/raid1/www/Hosts/bankrupt/TCR_Public/050502.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, May 2, 2005, Vol. 9, No. 102
Headlines
127 RESTAURANT: Hires Milber Makris as Special Appellate Counsel
ACCLAIM ENT: Has Until May 27 to Decide on Mirra License Pact
ALASKA AIRLINES: Arbitrator Orders 26% Wage Cut for All Pilots
ALPHARMA INC: Amending SEC Filings to Reclassify Debt
ALUMINUM DOORS: Case Summary & 6 Largest Unsecured Creditors
AMERICAN HEALTHCARE: Brings In Gifford Hillegas as Accountant
AMERICAN REF-FUEL: Moody's Pares Senior Sec. Notes to Ba1 Rating
APPLIED TECHNOLOGIES: Case Summary & 20 Unsecured Creditors
ARDENT HEALTH: 99% of Noteholders Tender $224.97MM Sr. Sub. Notes
ARGONAUT TECH: Losses & Neg. Cash Flow Prompt Going Concern Doubt
ATA AIRLINES: Ronald Callahan Gets Stay Lifted to Pursue Lawsuit
ATA AIRLINES: Fleet Nat'l Gets Court Nod for Adequate Protection
B&A CONSTRUCTION: U.S. Trustee Picks 4-Member Creditors' Committee
B&A CONSTRUCTION: Sells Heavy Equipment for $4.8 Million
BABSELL CORPORATION: Voluntary Chapter 11 Case Summary
BANC OF AMERICA: Fitch Puts Low-B Ratings on Two 2005-D Certs.
BANC OF AMERICA: Fitch Puts BB on $552,000 Class B-4 Mort. Certs.
BEAR STEARNS: Fitch Puts Low-B Ratings on 6 Mortgage Certificates
BLOCKBUSTER: Fitch Revises Outlook of B+ Sr. Debt Rating to Stable
BRADLEY PHARMACEUTICALS: Inks Forbearance Pact with Bank Lenders
BRAZIL FAST: Losses & Deficit Trigger Going Concern Doubt
BRIDGE INFO: Plan Admin. Wants Until September to Object to Claims
CANFIBRE OF RIVERSIDE: Disclosure Hearing Set for June 15
CAPCO AMERICA: Fitch Affirms Three 1998-D7 Mortgage Certificates
CAROLINA TOBACCO: Case Summary & 20 Largest Unsecured Creditors
CATHOLIC CHURCH: DuFresne Wants Portland Claims Bar Date Extended
CATHOLIC CHURCH: Portland Gets Court Nod to Execute Covenants
CENTERPOINT FUNDING: Fitch Withdraws Default Rating on Class M
CITICORP MORTGAGE: Fitch Puts Low-B Ratings on B-4 & B-5 Classes
CONE MILLS: Wants Removal Action Period Stretched to May 18
CONNECTICUT RESOURCES: Moody's Cuts Ratings on $43.5M Bonds to Ba2
CONSTELLATION BRANDS: Planned Allied Buy Cues S&P to Watch Rating
COVANTA ENERGY: Moody's Rates Proposed $690MM Facilities at B1
CWMBS INC.: Fitch Assigns Low-B Ratings on $1.4MM Mortgage Certs.
DELAWARE COUNTY: Moody's Slices Ratings on $172.4M Bonds to Ba2
DIGITAL VIDEO: Inks $3.42 Million Equity Settlement with Ex-CEO
EAGLEPICHER INC: Hires The Trumbull Group as Noticing Agent
EAGLEPICHER INC: Taps Sitrick & Company as Communications Advisor
EAGLEPICHER INC: Reiterates Commitment on Med. Supply Obligations
ENRON CORP: Committee Gets Court Nod on Derrick, et al. Settlement
FANNIE MAE: S&P Lifts Ratings on Two Series 1998-M6 Class Certs.
FEDERAL-MOGUL CORP: Moody's Withdraws Low-B Ratings
FINOVA GROUP: Reports Continuing Progress on Asset Liquidation
FRANKLIN MORTGAGE: Fitch Rates $9,563,000 Class B-1 at BB+
FRANKLIN MORTGAGE: Fitch Rates $6.6 Million Class B at BB+
GEORGIA GULF: Improved Environment Prompts Moody's to Up Ratings
GREENTREE GAS: Delays Filing Financial Reports to Complete Audit
GSI GROUP: Moody's Rates Proposed $125 Million Senior Notes at B3
HAWAIIAN AIRLINES: Inks Revised Labor Pact with Pilots Union
HEILIG-MEYERS: Judge Tice Approves Disclosure Statement
HOLLYWOOD ENT: Movie Gallery Completes $1.25 Billion Acquisition
HUGHES NETWORK: S&P Puts Low-B Ratings on $375 Million Loans
IKON OFFICE: Poor Finances Cue S&P to Change Outlook to Negative
IMPATH INC: Judge Beatty Confirms Third Amended Plan
INGLES MARKETS: Likely Weak Cash Flow Cues Moody's to Pare Ratings
JARETT R. LEZDEY: Case Summary & 13 Largest Unsecured Creditors
JOHNSONDIVERSEY: Moody's Junks $406.3MM Senior Discount Notes
JOSE DE LEON: Case Summary & 20 Largest Unsecured Creditors
JOSE RIVERA: Case Summary & 20 Largest Unsecured Creditors
JUNIPER GROUP: Recurring Losses Trigger Going Concern Doubt
KB TOYS: Plan Negotiations with Big Lots Crumble
KRISPY KREME: Kroll Zolfo Bonus Talk Deadline Pushed to May 31
KRISPY KREME: Delays Annual Report Filing Due to Ongoing Analysis
LAC D'AMIANTE: Court Okays Appointment of Future Representative
LAC D'AMIANTE: Judge Pate Taps Oppenheimer Blend as Counsel
LOGOATHLETIC INC: Court Formally Closes Chapter 11 Cases
MAGNETITE CBO: Overcollateralization Rises & Moody's Lifts Rating
MANUFACTURING TECHNOLOGY: Case Summary & 20 Unsecured Creditors
MARKET CENTRAL: Auditors Raises Going Concern Doubt
MARTHA SPITLER: Voluntary Chapter 11 Case Summary
MCI INC: 11 Officers Dispose of 40,990 Shares of Common Stock
MCI INC: Will Pay South Korean Firm $2-Bil for Technology Rights
MERIDIAN AUTOMOTIVE: Can Maintain Existing Bank Accounts
MERIDIAN AUTOMOTIVE: Can Pay $75,000 Prepetition Tax Obligations
MERIDIAN AUTOMOTIVE: Deposit Requirements Waived Until June 11
METOKOTE CORP: Moody's Rates Planned $162 Mil. Term Loan at B2
MICHIGAN HEALTH: Chapter 7 Trustee Wants to Pay Malpractice Claims
MIRANT CORP: Wants Kern River to Disgorge $5MM of "Overpayments"
ML CLO: Moody's May Downgrade Low-B Ratings After Review
MOONEY AEROSPACE: Equity Deficit Tops $23 Million at Dec. 31
MOVIE GALLERY: Completes Hollywood Entertainment Acquisition
MSW ENERGY: Moody's Pares Senior Sec. Notes Rating to Ba3
NETCON INC: Case Summary & 20 Largest Unsecured Creditors
NEXTWAVE: Final Bankruptcy Professional Fees Top $61 Million
NN SOOD: Case Summary & 5 Largest Unsecured Creditors
OCTANE ENERGY: Wants to Change Name to NX Capital Corp.
OMNICARE INC: Earns $58 Million of Net Income in First Quarter
ORION HEALTHCORP: Losses & Cash Deficit Prompt Going Concern Doubt
PACIFIC LUMBER: New Financing Cues S&P to Review Ratings
PETROLEUM GEO-SERVICES: Court Closes Chapter 11 Cases
PRIME CAMPUS: Files Schedules of Assets & Liabilities in Texas
PRUDENTIAL SECURITIES: S&P Lifts Ratings on Three Class Certs.
RAM VENTURE: Continuing Losses Trigger Going Concern Doubt
REDDY ICE: Extends 8-7/8% Senior Debt Tender Offer Until May 13
RESIDENTIAL ACCREDIT: Fitch Puts Low-B Ratings on 2 Cert. Classes
RESIDENTIAL ACCREDIT: Fitch Puts Low-B Ratings on Two Mort. Certs.
ROCK-TENN CO.: Gulf States Transaction Cues S&P to Pare Ratings
SAKS INC: Moody's Cuts Ratings, Citing Tardy Form 10-K & Problems
SHAW GROUP: Closes New Five-Year $450 Million Credit Facility
SPICES FINANCE: Moody's Slices Rating on $10M Sec. Notes to Ba1
STAAR SURGICAL: Fresh Equity Prompts Auditors to Remove Doubt
SYRATECH CORP: Committee Taps Anderson Kill as Co-Counsel
SYRATECH CORP: Committee Taps Houlihan Lokey as Financial Advisors
TRAVIS W. HAZLEWOOD: Case Summary & 8 Largest Unsecured Creditors
UNION AVENUE AUTO: Taps Yablonsky & Associates as Counsel
U.S. MINERAL: Chapter 11 Trustee & Committee File Amended Plan
USG CORP.: Asbestos Claimants Say USG Corp. is Likely Insolvent
USG CORP.: Property Claimants Balk at Proposal to Pay Claims Now
VELOCITA CORP: Wants Until October 31 to Object to Claims
VERILINK CORP: Posts $2.6 Million Net Loss in Third Quarter
VESTA INSURANCE: Fitch Withdraws Ratings Absent Sufficient Info.
VISION METALS: Court Sets May 17 as Administrative Claims Bar Date
WERNER HOLDING: Moody's Junks $100M Senior Secured Term Loan
WESTERN STEEL: Case Summary & 20 Largest Unsecured Creditors
WILLIAM LYON: S&P Puts Low-B Ratings on Creditwatch
WINN-DIXIE: 11 Creditors File Reclamation Demands
WINN-DIXIE: Wants to Sell Some Prescriptions & Inventory to CVS
WOMAN'S MEDICAL: Case Summary & 20 Largest Unsecured Creditors
W.R. GRACE: Names Richard Brown VP & Grace Performance President
XTREME COS: Subsidiary Secures First International Reseller
* Mark Hootnick Joins Greenhill as Managing Director
* BOND PRICING: For the week of April 25 - April 29, 2005
*********
127 RESTAURANT: Hires Milber Makris as Special Appellate Counsel
----------------------------------------------------------------
The Honorable Cornelius Blackshear, of the U.S. Bankruptcy Court
for the Southern District Of New York, approved the retention of
Milber Makris Plousadis & Seiden, LLP as special appellate counsel
to 127 Restaurant Corp. and its debtor-affiliates, nunc pro tunc
to January 6, 2005.
