would become structurally junior to
other material obligations.
"The negative CreditWatch listing of the Qwest ratings reflects
the higher business risk at MCI if its bid is ultimately
successful," explained Standard & Poor's credit analyst Catherine
Cosentino. As a long-distance carrier, MCI is facing ongoing
stiff competition from other carriers, especially AT&T Corp.
Moreover, MCI is considered to be competitively disadvantaged
relative to AT&T in terms of its materially smaller presence in
the enterprise segment and fewer local points of presence -- POPs.
The latter, in particular, results in higher access costs relative
to AT&T. Qwest also faces the challenge of integrating and
strengthening MCI's operations while improving its own
underperforming, net free cash flow negative long-distance
business. These issues overshadow the positive aspects of Qwest's
incumbent local exchange carrier business that were encompassed in
the former developing outlook.
As reported in the Troubled Company Reporter on Feb. 22, 2005,
Moody's Investors Service has placed the long-term ratings of MCI,
Inc., on review for possible upgrade based on Verizon's plan to
acquire MCI for about $8.9 billion in cash, stock and assumed
debt.
These MCI ratings were placed on review for possible upgrade:
* B2 Senior Implied
* B2 Senior Unsecured Rating
* B3 Issuer rating
Moody's also affirmed MCI's speculative grade liquidity rating at
SGL-1, as near term, MCI's liquidity profile is unchanged.
As reported in the Troubled Company Reporter on Feb. 22, 2005,
Standard & Poor's Ratings Services placed its ratings of Ashburn,
Virginia-based MCI Corp., including the 'B+' corporate credit
rating, on CreditWatch with positive implications. The action
affects approximately $6 billion of MCI debt.
As reported in the Troubled Company Reporter on Feb. 16, 2005,
Fitch Ratings has placed the 'A+' rating on Verizon Global
Funding's outstanding long-term debt securities on Rating Watch
Negative, and the 'B' senior unsecured debt rating of MCI, Inc.,
on Rating Watch Positive following the announcement that Verizon
Communications will acquire MCI for approximately $4.8 billion in
common stock and $488 million in cash.
METROMEDIA INT'L: Dec. 31 Balance Sheet Upside-Down by $6.5 Mil.
----------------------------------------------------------------
Metromedia International Group, Inc. (OTCBB:MTRM) -- Common Stock
and (PINK SHEETS:MTRMP) -- Preferred Stock, reported preliminary
financial results for the year ended December 31, 2004.
Highlights for the fourth quarter 2004 vs. the fourth quarter
2003:
-- Consolidated revenues of $22.5 million vs. $20.0 million -
improvement of 12%
-- Consolidated cost of services of $7.9 million vs.
$6.6 million - increase of 20%
-- Consolidated cost of services as a percentage of revenues of
35% vs. 33%
-- Consolidated operating loss of $(2.4) million vs.
$(2.7) million - improvement of 12%
-- Corporate overhead of $4.4 million vs. $6.3 million -
reduction of $1.9 million
-- Consolidated Adjusted EBITDA (1) of $8.8 million vs.
$4.2 million - improvement of $4.6 million
Highlights for the full-year 2004 vs. full-year 2003:
-- Consolidated revenues of $80.4 million vs. $73.1 million -
improvement of 10%
-- Consolidated cost of services of $26.6 million vs.
$23.6 million - increase of 13%
-- Consolidated cost of services as a percentage of revenues of
33% vs. 32%
-- Consolidated operating loss of $(2.6) million vs.
$(17.3) million - improvement of 85%
-- Corporate overhead of $13.8 million vs. $29.6 million -
reduction of $15.8 million
-- Consolidated Adjusted EBITDA (1) of $34.9 million vs.
$8.5 million - improvement of $26.4 million
In connection with these and other results reported here, Ernie
Pyle, Chief Financial Officer of MIG, commented: "This press
release reflects preliminary financial results for the Company.
While there exists the possibility that the Company's final
audited financial results might differ materially from those
reported here, the Company does not presently anticipate such
differences. The Company is currently completing preparation of
its Annual Report on Form 10-K for the fiscal period ended
December 31, 2004 and anticipates filing such report with the
United States Securities and Exchange Commission within the next
three weeks."
Results of operations of the Company's majority-owned PeterStar
business venture in Russia are reported on a consolidated basis
and are directly reflected in and account for the principal
portion of the Company's consolidated revenues and costs of sales.
Operating expenses at PeterStar plus corporate overhead expenses
are reflected in the Company's consolidated operating losses.
Results of operations of the Company's minority-owned Magticom
business venture in Georgia are reported on an equity method basis
and are reflected only in the Company's consolidated net earnings
and Adjusted EBITDA.
As of December 31, 2004 and March 31, 2005, the Company had
$32.7 million and $16.7 million, respectively, of unrestricted
corporate cash. The $16.0 million reduction in corporate cash
from December 31, 2004 to March 31, 2005 reflects:
-- Receipt of approximately $9.3 million from Magticom,
representing the Company's share, net of 10% Georgian
dividend withholding tax, of a $30.0 million Magticom
dividend paid in first quarter 2005;
-- Disbursement of approximately $7.5 million to fund the
Company's portion of a $15.0 million payment to the Georgian
government to cancel all of the Georgian government's rights
under a memorandum of understanding between the Georgian
government and a wholly-owned subsidiary of the Company
providing for such subsidiary to issue an assignable option
to purchase a 20% ownership interest in Magticom to the
Georgian government;
-- Disbursement of approximately $5.0 million to purchase from
the Georgian government an additional 51% ownership interest
in Telecom Georgia, a Georgian long-distance transit
operator, bringing the Company's total ownership interest in
Telecom Georgia to 81%;
-- Disbursement of the approximately $8.0 million semi-annual
interest payment, which was due on March 31, 2005, on the
Company's outstanding $152.0 million 10 1/2% Senior Notes
due 2007; and
-- The remaining reduction in cash of $4.8 million is
principally attributable to corporate overhead expenditures
and settlement of corporate liabilities. The Company
presently believes that its current corporate cash burn-rate
is not indicative of its recurring cash-burn rate due to the
Company's incurrence of non-recurring professional advisory
cash outlays attributable to the recently announced pending
PeterStar sale transaction.
In 2004 and 2003, the Company experienced certain gains and losses
attributable to the sales of business ventures, the retirement of
indebtedness, impairment charges associated with the Company's
carrying value in businesses prior to their disposition and other
gains and losses that result from events not in the ordinary-
course of the Company's business operations.
At Dec. 31, 2004, Metromedia International's balance sheet showed
a $6,477,000 stockholders' deficit, compared to a $13,155,000
deficit at Dec. 31, 2003.
NATIONAL ENERGY: Inks Settlement Pact Resolving Calif. DWR Claims
-----------------------------------------------------------------
NEGT Energy Trading - Power, L.P. and the California Department
of Water Resources are parties to a Master Power Purchase and
Sale Agreement and Confirmation, which were subsequently amended.
Additionally, ET Power and the DWR are parties to a certain
settlement related to each party's continuing obligations for,
inter alia, "imbalance energy." Imbalance Energy is the energy
required to make up the difference when scheduled energy outputs
fail to meet actual, real-time demand.
In 2003, the DWR sent ET Power two separate invoices for
Imbalance Energy, requesting payment for:
(1) $943,265 for the period from June 2002 through September
2002; and
(2) $49,803 for the period from October 2001 through September
2002.
ET Power also sent an Imbalance Energy invoice to California for
$168,287 covering the period from October 2002 to January 2003.
After netting the amounts owed under the DWR Invoices and the ET
Power Invoice, ET Power owes the DWR $824,287.
Consequently, the DWR filed Claim No. 119 against ET Power for
$993,069, and Claim No. 120 against NEGT Energy Trading Holdings
Corporation for $993,069. The DWR's sole basis for filing Claim
No. 120 against ET Holdings was that ET Holdings is ET Power's
general partner.
ET Power, ET Holdings, and the DWR amicably settle all matters
relating to Claim Nos. 119 and 120. In a Court-approved
stipulation, the parties agree that:
(a) Claim No. 119 is reduced and allowed as a general
unsecured claim against ET Power for $824,287; and
(b) Claim No. 120 is reduced and allowed as a general
unsecured claim against ET Holdings for $824,287.
Claim Nos. 119 and 120 will be treated in accordance with the
provisions of the ET Debtors' Chapter 11 Plan of Liquidation.
Headquartered in Bethesda, Maryland, PG&E National Energy Group,
Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas
Transmission, Inc.) develops, builds, owns and operates electric
generating and natural gas pipeline facilities and provides energy
trading, marketing and risk-management services. The Company and
its debtor-affiliates filed for Chapter 11 protection on July 8,
2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq.,
Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at
Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin
T. Fletcher, Esq., at Whiteford, Taylor & Preston L.L.P.,
represent the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$7,613,000,000 in assets and $9,062,000,000 in debts. NEGT
received bankruptcy court approval of its reorganization plan in
May 2004, and that plan took effect on Oct. 29, 2004. (PG&E
National Bankruptcy News, Issue No. 40; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
NORSKE SKOG: Moody's Affirms Low-B Ratings; Outlook Remains Neg.
----------------------------------------------------------------
Moody's Investors Service affirmed Norske Skog Canada Ltd.'s
senior implied, issuer and senior unsecured ratings at Ba3. The
company's secured bank credit facility rating was also affirmed at
Ba2. The outlook remains negative.
Ratings Affirmed:
-- Norske Skog Canada Ltd.
* Outlook: Negative
* Senior Implied: Ba3
* Issuer Rating: Ba3
* Senior Unsecured: Ba3
-- Norske Skog Canada Finance Limited
* Outlook: Negative
* Backed Senior Secured Bank Credit Facility (Dom Curr): Ba2
The Ba3 rating primarily reflects NorskeCanada's high leverage and
weak coverage metrics, and the relatively poor market dynamics for
newsprint and related mechanical paper grades. As well, the
company's relatively limited geographic and product line
diversification, and its relative lack of flexibility to monetize
portions of its asset portfolio to generate proceeds to facilitate
debt reduction are also important influences. So too are risks
related to the company's exposure to further Canadian dollar
appreciation, and as well, pressure from other input costs such as
wood, electricity, chemicals and labor. The ratings are supported
by NorskeCanada's improving relative cost competitiveness, its
relatively strong backwards integration into virgin and recycled
fiber supply, its leading directory paper position, and its solid
liquidity arrangements.
NorskeCanada has very good liquidity. The company maintains a
C$350 million revolver that is largely un-drawn. The facility
matures in July 2007. With the company's exposure to pulp, where
favourable pricing conditions currently prevail, Moody's expects
quarterly LTM results to improve sequentially through 2005. Since
NorskeCanada does not have significant debt maturities to address
over the next year, the combination of its FCF and the revolving
credit facility provides good liquidity. NorskeCanada is in
compliance with the lone applicable financial covenant. Moody's
does not expect the covenant to act as a constraint for the
foreseeable future.
Moody's overall assessment of NorskeCanada's credit profile
reflects risks that the company's financial performance will
continue to be adversely affected by difficult fundamentals in the
North American newsprint and uncoated mechanical paper markets,
and by the recent strengthening of the exchange value of the
Canadian versus the US dollar. While Moody's is concerned that
difficult North American market fundamentals may cause current
commodity pricing to be representative of near peak levels, the
rating anticipates that supply management activities, such as the
company's recent permanent idling of a 140,000 tonne newsprint
machine, will continue to allow modest price increases to be
implemented so long as demand does not decline precipitously.
Nonetheless, owing to uncertainties concerning the effectiveness
of supply management initiatives, and in the context of gradually
declining demand, there is skepticism that consumption will not
decline in the face of price increases that result from input
prices or exchange rate induced cost-push pressure, and
consequently, margins may remain under significant pressure. As
well, there are risks that decreases in North American newsprint
demand may yet again accelerate. Accordingly, Moody's continues
to view the balance of potential risks relative to the existing
rating level as being adverse, and accordingly, the outlook
remains negative.
Moody's expectations for a Ba3 rating include average through-the-
cycle RCF in excess of 10%, with the related FCF measure in excess
of 5%. Note that Moody's debt figures account for operating
leases and unfunded pensions, and while these are not included in
the above figures, they do contribute incremental leverage that
must be assessed. Norske has a $60 million pension funding
shortfall that requires funding, and increases effective leverage.
Until conclusive evidence of the benefits of the market structure
revisions the company is participating in are observed on a
sustained basis, a ratings upgrade is unlikely. The most positive
near-to-mid term rating action would involve the outlook being
revised to stable from negative. In absence of near term progress
in permanently improving credit metrics, or in the event either or
both of 2005 results and expectations for 2006 do not show
dramatic improvement over the recent past, a ratings downgrade
becomes more likely. A downgrade would also result from
significant debt-financed acquisition activity or were liquidity
arrangements to deteriorate significantly.
NorskeCanada, headquartered in Vancouver, British Columbia,
Canada, is the third largest newsprint and specialty groundwood
paper producer in North America. The Company also produces market
pulp. Primary paper markets are North America, Latin America and
the Pacific Rim. Primary pulp markets are Europe and the Pacific
Rim. NorskeCanada is a broadly held Canadian public company with
shares traded on the TSX under the symbol NS.