Milber Makris will:
a) represent the Debtors in a Summary Judgment Appeal;
b) perform other services required by the Debtors involving
appellate litigation.
Harry J. Makris, Esq. is the lead attorney in the Debtors'
bankruptcy proceedings. Mr. Makris discloses that the Firm did
prepetition work for the Debtors and as a result holds $20,000 in
its retainer account.
Milber Makris will charge the Debtors at these hourly rates:
Professional Rate
------------ ----
Partners $215.00
Associates 185.00
Paralegals 60.00
To the best of the Debtors' knowledge, Milber Makris does not hold
any interest materially adverse to the Debtors and their estates.
Headquartered in New York City, New York, 127 Restaurant Corp.,
operates a restaurant. The Company along with its debtor-
affiliates filed for chapter 11 protection on Aug. 27, 2003
(Bankr. S.D.N.Y. Case No. 03-15359). Joshua Joseph Angel, Esq.,
at Angel & Frankel, PC., represents the Debtors in their
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $2,710,160 in total assets and
$12,906,360 in total debts.
ACCLAIM ENT: Has Until May 27 to Decide on Mirra License Pact
-------------------------------------------------------------
Allan B. Mendelsohn, Esq., the Chapter 7 Trustee overseeing the
liquidation of Acclaim Entertainment Inc. sought and obtained more
time from the U.S. Bankruptcy Court for the Eastern District of
New York to decide whether he wants to assume, assume and assign,
or reject a License Agreement with Dave Mirra. The Chapter 7
Trustee has until May 27, 2005, to make that decision.
Initially, Dave Mirra balked at the request. Dave Mirra and the
Chapter 7 Trustee talked, and presented the Bankruptcy Court with
an agreed order extending the Trustee's time to make a decision.
Headquartered in Glen Cove, New York, Acclaim Entertainment Inc.
was a worldwide developer, publisher and mass marketer of software
for use with interactive entertainment game consoles including
those manufactured by Nintendo, Sony Computer Entertainment and
Microsoft Corporation as well as personal computer hardware
systems. The Company filed a chapter 7 petition on Sept. 1, 2004
(Bankr. E.D.N.Y. Case No. 04-85595). Jeff J. Friedman, Esq., at
Katten Muchin Zavis Rosenman represents the Debtor. Allan B.
Mendelsohn, Esq., serves as the chapter 7 Trustee. When the
Company filed for bankruptcy, it listed $47,338,000 in total
assets and $145,321,000 in total debts.
ALASKA AIRLINES: Arbitrator Orders 26% Wage Cut for All Pilots
--------------------------------------------------------------
A 26 percent pay cut for Alaska Airlines' pilots took effect
yesterday, May 1, 2005, after an arbitrator handed down a new
contract to the airline and the Air Line Pilots Association
bargaining unit. The decisions of the arbitrator, Richard Kasher,
cover all 1,465 pilots employed by Alaska Airlines.
The decision riled the union, according to Melissa Allison of the
Seattle Times. The union said Alaska's nearly 1,500 pilots would
continue to provide good service "despite the unconscionable
decision by the arbitration board to penalize our pilots for the
shortcomings of management."
The decision will put unnecessary hardship on the airline's pilots
and their families, Ms. Allison cited Capt. Mark Bryant, chairman
of the Alaska pilots union.
The terms of the agreement, set by the arbitrator, were based on
information presented by both the airline and ALPA. Aside from
the pay reduction, pilots will be subject to various work rule
changes resulting in productivity improvements and higher employee
health care contributions. No changes were made to the pilots'
pension or profit sharing plans.
"We are grateful to the arbitrator for helping us reach a
resolution," said Dennis Hamel, Alaska's vice president of
employee services. "This allows us to move forward with a
competitive wage and benefit package for our pilots and helps us
achieve a better cost alignment with other major carriers."
ALPA and Alaska Airlines began contract talks in October 2003. An
arbitrator, mutually agreed upon, was called in to help craft a
settlement when an agreement could not be reached by a Dec. 15,
2004, deadline. The existing contract between the airline and the
union called for the arbitrator to resolve differences if the
parties were unable to reach agreement.
While wage provisions went into effect yesterday, full
implementation of all provisions is expected to occur over several
weeks. The contract becomes amendable in two years.
About the Company
Alaska Airlines is the nation's ninth largest carrier. Alaska and
its sister carrier, Horizon Air, together serve more than 80
cities in Alaska, the Lower 48, Canada and Mexico. For more news
and information, visit the Alaska Airlines Newsroom on the
Internet at http://newsroom.alaskaair.com/
Seattle-based Alaska Air Group is the parent company of Alaska
Airlines and Horizon Air Industries. The company and its sister
carrier, Horizon Air, together serve 80 cities in Alaska, the
Lower 48, Canada and Mexico.
* * *
As reported in the Troubled Company Reporter on Apr. 25, 2005,
Standard & Poor's Ratings Services lowered its ratings on Alaska
Airlines Inc.'s 9.5% equipment trust certificates (ETCs) due
April 12, 2012, to 'B+' from 'BB', as part of an industry wide
review of aircraft-backed debt. All other ratings on Alaska
Airlines and parent Alaska Air Group Inc., including the 'BB-'
corporate credit ratings on both, are affirmed. The outlook
remains negative.
"The lower rating on the ETCs reflects Standard & Poor's concern
that repayment prospects for holders of aircraft-backed debt could
suffer in a potential scenario of multiple, further bankruptcies
of large U.S. airlines weakened by high fuel prices and intense
price competition," said Standard & Poor's credit analyst Betsy
Snyder. "Downgrades of aircraft-backed debt securities were
focused on debt instruments that would be hurt in such a scenario,
particularly debt backed by aircraft that are concentrated heavily
with large U.S. airlines that would be at greater risk in
negotiated restructurings or sale of repossessed collateral," the
analyst continued.
ALPHARMA INC: Amending SEC Filings to Reclassify Debt
-----------------------------------------------------
Alpharma Inc., disclosed that, during the course of a review of
its debt covenants, the company concluded that as of Dec. 31, 2003
and 2004, the company was not in compliance with certain debt
covenants relating to the payment of liquidated damages and timely
filing of certain certificates. Subsequent to the identification
of these issues, the company corrected the default related to
liquidated damages, and certain of the certificate defaults, and
intends to correct the remaining certificate defaults concurrent
with the filing of the Company's 10-K/A.
As a result of these issues, the company will be amending certain
quarterly filings with Securities and Exchange Commission for 2003
and 2004, and its annual 10-K filing for 2004, and certain debt
previously classified as long-term on the balance sheet will be
reclassified to current status for the impacted periods. The
company expects that beginning with the filing of the Form 10-Q
for the period ended March 31, 2005, the balance sheet
classification of the debt will reflect these debt instruments as
long-term based on the correcting of the defaults described above.
These reclassifications have no impact on previously reported
income or free cash flow.
The Public Company Accounting Oversight Board standards require
that certain restatements be regarded as significant deficiencies
in internal control over financial reporting and strong indicators
of a material weakness. Consistent with these standards, the
company considers this deficiency in its monitoring of debt
compliance to be a material weakness in its internal control over
financial reporting.
Alpharma Inc. (NYSE: ALO) -- http://www.alpharma.com/-- is a
global generic pharmaceutical company with leadership positions in
products for humans and animals. Alpharma is presently active in
more than 60 countries. Alpharma is a leading manufacturer of
generic pharmaceutical products in the U.S., offering solid,
liquid and topical pharmaceuticals. It is also one of the largest
suppliers of generic solid dose pharmaceuticals in Europe, with a
presence in Southeast Asia. Alpharma is among the world's leading
producers of several important pharmaceutical-grade bulk
antibiotics and is internationally recognized as a leading
provider of pharmaceutical products for poultry, swine and cattle.
* * *
As reported in the Troubled Company Reporter on Apr. 15, 2005,
Moody's Investors Service affirmed the ratings of Alpharma Inc.
(B2 senior implied) following the recent disclosure of several
material weaknesses in its internal financial controls. The
rating outlook is stable, which incorporates Moody's assumption
that the company will initiate refinancing plans during the second
quarter of 2005.
Alpharma recently disclosed three material weaknesses in its
internal financial controls related to:
(1) customer discount reserves and certain accrual accounts at
the U.S. generics business;
(2) income tax accounts; and
(3) the determination of proper segment disclosure that led to
a recent restatement to disaggregate previously segmented
results.
Although these issues combined with the recent change in external
auditors are concerning, Moody's believes that the company remains
appropriately positioned at B2 senior implied, reflecting
prospects for continued deleveraging. Alpharma faces various
operating challenges in its core businesses, but has continued to
generate free cash flow and to significantly deleverage its
balance sheet.
Alpharma reduced debt balances from $817 million to $702 million
during 2004, primarily from free cash flow. The company further
reduced debt balances to under $590 million as of March 31, 2005
primarily using cash repatriated from its offshore operations.
Moody's anticipates free cash flow of approximately
$60 to $80 million during 2005, which assumes a challenging
operating environment and no benefit from working capital
management.
Ratings affirmed:
Alpharma Inc:
* B3 8-5/8% guaranteed senior unsecured notes of $220 million
due 2011
* B2 senior implied
* Caa1 senior unsecured issuer rating
Alpharma Operating Corporation:
* B1 guaranteed senior secured revolving credit facility of
$150 million maturing 2007
* B1 guaranteed senior secured term loan A maturing 2007
* B1 guaranteed senior secured term loan B maturing 2008
ALUMINUM DOORS: Case Summary & 6 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: Aluminum Doors Manufacturing, Inc.