NORTHWEST AIRLINES: Completes $148 Million Refinancing
------------------------------------------------------
Northwest Airlines (Nasdaq: NWAC) successfully completed a $147.8
million financing transaction. The proceeds were used to pay the
November 2005 principal amortization in the same amount under the
airline's $975 million credit agreement.
Terms of the refinancing include an interest rate of LIBOR + 6.25%
and repayment over five years with a 96% balloon payment due in
November 2010. This new term loan financing transaction was led
by JP Morgan and Citigroup and included participation from
existing and new lenders in the credit agreement.
In connection with the closing of this financing, Northwest
received consent from its lenders to waive its fixed charge
coverage covenant until the second quarter of 2006. Northwest
Executive Vice President and Chief Financial Officer, Bernie Han,
said, "We are pleased to be able to complete this transaction in a
challenging industry environment, and would like to thank our lead
banks and institutional lenders for their support."
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.
* * *
As reported in the Troubled Company Reporter on Apr. 12, 2005,
Moody's Investors Service placed the long-term debt ratings of NWA
Corp and Northwest Airlines Inc. on review for possible downgrade
(Senior Implied Rating is B2). The company's SGL-2 Speculative
Grade Liquidity rating has been affirmed. The review of the long
term ratings for possible downgrade was prompted by the ongoing
financial losses and deficit cash flow being experienced by the
company, and the expectation that continuing difficult business
conditions for the airline industry will preclude any meaningful
near term improvement in the company's performance.
NORTHWEST AIRLINES: Supports Senate's Pension Reform Legislation
----------------------------------------------------------------
Northwest Airlines (Nasdaq: NWAC) supports legislation introduced
by U.S. Sen. Johnny Isakson (R-Ga.) and co-sponsored by U.S. Sen.
Jay Rockefeller (D- W.Va.) to reform how companies pay the
unfunded liabilities of their frozen defined benefit pension
plans. The "Employee Pension Preservation Act of 2005," which was
introduced in the U.S. Senate on Apr. 20, 2005, will allow
companies to fully fund their frozen defined benefit pension plans
over a 25-year period versus the three-year "catch-up" requirement
in place today.
"Northwest is in strong support of the bill introduced by Sen.
Isakson and co-sponsored by Sen. Rockefeller and we thank them for
their leadership on this issue," said Andrea Fischer Newman,
senior vice president of government affairs. "This legislation
will help protect airline employees from losing any of their hard-
earned pension benefits and help protect taxpayers from even more
pension plans becoming the responsibility of the Pension Benefit
Guaranty Corporation."
Northwest's low-cost carrier competitors, such as Southwest,
JetBlue and AirTran, provide their employees with less expensive
defined contribution plans such as 401(k)s. Northwest, a company
that was providing air service and pension benefits long before
401(k)-style plans ever existed, is one of just five remaining
U.S. airlines that provide its employees with defined benefit
plans.
Northwest's pension plans were fully funded as recently as 2000.
However, as a result of four consecutive years of falling interest
rates, major stock market declines during 2000 through 2002, and
increasing employee pension benefits, the company's pension plans
are now underfunded. In addition, the law governing pension
funding requires highly accelerated "catch-up" payments when a
plan is underfunded. These catch-up payments are particularly
onerous in the current environment as nearly all U.S. airlines
struggle to return to profitability and cannot afford to make such
contributions.
Some of Northwest's largest competitors have terminated their
defined benefit contribution plans through the Chapter 11
bankruptcy process, turning responsibility for the plans over to
the PBGC, a self-financed governmental corporation that partially
insures failed pension plans. The PBGC recently reported a record
deficit of $23 billion, which includes the cost of taking over
pension plans at United Airlines and US Airways. The PBGC
predicts a $40 billion deficit if other airline pension plans are
terminated.
Northwest, the Air Line Pilots Association (ALPA) and several
other airlines are working together to develop a solution to this
challenge. The legislation will allow Northwest to achieve the
second part of its three-part, long-term solution to the pension
challenge it faces:
-- Receiving union concurrence to freeze defined benefit plans
at current levels rather than terminating the plans.
-- Making up the funding shortfall of the frozen plans over a
longer period than current law allows.
-- Establishing a defined contribution 401(k) retirement plan,
to provide secure employee pension benefits going forward.
"The legislation introduced will allow companies such as Northwest
to fully honor the pension commitments made to employees and spare
taxpayers, through the PBGC, from having to step in as guarantor
of terminated pension plans." Ms. Newman continued. "This
responsible solution, embraced by management and labor, is a far
superior alternative to the job losses, substantial reductions in
pension benefits and increase in airline bankruptcies that will
inevitably occur if action is not taken soon."
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.
* * *
As reported in the Troubled Company Reporter on Apr. 12, 2005,
Moody's Investors Service placed the long-term debt ratings of NWA
Corp and Northwest Airlines Inc. on review for possible downgrade
(Senior Implied Rating is B2). The company's SGL-2 Speculative
Grade Liquidity rating has been affirmed. The review of the long
term ratings for possible downgrade was prompted by the ongoing
financial losses and deficit cash flow being experienced by the
company, and the expectation that continuing difficult business
conditions for the airline industry will preclude any meaningful
near term improvement in the company's performance.
NUMATICS: Moody's Withdraws Ratings Absent Financial Information
----------------------------------------------------------------
Moody's Investors Service has withdrawn the ratings of Numatics
Inc. The company does not file public financial statements, and
management does not plan to continue providing the financial
statements to Moody's.
These ratings have been withdrawn:
* Senior subordinated notes due 2008 - Caa2
* Senior implied rating - B3
* Unsecured issuer rating - Caa1
Numatics Inc., located in Highland, Michigan, is a leading North
American manufacturer of pneumatic valves.
OMNI ENERGY: Secures $50 Million Senior Term Loan Commitments
-------------------------------------------------------------
OMNI Energy Services Corp. (Nasdaq: OMNI) received commitments for
a $50 million senior credit term loan from an institutional
investor. Closing is expected during the second quarter of 2005
and is subject to the negotiation, execution and delivery of loan
and contractual documentation reasonably satisfactory to the
lender, as well as approval from the Company's Board of Directors.
Additionally, the Company announced that concurrent with the
closing of the new senior secured credit facility, it will
increase its existing working capital revolver to $15 million.
The proceeds from the senior credit term loan and the increased
availability under the revolver will be used to re-finance certain
long-term debt, provide working capital and establish funding
necessary to complete strategic transactions.
On the new credit facilities, James C. Eckert, OMNI's Chief
Executive Officer, commented, "The new credit facilities are an
integral component of our strategic business plans to facilitate
the continued expansion and growth of OMNI. These new senior
credit facilities permit the Company to re-finance its existing
debt under terms more favorable than what is provided under our
existing credit agreements. This increased funding capacity
available under these new senior credit facilities positions OMNI
to complete certain strategic acquisitions within our core
business segments while remaining focused on organic growth.
Additionally, in the future, using a combination of debt and
equity to support our business model enhances stockholder value
without adversely leveraging the Company's balance sheet.
Management remains confident in its long-range business model to
establish OMNI as a leading provider of an integrated range of
services to the oil and gas industry," concluded Eckert.
Events of Default
On Feb. 25, 2005, OMNI received notice of certain alleged events
of default under certain of its 6.5% Convertible Debentures, dated
Feb. 12, 2004, and April 15, 2004, issued to Portside Growth and
Opportunity Fund for $2,500,000 and $1,250,000, respectively.
As a result of these defaults, Portside demanded that OMNI redeem
all of the debentures held by it, in the aggregate principal
amount of $2,765,625, on March 2, 2005. Portside also notified
OMNI of its intention to commence a civil action against OMNI to
obtain a judgment with respect to all amounts owed to it under the
debentures.
Headquartered in Carencro, La., OMNI Energy offers a broad range
of integrated services to geophysical companies engaged in the
acquisition of on- shore seismic data and through its aviation
division, transportations services to oil and gas companies
operating in the shallow, offshore waters of the Gulf of Mexico.
The company provides its services through several business units:
Seismic Drilling, Aviation, Permitting, Seismic Survey and
Environmental. OMNI's services play a significant role with
geophysical companies who have operations in marsh, swamp, shallow
water and the U.S. Gulf Coast also called transition zones and
contiguous dry land areas also called highland zones.
RCN CORP: Court Awards AP Services $2 Million Success Fee
---------------------------------------------------------
AP Services, LLC, RCN Corporation and its debtor-affiliates'
crisis managers, asked the U.S. Bankruptcy Court for the Southern
District of New York to approve and declare that it is entitled to
a $4,000,000 contingent success fee from the Debtors' estate.
When AP Services was retained, the Debtors agreed to pay AP
Services a Contingent Success Fee based on these components:
(a) $5,000,000 upon completion of an out-of-court
restructuring, the sale of a majority of the assets of the
company or upon confirmation of a Plan of Reorganization
that occurs prior to September 15, 2004;
(b) $4,000,000 upon completion of an out-of-court
restructuring, the sale of a majority of the assets of the
company or upon confirmation of a Plan that occurs after
September 15, 2004 but prior to February 15, 2005; or
(c) $3,000,000 upon completion of an out-of-court
restructuring, the sale of a majority of the assets of the
company or upon confirmation of a Plan that occurs after
February 15, 2005.
The Debtors' Plan was confirmed December 8, 2004. The Plan
took effect December 21.
Committee Balks
The Official Committee of Unsecured Creditors acknowledges that
different types of professional firms traditionally have
different compensation models. On the one hand, law firms and
accounting firms are usually compensated on an hourly basis, and
fee enhancements for these types of professionals are extremely
rare rather than the rule. On the other hand, investment bankers
and similar financial advisors are usually compensated on the
basis of a flat monthly or quarterly retainer plus an agreed-upon
fee enhancement tied to specific targets.
Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in
New York, however, argues that AP Services wants to cherry-pick
the best components of both compensation models, without the
downside of either. Rather than agree to a flat retainer and
take the risk that the actual hours expended will not be fully
compensated by a flat fee, but with the potential for a success
fee if certain goals are obtained, Mr. Dunne tells the Court that
AP Services chose to be compensated on an hourly basis -- like
lawyers and accountants, for whom success fees are a rare
exception. Once AP Services elected to be compensated on an
hourly basis, it implicitly agreed to the Court's review of the
reasonableness of its compensation requests based on the same
criteria as the Court would use to assess compensation requests
of other bankruptcy professionals that are compensated on the
same basis.
AP Services has not attempted to meet its high burden of proof by
providing evidence with respect to either the "extraordinary" or
"unexpected" results of the Debtors' Chapter 11 case or its own
crucial role in achieving the results. AP Services' sole
"justification" for its alleged entitlement to the Success Fee is
the statement that "[p]erformance fees are a normal part of
compensation for firms" such as AP Services, and that
"[t]herefore, this Court should approve" the Success Fee.
Mr. Dune argues that the Success Fee is not warranted because:
(a) most of the terms of the Plan had been finalized prior to
AP Services' retention, including a commitment for an Exit
Facility from Deutsche Bank. Given that the Plan provided
for a simple debt-for-equity swap, minimal negotiation was
involved, and no particular sophistication or expertise
was required to have the plan finalized and confirmed;
(b) the results achieved in these cases were neither
extraordinary nor unexpected. While it is true that these
cases required substantial efforts to secure exit
financing and the consummation of the Plan, it was another
of the Debtors' advisors, the Blackstone Group LP, that
had arranged the financing. Moreover, the most difficult
part of the exit financing -- the last-out, second lien
tranche -- was provided by bondholders. Again, AP
Services played no role in this aspect; and
(c) even in the areas of operational restructuring and cost
cutting measures, for which AP Services was specifically
retained, its performance will be sufficiently compensated
by the payment of its hourly rates and, in this case, does
not warrant an additional success fee.
The Committee expected to receive timely and detailed analyses of
the Debtors' operations and contractual relationships necessary
to quantify achievable cost-cutting measures as well as the
potential benefits of filing additional operating subsidiaries.
To obtain these analyses, the Committee asked its own financial
advisors, Capital & Technology Advisors LLC, to expend
significantly more time on these issues than was originally
anticipated.
While significant cost-cuts were achieved in the chapter 11 case,
as is common in most bankruptcy cases given the unique
opportunity to reject and renegotiate contracts and leases, the
Reorganized Debtors are currently dealing with various items that
were not resolved during the case.
For instance, Mr. Dune reports, AP Services was specifically
asked to negotiate a favorable termination of a lease of an
office building in New York City, which, while vacant as of the
Petition Date, was costing the estate over $1.6 million a year.
Despite months of efforts to negotiate the lease termination
during the pendency of these cases without success, the
Reorganized Debtors are devoting significant time to resolving
these and other issues.
Moreover, while AP Services originally was retained by the
Debtors to manage the restructuring and operations of the
company, in August, the Debtors felt it necessary to retain PDA
Group LLC, as an operations expert.