P.O. Box 851
Juana Diaz, Puerto Rico 00795
Bankruptcy Case No.: 05-03784
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Cristales Curvos y de Seguridad, Inc. 05-03783
Type of Business: The debtor manufactures aluminum doors and
windows. Miguel A. Maldonado Santiago, an
affiliate, filed for chapter 11 protection on
October 12, 2004 (Bankr. D. P.R. Case No.
04-12504).
Chapter 11 Petition Date: April 25,2005
Court: District of Puerto Rico (Old San Juan)
Debtor's Counsel: Modesto Bigas Mendez, Esq.
Bigas & Bigas
P.O. BOX 7462
Ponce, Puerto Rico 00732
Tel: (787) 844-1444
Total Assets: $3,040,565
Total Debts: $1,194,706
A. Lead Debtor's 6 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Banco Santander Trade debt $791,555
P.O. Box 362589 Value of collateral:
San Juan, PR 00936 $313,645
Unsecured value:
$477,910
Internal Revenue Service Taxes $209,642
Mercantil Plaza Ofic 914
2 Ponce de Leon, PDA 27 1/2
San Juan, PR 00918
Departamento de Hacienda Taxes $109,621
Sec. De Quiebras Ofic 424-B
P.O. Box 9024140
San Juan, PR 00902
Departamento del Trabajo Taxes $41,773
y Rec Hum Negociado
Seguridad Empleo
Internal Revenue Service Trade debt $23,612
Departamento de Hacienda Taxes $18,500
B. Cristales Curvos y de Seguridad, Inc.'s 20 Largest Unsecured
Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Vitro Caribe Trade debt $57,204
c/o E. Anton Tejada
552 Avenue Abraham Lincoln
Santo Domingo
DOMINICAN REPUBLIC
Saint Gorain - Grass Mexico, Trade debt $38,208
S.A. De CV
c/o Hinaica A. Peters, Inc.
P.O. Box 362721
San Juan, PR 00936
Distribuidora Vidrio Cristal Trade debt $31,631
Gerling
Mex-american Grass Trade debt $31,556
VASA Trade debt $15,474
Departamento de Hacienda Trade debt $14,854
Standard Glass Co Jand Trade debt $12,441
Kristin Catpoole
Internal Revenue Service Trade debt $11,389
PPG Industries Trade debt $10,145
Mex-American Glass Company Trade debt $9,704
Departamento de Hacienda Trade debt $8,836
Standard Glass B.V. Trade debt $7,500
Hanover Wire Cloth Corp. Trade debt $6,266
Departamento de Hacienda Trade debt $1,200
National Ceramic, Inc. Trade debt $1,151
Fondo del Seguro del Estado Taxes $1,000
Departamento del Trabajo y Trade debt $165
Rec Hum Negociado Seguridad
Empleo
AMERICAN HEALTHCARE: Brings In Gifford Hillegas as Accountant
-------------------------------------------------------------
American Healthcare Services, Inc., and its debtor-affiliate,
American Physician Services, Inc., sought and obtained permission
from the U.S. Bankruptcy Court for the Northern District of
Georgia to employ Gifford, Hillegass & Ingwersen, LLP as their
accountant.
Gifford Hillegass will:
a) prepare tax returns,
b) assist the Debtors in connection with a pending Internal
Revenue Service audit of Debtors' claim for a refund
resulting from a net operating loss carryback,
c) review and assist in the preparation of necessary financial
statements and reports, and
d) other accounting or financial consulting services requested
by the Debtors in order to assist in the administration of
this cases.
George W. Hillegas, a Member at Gifford Hillegass discloses that
the Firm received a $20,000 retainer.
Mr. Hillegas reports Gifford Hillegass' professionals bill:
Designation Hourly Rate
----------- -----------
Partners & Principals $260 - $300
Assistants $100 - $150
Gifford Hillegass assures the Court that it does not represent any
interest adverse to the Debtors or their estates.
Headquartered in Roswell, Georgia, American Healthcare Services,
Inc. -- http://www.american-healthcare-services.com/-- provides
practice management to physicians and other health care providers
who work in the fields of ear, nose, throat and head and neck
medicine, including financial and administrative management
services. The Company and its debtor-affiliate filed for chapter
11 protection on March 11, 2005 (Bankr. N.D. Ga. Case No.
05-64660). When the Debtors filed for protection from their
creditors, they listed estimated assets of $1 million to $10
million and estimated debts of $10 million to $100 million.
AMERICAN REF-FUEL: Moody's Pares Senior Sec. Notes to Ba1 Rating
----------------------------------------------------------------
Moody's Investors Service downgraded the rating of American
Ref-Fuel Company LLC's senior secured notes to Ba1 from Baa2.
Moody's downgraded the senior secured notes of MSW Energy Holdings
LLC and MSW Energy Finance Co., Inc.'s (co-issuers hereafter
referred to as MSW Energy) to Ba3 from Ba1 and downgraded the
senior secured notes of MSW Energy Holdings II LLC and MSW Energy
Finance II Co., Inc.'s (co-issuers hereafter referred to as MSW
Energy II) to Ba3 from Ba2. Also downgraded are $43.5 million of
resource recovery bonds issued by the Connecticut Resources
Recovery Authority to Ba2 from Baa2 and $172.4 million of bonds
issued by the Delaware Valley Industrial Development Authority to
Ba2 from Baa3, for which ARC is the underlying obligor. The
rating outlook is stable for ARC, MSW Energy, and MSW Energy II.
The rating actions reflect the pending acquisition of American
Ref-Fuel Holdings Corp. by Covanta Energy Corporation for
$740 million in cash plus the assumption of debt. Covanta is
financing the acquisition with a common stock rights offering by
Covanta's parent, Danielson Holding Corporation, and through the
issuance of $1.1 billion of new credit facilities being issued as
part of an overall refinancing of Covanta's outstanding debt and
letter of credit facilities. These ratings are assigned subject
to the acquisition closing under terms and conditions, which are
in accordance with Moody's current understanding, including the
sizing and terms of the financing.
The downgrade of the ratings of ARC, MSW Energy, and MSW Energy II
considers their acquisition by a more leveraged parent company and
the substantial difference in credit quality between these three
subsidiaries and the new owner. The ratings also reflect
structural subordination of the notes at ARC, MSW Energy, and MSW
Energy II to approximately $865 million of debt at the subsidiary
waste-to-energy projects. In addition, a $75 million revolving
credit facility in place at ARC is being replaced by a credit
facility at Covanta and ARC will have to rely on Covanta's
on-going access to this credit facility for its own liquidity
needs going forward. The downgrade of the ratings of the
Connecticut Resources Recovery Authority bonds and the Delaware
Valley IDA bonds reflects their reliance on a senior unsecured
guarantee from ARC.
Covanta emerged from bankruptcy just over one year ago, on
March 10, 2004, and will continue to have relatively high
consolidated leverage and limited financial flexibility following
the acquisition, with approximately $3.4 billion of total debt,
with $2.0 billion of recourse corporate debt, including
$440 million of undrawn credit facilities, at both Covanta and
American Ref-Fuel Holdings. There is a cash receipts and
disbursements waterfall arrangement administered by a trustee, and
distribution tests for the upstreaming of dividends to Covanta
from ARC, MSW Energy and MSW Energy II. However, the collateral
for the debt of these issuers is limited to the stock of
subsidiaries as the underlying operating assets are pledged to
secure project level debt. Distributions could be restricted by a
number of cash traps if the financial performance of the
underlying projects deteriorates, including a 1.30x debt service
coverage test at the SEMASS project, a 1.75x debt service coverage
test at ARC, and 2.0x consolidated interest coverage tests at both
MSW Energy and MSW Energy II.
Although there are some structural features, which may provide a
degree of insulation between the weaker parent and its
subsidiaries, Moody's does not believe ARC, MSW Energy or MSW
Energy II would be completely insulated from potential financial
problems at the Covanta parent company level under all
circumstances. The ARC operating facilities will represent
important, core strategic assets for the company and constitute a
substantial portion of Covanta's operations and cash flow going
forward. Moody's notes that when Covanta filed for bankruptcy
protection in 2002, the company chose to also make filings for 123
of its domestic project subsidiaries.
The ratings also recognize the limited collateral available to the
ARC, MSW Energy, and MSW Energy II bondholders and a high reliance
on a few projects for most dividends. Cash flow upstreamed to
service this debt is highly concentrated from two key WTE
projects, Hempstead and SEMASS, which together generate over half
of the cash flow distributable to ARC. The Hempstead contracts
currently expire in 2009, six years before the maturity of the ARC
notes and one year before the maturity of the MSW Energy and MSW
Energy II notes.
The stable outlook on the ratings of ARC, MSW Energy, and MSW
Energy II reflects Moody's expectation that:
(i) the waste-to-energy projects' contracts with the
respective municipalities and utilities will remain in
place through their current maturities;
(ii) Covanta management will continue to operate the plants at
high availability levels and generate synergies with
regard to administrative expenses;
(iii) Covanta will de-lever over the next several years at the
subsidiary project level; and
(iv) Covanta will be able to utilize a significant portion of
Danielson's NOLs.
Ratings downgraded include:
* American Ref-Fuel Company LLC's senior secured notes, to Ba1
from Baa2;
* MSW Energy Holdings LLC's senior secured notes, to Ba3 from
Ba1;
* MSW Energy Holdings II LLC's senior secured notes, to Ba3
from Ba2;
* $30 million Connecticut Resources Recovery Authority
Corporate Credit Resource Recovery Bonds (American Ref-Fuel
Company of Southeastern Connecticut Project), to Ba2 from
Baa2;
* $13.5 million Connecticut Resources Recovery Authority
Corporate Credit Resource Recovery Bonds (American Ref-Fuel
Company LLC, I Series A and II Series A), to Ba2 from Baa2;
* $172.4 million Delaware County Industrial Development
Authority Revenue Refunding Bonds Series A 1997, to Ba2 from
Baa3.
American Ref-Fuel Company LLC is an owner and operator of six
waste-to-energy companies in the northeastern United States. It is
jointly owned by MSW Energy Holdings LLC and MSW Energy Holdings
II LLC.
Covanta Energy Corporation, headquartered in Fairfield, New
Jersey, is an energy company with operations in waste-to-energy,
independent power production, and water. Parent company Danielson
Holding Corporation, also headquartered in Fairfield, has
operations in insurance services in addition to Covanta.
APPLIED TECHNOLOGIES: Case Summary & 20 Unsecured Creditors
-----------------------------------------------------------
Debtor: Applied Technologies and Research, Inc.
17040 South Highway 11
Fair Play, South Carolina 29643
Bankruptcy Case No.: 05-04566
Type of Business: The Debtor manufacturers aftermarket performance
products for turbocharging all types of cars.
See http://www.atrperformance.com/
Chapter 11 Petition Date: April 20, 2005
Court: District of South Carolina (Spartanburg)
Judge: Wm. Thurmond Bishop
Debtor's Counsel: Robert H. Cooper, Esq.
2320 East North Street, Suite B
Greenville, South Carolina 29607
Tel: (864) 271-9911
Fax: (864) 232-5236
Estimated Assets: $100,000 to $500,000
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
US Small Business Lots in Oconee $4,111,000
Administration County
1835 Assembly Street, Value of Security:
Room 1425 $500,000
Columbia, SC 29201
BB&T Real Property $50,000
P.O. Box 408
Greenville, SC 29602
IRS MDP 39 Taxes $40,000
1835 Assembly ST RM 653
Columbia, SC 29201
BB&T Leasing Corporation Leased property $25,000
American Stainless Tubing, Trade debt $18,929
Inc.
BB&T Unsecured credit card $9,000
Oconee County Treasurer Taxes $8,125
Sterling Printing, Co. Trade debt $6,300
Dickson Investment Hardware, Trade debt $4,885
Inc.
AK Tube LLC Trade debt $4,747
Limit Engineering Trade debt $4,715
SCE Trade debt $3,700
ROL/MARWIL Manufacturing Trade debt $3,500
Hellwig Products, Inc. Trade debt $3,200
Foothills Machining, Inc. Trade debt $3,200
Dia Com Corp. Trade debt $3,031
Clamps, Inc. Trade debt $2,950
Bradshaw, Gordon, Accounting services $2,900
Clinkscales, LLC
Performance Chevrolet Trade debt $2,557
Ind Com Services, Inc. Trade debt $2,500
ARDENT HEALTH: 99% of Noteholders Tender $224.97MM Sr. Sub. Notes
-----------------------------------------------------------------
Ardent Health Services LLC reported the results to date of the
previously announced tender offer and consent solicitation by its
subsidiary, Ardent Health Services, Inc., for its outstanding 10%
Senior Subordinated Notes due 2013. As of 5:00 p.m., New York
City time, on Apr. 28, 2005, which was the deadline for holders to
tender their Notes and deliver their consents in order to be
eligible to receive the consent payment of $30 per $1,000
principal amount in connection with the tender offer and consent
solicitation, tenders and consents had been received from holders
of $224.97 million in aggregate principal amount of the Notes,
representing approximately 99.99% of the outstanding Notes.
Accordingly, the requisite consents to adopt the proposed
amendments to the indenture governing the Notes have been
received, and a supplemental indenture to effect the proposed
amendments described in the Offer to Purchase and Consent
Solicitation Statement dated Apr. 15, 2005 has been executed.
Adoption of the proposed amendments required the consent of
holders of at least a majority of the aggregate principal amount
of the outstanding Notes. As the company has executed the
supplemental indenture, tendered Notes may no longer be withdrawn
and consents delivered may no longer be revoked, except in the
limited circumstances described in the Offer to Purchase.
The tender offer remains open and is scheduled to expire at 5:00
p.m., New York City time, on May 13, 2005, unless extended. The
completion of the tender offer and consent solicitation is subject
to the satisfaction or waiver by the company of a number of
conditions, as described in the Offer to Purchase.
Requests for documents relating to the tender offer and consent
solicitation may be directed to Global Bondholder Services
Corporation, the depositary and information agent for the tender
offer and consent solicitation, at (212) 430-3774 (collect) or
(866) 389-1500 (U.S. toll-free). Additional information
concerning the tender offer and consent solicitation may be
obtained by contacting Banc of America Securities LLC, the dealer
manager and solicitation agent for the tender offer and consent
solicitation at (704) 388-9217 (collect) or (888) 292-0070 (U.S.
toll-free).
This announcement is not an offer to purchase, a solicitation of
an offer to purchase or a solicitation of consents with respect to
any securities. The tender offer and consent solicitation are
being made solely by the Offer to Purchase.
About the Company
Ardent Health Services is a provider of health care services to
communities throughout the United States. Ardent currently owns
34 hospitals in 13 states, providing a full range of
medical/surgical, psychiatric and substance abuse services to
patients ranging from children to adults.
* * *
As reported in the Troubled Company Reporter on March 15, 2005,
Moody's Investors Service affirmed the ratings of Ardent Health
Services and changed the outlook to developing. This action
follows Ardent's announcement that it has entered into a
definitive agreement to sell its behavioral health division,
consisting of 20 behavioral hospitals, to Psychiatric Solutions,
Inc., in a transaction valued at $560 million.
These ratings were affirmed:
* $150 Million Senior Secured Revolving Credit Facility due
2008, B1
* $300 Million Term Loan B due 2011, rated B1
* $225 Million Senior Subordinated Notes due 2013, rated B3
* Senior implied rating, rated B1
* Senior Unsecured Issuer Rating, rated, B2
ARGONAUT TECH: Losses & Neg. Cash Flow Prompt Going Concern Doubt
-----------------------------------------------------------------
Argonaut Technologies, Inc. (Nasdaq: AGNT) filed an application to
have its common stock traded on The NASDAQ SmallCap Market. As a
result of the bid price of the Company's common stock remaining
below the NASDAQ National Market's minimum $1.00 per share
requirement, the Company filed its transfer application last week.
The transfer of Argonaut's common stock to The NASDAQ SmallCap
Market is expected to be effective following NASDAQ's review of
the Company's application.
Going Concern Doubt
The Company delivered its annual report for the year ended Dec.
31, 2004 to the Securities Exchange Commission April 21, 2005.
In that report, Ernst & Young LLP, the Company's Independent
Registered Public Accounting Firm, state that the financial
statements present fairly, in all material respects, the
consolidated financial position of the Company and the
consolidated results of its operations and its cash flows, in
conformity with U.S. generally accepted accounting principles.
The Ernst & Young LLP report also notes that the company has
incurred recurring operating losses and negative cash flows from
operating activities, and that this raises substantial doubt about
the Company's ability to continue as a going concern.
Asset Sale
In March 2005, Argonaut prepared a proxy statement asking
stockholders to approve a sale of the assets of Argonaut's
chemistry consumables business and certain assets related to the
process chemistry business, which constitutes substantially all of
Argonaut's assets, to Biotage AB. If the asset sale is completed,
Argonaut will be paid $21.2 million in cash by Biotage, and
Biotage will assume specified liabilities. The purchase price
will be decreased to the extent that the value of the working
capital of the Company's chemistry consumables business at the
closing of the asset sale is less than $7,080,000, and will be
increased to the extent that the value of the working capital of
the Company's chemistry consumables business is greater than
$7,080,000. At the closing of the asset sale, $2,000,000 of the
cash purchase price will be put into an escrow account to secure
Argonaut's indemnification obligations under the purchase
agreement.
"We anticipate the transaction will close shortly after the
special meeting," the Company stated in its Annual Report. "After
the closing of the asset sale to Biotage, we currently intend to
wind up our affairs and continue to explore alternatives for the
use and disposition of our remaining assets. We currently intend
to make an initial distribution to our stockholders of a portion
of the net proceeds of the asset sale to Biotage after the closing
of the asset sale."
If the asset sale to Biotage is not approved, the Company will
review all options for continuing operations, including:
-- reducing expenses through the termination of employees and
the discontinuation of its process chemistry business; and
-- selling the Company's stock or all or any part of its assets
to the highest bidder, if any.
"We may be required to pay to Biotage a termination fee of
$950,000 if the purchase agreement is terminated under certain
circumstances," the Company said. "In addition, under the terms
of the purchase agreement, we would be obligated to reimburse
Biotage for its expenses incurred in connection with the
transaction in an amount up to $550,000."
About Argonaut Technologies, Inc.
Argonaut Technologies, Inc. is a leading provider of consumables,
instruments, and services designed to help the pharmaceutical
industry accelerate drug development. The company's products
enable chemists to increase productivity, reduce operating costs,
achieve faster time to market, and test the increasing number of
targets and chemical compounds available for drug development.
Argonaut Technologies develops products in close consultation and
collaboration with scientists from leading pharmaceutical
companies. More than 1,200 customers use Argonaut's products
worldwide.
ATA AIRLINES: Ronald Callahan Gets Stay Lifted to Pursue Lawsuit
----------------------------------------------------------------
Ronald Callahan sought and obtained the Court's authority to
pursue his lawsuit against the Debtors in the Circuit Court of
Cook County, Illinois.
Prior to the Petition Date, Mr. Callahan sustained injuries caused
in part by the Debtors' negligence. He filed a lawsuit against,
among others, the Debtors in the Illinois Court, which was stayed
due to the Debtors' Chapter 11 filing.
At the time of the incident, the Debtors were insured by United
States Aviation Underwriters pursuant to policies with limits in
excess of $1,000,000.
Judge Lorch lifts the automatic stay on the condition that any
monetary claims adjudged against the Debtors will be collected
from the proceeds of any insurance coverage provided by United
States Aviation Underwriters. No collection or other action to
collect any amounts from the Debtors or their bankruptcy estates
will be pursued in the Illinois Court.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.
(ATA Airlines Bankruptcy News, Issue No. 21; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ATA AIRLINES: Fleet Nat'l Gets Court Nod for Adequate Protection
----------------------------------------------------------------
As reported in the Troubled Company Reporter on March 9, 2005,
Pursuant to Sections 361 and 363(e) of the Bankruptcy Code, Fleet
National Bank, as successor-in-interest to Summit Bank, sought
adequate protection of its interests in certain aircraft mortgaged
by American Trans Air, Inc., to Summit Bank under two operative
agreements:
Agreement Aircraft Description
--------- --------------------
September 22, 2000 Lockheed L1011-385-3: Serial 1229, Reg.
Loan Agreement N162AT
February 17, 2000 Lockheed L1011-385-3: Serial 1229, Reg.