Mr. Toll also points out that at least three firms have taken
credit and seek to be rewarded for the less than spectacular
results achieved in these cases. In addition to AP Services,
Blackstone is seeking a success fee of $7.8 million, which,
having been previously negotiated and approved, is likely to be
allowed. Merrill Lynch, Pierce & Smith, Inc., the Debtors'
prepetition financial advisor, also has filed a proof of claim
claiming that it is entitled to a $9.8 million restructuring fee.
When more than one professional claims responsibility for the
results achieved in a particular case, the Court should bear this
in mind as well, and adjust the compensation awards accordingly.
AP Services Responds
Sheldon S. Toll, Esq., in Southfield, Michigan, asserts that
there is no dispute that AP Services earned the $4 million
success fee since the Plan was confirmed in December 2004, and
RCN exited bankruptcy after only 28 weeks in Chapter 11.
Payment of the $4 million success fee to AP Services was baked
into the RCN bankruptcy emergence cash flows, which were vetted
by all parties-in-interest in the case, including the advisors to
the Official Committee of Unsecured Creditors, Mr. Toll points
out. Projected cash at emergence was $140 million, after payment
of various expenses, including $21.794 million in professional
fees. That sum, Mr. Toll says, included payment of the $4
million success fee to AP Services.
Mr. Toll informs the Court that the Committee is attempting to
shoe-horn AP Services into one of the two categories of
bankruptcy professional compensation schemes (i) hourly fees for
lawyers and accountants, where success fees are only awarded
under "extraordinary" circumstances, and (ii) flat monthly fees
plus more-common success fees for investment bankers and similar
financial advisors, which blithely ignores the fact that crisis
management firms like AP Services are different -- they base
their compensation on standard hourly rates plus success fees.
"This distinguishing characteristic was noted in the decision of
In re Cardinal Industries, Inc., 151 B.R. 843," Mr. Toll says.
Alfred Fasola, the lead independent outside director of RCN's
board of directors during the Chapter 11 case, testified at his
deposition that, in approving AP Services' engagement letter, the
board caused the matter to be investigated and determined that AP
Services' fee structure, including success fee, was "at market."
Mr. Toll points out that the Final Order retaining AP Services
specifically stated that "all references to 'Contingent Success
Fee' in the engagement letter and the Application shall be deemed
stricken." However, Mr. Toll notes, it does not stop with the
word "stricken," but continues with the words "without
prejudice." The Committee omitted the "without prejudice"
wording from its objection, Mr. Toll says.
AP Services submits that its results were extraordinary and
unexpected as its personnel led the restructuring process, worked
closely with the RCN board, and were involved in all negotiations
to achieve these benefits for the estate:
* Chapter 11 case lasted a mere 28 weeks;
* Debtors emerged with a strong balance sheet;
* Amendment to franchise agreements eliminating $720 million
of build-out obligations;
* Successful refinance for in excess of $400 million of senior
secured debt;
* Successful renegotiation of over $30 million evergreen
facility;
* SG&A cost reduction process, wringing out millions of
dollars in costs;
* Real estate lease negotiations, providing annualized savings
of millions of dollars;
* Employee turnover was limited;
* Got all parties to a consensual term sheet on May 26, 2004,
and kept this term sheet on track during the Chapter 11
case; and
* Avoided costly filings of non-debtor entities and a time-
consuming substantive consolidation fight.
Crisis management firms regularly receive success fees both
inside and outside of bankruptcy cases, Mr. Toll says. When
Congress passed the Bankruptcy Reform Act of 1978, Mr. Toll
relates, it decided to remove the "spirit of frugality" as a
factor in bankruptcy professional fees. "The reference is now to
the cost of comparable services in a non-bankruptcy setting."
AP Services, therefore, asks the Court to overrule the
Committee's objection and approve its $4 million success fee.
$2 Million Success Fee Approved
Judge Drain approves AP Services' request for payment of a
success fee at a reduced amount of $2 million.
Headquartered in Princeton, New Jersey, RCN Corporation --
http://www.rcn.com/-- provides bundled Telecommunications
services. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on
May 27, 2004. The Debtors' confirmed chapter 11 Plan took effect
on December 21, 2004. Frederick D. Morris, Esq., and Jay M.
Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed
$1,486,782,000 in assets and $1,820,323,000 in liabilities.
(RCN Corp. Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
RELIANCE GROUP: Liquidator Asks Court to Okay PRS Settlement Pact
-----------------------------------------------------------------
M. Diane Koken, as Insurance Commissioner of the Commonwealth of
Pennsylvania and Liquidator of Reliance Insurance Company, seeks
permission to enter into a settlement agreement with PRS
Insurance Group, Inc., and its affiliates.
PRS Insurance Group was the Delaware domiciled holding company
for three insurance agencies, three Barbados domiciled captive
reinsurers, a Cayman Islands investment firm and other entities.
PRS Insurance Group was also the parent of two Ohio insurance
companies that are now in liquidation.
Beginning in 1996, the parties entered into a number of Program
Managers' Agreements whereby the PRS Agencies helped RIC and its
predecessor insurance companies underwrite insurance. The
relationship lasted about four years and produced premiums for
RIC in excess of $100,000,000.
Deborah F. Cohen, Esq., at Pepper Hamilton, in Philadelphia,
Pennsylvania, relates that a substantial portion of the business
written under the PMAs was ceded by RIC to the PRS Captives.
Pursuant to reinsurance agreements and state laws requiring
security for reinsurers not licensed in the United States, RIC,
Comerica Bank and each of the PRS Captives were parties to
Reinsurance Trusts as security for various reinsurance
arrangements. The current aggregate value of the Reinsurance
Trusts is $22,215,000.
On October 31, 2000, an involuntary petition for relief under
Chapter 7 of the Bankruptcy Code was filed against the PRS
Insurance Group in United States Bankruptcy Court for the
District of Delaware, Case No. 00-04070 MFW.
On June 5, 2001, the Bankruptcy Court appointed Sean C. Logan as
Chapter 11 Trustee for PRS Insurance Group. Three days later,
Mr. Logan commenced voluntary bankruptcy cases for all PRS
Entities, except the two insurance companies in liquidation in
Ohio. The PRS entities that were placed under bankruptcy
protection were:
-- PRS Guaranty Insurance Ltd.
-- PRS Insurance Holdings (Barbados) Ltd.
-- PRS Enterprise Insurance Services, Inc.
-- Enterprise Insurance Co., Ltd.
-- Brockwell Insurance Co., Ltd.
-- PRS Management Group, Inc.
-- PRS Surety Bond Agency, Inc.
-- PRS Captive Investment Fund, Limited
-- PRS Benefits Services, Inc.
-- PRS Enterprises, Inc., d/b/a PRS Insurance Services
-- PRS Management Services, Inc.
On July 20, 2001, RIC sent a letter of intent to withdraw funds
from the Reinsurance Trusts. The PRS Trustee opposed and
Comerica Bank rejected RIC's withdrawal request. On February 19,
2002, RIC filed an adversary proceeding in PRS' bankruptcy that
sought to lift the automatic stay. RIC also asked for permission
to draw on the Reinsurance Trusts. The PRS Trustee opposed RIC's
requests. The judge overseeing the PRS proceedings referred the
dispute to arbitration. On April 24, 2002, RIC filed Claims Nos.
60, 61, 62 and 63 against PRS.
On August 10, 2004, the PRS Trustee commenced an arbitration
proceeding to settle the Claims. The PRS Trustee also sought to
block RIC's draw against a letter of credit issued by U.S. Bank
at the behest of the PRS Agencies to secure large deductibles on
policies written by PRS Agencies.
Before arbitration got very far, the parties realized that
considerable resources had been expended in these matters. It
would take even more resources to obtain a decision in
arbitration. To reduce costs and bring finality to the dispute,
the parties entered into negotiations, which resulted in the
Settlement Agreement. Pursuant to the Settlement Agreement, PRS
and RIC will mutually release one another in exchange for:
1) release of $22,215,000 in Reinsurance Trust funds to RIC;
2) RIC will pay PRS $2,000,000 of the Reinsurance Trust funds;
3) RIC will receive an allowed unsecured claim, with respect to
Claim No. 63, for $19,000,000 in PRS' bankruptcy; and
4) PRS will direct Bonding and Insurance Specialists Agency,
Inc., an unaffiliated program manager, to release $800,000
in premium funds to RIC.
Ms. Cohen notes that of the $19,000,000 RIC will be allowed for
its unsecured claim, $11,800,000 will be subordinated to the
allowed claims of all other general unsecured creditors of the
PRS Group until they have received distributions equal to 20% of
their claims. If the total allowed general unsecured claims
against PRS exceed $61,000,000, RIC will receive an additional
allowed claim of 31% of this total amount minus $19,000,000.
To be effective, the Settlement Agreement must be approved by the
Commonwealth Court and the Court overseeing PRS's bankruptcy. No
payments will take place until RIC and PRS execute the Settlement
Agreement and both Courts grant their approval.
Ms. Cohen assures Judge James G. Colins that the Settlement
Agreement is in RIC's best interests. RIC will receive a net
payment of $20,215,000 plus an allowed unsecured claim for
$19,000,000, which will substantially equal all of PRS's
obligations to RIC. The $2,000,000 payment by RIC to PRS
represents a compromise on several issues, namely claims of
offset, calculations of amounts due, claims for return of excess
funds and RIC's draw on the U.S. Bank letter of credit. If RIC
were to prevail in its arbitration with PRS, Ms. Cohen says, RIC
might only collect an additional 10% or $2,000,000, since
recovery on an allowed claim in the PRS bankruptcy is
speculative. Ms. Cohen notes that the rewards of continuing the
dispute is small compared to the resources required and the time
involved. Therefore, Ms. Cohen asserts, the Commonwealth Court
should approve the Settlement Agreement.
Headquartered in New York, New York, Reliance Group Holdings,
Inc. -- http://www.rgh.com/-- is a holding company that owns
100% of Reliance Financial Services Corporation. Reliance
Financial, in turn, owns 100% of Reliance Insurance Company.
The holding and intermediate finance companies filed for chapter
11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403)
listing $12,598,054,000 in assets and $12,877,472,000 in debts.
The insurance unit is being liquidated by the Insurance
Commissioner of the Commonwealth of Pennsylvania. (Reliance
Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
RICHARDSON ELECTRONICS: Receives Nasdaq Delisting Notice
--------------------------------------------------------
Richardson Electronics, Ltd. (Nasdaq: RELL) received a Nasdaq
Staff Determination Letter on April 19, 2005, indicating that the
Company is subject to potential delisting by April 28, 2005, from
The Nasdaq National Market because it is not in compliance with
Nasdaq Marketplace Rule 4310(c)(14) as a result of the Company's
previously announced inability to timely file its Form 10-Q for
the quarter ended February 26, 2005.
The Company will request a hearing before a Nasdaq Listing
Qualifications Panel to appeal the Nasdaq staff's notification and
request continued listing, which will stay the delisting until the
appeal has been heard and the panel has rendered its decision.
Until a decision is made on the appeal the Company's trading
symbol will be "RELLE".
As previously announced, the filing of the Company's Form 10-Q for
the quarter ended February 26, 2005, has been delayed in order to
provide additional time for the Company's current independent
auditors to complete a review of certain currency translation
adjustments and to reach agreement with our prior auditors
regarding their impact on prior periods. The Company is working
to resolve these matters and expects to file its required filings
as soon as practicable following the completion of this review.
These adjustments will not impact the Company's previously
reported net cash flows, revenues or operating income.
Form 10-Q Filing Delay
The Company filed an extension of the Apr. 7, 2005 filing deadline
for its quarterly report on Form 10-Q for the period ended
Feb. 26, 2005, with the Securities and Exchange Commission in
order to correct the accounting treatment relating to certain
currency translation adjustments and complete the preparation of
its filing.
On April 7, 2005, the Company's management, in consultation with
the Company's independent accounting firm and the Audit Committee
of the Board of Directors, concluded that the Company's previously
issued consolidated financial statements for the quarter ended
November 27, 2004 and its earnings release for the quarter ending
February 26, 2005, should be restated to correct the Company's
method of accounting for currency translation adjustments under
Financial Accounting Standard No. 52. The Company is finalizing
its analysis of the impact on these periods and is continuing to
evaluate the accounting correction on prior periods and has not
yet determined whether it will need to restate any other prior
periods. These adjustments will not impact the Company's
previously reported net cash flows, revenues, or operating income.
The Company expects to file its quarterly report on Form 10-Q for
the period ended February 26, 2005, on or before the 5th calendar
day following the prescribed due date and to amend its quarterly
report on Form 10-Q for the period ended November 27, 2004. The
Company's late filing and restatement will result in a default of
the Company's secured revolving credit agreement with respect to
the timely delivery of financial statements. The Company is
currently discussing with its senior lenders if a waiver is needed
under its secured revolving credit facility, relating to the
restatement.
As a result of the Company's determination to restate its
consolidated financial results as discussed above, the financial
statements for the quarter ended November 27, 2004, and the
earnings release for the quarter ended February 26, 2005, will be
corrected accordingly.