Loan Agreement N163AT
According to David H. Kleiman, Esq., at Dann Pecar Newman &
Kleiman, PC, in Indianapolis, Indiana, ATA Airlines, Inc. and its
debtor-affiliates continue to use the Aircraft without making any
payments to Fleet National Bank. The Aircraft are rapidly
declining in value every hour in which the Aircraft remain in use
by the Debtors, and Fleet National Bank has not been protected
from the significant continued diminution in the value of its
collateral.
Mr. Kleiman relates that the cost of a "Dcheck" maintenance event
is approximately $1.5 million for each Aircraft and the cost of
engine overhauls are approximately $4.5 million for each
Aircraft. Based on Fleet National Bank's calculations, the
maintenance burn off alone is $125,000 per month for each
Aircraft, not even considering the debt service due and owing to
Fleet National Bank, which is an additional $146,000 per month and
interest only is $71,000 per month. Yet, the Debtors have no
equity in the Aircraft, which are all worth substantially less
than the Debtors' indebtedness to Fleet National Bank.
Furthermore, Fleet National Bank has little protection in the
event that certain of the Aircraft's parts are removed, replaced
or swapped to other aircraft not subject to Fleet National Bank's
security interests.
Parties Stipulate
In a Court-approved stipulation, Fleet National Bank allows the
Debtors to continue using the two Lockheed L-1011 aircraft with
U.S. Registration Nos. N162AT and N163AT, subject to these
conditions:
(a) As adequate protection of Fleet National's interests in
the Aircraft, the Debtors will pay undisclosed amounts to
Fleet National Bank, commencing retroactive to February 8,
2005, and on or about the eighth day of each month
thereafter for the agreed period. The Adequate Protection
Payments consist confidential information and are filed
under seal;
(b) The Debtors may extend the terms of the Stipulation
as to one or both Aircraft for additional one-month
periods by giving written notice to Fleet National Bank
and its counsel and counsel for the Official Committee of
Unsecured Creditors on or before 21 days prior to the
expiration of the current term. If the Debtors elect to
extend, the Debtors will pay an undisclosed amount before
the eighth day of the month for each elected Aircraft;
(c) In the event the Debtors fail to make the Adequate
Protection Payments, the automatic stay as it relates to
the Aircraft and Fleet National Bank's actions, will be
automatically terminated in the event the Default is not
cured within 10 days after the Notice of Default;
(d) The Stipulation will terminate on the Effective Date of
a confirmed plan of reorganization for the Debtors;
provided, however, that the Debtors will continue to be
obligated to make the required payments;
(e) The Debtors will continue to maintain and insure the
Aircraft while in their possession and provide Fleet
National Bank with reasonable opportunity to inspect the
Aircraft;
(f) Upon termination of the Debtors' use of an Aircraft, the
Aircraft with its original engines will be delivered to
Fleet National Bank at a location within the contiguous
Continental United States, mutually agreeable to the
parties or otherwise the Court; and
(g) Fleet National Bank reserves its right to assert
additional claims for non-ordinary damage to the Aircraft
incurred after the Petition Date and for actions of the
Debtors inconsistent with the terms of the Stipulation.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.
(ATA Airlines Bankruptcy News, Issue No. 21; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
B&A CONSTRUCTION: U.S. Trustee Picks 4-Member Creditors' Committee
------------------------------------------------------------------
The United States Trustee for Region 21 appointed four creditors
to serve on an Official Committee of Unsecured Creditors in B&A
Construction Co., Inc.'s chapter 11 case:
1. Martin Contracting, Inc.
ATTN: Bryan K. Martin, President
3435 Gravitt Road
Cumming, GA 30040
Tel: 770-887-8747
Fax: 770-844-8415
E-Mail: bkmhta@aol.com
2. E. R. Snell Contractor, Inc.
ATTN: David E. Snell, Vice-President
P. O. Box 306
Snellville, GA 30078
Tel: 770-985-0600
Fax: 770-978-9403
E-Mail: dsnell@ersnell.com
3. Keating Brothers Construction Co., Inc.
ATTN: Tom Keating, President
3230 Moonstation Road, Suite A
Kennesaw, GA 30144
Tel: 678-784-2819
Fax: 770-429-8631
E-Mail: klkelly@mijs.com
4. Ferguson Waterworks
ATTN: Eddie Johnson, Dist. Credit Manager
5475 Technology Parkway
Braselton, GA 30517
Tel: 770-967-1845
Fax: 770-967-2902
E-Mail: eddie.johnson@ferguson.com
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Gainesville, Georgia, B&A Construction Co., Inc.,
is a commercial, highway and residential grading contractor. The
Company filed for chapter 11 protection on Feb. 18, 2005 (Bankr.
N.D. Ga. Case No. 05-20421). J. Robert Williamson, Esq., at
Scroggins and Williamson represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it estimated assets and debts between $10 million
to $50 million.
B&A CONSTRUCTION: Sells Heavy Equipment for $4.8 Million
--------------------------------------------------------
B&A Construction Co., Inc., obtained permission from the U.S.
Bankruptcy Court for the Northern District Of Georgia, Gainesville
Division, to sell 50 pieces of earthmoving equipment to
IronPlanet, Inc. for $4,800,000.
The Debtor initially stuck a deal to sell these assets to Yancey
Brothers, Inc., for $3,691,000. At an auction held on April 12,
2005, IronPlanet advanced the highest and best bid.
Six secured lenders, collectively owed $3,231,155, hold valid
first priority liens in these assets sold. The sale proceeds will
be used to repay that secured debt in full.
Headquartered in Gainesville, Georgia, B&A Construction Co., Inc.,
is a commercial, highway and residential grading contractor. The
Company filed for chapter 11 protection on Feb. 18, 2005 (Bankr.
N.D. Ga. Case No. 05-20421). J. Robert Williamson, Esq., at
Scroggins and Williamson represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it estimated assets and debts between $10 million
to $50 million.
BABSELL CORPORATION: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Babsell Corporation
4880 Carlisle Pike
Mechanicsburg, Pennsylvania 17055
Bankruptcy Case No.: 05-02611
Chapter 11 Petition Date: April 20, 2005
Court: Middle District of Pennsylvania (Harrisburg)
Judge: Mary D. France
Debtor's Counsel: Robert E. Chernicoff, Esq.
Cunningham & Chernicoff PC
2320 North Second Street
P.O. Box 60457
Harrisburg, Pennsylvania 17106-0457
Tel: (717) 238-6570
Fax: (717) 238-4809
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
BANC OF AMERICA: Fitch Puts Low-B Ratings on Two 2005-D Certs.
--------------------------------------------------------------
Banc of America Mortgage Securities, Inc., series 2005-D, mortgage
pass-through certificates, are rated by Fitch Ratings:
-- $491,481,100 classes 1-A-1, 1-A-2, 1-A-R, 2-A-1, 2-A-2,
2-A-3, 2-A-4, 2-A-5, 2-A-6, 2-A-7, and 3-A-1 (senior
certificates) 'AAA';
-- $9,167,000 class B-1 'AA';
-- $3,311,000 class B-2 'A';
-- $2,292,000 class B-3 'BBB';
-- $1,018,000 class B-4 'BB';
-- $764,000 class B-5 'B'.
The 'AAA' rating on the senior certificates reflects the 3.50%
subordination provided by:
* the 1.80% class B-1,
* the 0.65% class B-2,
* the 0.45% class B-3,
* the 0.20% privately offered class B-4,
* the 0.15% privately offered class B-5, and
* the 0.25% privately offered class B-6.
The ratings on class B-1, B-2, B-3, B-4, and B-5 certificates
reflect each certificate's respective level of subordination.
Class B-6 and Class 1-IO are not rated by Fitch.
The ratings also reflect the quality of the underlying mortgage
collateral, the primary servicing capabilities of Bank of America
Mortgage, Inc. (rated 'RPS1' by Fitch) and Fitch's confidence in
the integrity of the legal and financial structure of the
transaction.
The transaction consists of three groups of adjustable interest
rate, fully amortizing mortgage loans, secured by first liens on
one- to four-family properties, with a total of 1,066 loans and an
aggregate principal balance of $509,307,295.97 as of April 1,
2005, the cut-off date. The three loan groups are cross-
collateralized.
The group 1 collateral consists of 3/1 hybrid adjustable-rate
mortgage loans. After the initial fixed interest rate period of
three years, the interest rate will adjust annually based on the
sum of one-year LIBOR index and a gross margin specified in the
applicable mortgage note. Approximately 52.37% of group 1 loans
require interest-only payments until the month following the first
adjustment date. As of the cut-off date, the group has an
aggregate principal balance of approximately $39,552,465.46 and an
average balance of $387,769. The weighted average original loan-
to-value ratio -- OLTV -- for the mortgage loans is approximately
74.90%. The weighted average remaining term to maturity -- WAM --
is 357 months, and the weighted average FICO credit score for the
group is 715. Second homes and investor-occupied properties
constitute 8.79% and 2.93%, respectively, of the loans in group 1.
Rate/term and cashout refinances account for 18.34% and 17.77% of
the loans in group 1, respectively.
The states that represent the largest geographic concentration of
mortgaged properties are California (28.33%, Florida (18.18%),
Nevada (6.41%), and Virginia (6.32%). All other states represent
less than 5% of the outstanding balance of the group.
The group 2 collateral consists of 5/1 hybrid ARM mortgage loans.
After the initial fixed interest rate period of five years, the
interest rate will adjust annually based on the sum of one-year
LIBOR index and a gross margin specified in the applicable
mortgage note. Approximately 69.29% of group 2 loans require
interest-only payments until the month following the first
adjustment date. As of the cut-off date, the group has an
aggregate principal balance of approximately $438,791,971.43 and
an average balance of $487,547. The weighted average OLTV for the
mortgage loans is approximately 71.90%. The weighted average
remaining term to maturity is 359 months, and the weighted average
FICO credit score for the group is 737. Second homes and
investor-occupied properties constitute 9.65% and 0.57% of the
loans in group 2, respectively. Rate/term and cashout refinances
account for 22.35% and 15.88% of the loans in group 2,
respectively.
The states that represent the largest geographic concentration of
mortgaged properties are California (51.44%), Florida (9.62%), and
Virginia (8.53%). All other states represent less than 5% of the
outstanding balance of the pool.
The group 3 collateral consists of 7/1 hybrid ARM mortgage loans.