About Richardson Electronics
Richardson Electronics, Ltd., is a global provider of "engineered
solutions," serving the RF and wireless communications, industrial
power conversion, security and display systems markets. The
Company delivers engineered solutions for its customers' needs
through product manufacturing, systems integration, prototype
design and manufacture, testing and logistics.
RYLAND GROUP: Board Extends CEO Employment Term to Three Years
--------------------------------------------------------------
The Board of Directors of The Ryland Group, Inc. (NYSE: RYL),
approved a three-year extension of the employment agreement with
R. Chad Dreier, Ryland's Chairman, President and Chief Executive
Officer. This action by the Board extends Mr. Dreier's employment
agreement until December 30, 2010.
With headquarters in Southern California, Ryland Group, Inc. --
http://www.ryland.com/-- currently operates in 27 markets across
the country and has built more than 235,000 homes and financed
more than 200,000 mortgages since its founding in 1967. Ryland is
a Fortune 500 company listed on the New York Stock Exchange under
the symbol "RYL."
* * *
The Ryland Group Inc.'s $150 million 9-1/8% senior subordinated
notes due 2011 carry Standard & Poor's and Fitch's double-B
ratings and Moody's Investors Service's Ba2 rating.
SALOMON BROTHERS: Moody's Places Low-B Ratings on 16 Cert. Classes
------------------------------------------------------------------
Moody's Investors Service upgraded six classes and affirmed 17
classes of Salomon Brothers Commercial Mortgage Trust 2001-MM,
Commercial Mortgage Pass-Through Certificates, Series 2001-MM and
placed seven classes on review for possible downgrade as follows:
-- Class A-2, $167,443,477, Fixed, affirmed at Aaa
-- Class A-3, $130,675,394, Fixed, affirmed at Aaa
-- Class X, Notional, affirmed at Aaa
-- Class B, $19,311,544, Fixed/WAC Cap, upgraded to Aa1 from
Aa2
-- Class C, $24,129,605, Fixed/WAC Cap, affirmed at A2
-- Class D, $10,591,148, Fixed/WAC Cap, currently rated A3; on
review for possible downgrade
-- Class E-1, $14,100,000, Fixed, currently rated Baa2; on
review for possible downgrade
-- Class F-1, $7,600,000, Fixed, currently rated Ba2; on review
for possible downgrade
-- Class G-1, $4,111,964, Fixed, currently rated B2; on review
for possible downgrade
-- Class E-2, $13,414,926, Fixed, upgraded to Baa1 from Baa2
-- Class F-2, $5,000,000, Fixed, upgraded to Ba1 from Ba2
-- Class G-2, $2,211,964, Fixed, affirmed at B2
-- Class E-3, $12,800,000, Fixed, upgraded to Baa1 from Baa2
-- Class F-3, $6,100,000, Fixed, affirmed at Ba2
-- Class G-3, $6,211,964, Fixed, affirmed at B2
-- Class E-4, $11,400,000, Fixed, affirmed at Baa2
-- Class F-4, $2,800,000, Fixed, affirmed at Ba2
-- Class G-4, $511,964, Fixed, affirmed at B2
-- Class E-5, $14,400,000, Fixed, upgraded to Baa1 from Baa2
-- Class F-5, $5,900,000, Fixed, upgraded to Ba1 from Ba2
-- Class G-5, $511,964, Fixed, affirmed at B2
-- Class E-6, $7,900,000, Fixed, currently rated Baa2; on
review for possible downgrade
-- Class F-6, $1,200,000, Fixed, currently rated Ba2; on review
for possible downgrade
-- Class G-6, $511,964, Fixed, currently rated B2; on review
for possible downgrade
-- Class E-7, $12,300,000, Fixed, affirmed at Baa2
-- Class F-7, $1,400,000, Fixed, affirmed at Ba2
-- Class G-7, $1,811,964, Fixed, affirmed at B2
-- Class E-8, $15,000,000, Fixed, affirmed at Baa2
-- Class F-8, $5,500,000, Fixed, affirmed at Ba2
-- Class G-8, $3,811,964, Fixed, affirmed at B2
As of the April 18, 2005 distribution date, the transaction's
aggregate balance has decreased by approximately 24.6% to
$508.7 million from $674.4 million at securitization. The
Certificates are collateralized by 27 mortgage loans secured by
commercial and multifamily properties. The loans range in size
from 1.7% to 8.5% of the pool, with the top ten loans representing
55.7% of the pool. There have been no losses since securitization
and there are no loans in special servicing. The loans were
originated by Massachusetts Mutual Life Insurance Company.
This transaction has some unique features in terms of certificate
structure, loan grouping, payment priority and loss allocation.
The trust consists of six senior certificates (Classes A-2, A-3,
X, B, C and D) and 24 junior certificates. The junior
certificates are divided into eight series that each contains
three certificates (Classes E, F and G) that correspond to eight
specific loan groups. Each loan group originally contained 4
loans. The aggregate principal balance of each loan group is
divided into a senior portion and a junior portion. After the
principal balance of the related senior portion has been reduced
to zero, the principal balance of each junior portion is reduced
by the remaining payments of principal made on the related
mortgage loans. Based on the payment priority and the certificate
structure of this transaction, it is possible that a junior
certificate holder may receive principal payments before the
principal balance of a higher-rated certificate is reduced to
zero. It is also possible that a junior certificate holder of a
lower-rated bond may receive principal payment before the
principal balance of a higher-rated certificate from a different
junior certificate series is reduced to zero.
Moody's was provided with year-end 2003 operating results for
100.0% of the pool and year-end 2004 operating results for 57.7%
of the pool. Moody's loan to value ratio for the overall pool is
69.1%, compared to 72.8% at securitization. The LTV of each loan
group is discussed below. The upgrade of pooled Class B is due to
increased subordination levels and stable overall pool
performance. The upgrade of Classes E-2, F-2, E-3, E-5 and F-5 is
due to the improved performance of the associated loan group.
Moody's has placed Classes D, E-1, F-1, G-1, E-6, F-6 and G-6 on
review for possible downgrade due to concerns about the
performance of Loan Groups A and E. Moody's review will focus on
current operating performance as well as future prospects for the
loans in these two groups.
Loan Group A consists of four loans totaling $80.5 million and is
the collateral for Classes E-1, F-1 and G-1. Loan Group A has
amortized 6.6% since securitization. The overall performance of
Loan Group A has declined due to the significant decline in
performance of the Cabana Crowne Plaza Loan ($10.9 million --
2.1%), which is secured by a 192-room hotel in Palo Alto,
California and the 2777 East Camelback Road Loan ($10.8 million --
2.1%), which is secured by a 106,000 square foot office building
in Phoenix, Arizona. In addition, the performance of the 8260
Greensboro Drive Loan ($15.5 million -- 3.0%) has been impacted by
a decline in occupancy due to the loss of two tenants in 2003.
Classes E-1, F-1 and G-1 have been placed on review for possible
downgrade. Moody's review will incorporate the current operating
performance, leasing prospects and market conditions for all of
the loans in Loan Group A.
Loan Group B consists of two loans totaling $20.6 million and is
the collateral for Classes E-2, F-2 and G-2. Two loans from Loan
Group B have paid off and the Group is no longer making principal
payments to the senior pooled classes. The two remaining loans
in Loan Group B include the Mercy West Medical Center Loan
($11.6 million -- 2.3%), which is secured by a 142,000 square foot
medical office building in Clive, Iowa and the Shoppes at Flower
Mill ($9.1 million -- 1.8%), which is secured by a 133,000 square
foot retail center in Langhorne, Pennsylvania. Performance at
both properties has improved since securitization. The weighted
average LTV for Loan Group B is 72.1%, compared to 82.5% at
securitization. As a result, Classes E-2 and F-2 have been
upgraded.
Loan Group C consists of four loans totaling $80.5 million and is
the collateral for Classes E-3, F-3 and G-3. Loan Group C has
amortized 6.7% since securitization. The largest loan in Loan
Group C is the Promenade at Westlake Loan ($35.7 million - 7.0%),
which is secured by a 155,000 square foot retail/entertainment
retail center located in Thousand Oaks, California. The property
is 100.0% occupied, the same as at securitization. Major tenants
include Bristol Farms (20.0% GLA; expiration November 2016),
Barnes and Noble (13.3% GLA; expiration January 2008) and Cost
Plus (12.2% GLA; expiration January 2012). Moody's LTV for the
Promenade at Westlake Loan is 85.1%, compared to 90.0% at
securitization. The weighted average LTV for Loan Group C is
72.9%, compared to 77.6% at securitization. As a result, Class
E-3 has been upgraded.
Loan Group D consists of three loans totaling $57.3 million and is
the collateral for Classes E-4, F-4 and G-4. One loan from Loan
Group D has paid off. The largest loan in Loan Group D is the
Richmond Square Apartments Loan ($24.5 million - 4.8%), which is
secured by a 360-unit luxury high rise apartment building located
in Arlington, Virginia. Although the property has maintained
100.0% occupancy since securitization, its performance has been
impacted by increased expenses. Moody's LTV for the Richmond
Square Apartments Loan is 60.0%, compared to 58.0% at
securitization. The weighted average LTV for Loan Group C is
64.9%, compared to 68.7% at securitization.
Loan Group E consists of four loans totaling $74.1 million and is
the collateral for Classes E-5, F-5 and G-5. Loan Group E has
amortized 13.2% since securitization. The largest loan in Group E
is the Glenpointe Center East Loan ($33.0 million - 6.5%), which
is secured by a 319,000 square foot Class A office complex located
in Teaneck, New Jersey. The property is 97.0% occupied, compared
to 100.0% at securitization. The largest tenant, Peoplesoft
(25.0% NRA), recently renewed its lease through August 2010.
Moody's LTV for the Glenpointe Center East Loan is 64.1%, compared
to 77.0% at securitization. The weighted average LTV for Loan
Group C is 62.7%, compared to 74.8% at securitization. As a
result, Classes E-5 and F-5 have been upgraded.
Loan Group F consists of three loans totaling $51.9 million and is
the collateral for Classes E-6, F-6 and G-6. One loan from Group F
has paid off. The largest loan in Loan Group F is the SouthPark
Towers Loan ($28.7 million - 5.6%), which is secured by a Class A
office building located in Charlotte, North Carolina. Occupancy
has declined to 70.0% from 98.4% at securitization. The second
largest loan is the Embassy Suites Loan ($14.8 million -- 2.9%),
which is secured by a full service hotel located in Atlanta,
Georgia. Occupancy has declined from 72.0% at securitization to
67.5% as of year-end 2004. Based on the borrowers' financial
statements, all of the loans in Loan Group F have declined since
securitization. Moody's has placed Classes E-6, F-6 and G-6 on
review for possible downgrade. Moody's review will incorporate
the current operating performance, leasing prospects and market
conditions for all of the loans in Loan Group F.
Loan Group G consists of four loans totaling $77.0 million and is
the collateral for Classes E-7, F-7 and G-7. Loan Group G has
amortized 10.3% since securitization. The largest loan in Loan
Group G is the Capitol Place III Loan ($26.1 million - 5.1%),
which is secured by a 303,000 square foot office building located
in Washington, D.C. The performance of the loan has improved
since securitization due to increased rental revenue and stable
expenses. Moody's LTV for this loan is 54.5%, compared to 72.0%
at securitization. The second largest loan in this pool is The
Sagamore Resort Loan ($20.2 million - 4.0%), which is secured by a
350-room lakeside resort on Lake George, approximately 70 miles
north of Albany, New York. The property is a seasonal resort that
has been negatively impacted by a decline in occupancy. Moody's
LTV for The Sagamore Resort Loan is 84.0%, compared to 66.0% at
securitization. The weighted average LTV for Loan Group C is
66.5%, compared to 72.1% at securitization.
Loan Group H consists of three loans totaling $67.0 million and is
the collateral for Classes E-8, F-8 and G-8. The largest loan in
Loan Group H is the Stamford Square Loan ($32.3 million - 6.4%),
which is secured by a 275,000 square foot Class A office building
located in Stamford, Connecticut. The property is 100.0%
occupied, the same as at securitization. The largest tenants are
General Electric Investment Company (35.0% NRA; expiration 2012)
and KPMG (27% NRA; expiration May 2010). The property's
performance has improved since securitization due to increased
rental revenue and stable expenses. Moody's LTV for the Stamford
Square Loan is 79.0%, compared to 87.0% at securitization. The
weighted average LTV for Loan Group C is 70.9%, compared to 78.2%
at securitization.
The pool's collateral is a mix of:
* office (66.8%),
* retail (14.3%),
* multifamily (9.8%), and
* lodging (9.1%).
The collateral properties are located in 15 states and the
District of Columbia. The highest state concentrations are:
* Virginia (16.4%),
* New York (16.0%),
* California (9.2%),
* Washington, D.C. (8.4%), and
* New Jersey (6.5%).
All of the loans are fixed rate.
SPIEGEL INC: Wants Until June 30 to Decide on Leases
----------------------------------------------------
Throughout the course of their Chapter 11 cases, Spiegel, Inc.,
and its debtor-affiliates have engaged in an exhaustive financial
review of all their retail stores and approximately 600 non-
residential real property leases. As this process has continued,
the Debtors have timely closed under performing retail locations,
and either rejected the applicable lease or entered into a
termination agreement with the landlord.
Andrew V. Tenzer, Esq., at Shearman & Sterling LLP, in New York,
relates that the Debtors' consistent focus on rationalizing their
non-residential real property leases demonstrates their
commitment towards maximizing creditor recoveries.
In early 2004, the Debtors conducted store closing sales at
29 Eddie Bauer stores. Moreover, in accordance with the Home
Store Closing Program, Eddie Bauer, Inc., anticipates disposing
of approximately 34 additional leases by either negotiating
favorable modifications to or termination of Home Store Leases
and, where necessary, rejecting them.
Mr. Tenzer tells Judge Lifland that the Debtors have also taken
significant steps to rationalize their use of leased office
space. The Debtors closed their call centers located in Bothell,
Washington, and Rapid City, South Dakota. In addition, Spiegel,
Inc., rejected its headquarters' office lease and entered into a
new postpetition lease that resulted in substantial savings to
the Debtors' estates. On December 15, 2004, the Court authorized
the Debtors to enter into a lease satisfaction agreement
satisfying the remaining obligations under the new lease and
authorizing it to enter into a second postpetition lease for
substantially less space at its headquarters office and at
minimal cost.
The Debtors anticipate that their Plan of Reorganization will
become effective on June 6, 2005, provided that it gets confirmed
on time. Accordingly, the Debtors ask the Court to extend the
deadline by which they must assume or reject all of their
unexpired non-residential real property leases through and
including June 30, 2005, to ensure that the deadline does not
occur prior to the Effective Date.
Mr. Tenzer assures the Court that the extension will not
prejudice any of the landlords under the Leases as, pursuant to
the terms of the Plan, they will know the Debtors' intention with
respect to the Leases no later than three days prior to the
Confirmation Hearing.
Absent the extension, Mr. Tenzer explains that the Debtors may be
forced to assume the Leases prematurely, and this could lead to
unnecessary administrative claims against their estates if the
Leases are ultimately rejected. If the Debtors precipitously
reject the Leases or are deemed to reject the Leases by operation
of Section 365(d)(4) of the Bankruptcy Code, they may forgo
significant value in those Leases, resulting in the loss of
valuable property interests that may be essential to the
reorganization of the Eddie Bauer business.
Headquartered in Downers Grove, Illinois, Spiegel, Inc. --
http://www.spiegel.com/-- is a leading international general
merchandise and specialty retailer that offers apparel, home
furnishings and other merchandise through catalogs, e-commerce
sites and approximately 560 retail stores. The Company filed for
Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No.
03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq.,
at Shearman & Sterling, represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $1,737,474,862 in assets and
$1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 43;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
STEVE NGUYEN: Case Summary & 12 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Steve Quynh Nguyen
3738 Touraine Avenue
Port Arthur, Texas 77642
Bankruptcy Case No.: 05-10575
Chapter 11 Petition Date: April 15, 2005
Court: Eastern District of Texas (Beaumont)
Judge: Chief Judge Bill Parker
Debtor's Counsel: Frank J. Maida, Esq.
Maida Law Firm
4320 Calder Avenue
Beaumont, Texas 77706-4631
Tel: (409) 898-8200
Fax: (409)898-8400
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 12 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Caterpillar Financial Security interest $837,127
Services Value of security:
2120 West End Avenue $200,000
Nashville, TN 37203
Caterpillar Financial Security agreement $819,720
Services Value of security:
2120 West End Avenue $210,000
Nashville, TN 37203
Caterpillar Financial Security agreement $620,949
Services Value of security:
2120 West End Avenue $150,000
Nashville, TN 37203
SouthTrust Bank Loan $30,000
P.O. Box 830716
Birmingham, AL 35283-0716
Sabine Industries Inc. Fuel $30,000
7266 South 1st Avenue
Sabine Pass, Texas 77655
S. Rao-Kothapalli, M.D. Medical $24,690
2001 9th Avenue, Suite. 202
Port Arthur, Texas 77642
Joseph Chicone Loan $20,000
32180 477th Avenue
Elk Point, SD 57025
Bank of America Purchase of goods $6,154
P.O. Box 30770
Tampa, FL 33630
Nordstrom Purchase of goods $4,690
P.O. Box 79137
Phoenix, AZ 85062-9137
AT&T Universal Purchase of goods $3,526
P.O. Box 6418
The Lakes, NV 88901-6418
Discover Card Purchase of goods $3,039
P.O. Box 30395
Salt Lake City, UT 84130
Caterpillar Financial Personal guarantee $0
Services
2120 West End Avenue
Nashville, TN 37203
SUMMIT NATIONAL: Case Summary & 11 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Summit National, Inc.
617 Brier Street
Kenilworth, Illinois 60043
Bankruptcy Case No.: 05-15565
Type of Business: The Debtor provides lease accounting software
solutions offering five unique back-end systems;
a front-end application processor and credit
management system; as well as, customized ASP
and outsourcing services, disaster recovery,
upgrades & conversions, lease portfolio
auditing, customization, and training.
See http://www.summitnational.com/
Chapter 11 Petition Date: April 21, 2005
Court: Northern District of Illinois (Chicago)
Judge: Jacqueline P. Cox
Debtor's Counsel: Chester H. Foster, Jr., Esq.
Foster, Kallen & Smith
3825 West 192nd Street
Homewood, Illinois 60430
Tel: (708) 799-6300
Fax: (708) 799-6339
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 11 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
NDSI, Inc. $35,000
Jones, Blechman, Woltz & Kelly
701 Town Center Drive
Newport News, VA 23612
Healthcare Information Systems $35,000
Stein & Rotman
105 West Madison
Chicago, IL 60602
McDonnell Boehnen $25,000
300 South Wacker Drive
Chicago, IL 60606
David M. Ward $20,000
c/o O'Halloran, Kosoff P.C.
650 Dundee Road
Northbrook, IL 60062
Chris Brennan $20,000
English, McCaughan, O'Brien $15,000
Karm, Winand & Patterson $10,000
Kiesler & Berman $5,000
Huff, Poole & Mahoney, PC $4,000
Craig & Associates $2,000
Sachnoff & Weaver, Ltd. $1,500
SUPPLY KING: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Supply King, Inc.
One Third Avenue
Neptune City, New Jersey 07763
Bankruptcy Case No.: 05-23177
Type of Business: The Debtor sells floor care equipment and
supplies, paper supplies, and cleaning
chemicals. See http://www.supplyking.com
Chapter 11 Petition Date: April 21, 2005
Court: District of New Jersey (Trenton)
Judge: Raymond T. Lyons Jr.
Debtor's Counsel: Richard Honig, Esq.
Hellring, Lindeman, Goldstein & Siegal LLP
One Gateway Center, 8th Floor
Newark, New Jersey 07102
Tel: (973) 621-9020
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
White House Chemical & Supply Company, Inc. $750,000
455 Trinity Avenue
Hamilton, NJ 08619
Bank of America $110,000
P.O. Box 150462
Hartford, CT 06115-0462
CTG Sales Inc. - Cascades $84,786
P.O. Box 673344
Detroit, MI 48267-3344
Triple S $57,217
P.O. Box 845174
Boston, MA 02284-5174
Bay West Paper Corporation $56,867
Consolidated Paper $49,061
Alliance Paper Company $45,089
The Butcher Company $43,661
Lagasse Inc. $40,824
Tennant Sales $30,062
Bunzidistribution NE LLC $28,791
Misco Products Corporation $28,510
Inopak Ltd. $23,121
Converpro $22,613
3M Products $19,723
JH Cohn $18,500
Peters Chemical Company $17,534
North American Cleaning Equipment $16,814
Forman Inc. $16,205
Epic Industries $14,372
TENNECO AUTOMOTIVE: Offering $500 Million 8-5/8% Sr. Sub. Notes
---------------------------------------------------------------
Tenneco Automotive (NYSE: TEN) commenced an offer to exchange up
to $500 million principal amount of 8-5/8% Senior Subordinated
Notes due 2014, which have been registered under the Securities
Act of 1933, for a like amount of its 8-5/8% Senior Subordinated
Notes due 2014, which were issued in November 2004 in a private
placement. The offer is being made pursuant to the terms and
conditions included in the company's prospectus dated April 11,
2005.
The terms of the new notes are substantially identical to the
terms of the notes for which they are being exchanged, except that
the transfer restrictions and registration rights applicable to
the original notes generally do not apply to the new notes.
The exchange offer will expire at 5:00 p.m., New York City time,
on May 18, 2005, unless extended by Tenneco Automotive.
Copies of the prospectus and other information relating to this
exchange offer, including transmittal materials, may be obtained
from the exchange agent:
The Bank of New York Trust Company, N.A.
c/o The Bank of New York
101 Barclay Street
7 East, New York, New York 10286
Attn: Mr. Randolph Holder
About the Company
Tenneco Automotive is a $4.2 billion manufacturing company with
headquarters in Lake Forest, Illinois and approximately 18,400
employees worldwide. Tenneco Automotive is one of the world's
largest designers, manufacturers and marketers of emission control
and ride control products and systems for the automotive original
equipment market and the aftermarket. Tenneco Automotive markets
its products principally under the Monroe(R), Walker(R), Gillet(R)
and Clevite(R) Elastomer brand names. Among its products are
Sensa-Trac(R) and Monroe Reflex(R) shocks and struts, Rancho(R)
shock absorbers, Walker(R) Quiet-Flow(R) mufflers, Dynomax(R)
performance exhaust products, and Clevite(R) Elastomer noise,
vibration and harshness control components.
* * *
Tenneco Automotive's 8-5/8% senior subordinated notes due 2014 and
10-1/4% secured notes due 2013 currently carry Moody's Investors
Service's Standard & Poor's, and Fitch's single-B ratings.
TNS INC.: S&P Rates New $240 Million Bank Loan at BB-
-----------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit rating on Reston, Virginia-based TNS Inc., and assigned its
'BB-' rating and '3' recovery rating to the company's new bank
loan. The outlook is stable.
"The ratings on TNS Inc. reflect its narrow addressed market and
significant customer concentrations. These are offset partly by a
solid market position, strong prospects for continued
international expansion and consistent free operating cash flow
generation," said Standard & Poor's credit analyst Ben Bubeck.
The new bank loan package consists of a $210 million term loan 'B'
and a $30 million revolving credit agreement. Proceeds will be
used to repay an outstanding term loan and buy back up to 9
million shares of the company's outstanding stock in a modified
Dutch auction, for an aggregate purchase price of up to $166.5
million. The revolver and term loan will be scaled downward in
the event that fewer than nine million shares are tendered.
Although the transaction significantly will increase leverage, the
temporarily low leverage at Dec. 31, 2004, was about 1x, which
provided room within the rating for the current repurchase. TNS
provides private data communications networks for transaction-
oriented applications. Pro forma for the transaction, TNS had
$252 million debt and capitalized operating leases outstanding as
of Dec. 31, 2004.
Despite its leadership position in its selected niche, the company
remains vulnerable to competitors that are substantially larger.
The company's market positions are defensible over the
intermediate term because of investments in its proprietary and
scalable technology, coupled with contractual customer
relationships with moderate switching costs; however, the company
has significant customer concentrations.
UAL CORP: Daniel Miller Asks Court for $4.3 Million Judgment
------------------------------------------------------------
Daniel T. Miller, of Genesco, Illinois, tells the U.S. Bankruptcy
Court for the Northern District of Illinois that, from 1987
through 1998, UAL Corporation and its debtor-affiliates diverted
$361,717 of his earnings to a third party. The Debtors did not a
have a court order or authorization from Mr. Miller to divert his
earning to the third party. Mr. Miller says he notified the
Debtors several times that conversion of his property was in
violation of the written law and due process of law. However, the
Debtors refuse to correct these wrongs and Mr. Miller is still
suffering as a result.
In 1978, Mr. Miller alleges that he was the subject of
discrimination at the hands of the Debtors. During an interview,
the Debtors raised the hearing exam threshold to eliminate older
applicants. Older pilot applicants have an increased exposure to
jet engines and a resultant loss of hearing in a certain decibel
range. The Debtors, during their 1985 labor strife, again tested
Mr. Miller's hearing and found that he passed the "self help"
standards. For over 17 years and over 20 tests, Mr. Miller's
hearing met the Debtors' standards. Mr. Miller alleges that he
was irrevocably damaged by this discrimination.
The Debtors also fraudulently denied Mr. Miller his just earnings
and conspired with other known and unknown persons to damage Mr.
Miller. The Debtors damaged Mr. Miller by promising shares in
UAL Corporation in exchange for a lower wage rate. The Debtors
knew that "the stock would be near worthless in comparison to
traded earnings." Mr. Miller believes that the Debtors knew that
the Employee Stock Option Plan would not mature. The Debtors'
intentions were laid bare by Chief Financial Officer Jack Brace
at a "New Captain's Indoctrination" tour of Headquarters. Mr.