After the initial fixed interest rate period of seven years, the
interest rate will adjust annually based on the sum of one-year
LIBOR index and a gross margin specified in the applicable
mortgage note. Approximately 56.83% of group 3 loans require
interest-only payments until the month following the first
adjustment date. As of the cut-off date, the group has an
aggregate principal balance of approximately $30,962,859.08 and an
average balance of $483,795. The weighted average OLTV for the
mortgage loans is approximately 70.96%. The weighted average
remaining term to maturity is 359 months, and the weighted average
FICO credit score for the group is 736. Second homes and investor-
occupied properties constitute 5.54% and 1.41%, respectively, of
the loans in group 3. Rate/term and cashout refinances account
for 13.01% and 14.20%, respectively, of the loans in group 3.
The states that represent the largest geographic concentration of
mortgaged properties are California (39.62%), Florida (14.27%),
Massachusetts (8.89%), Arizona (7.45%), Virginia (6.54%), and
Maryland (5.41%). All other states represent less than 5% of the
outstanding balance of the pool.
Approximately 47.01% of the group 1 mortgage loans, approximately
60.32% of the group 2 mortgage loans, approximately 51.02% of the
group 3 mortgage loans, and approximately 58.72% of all of the
mortgage loans were originated under the accelerated processing
programs. Loans in the accelerated processing programs, which may
include the all-ready home and rate reduction refinance programs,
are subject to less stringent documentation requirements.
None of the mortgage loans are 'high cost' loans as defined under
any local, state, or federal laws. For additional information on
Fitch's rating criteria regarding predatory lending legislation,
see the press release 'Fitch Revises Rating Criteria in Wake of
Predatory Lending Legislation,' dated May 1, 2003, available on
the Fitch Ratings web site at http://www.fitchratings.com/
Banc of America Mortgage Securities, Inc., deposited the loans in
the trust, which issued the certificates, representing undivided
beneficial ownership in the trust. For federal income tax
purposes, elections will be made to treat the trust as two
separate real estate mortgage investment conduits. Wells Fargo
Bank, National Association will act as trustee.
BANC OF AMERICA: Fitch Puts BB on $552,000 Class B-4 Mort. Certs.
-----------------------------------------------------------------
Banc of America Mortgage Securities, Inc.'s mortgage pass-through
certificates, series 2005-4, are rated by Fitch Ratings:
Group 1 and 2 certificates:
-- $269,179,518.00 classes 1-A-1 through 1-A-13, 1-A-R, 2-
A-1, A-IO, and A-PO senior certificates 'AAA';
-- $3,588,000 class B-1 'AA';
-- $1,241,000 class B-2 'A';
-- $690,000 class B-3 'BBB';
-- $552,000 class B-4 'BB'.
The 'AAA' ratings on the senior certificates reflect the 2.45%
subordination provided by the:
* 1.30% class B-1,
* 0.45% class B-2,
* 0.25% class B-3,
* 0.20% privately offered class B-4,
* 0.15% privately offered class B-5, and
* 0.10% privately offered class B-6.
Classes B-1, B-2, B-3, and B-4, are rated 'AA', 'A', 'BBB', and
'BB', respectively, based on their respective subordination.
Classes B-5 and B-6 are not rated by Fitch.
The ratings also reflect the quality of the underlying collateral,
the primary servicing capabilities of Bank of America Mortgage,
Inc. (rated 'RPS1' by Fitch), and Fitch's confidence in the
integrity of the legal and financial structure of the transaction.
The transaction is secured by two pools of mortgage loans. Loan
groups 1 and 2, the 30-year loan group, and the 20-year loan
group, respectively, are cross-collateralized and supported by the
B-1 through B-6 subordinate certificates.
Loan groups 1 and 2 in the aggregate consist of 519 recently
originated, conventional, fixed-rate, fully amortizing, first
lien, one- to four-family residential mortgage loans with original
terms to stated maturity ranging from 240 to 360 months.
The aggregate outstanding balance of the pool as of April. 1,
2005, the cut-off date, is $275,940,890, with an average balance
of $531,678 and a weighted average coupon of 5.732%. The weighted
average original loan-to-value ratio for the mortgage loans in the
pool is approximately 63.98%. The weighted average FICO credit
score is 749. Second homes constitute 5.74%, and there are no
investor occupied properties. Rate/term and cash-out refinances
account for 45.06% and 25.30% of the loans in the group,
respectively.
The states that represent the largest geographic concentration of
mortgaged properties are:
* California (50.25%),
* Florida (7.70%),
* Virginia (6.25%), and
* Maryland (6.18%).
All other states represent less than 5% of the aggregate pool
balance as of the cut-off date.
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws. For additional information on
Fitch's rating criteria regarding predatory lending legislation,
see the press release 'Fitch Revises Rating Criteria in Wake of
Predatory Lending Legislation,' dated May 1, 2003, available on
the Fitch Ratings web site at http://www.fitchratings.com/
Banc of America Mortgage Securities, Inc., deposited the loans in
the trust, which issued the certificates, representing undivided
beneficial ownership in the trust. For federal income tax
purposes, elections will be made to treat the trust as two real
estate mortgage investment conduits. Wells Fargo Bank, National
Association will act as trustee.
BEAR STEARNS: Fitch Puts Low-B Ratings on 6 Mortgage Certificates
-----------------------------------------------------------------
Bear Stearns Commercial Mortgage Trust 2005-TOP18 commercial
mortgage pass-through certificates are rated by Fitch:
-- $69,500,000 class A-1 'AAA';
-- $121,900,000 class A-2 'AAA';
-- $41,600,000 class A-3 'AAA';
-- $105,700,000 class A-AB 'AAA';
-- $517,238,000 class A-4 'AAA';
-- $75,000,000 class A-4FL 'AAA';
-- $74,307,000 class A-J 'AAA';
-- $1,121,613,137 class X* 'AAA';
-- $29,443,000 class B 'AA';
-- $8,412,000 class C 'AA-';
-- $12,618,000 class D 'A';
-- $11,216,000 class E 'A-';
-- $9,814,000 class F 'BBB+';
-- $9,814,000 class G 'BBB';
-- $8,412,000 class H 'BBB-';
-- $4,206,000 class J 'BB+';
-- $4,206,000 class K 'BB';
-- $4,206,000 class L 'BB-';
-- $1,402,000 class M 'B+';
-- $1,403,000 class N 'B';
-- $2,804,000 class 0 'B-'.
*Notional amount and interest only.
Class P is not rated by Fitch. Classes A-1, A-2, A-3, A-AB, A-4,
A-4FL, A-J, B, C, and D are offered publicly, while classes X, E,
F, G, H, J, K, L, M, N, and O are privately placed pursuant to
Rule 144A of the Securities Act of 1933. The certificates
represent beneficial ownership interest in the trust, primary
assets of which are 156 fixed-rate loans having an aggregate
principal balance of approximately $1,121,613,138, as of the
cutoff date.
For a detailed description of Fitch's rating analysis, see the
report 'Bear Stearns Commercial Mortgage Securities Trust 2005-
TOP18,' dated April 11, 2005, available on the Fitch Ratings web
site at http://www.fitchratings.com/
BLOCKBUSTER: Fitch Revises Outlook of B+ Sr. Debt Rating to Stable
------------------------------------------------------------------
Fitch Ratings has revised the Rating Outlook for Blockbuster, Inc.
to Negative from Stable. Fitch rates Blockbuster's senior secured
debt 'BB' and its senior subordinated debt 'B+'. Approximately
$1.1 billion in debt is affected by Fitch's action.
The Negative Outlook reflects Fitch's increased level of concern
regarding potential changes in the company's financial policies.
Important to note is that investor Carl Icahn, BBI's largest
shareholder, with an 8.6% voting interest, is currently waging a
proxy battle for three board seats with votes due on May 11, 2005.
Icahn's publicly stated plans for the company include increasing
dividend payments, with a one-time special dividend of $330
million, which Fitch believes will likely increase leverage and
further weaken Blockbuster's credit profile.
Further, if Icahn is successful, John Antioco, the company's
Chairman and CEO, has stated that he will resign. These potential
events are especially significant given the potential for weakened
credit metrics in 2005 due to the absence of income related to the
company's elimination of late fees. Even if Icahn's attempts for
the Director seats are unsuccessful, Fitch believes his continued
influence on the company's fiscal policies may have a negative
impact on creditors.
As previously stated by Fitch, ongoing credit concerns include
competing technologies, particularly video-on-demand, pay-per-
view, and Internet-based delivery services, which will
increasingly result in easier access to home video rentals for the
end-user. The increase in competition for DVD sales from large
retailers is also a credit concern. Due to this increasing
competition, the company has undertaken various new initiatives
that include in-store and Internet-based subscription services for
DVDs, video game subscriptions, and the elimination of late fees
on video rentals. These actions are expected to result in cash
flow weakness in the near term.
However, potential increases in rental and retail traffic
associated with the new initiatives, as well as the recently
announced reductions in headcount, may offset start-up costs and
the elimination of late fees that were expected to contribute
$250-$300 million of operating income in 2005. Fitch will
continue to monitor the effect these new initiatives have on the
company's margins, its leadership position in video rentals, and
the long-term growth potential in other areas such as merchandise
and video games, as well as the impact of the purchase of
Hollywood Entertainment by Movie Gallery Inc. on Blockbuster's
competitive position within the industry.
The ratings are supported by Blockbuster's leading market position
in the highly competitive/fragmented and mature home entertainment
industry and its strong global brand-name recognition.
Blockbuster's leading 39% market share in the U.S. movie rental
industry provides it with economies of scale not afforded to its
smaller competitors.
The company's liquidity is supported by approximately $221 million
in availability under its credit facility and cash balances of
$330 million (both figures as of Dec. 31, 2004). The company has
traditionally generated annual free cash flow (cash flow from
operations less capital expenditures and rental library purchases)
in excess of $100 million; however, due to its new strategic
initiatives we do not expect free cash flow to meaningfully
contribute to the company's liquidity in 2005. Blockbuster's
current debt maturities are manageable, as the company has
approximately $5.8 million due in 2005 and $20.5 million due in
both 2006 and 2007.