Brace told the captains that they would not keep the newly signed
post-2000 and pre- September 11, 2002 contract. Mr. Miller
alleges that this Promissory Fraud has damaged all stockholders.
As a result, Mr. Miller asks the Court to award a judgment of
$361,717, plus interest and costs. Further, Mr. Miller wants
$4,000,000 for stress, pain and suffering as a result of the
Debtors' torturous conduct.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through UnitedAir 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. 81; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
UAL CORPORATION: Wants to Enter Into UAX Agreement with SkyWest
---------------------------------------------------------------
In their efforts to trim costs and optimize fleet size, UAL
Corporation and its debtor-affiliates are negotiating a transition
agreement with Air Wisconsin Airlines Corporation, whereby Air
Wisconsin's services will be phased out over the next year. Under
the proposed Second Amended Agreement, SkyWest Airlines, Inc.,
will partially replace the Air Wisconsin capacity.
SkyWest will provide 20 regional jets, in addition to the jets it
already provides under an Amended Agreement that was approved by
the Court. The 20 additional aircraft will be 70-seat regional
jets that will enter service for the Debtors between July 2005
and January 2006. This arrangement will allow the Debtors to
operate fewer planes on the same routes, optimizing the fleet and
lowering costs.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago,
Illinois, tells Judge Wedoff that SkyWest is one of the Debtors'
lowest-cost UAX Regional Carriers. Expanding the relationship
offers the Debtors "extremely attractive rates." The SkyWest
Agreement provides lower rates than the Debtors were paying for
the Air Wisconsin aircraft. Further, the Debtors have mitigated
their exposure to future administrative expense claims by SkyWest
through a provision in the Agreement that limits any SkyWest
administrative claim.
The Debtors also seek permission to file the Second Amended
Agreement under seal. Otherwise, the Debtors' competitors will
use the information to their advantage. Mr. Sprayregen says the
terms and economics of the Agreement could be used by other
regional air carriers as leverage in ongoing or future
negotiations with the Debtors.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through UnitedAir 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. 81; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
US AIRWAYS: Expands J. Glass' & B. Trousdale's Executive Roles
--------------------------------------------------------------
US Airways expanded the roles of two executives, naming Jerrold A.
Glass as executive vice president - chief human resources officer,
and Bill Trousdale as vice president - financial planning and
analysis.
Mr. Glass, who joined the company in April 2002 as senior vice
president of employee relations, oversees US Airways'
relationships with its unions as well as human resources policy
and compliance, recruiting, corporate learning and development,
compensation and benefits.
In his new role, Mr. Glass will also oversee the company's
"Partners for Change" program, which is designed to build better
relationships with labor to address business issues and improve
operational efficiency.
"Jerry has been able to work constructively with all of our unions
in dealing with some extremely difficult issues," said Bruce R.
Lakefield, US Airways president and chief executive officer. "He
has a tremendous understanding of the human resources issues
facing our industry, and has done a great job not only in
developing new programs, but also in balancing our employees' and
company's needs."
Mr. Trousdale, currently a managing director in the finance
department, will be responsible for all aspects of the airline's
financial and capital planning and analysis, in additional to
labor, fleet, and market profitability analysis functions.
"Bill's broad range of talents and financial acumen have played an
important role in our ability to develop a viable business plan to
return our company to profitability," said Mr. Lakefield. "He is
a highly motivated and dynamic individual and we welcome his
continued expertise and contributions."
Mr. Glass holds a bachelor of arts degree from Boston University
and a master's degree in public administration from The George
Washington University.
Mr. Trousdale joined US Airways in 1999 from Weil-McLain. He
holds a master's in business administration in management &
strategy and marketing from the Kellogg Graduate School of
Management at Northwestern University and a bachelor's of science
degree in mechanical engineering from the Massachusetts Institute
of Technology. Mr. Trousdale also served five years in the United
States Navy as a nuclear submarine officer.
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts.
U.S. ENERGY: Auditors Continue to Have Going Concern Doubt
----------------------------------------------------------
U.S. Energy Corp. (Nasdaq: USEG) and Crested Corp. (OTC Bulletin
Board: CBAG), d/b/a USECC reported that that their independent
auditor, Epstein, Weber & Conover, PLC of Scottsdale, Ariz., has
issued a going concern opinion qualifying the financial statements
of both companies for the year ended December 31, 2004. This is
consistent with the qualified opinions issued by Grant Thornton
for the year ended December 31, 2003, the seven months ended
December 31, 2002, and the (former) fiscal year ended May 31,
2002.
Keith Larsen, President of U.S. Energy Corp. stated, "The going
concern qualification on our audited financial statements was not
a surprise to management. For the past three years, U.S. Energy
Corp. and its affiliated companies have been selling non-
performing assets, and streamlining overhead, to build shareholder
value and maximize the return potential of the diverse commodity
holdings of the Company. With the recent announcement that U.S.
Energy is in the process of selling its coal bed methane assets
owned by its subsidiary, Rocky Mountain Gas, Inc., to Enterra
Energy Trust, while retaining an 11.9% interest in Pinnacle Gas
Resources, Inc., it will proceed to exploit the rapidly increasing
value of its uranium, molybdenum and gold holdings. We are
confident that we are on the right track to erase the 'going
concern' opinion in the future. Although, as always, there can be
no guarantees that we will meet that goal, we feel that we have
made the significant steps necessary to enhance the company's
financial position and economic future. The prices of the
uranium, gold and molybdenum commodities represented in the
mineral holdings of U.S. Energy have appreciated significantly
over the past year. The prices for these commodities are expected
by most metals analysts to remain strong looking forward, uranium
is at a 15-year high of $21.00 per pound, gold is above $430.00
per ounce, and molybdic oxide is at a recent historical high price
of $30.00 per pound.
"Our strategy has become apparent from our recent press releases
on our progress in the uranium mining and development area, along
with the return of the molybdenum holdings near Crested Butte, CO
from Phelps Dodge. In addition, our investment in our subsidiary
Sutter Gold Mining Inc. (SGM.V), represented by the ownership of
34.3 million shares of SGM, has made substantial progress in the
development of the Sutter Gold Mine property in California.
"We also look forward to a final resolution of the Nukem
litigation which was remanded to the arbitration panel after
Nukem's third appeal. This could provide the companies with a
substantial amount of cash in the future upon final decision in
the courts or through negotiations," he concluded.
About U.S. Energy
U.S. Energy Corp. and its majority owned subsidiary, Crested
Corp., are engaged in joint business operations as USECC. Through
their subsidiary Rocky Mountain Gas, Inc., they own interests in
over 364,816 gross acres prospective for coalbed methane (CBM) in
the Powder River Basin of Wyoming and Montana and acreage adjacent
to the Greater Green River Basin in southwest Wyoming. This
acreage data includes approximately 100,000 gross acres held by
Pinnacle Gas Resources, Inc., in which RMG owns a minority equity
interest. USECC owns control of Sutter Gold Mining Inc., which
owns properties in California prospective for gold. USECC also
owns various interests in uranium properties in Wyoming and Utah.
USGEN NEW ENGLAND: Settles JPMorgan Letter of Credit Issues
-----------------------------------------------------------
USGen New England, Inc., sought and obtained the U.S. Bankruptcy
Court for the District of Maryland's approval of a settlement with
JPMorgan Chase Bank, N.A., concerning excess funds in a letter of
credit.
USGen secured from JPMorgan a $10,000,000 letter of credit on
August 21, 2002, for the benefit of Algonquin Gas Transmission
Company and its affiliates. The Letter of Credit served as
collateral for USGen's performance of its obligations to
Algonquin. After USGen filed for Chapter 11, Algonquin made a
draw under the Letter of Credit for the face amount.
USGen and Algonquin resolved their disputes in 2004 and entered
into a global settlement. Pursuant to that settlement, Algonquin
retained $3,020,594 of the Letter of Credit funds and returned
the remaining $6,979,406 to USGen to be held in escrow pending a
determination of whether the Excess Funds constitute property of
JPMorgan or property of the bankruptcy estate. The Court order
approving the Global Settlement required USGen to segregate the
Excess Funds in an interest bearing account pending a resolution
of the claims to the Excess Funds that have been or may be
asserted by USGen, JPMorgan, NEGT Energy Trading-Power L.P., and
NEGT Energy Trading-Gas Corporation.
Pursuant to the Global Settlement Order, USGen deposited the
Excess Funds in an interest-bearing escrow account where they
remain to date. As of the end of 2004, the account approximated
$7,036,300.
Since the entry of the Global Settlement Order, USGen and
JPMorgan have engaged in extensive discussions concerning their
claims to the Excess Funds. JPMorgan argues that it is entitled
to the Excess Funds because it paid them directly to Algonquin.
USGen insists that JPMorgan should receive an additional
unsecured claim in lieu of the money.
JPMorgan, as agent for USGen's prepetition lenders, has filed an
unsecured proof of claim for $88,000,000.
USGen's affiliates do not assert any claim to the Excess Funds.
Although USGen and JPMorgan have been unable to reconcile their
conflicting views on applicable legal precedent, intervening
circumstances have caused USGen to re-evaluate the benefit of
continued litigation. Specifically, pursuant to USGen's plan of
liquidation, USGen anticipates paying holders of allowed
unsecured claims in full. Consequently, a dispute over whether
JPMorgan should receive the Excess Funds or merely an allowed
claim in equal amount becomes meaningless, since both would
result in the same cash distribution to JPMorgan.
Therefore, USGen determined that continued prosecution would
provide little or no benefit to the estate and would consume
unnecessary estate resources. To avoid the additional costs and
distraction, USGen agreed to release the Excess Funds to JPMorgan
in partial satisfaction of JPMorgan's claims against the estate.
Among other things, the Settlement provides that JPMorgan will
receive 100% of the Excess Funds and 100% of the interest earned
thereon. The claims asserted by JPMorgan against USGen's estate
will be correspondingly reduced.
Headquartered in Bethesda, Maryland, USGen New England, Inc., an
affiliate of PG&E Generating Energy Group, LLC, owns and operates
several electric generating facilities in New England and
purchases and sells electricity and other energy-related products
at wholesale. The Debtor filed for Chapter 11 protection on
July 8, 2003 (Bankr. D. Md. Case No. 03-30465). John E. Lucian,
Esq., Marc E. Richards, Esq., Edward J. LoBello, Esq., and Craig
A. Damast, Esq., at Blank Rome, LLP, represent the Debtor in its
restructuring efforts. When it sought chapter 11 protection, the
Debtor reported assets amounting to $2,337,446,332 and debts
amounting to $1,249,960,731. (PG&E National Bankruptcy News,
Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000)
VISTEON CORP.: Various Concerns Prompt S&P to Cut Rating to B+
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating for Visteon Corp. to 'B+' from 'BB+'. The rating remains
on CreditWatch, but the implications have been revised to
developing, indicating that the rating could be raised or lowered
pending the outcome of a new round of discussions with Ford Motor
Co. (BBB-/Negative/A-3), Visteon's former parent and largest
customer, to restructure the terms of their relationship.
"Our action reflected the intensified earnings and cash flow
pressures Visteon faces as a result of its high fixed costs,
inflexible labor agreements, and underperforming businesses," said
Standard & Poor's credit analyst Martin King. "These factors are
combined with the growing challenges of the automotive supply
industry, including reduced vehicle production by Visteon's main
customer and high raw material costs."
Dearborn, Michigan-based Visteon has total debt of about $2.2
billion, including securitized accounts receivable and capitalized
operating leases, and its total underfunded pension and other
postretirement employee benefits (OPEB) obligations were $2
billion as of Dec. 31, 2004.
Ford today revised its second-quarter North American production
forecast, with production now expected to decline 5%, following a
10% cut in the first quarter. Ford's bloated inventory levels and
recent market-share losses caused its production cuts. The
earnings and cash flow of Visteon, which derives 70% of its
revenue from Ford, will be severely affected. Visteon has not
provided earnings guidance for 2005, but pressures have
intensified since 2004 when the company reported a $226 million
loss (before special charges) and $475 million of negative free
cash flow (excluding receivable sales).
Recently announced interim agreements with Ford will help to
partially offset earnings and cash flow pressures, strengthening
Visteon's near-term profitability, cash flow generation, and
liquidity. The agreements should enhance Visteon's 2005 cash flow
by about $500 million by providing for accelerated payment terms,
wage reimbursements, and sharing of capital expenditures. But
either party can terminate the interim agreements at the end of
2005. The two companies continue to negotiate more permanent
structural changes to Visteon's U.S. businesses that will improve
its long-term financial results and competitive position.
We continue to expect the companies to reach an agreement that
will strengthen Visteon's business position and financial profile,
but the timing and details are very uncertain. While Standard &
Poor's believe the risk that the companies will not reach an
agreement is low, if that were to occur, the sustainability of
Visteon in its present form would be in question.
"The rating for Visteon could be lowered further if it appears
that future results will remain subpar for a prolonged period,"
Mr. King said. "The rating could be raised if, following the
completion of a permanent agreement with Ford, we believe Visteon
will achieve sustainable improvements to its competitive position
and financial profile."
WMG ACQUISITION: IPO Cues S&P to Watch Ratings
----------------------------------------------
Standard & Poor's Ratings Services placed its ratings on WMG
Acquisition Corp., including the company's 'B+' long-term
corporate credit rating, on CreditWatch with positive
implications.
"The CreditWatch listing acknowledges the financial profile
improvement that would likely occur from the company's anticipated
initial public offering," said Standard & Poor's credit analyst
Alyse Michaelson Kelly.
New York, New York-based music recording and publishing company
WMG had approximately $2.5 billion in debt at Dec. 31, 2004. The
company was acquired from Time Warner Inc. in February 2004 by an
investor group comprising:
(1) Thomas H. Lee Partners,
(2) Edgar Bronfman Jr.,
(3) Bain Capital Partners, and
(4) Providence Equity Partners.
Standard & Poor's currently believes that the ratings could be
raised by one notch, to 'BB-'. In such a case, proceeds from an
expected equity offering would need to be used to reduce debt, and
we would expect pro forma leverage to be lowered by between one
and two turns from the debt to EBITDA ratio of more than 6x at
Dec. 31, 2004. The company should also show that it can maintain
its leverage at a level appropriate for a higher rating, and this
would require more clarity about the music industry's prospects
for defeating on-line piracy and restoring sustainable revenue
growth. An additional rating factor will be the regularity and
magnitude of future special dividends.
Liquidity is derived from the company's healthy cash balances,
good cash flow, and borrowing availability under an undrawn
revolving credit facility. Business reinvestment and capital
distributions are also important determinants of liquidity.
Significant capital distributions in the past few months have
rewarded the company's shareholders at the expense of its credit
profile.
These distributions were primarily funded with debt, and to a
lesser degree, by the company's higher-than-expected cash
balances, which resulted from cost saving and lower-than-expected
one-time restructuring costs.
Continued EBITDA growth and improving earnings stability could
result from more effective artist management relative to release
schedules, as well as development of new artists.
Standard & Poor's will evaluate WMG's near-term operating outlook,
considering current trends in CD sales, indications that
electronic piracy is slowing, and the success of the company's
release schedule. Standard & Poor's will also assess management's
financial policies and the potential for significant capital
distributions. The rating would likely be taken off CreditWatch
and the company's 'B+' rating affirmed with a negative outlook if
WMG's plans for an equity offering are derailed.
WORLDCOM INC: Intelsat Wants to Compel Delivery of 82,394 Shares
----------------------------------------------------------------
Stephen B. Selbst, Esq., at McDermott Will & Emery LLP, in New
York, relates that after the Effective Date, Intelsat, Ltd.,
Intelsat USA License Corp. and Intelsat USA Sales Corp. tried
several times to engage the Reorganized Debtors in a dialogue
regarding the appropriate payout of their allowed claims to no
avail. In December 2004, Intelsat filed a motion to compel in
connection with its allowed claims.
To settle their disputes, the Reorganized Debtors and Intelsat
entered into a stipulation that was approved by the Court on
March 21, 2005. Under the Stipulation, the Reorganized Debtors
were obligated, by March 31, 2005, to:
(a) pay Intelsat $1,754,370 in cash; and
(b) transfer to Intelsat 82,394 shares of New Common Stock.
According to Mr. Selbst, Intelsat received the full cash payment
within the deadline. Intelsat didn't receive the Shares. The
Reorganized Debtors have failed to give Intelsat any reason for
their failure to deliver the Shares.
The Reorganized Debtors are in breach of the March 21 Court Order
by refusing to deliver the Shares, Mr. Selbst argues. Every day
that the Reorganized Debtors fail to deliver the Shares, Intelsat
is subject to the risk of market price fluctuation.
Accordingly, Intelsat asks the Court to:
(a) direct the Reorganized Debtors to deliver to Intelsat the
Shares without further delay;
(b) indemnify Intelsat against any loss in the market value of
the Shares following March 31, 2005; and
(c) assess appropriate penalties against the Reorganized
Debtors for its refusal to comply with the March 21 Court
Order.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on
October 31, 2003, and on April 20, 2004, the company formally
emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom
Bankruptcy News, Issue No. 84; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
W.R. GRACE: March 31 Balance Sheet Upside-Down by $628.7 Million
----------------------------------------------------------------
W. R. Grace & Co. (NYSE:GRA) reported that 2005 first quarter
sales totaled $603.2 million compared with $518.5 million in the
prior year quarter, an increase of 16.3%.
Revenue from higher base volumes and from acquisitions accounted
for most of the increase, with selling price increases to
partially offset inflation in the cost of raw materials and
energy, and favorable currency translation accounting for the
remainder. Grace reported first quarter net income of
$3.1 million, or $0.05 per diluted share, compared with net income
of $15.8 million, or $0.24 per share, in the first quarter of
2004.
Net income for the first quarter of 2005 includes higher interest
expense to conform to rates in Grace's proposed plan of
reorganization, higher pension expenses to reflect recent plans'
experience and capital market returns, and higher legal costs
related to Chapter 11 and other litigation proceedings. Pre-tax
income from core operations in the first quarter of 2005 was
$41.1 million compared with $38.5 million in the first quarter of
2004, a 6.8% increase. The pre-tax results from core operations
reflect added profit from higher sales and from productivity
improvements, which more than offset inflationary increases in the
costs of raw materials, transportation fuels, energy and certain
operating expenses, including pension costs as mentioned above.
"Our businesses continued to deliver healthy sales and earnings
growth," said Grace's Chairman and Chief Executive Officer Paul J.
Norris. "We delivered higher operating profits even when
challenged with a more than 10% increase in the cost of raw
materials and energy." Fred Festa, Grace's President, Chief
Operating Officer and CEO designate added that, "actions taken in
the latter part of 2004 to improve supply chain productivity and
to recognize the higher materials costs in our future selling
prices, served to temper the high inflationary pressure. In
addition, we continue to drive integration across Grace's
businesses and functions to reduce our cost structure and to
improve the effectiveness of our business processes. However, in
the near term, we do not foresee any significant moderating of the
raw material and energy cost increases experienced to date."
Core Operations
Davison Chemicals
Refining Technologies and Specialty Materials
First quarter sales for the Davison Chemicals segment were
$334.7 million, up 23.6% from the prior year quarter, mainly
reflecting volume increases from strong global demand for
transportation fuels, higher selling prices to compensate for
inflationary increases in raw materials and energy costs, and
acquisitions. Excluding the effects of favorable currency
translation, sales were up 21.2% for the quarter. Sales of
refining technologies products, which include fluid cracking
catalysts, hydroprocessing catalysts and performance additives,
were $194.4 million in the first quarter, up 34.0% compared with
the prior year quarter (32.5% after accounting for favorable
currency translation). The increase resulted from volume gains in
response to high worldwide demand for catalysts that enhance
refinery through-put, upgrade crude oil feedstocks and help
produce cleaner fuels, and added revenue from the contractual
pass-through of commodity metals costs. Sales of specialty
materials products, which include silica-based engineered
materials, specialty catalysts, and products used for molecular
research, were $140.3 million, up 11.5% compared with the first
quarter of 2004, primarily attributable to sales from the
acquisition of Alltech International Holdings, Inc., completed in
August 2004, and favorable currency translation. Operating income
of the Davison Chemicals segment for the first quarter was
$37.6 million, 17.5% higher than the 2004 first quarter.
Operating margin was 11.2%, lower than the prior year quarter by
0.6 percentage points. The increase in operating income was
attributable to improved sales volume, particularly in refining
technologies products, and selling price increases implemented to
partially offset higher raw materials and energy costs.
Performance Chemicals
Construction Chemicals, Building Materials, and Sealants and
Coatings
First quarter sales for the Performance Chemicals segment were
$268.5 million, up 8.4% from a strong prior year quarter.
Favorable currency translation accounted for 2.3 percentage points
of the increase. Sales of specialty construction chemicals, which
include concrete admixtures, cement additives and masonry
products, were $129.8 million, up 11.5% versus the year-ago
quarter (9.0% excluding favorable currency translation). Sales
were up in all regions, mainly reflecting the continued success of
growth initiatives and new products as well as relatively strong
construction activity, particularly in North America. Sales of
specialty building materials, which include waterproofing and fire
protection products, were $66.8 million, up 11.7% compared with
the first quarter of 2004 (up 10.0% excluding favorable currency
translation). The first quarter reflects added sales of
waterproofing materials from the acquisition of the TRI-FLEX 30(R)
synthetic roofing underlayment product line in December 2004,
strong sales of other roofing underlayments particularly in North
America, and higher sales of specialty below-grade waterproofing
worldwide. Sales of fire protection products were slightly lower
compared with the first quarter of 2004 reflecting reduced project
activity. Sales of specialty sealants and coatings, which include
container sealants, coatings and polymers, were $71.9 million, up
0.7% compared with the first quarter of 2004 (down by 1.8% after
excluding favorable currency translation). Sales of can sealants
and coatings were up in all regions from both volume and selling
price increases, but were offset by a decline in volume of closure
sealants in Europe and Latin America. Operating income for the
Performance Chemicals segment was $28.1 million, about even with a
strong prior year quarter; operating margin of 10.5% was 0.6
percentage points lower. Operating income and margins were
negatively affected by higher raw material and transportation
costs, but were largely offset by improved volumes in the
construction-related product lines, selling price increases and
productivity gains.
Corporate Costs and Other Matters
First quarter corporate costs related to core operations were
$24.6 million compared with $21.1 million in the prior year
quarter. The first quarter increase was attributable primarily to
higher pension expense that reflects updated assumptions for
expected life-spans, the longevity of Grace's active work force,
and amortization of deferred costs related to capital market
returns in recent years.
As previously disclosed, Grace and seven current and former
employees are defendants in a criminal proceeding related to
former vermiculite mining operations in Montana. Grace's first
quarter financial statements include $6.0 million of legal costs
for the defense of the Company and named individuals. A trial has
been scheduled for September 2006.
Also as previously disclosed, Grace's amended proposed plan of
reorganization provides for interest on general unsecured claims
(not payable until a plan is confirmed) at rates that generally
range from 4.19% to 6.09%. Such rates were applied to Grace's
estimate of eligible claims for the three months ended March 31,
2005, increasing quarterly interest expense by approximately $10
million.
Cash Flow and Liquidity
Grace's cash flow from operating activities was a negative
$31.7 million for the 2005 first quarter, compared with a positive
$20.7 million for the comparable period of 2004. The first
quarter includes payments of approximately $70 million for prior
year performance incentives and customer volume rebates. First
quarter 2005 pre-tax income from core operations before
depreciation and amortization was $69.9 million, 6.4% higher than
2004, a result of the higher income from core operations described
above and higher depreciation costs. Cash provided by investing
activities was $2.3 million during the first quarter of 2005,
reflecting proceeds from the termination of life insurance
policies, net of capital replacements and acquisition investments.
At March 31, 2005, Grace had available liquidity in the form of
cash ($474.8 million), net cash value of life insurance ($81.0
million) and unused credit under its debtor-in-possession facility
($197.1 million). Grace believes that these sources and amounts
of liquidity are sufficient to support its strategic initiatives
and Chapter 11 proceedings for the foreseeable future.
Chapter 11 Proceedings
On April 2, 2001, Grace and 61 of its United States subsidiaries
and affiliates, including its primary U.S. operating subsidiary
W.R. Grace & Co.-Conn., filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the District of
Delaware. Grace's non-U.S. subsidiaries and certain of its U.S.
subsidiaries were not part of the Filing. Since the Filing, all
motions necessary to conduct normal business activities have been
approved by the Bankruptcy Court.
On November 13, 2004 Grace filed a plan of reorganization, as well
as several associated documents, including a disclosure statement,
with the Bankruptcy Court. On January 13, 2005, Grace filed an
amended plan of reorganization and related documents to address
certain objections of creditors and other interested parties. The
amended Plan is supported by committees representing general
unsecured creditors and equity holders, but is not supported by
committees representing asbestos personal injury claimants and
asbestos property damage claimants. The Bankruptcy Court
proceedings are currently focused on the estimation of Grace's
asbestos-related liabilities, a process that is likely to extend
into 2006.
Most of Grace's noncore liabilities and contingencies (including
asbestos-related litigation, environmental claims, tax matters and
other obligations) are subject to compromise under the Chapter 11
process. The Chapter 11 proceedings, including related litigation
and the claims valuation process, could result in allowable claims
that differ materially from recorded amounts. Grace will adjust
its estimates of allowable claims as facts come to light during
the Chapter 11 process that justify a change, and as Chapter 11
proceedings establish court-accepted measures of Grace's noncore
liabilities. See Grace's recent Securities and Exchange Commission
filings for discussion of noncore liabilities and contingencies.
At Mar. 31, 2005, W.R. Grace's balance sheet showed a
$628.7 million stockholders' deficit, compared to a $621.8 million
deficit at Dec. 31, 2004.