BRADLEY PHARMACEUTICALS: Inks Forbearance Pact with Bank Lenders
----------------------------------------------------------------
Bradley Pharmaceuticals, Inc. (NYSE: BDY) entered into a
Forbearance Agreement with the lenders that are party to its
$125 million credit facility under which Wachovia Bank, National
Association, serves as administrative agent. Under the
Forbearance Agreement, the lenders agreed to forbear from
exercising their remedies under certain provisions of the credit
facility as a result of the Company's failure to file its Annual
Report on Form 10-K for the year ended December 31, 2004 and
furnish audited financial statements for 2004, which constitute
events of default under the credit facility.
As those events of default continue to exist and the Forbearance
Agreement expired on April 22, 2005, all loan commitments under
the credit facility can now be terminated and all amounts owing
under the credit facility can now be declared due and payable,
though as of March 22, 2005, no such demands have been made nor
have any indications been given to the Company that the lenders
will take any remedial action. Approximately $68 million in
principal is outstanding under the credit facility as of the date
of this Report.
Reporting Default
On Apr. 25, 2005, the Company received a notice from a beneficial
holder of the Company's 4% Convertible Senior Subordinated Notes
due 2013 claiming a default under the related indenture as a
result of the Company's failure to file its Annual Report on Form
10-K. If not cured within 30 days after receipt of the notice,
such a default would constitute an event of default entitling the
trustee or note holders to accelerate maturity of the Notes in the
aggregate principal amount of $37 million.
The Company intends to continue discussions of these matters with
its lenders and noteholders. As of March 31, 2005, the Company
had approximately $65 million in cash and cash equivalents and $15
million in short-term investments."
$1 Million Restatement
On April 21, 2005, the Company received notice from its
independent auditors, Grant Thornton LLP, that during their
audit of the Company's financial statements for the year ended
December 31, 2004, which they have not completed, they became
aware of information indicating that a transaction recorded as a
sale by the Company in the quarter ended September 30, 2004 did
not meet the criteria for revenue recognition in that period. On
April 25, 2005, the Company received a further notice from Grant
Thornton LLP advising of a material weakness in the Company's
internal controls in connection with the approval and
consideration by appropriate personnel of all terms and conditions
of the transaction and recommending that the Company implement
controls relating to the approval and communication of all terms
and conditions of all sales transactions.
The transaction consisted of a sale of approximately $1 million of
Deconamine Syrup shipped and paid for in the third quarter. Based
on information provided by the Company, Grant Thornton LLP has
indicated its conclusion that the sale did not meet the criteria
for revenue recognition after the customer expressed its
intentions to return the product and the sale was modified in that
the Company would accept all unsold product as of Feb. 1, 2005,
with credit granted against other trade amounts owed by the
customer.
As a result of the non-recognition of revenue in the third quarter
from this sale, the Company's consolidated statement of income for
the third quarter of 2004 will need to be adjusted and restated to
reduce net sales by $1,043,907 to $27,452,698, net income by
$613,594 to $3,047,789, and the Company's consolidated balance
sheet as of September 30, 2004, will need to be adjusted and
restated to record $1,043,907 of deferred revenue.
Bradley Pharmaceuticals, Inc. (NYSE: BDY) was founded in 1985 as a
specialty pharmaceutical company marketing to niche physician
specialties in the U.S. and 38 international markets. Bradley's
success is based on the strategy of Acquire, Enhance and Grow.
Bradley Acquires non-strategic brands, Enhances these brands with
line extensions and improved formulations and Grows the products
through promotion, advertising and selling activities to optimize
life cycle management. Bradley Pharmaceuticals is comprised of
Doak Dermatologics, specializing in topical therapies for
dermatology and podiatry, and Kenwood Therapeutics, providing
gastroenterology, respiratory and other internal medicine brands.
BRAZIL FAST: Losses & Deficit Trigger Going Concern Doubt
---------------------------------------------------------
Brazil Fast Food (OTC BB: BOBS.OB), a 388-outlet fast-food chain
and the second largest fast-food chain operator in Brazil,
reported financial results for its fourth quarter ended Dec. 31,
2004.
System-wide sales for the three months ended Dec. 31, 2004,
increased 25.02 percent to R$81,870,652.29, from R$65,485,452.74
for the same period of the prior year. Net franchise revenue was
R$2.5 million for the three-month period ended Dec. 31, 2004 - a
25 percent increase from 2003's fourth-quarter net franchise
revenue of R$2.0 million. The net operating profit for the fourth
quarter of 2004 was R$1.8 million, versus a net operating profit
of R$276,000 for the same period of 2003. Net loss was
R$(102,000) for the fourth quarter of 2004, versus a net loss of
R$(830) basic and diluted, for the fourth quarter of 2003.
For the 12-month period ended Dec. 31, 2004, Brazil Fast Food
reported system-wide sales of R$271,048,305.38, up 20.90 percent
from R$224,187,095.22 in system-wide sales for the same period of
the prior year. Net franchise revenue for the year ended Dec. 31,
2004, was R$8.0 million - a 19 percent rise from net franchise
revenue of R$6.7 million for the prior year. The Company reported
a net operating profit of about R$4.6 million - a dramatic
improvement from the R$(691,000) operating loss realized for 2003.
Brazil Fast Food reported net income of R$601,000, or R$0.08 per
share, basic and diluted, for the twelve-month period ended Dec.
31, 2004, compared with a net loss of R$(4.1) million, or R$(.55)
for 2003. Short-term debt and long-term debt were R$7.3 million
and R$21.9 million, respectively, as of Dec. 31, 2004, compared
with short-term debt of R$6.8 million and long-term debt of R$23.8
for the same date of the prior year.
As of April 22, 2005, Brazil Fast Food repurchased a total of
23,500 shares of Brazil Fast Food common stock under its
previously announced Board-approved stock repurchase plan, which
allows for the repurchase of as many as 200,000 shares of the
Company's common stock.
Ricardo Figueiredo Bomeny, Chief Executive Officer of Brazil Fast
Food Corp., stated, "Our financial results for 2004 reflect the
impact of a healthier Brazilian economy and our disciplined
management team. The economic environment in Brazil has been much
more favorable, marked by higher rates of income and employment
and a lower rate of inflation. This has resulted in more
disposable income and greater buying power for Brazilians,
contributing to our sales increase.
"Our management team has worked diligently to strategically
position Brazil Fast Food to realize significant benefits from
such an economic up-tick. During 2004, we added a net total of 47
points of sale, increased our number of franchisees and expanded
our chain's geographical coverage. This includes our re-entry
into the important market of Belo Horizonte, a Brazilian city with
a population of more than 2.3 million. A single franchisee opened
its fifth store in Belo Horizonte, and has plans to open an
additional five restaurants there this year. We also opened more
Bob's kiosks - both Company-owned and franchised - during 2004.
These kiosks require less start-up capital and deliver higher
margins. A fresh, new marketing campaign and a store
modernization project are helping us to revitalize our image and
increase sales. In addition, we have boosted sales with an
effective in-store motivational program and realized the bottom-
line benefits of strict cost-cutting initiatives.
"While we are encouraged by the progress we made during 2004, we
realize that there is still a long way to go. Brazil Fast Food
remains a going concern, however, we are addressing the Company's
problems and continuing to grow the Bob's chain and increase
sales. The prospects for 2005 remain positive for the Brazilian
economy - a crucial factor in our performance. This is a much
more hospitable environment for our growth initiatives and our
profitability goals. Therefore, we believe that we will be able
to continue to leverage the strength of our brand, the unique
quality and selection of our menu and our established niche in
Brazil's fast-food market in our efforts to secure the future of
our Company."
Going Concern Doubt
Trevisan Auditores Independentes raised substantial doubt about
Brazil Fast Food's ability to continue as a going concern after it
audited the Company's Form 10-K for the fiscal year ended Dec. 31,
2004. The Company has suffered recurring losses and has a
negative working capital and shareholders' equity, which triggered
the going concern opinion.
About the Company
Brazil Fast Food Corp. owns and operates, both directly and
through franchisees, the second largest chain of hamburger fast-
food restaurants in Brazil, through its wholly owned subsidiary,
Venbo Comercio de Alimentos Ltda. Brazil Fast Food Corp. conducts
business in Brazil under the trade name "Bob's." As of December
31 2004, the Company had 388 points of sale, which includes
traditional restaurants, kiosks and re-locatable trailers.
BRIDGE INFO: Plan Admin. Wants Until September to Object to Claims
------------------------------------------------------------------
Scoot Peltz, the Chapter 11 Plan Administrator overseeing the
winding up of Bridge Information Systems, Inc., and its
debtor-affiliates, asks the U.S. Bankruptcy Court for the Eastern
District of Missouri to extend the deadline he faces to object to
claims asserted against the Debtors' estates. Mr. Peltz wants the
deadline extended to Sept. 20, 2005.
The Debtors' confirmed chapter 11 plan did not provide for any
distributions to the holders of allowed claims against non-
consolidated Bridge entities, due to lack of available cash.
However, Distributions will be made to the extent cash becomes
available.
The Plan Administrator wants more time to determine whether or not
there will be available cash for Allowed Claims against non-
consolidated Bridge entities. As he continues that activity, the
Plan Administrator wants to preserve his right to evaluate claims
and file appropriate objections.
Bridge Information Systems Inc. filed a voluntary petition for
bankruptcy under Chapter 11 of the U.S. Bankruptcy Code on
February 15, 2001 (Bankr. E.D. Mo. Case Nos. 01-41593-293 through
01-41614-293, inclusive). On February 13, 2002, Judge McDonald
confirmed a chapter 11 plan of liquidation, which, among other
items, transferred ownership to the holders of Bridge's secured
creditors. Thomas J. Moloney, Esq., Seth A. Stuhl, Esq., and Kurt
A. Mayr, Esq., at Cleary, Gottlieb, Steen & Hamilton in New York
served as lead counsel to Bridge in its chapter 11 cases. Gregory
D. Willard, Esq., Lloyd A. Palans, Esq., and David M. Unseth,
Esq., at Bryan Cave LLP in St. Louis, served as local counsel.
CANFIBRE OF RIVERSIDE: Disclosure Hearing Set for June 15
---------------------------------------------------------
The Honorable Randolph Baxter of the U.S. Bankruptcy Court for the
District of Delaware will convene a hearing on June 15, 2005, at
1:30 p.m., to examine the adequacy of the information contained in
the Disclosure Statement explaining the Plan of Liquidation filed
by Canfibre of Riverside, Inc., on April 18, 2005.