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, P.C., represent the
Debtors in their restructuring efforts. (W.R. Grace Bankruptcy
News, Issue No. 83; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
YOUNG BROADCASTING: Moody's Puts B1 Rating on $295M Sr. Sec. Debts
------------------------------------------------------------------
Moody's Investors Service assigned B1 ratings to Young
Broadcasting Inc.'s $295 million in new senior secured credit
facilities ($20 million revolving credit facility due 2010,
$275 million senior secured term loan B due 2013).
Additionally, Moody's affirmed Young's existing ratings, including
a B2 senior implied rating, and changed the outlook to negative.
The proceeds from the issuance will be used to redeem the
company's 8.5% senior notes due 2008. Thus, the transaction is
neutral to leverage.
The negative outlook incorporates Young's still high debt burden,
operating margins that lag peers in the television broadcast
sector, and our expectation that the company will continue to burn
cash in the near-term. Accordingly, absent asset sales, the
company is not able to meaningfully reduce debt.
Moody's announced these rating actions:
* assigned a B1 rating to the $20 million senior secured
revolving credit facility due 2010,
* assigned a B1 rating to the $275 million senior secured term
loan B due 2013
* affirmed the B2 rating on the $247 million senior notes --
Tender in Process,
* affirmed the Caa1 rating on the $484 million senior
subordinated notes,
* affirmed the company's B2 senior implied rating, and
* affirmed the B2 senior unsecured issuer rating.
The rating outlook is negative.
The ratings remain constrained by Young's substantial debt burden
relative to cash flow (total debt to EBITDA in excess of 14 times)
and our belief that the company will not be able to meaningfully
de-lever over the ratings time horizon. While Young's portfolio
of station assets is likely to provide adequate coverage of the
company's debt in a distress scenario, it is our belief that the
company's television portfolio is likely to provide less cushion
relative to other station groups (i.e. 9 of the 10 stations are
located in DMAs that rank between the 30th and 123rd largest in
the United States). Further, Moody's notes that while KRON (the
company's independent station located in San Francisco,
California) has significant underlying asset value, the station
does not complement Young's portfolio and has been
underperforming. The ratings are also constrained by the
company's concentrated exposure to the economic fluctuations of
the San Francisco market (28% of revenues), as well as the general
cyclicality of the advertising market.
The ratings benefit from the concentration of revenues towards
more stable local advertising (53% of total revenues for YE 2004)
and a strong local news franchise (local news ranked #1 in 50% of
its markets). The ratings are also supported by the recent
positive momentum of ABC programming that covers 5 of the
company's 10 network affiliations. As Young has completed its
digital build-out, Moody's expects future capital expenditure
requirements will be reduced to maintenance levels, thus
mitigating the company's cash burn. The rating is also supported
by Young's strong liquidity (over $100 million in cash on the
balance sheet at the close of the transaction and $20 million in
availability under the revolving credit facility), which will
support the company's operating cash shortfalls over the ratings
horizon.
The negative outlook incorporates our expectation that the 2005
operating environment will remain challenging and Young will
continue to burn cash at least through 2007, balanced by the
likelihood that the company's liquidity is ample to meet any
funding requirements as operating cash flow falls short of
covering fixed charges. Absent an asset sale driving a meaningful
debt reduction, it is unlikely that the ratings will experience
positive ratings momentum in the near-term. The rating may face
negative pressure if Young fails to meet Moody's expectations on
operating performance.
Pro forma for the transaction, Moody's expects Young's leverage
(measured as total debt to EBITDA) to remain high at about
14.5 times and cash interest coverage (measured as EBITDA to cash
interest expense) to be 0.8 times for the year-ended 2004.
Moody's expects credit metrics to weaken in 2005, given the
off-year in political advertising, with leverage likely to
increase above 19 times. However, Moody's notes that as a result
of this refinancing, Young is reducing its cash interest burden by
approximately $4 million annually and extending its maturity
profile (no significant debt maturities until 2011).
The B1 ratings on the senior secured credit facilities reflect
their senior-most position in the company's capital structure.
The ratings benefit from a perfected first priority lien in the
capital stock of each of its subsidiaries and all of the tangible
and intangible assets of the borrower and the guarantors. The one
notch differential from the B2 senior implied rating reflects the
significant asset value of the company's KRON television station
(covering the 6th largest market in the U.S.), which provides
meaningful coverage to the bank group. In addition, it is Moody's
belief that Young will divest non-strategic assets in the near-
term in an effort to strengthen the balance sheet. This action
would likely translate into a repayment of the senior secured
facilities. The Caa1 rating on the senior subordinated notes
reflect their contractual subordination to the senior secured bank
facilities and Moody's expectation that there is less asset
coverage present in Young's smaller market television stations.
Young Broadcasting Inc., headquartered in Manhattan, New York,
owns and operates 10 television stations in 10 markets and a
television sales representative firm. Young's portfolio of
television stations currently reaches approximately 6% of U.S.
households.
* John Sarchio Returns to Chadbourne & Parke's Insurance Practice
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John J. Sarchio, Esq., 51, has returned to the international law
firm of Chadbourne & Parke LLP as a partner and co-head of the
Firm's insurance and reinsurance practice group, resident in the
Firm's New York office.
Mr. Sarchio re-joins Chadbourne from White & Case LLP, where he
has been a partner and the head of its global insurance industry
practice group since 1998. Previously, he was a partner at
Chadbourne.
Mr. Sarchio concentrates on:
-- insurance industry mergers, acquisitions and financings;
-- reinsurance transactions; self-insurance and captives; and
-- insurance regulatory matters.
He also advises on insurance company demutualizations and bank-
insurer affiliations, and has represented a variety of financial
services industry clients in domestic and offshore insurance
securitization transactions. Mr. Sarchio also has advised major
accounting firms in a wide range of matters relating to their
professional liability insurance programs, and has counseled
numerous industrial and financial services companies on matters
relating to their directors' and officers' insurance programs.
"We are delighted to welcome John back to the partnership. His 25
years' experience in the insurance industry regulatory and
transactional arena will bring renewed depth to our insurance
practice and enhance our ability to service the full breadth of
our clients' needs," said David Raim, current head of Chadbourne's
global insurance and reinsurance group in Washington, D.C. "His
return reinforces the continued growth of our reinsurance and
insurance practice in the United States and overseas. We have
strong trans-Atlantic insurance/reinsurance capabilities, with
significant interaction among our growing team in London and our
leading United States reinsurance and insurance practice. "
Chadbourne recently boosted its London office with the addition of
five reinsurance/insurance partners to further the Firm's
expansion into that market. Set to join Chadbourne from Denton
Wilde Sapte are Adrian Mecz, Christopher Cardona, Michelle George,
John Barlow and Mark Pring. Their work encompasses the financial
institutions risk field, high value disputes, indemnity and
product liability claims, fidelity and D&O matters, and high-
profile multi-jurisdictional disputes.
Since co-founding Chadbourne's insurance and reinsurance practice
with David Raim in 1989, Mr. Sarchio played a significant role in
structuring and developing the practice group. In addition to his
work for commercial clients, he has advised a number of state and
foreign governments on insurance issues, and has drafted a number
of laws and regulations governing various aspects of the insurance
industry, including Vermont's Captive Insurance Act, the U.S.
Virgin Islands's Exempt Companies Act and Exempt International
Insurers Act, and the Commercial Insurance Code of the Republic of
Belarus.
"We are excited to acquire the broad range of insurance and
reinsurance transactional, regulatory and legislative experience
that John brings back to the Firm as we continue to build enhanced
capabilities to service our clients," added Mr. Raim. "John
brings a wealth of knowledge in reinsurance matters and will
complement our already significant practice."
"The reputation and stature of Chadbourne's reinsurance group will
provide a unique platform for broadening the scope and depth of my
client base," Mr. Sarchio said. "The recent addition of
significant talent in London demonstrates the Firm's commitment to
building on the success of David's reinsurance team to develop a
preeminent full-service global insurance and reinsurance practice
group. I look forward to rejoining my partners and to being a part
of this exciting environment."
Chambers USA -- America's Leading Business Lawyers states that Mr.
Sarchio is known for his "incredibly incisive knowledge of the
industry nuances." He is also rated by Woodward/White's Best
Lawyers in America.
Mr. Sarchio earned a J.D. from the University of Pennsylvania Law
School, an LL.M. in international law from the London School of
Economics and Political Science, and a B.S., magna cum laude, from
Bucknell University.
About Chadbourne & Parke LLP
Chadbourne & Parke LLP, an international law firm headquartered in
New York City, provides a full range of legal services, including
mergers and acquisitions, securities, project finance, corporate
finance, energy, telecommunications, commercial and products
liability litigation, securities litigation and regulatory
enforcement, white collar defense, intellectual property,
antitrust, domestic and international tax, reinsurance and
insurance, environmental, real estate, bankruptcy and financial
restructuring, employment law and ERISA, trusts and estates and
government contract matters. The Firm has offices in New York,
Washington, D.C., Los Angeles, Houston, Moscow, Kyiv, Warsaw
(through a Polish partnership), Beijing and a multinational
partnership, Chadbourne & Parke, in London. For additional
information, visit http://www.chadbourne.com/
* BOOK REVIEW: BEING THE BOSS - The Importance of Leadership
------------------------------------------------------------
Author: Abraham L. Gitlow
Publisher: Beard Books
Softcover: 232 pages
List Price: $34.95
Order your personal copy at
http://amazon.com/exec/obidos/ASIN/158798234X/internetbankrupt
Gitlow's book grew out of a series of meetings between highly
successful active and retired executives and selected graduate
students at New York University's Stern School of Business in the
early 1990s. At these regular meetings held over a few years, the
experienced business leaders would relate to the promising
students "an analysis of their successes and shortcomings as
managers of...talent and capital." As Dean Emeritus of the Stern
School, Gitlow was instrumental on arranging for these meetings to
give the graduate students a picture of what they would face in
the real world of domestic and international business and guidance
of how to be productive and constructive in any ethical way.
While the discussions were wide-ranging, they nonetheless in one
way or another brought into consideration the two key elements
every business leader has to manage effectively and to some degree
imaginatively--namely, talent and capital. The successful leader
has to manage these so there is a symbiosis between them. Talent
without capital is a mere show, with no progress or productivity.
But under a good leader, talent is supported by capital, so that
capital is maximized and the business is strengthened. On the
other hand, no matter how much of it, capital without talent
cannot keep a business from decline. Gitlow's main subject is the
necessity of ethical principles, behavior, and decisions in good
management for the right interplay between talent and capital.
These alone do not account for successful leadership though. Such
leadership depends as well on the personal characteristics of
"courage, competence, health (physical energy), foresight, and
ego." Gitlow discusses these in the context of the varied and at
times unpredictable situations today's business leaders find
themselves in; and with an eye on both the competitive realities
and social obligations a leader must always be mindful of in
providing leadership in any situation.
While using the series of meetings as a guide to the basic
questions that arise for business leaders and for how they arrive
at suitable answers and reflect these in their actions, Gitlow's
book is much more than a simple record of the meetings. The
author goes into the diverse, but inter-related business
situations with his own insights and depth of analysis gained from
his long experience in teaching business ethics and interacting
with business students. Readers will find a business management
and leadership guide that is much more than today's innumerable
and often contradictory self-help business books. "Being the Boss"
is not a presentation of simple rules or mottos; nor is it an
expounding of a current management theory. The virtue of Gitlow's
book is that it recognizes the multiple considerations and
pressures leaders have to continually deal with. Along with this,
the book gives guidance on how to assess these and sift through
them to reach a satisfactory decision. In this, Gitlow never
looses sight of the human component of business leadership. He
gives guidance on how top business leaders can deal with complex
situations and challenging questions in ways that satisfy the role
of respectable leadership and the interests of employees,
stakeholders, and the public.
Though the title does not explicitly state it, Gitlow's book is a
book on business ethics. In its analyses and guidance, it
unfailingly looks to the effects of leadership. And beneficial
effects are not seen exclusively in bringing in the highest
profits by any means possible or in creating a compelling, though
largely unsubstantiated, image. Gitlow regards "ethical CEOs and
corporations as more successful than those that achieve greater
financial gains through unethical and shady practices." First
published in 1992 long before the incredible ethical lapses
demonstrated by Enron and WorldCom in recent years wreaking
devastating consequences on innumerable employees, stockholders,
and local economies, "Being the Boss" has obvious relevance to
central issues in the contemporary business world. In fact, in an
"Author's Note" dated April 2004 at the front of this reprinting,
Gitlow refers to the "recent corporate accounting scandals" with a
mention of how the lessons, decision-making, and oversight covered
in "Being the Boss" can bring back a state of business when such
scandals were uncommon.
Abraham L. Gitlow is Dean Emeritus of the Stern School of Business
at New York University. He is also the author of other books and
journal articles.
*********
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. Cherry
Soriano-Baaclo, Terence Patrick F. Casquejo, Rizande B. Delos
Santos, Jazel P. Laureno, Yvonne L. Metzler, Jason A. Nieva, Emi
Rose S.R. Parcon, Lucilo Junior M. Pinili, Marjorie Sabijon,
Christian Q. Salta, 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-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***