Objections to the Plan, if any, must be in writing and filed with
the Court by 4:00 p.m. of June 2. Copies of objections must be
served on:
Debtor's counsel:
Young Conaway Stargatt & Taylor, LLP
Attn: Michael R. Nestor, Esq. and Matthew B. Lunn, Esq.
The Brandywine Building
1000 West Street, 17th Floor
Wilmington, Delaware 19899-0391
Official Committee of Unsecured Creditors' counsel:
Richards, Layton & Finger, P.A.
Attn: John Henry Knight, Esq.
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
The Office of the U.S. Trustee:
United States Trustee
Attn: Mark S. Kenney, Esq.
844 King Street, Suite 2207
Lockbox 35
Wilmington, Delaware 19801
Copies of the Plan and the Disclosure Statement are available at
the Debtor's expense upon written request to Young Conaway.
About the Plan
The Plan provides for the liquidation of the Debtor's remaining
assets for distribution to creditors. A Liquidation Trust will be
established to:
a) prosecute causes of action;
b) prosecute and settle objections to claims and
interests; and
c) make distributions to holders of allowed claims in
accordance with the terms of the Plan.
The Plan appoints Chad Shandler at Traxi, LLC, as the Liquidation
Trustee. He can be reached at:
Chad Shandler
Traxi, LLC
212 West 35th Street, 4th Floor
New York, NY 10001
Telephone (212) 465-0770
Fax (212) 465-1919
On the Effective Date, the plan proposes to pay, in full, in cash:
* administrative claims;
* fee claims;
* priority tax claims;
* priority claims; and
* secured claims.
General unsecured creditors will receive pro rata shares of any
cash distributions from the Liquidation Trust. The Disclosure
Statement does not attempt to quantify the value of those shares,
nor do the Debtors indicate what creditors could expect to receive
if the estate were liquidated under chapter 7 of the Bankruptcy
Code.
Subject to a $300 cap, holders of Convenience Claims will 30% of
their claims in cash.
Equity interests will be cancelled on the Effective Date.
About Canfibre
Canfibre of Riverside, Inc., a Delaware corporation, developed,
constructed, owned and operated a waste wood recycling facility in
Riverside County, California. The Facility produced medium
density fiberboard -- MDF -- using a proprietary steam injection
process. Riverside's facility was unique due to its ability to
use recyclable dry fiber waste materials normally destined for
landfills, such as clean mill residue, construction and demolition
wood, packaging woods and waste panel board, without the use of
environmentally damaging urea formaldehyde resin.
Canfibre tumbled into chapter 11 on October 24, 2000, after it
failed to obtain working capital to operate its commercial scale
MDF plant using steam injection presses.
Howard Seife, Esq., Joseph H. Smolinsky, Esq., N. Theodore Zink,
Jr., Esq., at Chadbourne & Parke LLP, and James L. Patton, Jr.,
Esq., Brendan Linehan Shannon, Esq., Michael R. Nestor, Esq., and
Matthew B Lunn, Esq., at Young, Conaway, Stargatt & Taylor
represent Canfibre. John H. Knight, Esq., at Richards, Layton &
Finger, P.A., represents the Official Committee of Unsecured
Creditors. When the Company filed for protection from its
creditors, it listed estimated assets and debts of more than $100
million each.
CAPCO AMERICA: Fitch Affirms Three 1998-D7 Mortgage Certificates
----------------------------------------------------------------
Fitch Ratings upgrades CAPCO America Securitization Corp.'s
commercial mortgage pass-through certificates, series 1998-D7:
-- $68.5 million class A-3 to 'AAA' from 'A+';
-- $59.2 million class A-4 to 'A' from 'BBB';
-- $21.8 million class A-5 to 'BBB+' from 'BBB-';
-- $31.1 million class B-1 to 'BBB-' from 'BB+'.
In addition, Fitch affirms these classes:
-- $91.3 million class A-1A 'AAA';
-- $632.3 million class A-1B 'AAA';
-- Interest-only class PS-1 'AAA';
-- $62.3 million class A-2 'AAA';
-- $28 million class B-2 'BB';
-- $15.6 million class B-3 'BB-';
- -$24.9 million class B-4 'B-'.
The $15.6 million class B-5 certificates remain at 'CC'. Fitch
does not rate the $7 million class B-6 and B-6H certificates.
The upgrades are due to the increase in credit enhancement
resulting from loan payoffs and amortization. As of the April
2005 distribution date, the pool has paid down 15.1% to $1.06
billion from $1.25 billion at issuance. In addition, 23 loans
(10.3%) have been defeased, including the Banyan Pool I loan
(3.1%) which is the eighth largest loan in the pool.
Seven assets (4%) are currently in special servicing:
* three real estate owned (REO) properties (2%);
* one loan in foreclosure (0.6%); and
* three loans that are 90 days delinquent (1.4%).
The largest specially serviced asset is 6400 Shafer Court (1.2%),
an REO office property located in Rosemont, Illinois. The
property is currently 64% occupied and is being marketed for sale.
The second largest specially serviced loan is Pointe West (1%), an
office property located in Dayton, Ohio. According to the special
servicer, Lennar Partners, Inc., a deed-in-lieu of foreclosure is
being finalized and a receiver is in place. Losses are expected
on the specially serviced loans.
Twenty four loans (6.7%) are credit tenant lease loans, which are
secured by 136 properties net leased to one of six different
entities. The largest three CTL concentrations-Accor SA (4.2%),
Beckman Coulter, Inc. (1.1%), and Wachovia Bank N.A. (0.6%)-are
investment-grade rated entities. The remaining three
concentrations (0.8%) are considered below investment grade by
Fitch.
CAROLINA TOBACCO: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Carolina Tobacco Company
5620 Southwest Dover Lane
Portland, Oregon 97225
Bankruptcy Case No.: 05-34156
Type of Business: The Debtor manufactures Roger-brand cigarettes.
See http://www.carolinatobacco.com/
Chapter 11 Petition Date: April 18, 2005
Court: District of Oregon (Portland)
Judge: Elizabeth L. Perris
Debtor's Counsel: Paul G. Dodds, Esq.
Brownstein, Rask, Sweeney, Kerr, Grim,
DeSylvia & Hay, LLP
1200 Southwest Main Street
Portland, Oregon 97205
Tel: (503) 221-1772
- and -
Tara J. Schleicher, Esq.
Farleigh Witt, Attorneys at Law
121 Southwest Morrison #600
Portland, Oregon 97204
Tel: (503) 228-6044
Total Assets: $24,408,298
Total Debts: $14,929,169
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
State of Ohio Claim for escrow $4,039,092
Jim Petro, AG deposits under
30 East Broad Street, Qualifying Statute
17th Floor
Columbus, OH 43215
State of Indiana Claim for escrow $1,579,977
Steve Carter, AG deposits under
402 West Washington Street, Qualifying Statute
5th Floor
Indianapolis, IN 46204
State of Kentucky Claim of escrow $1,250,680
Gregory D. Stumbo, AG deposits under
700 Capitol Avenue, Qualifying Statute,
Suite 118 subject to offset for
Frankfort, KY 40601 excess escrow deposits
As set forth on
Exhibit B-20
State of California Claim for escrow $1,015,698
Bill Lockyer, AG deposits under
1300 I Street Qualifying Statute
Sacramento, CA 94244
Department of Treasury Federal excise taxes $914,464
United States Customs as of 4/15/05
Service
1300 Pennsylvania Avenue,
Northwest
Washington, DC 20229
State of Nebraska Claims for escrow $914,134
Mary Jane Egr Tax deposits under
Commissioner Qualifying Statute,
P.O. Box 94818 subject to offset for
Lincoln, NE 68509 excess escrow as set
forth on Exhibit B-20
Nampak Raw materials $736,037
P.O. Box 339
Eppindust 7475
South Africa
Sate of New York Claims for escrow $602,949
Andrew Eristoff, deposits under
Commissioner Qualifying Statute
Building 9, WA Harriman
Campus
Albany, NY 12227
State of Missouri Claims for escrow $588,757
Trish Vincent, Dir of deposits under
Revenue Qualifying Statute
301 West High Street
Jefferson City, MO 65101
State of Pennsylvania Claims for escrow $542,896
Tom Corbett, AG deposits under
1600 Strawberry Square Qualifying Statute
Harrisburg, PA 17120
CPI NV Ten-year note payable $534,765
Karel Oomastraat 4-B-2018 due to over
Antwerp distribution of
Belgium profits from previous
Years
State of West Virginia Claims for escrow $336,279
Virgil T. Helton, deposits under
Commissioner Qualifying Statute,
P.O. Box 3784 subject to offset for
Charleston, WV 25337 excess escrow deposits
as set forth on
Exhibit B-20
State of Alabama Claims for escrow $295,757
G. Thomas Surtees, deposits under
Commissioner Qualifying Statute,
50 North Ripley subject to offset for
Montgomery, AL 36132 excess escrow deposits
as set forth on
Exhibit B-20
State of Montana Claim for escrow $209,022
Mike McGrath, AG deposits under
215 North Sanders Street, Qualifying Statute
3rd Floor
Helena, MT 59620
State of Illinois Claim for escrow $200,453
Lisa Madigan, AG deposits under
100 West Randolph Street Qualifying Statute
Chicago, IL 60601
State of Kansas Claim for escrow $179,348
deposits under
Qualifying Statute
State of Oklahoma Claim for escrow $137,073
deposits under
Qualifying Statute
Subject to offset for
excess escrow deposits
as set forth on
Exhibit B-20
Corromaster Raw materials $129,492
State of North Dakota Claim for escrow $94,738
Deposits under
Qualifying Statute
State of Arizona Claim for escrow $93,306
deposits under
Qualifying Statute
CATHOLIC CHURCH: DuFresne Wants Portland Claims Bar Date Extended
-----------------------------------------------------------------
As previously reported in the Troubled Company Reporter, on
December 2, 2005, Judge Perris gave parishes, parishioners,
beneficiaries, donors and settlors until March 7, 2005, to file
claims of any nature against the Diocese of Portland.
Steven M. Hedberg, Esq., at Perkins Coie, LLP, in Portland,
Oregon, explains that potential claimants participating in the
Parishioners Committee are not prepared at this time to file
claims against the Archdiocese.
"The Committee and counsel are in the process of identifying
interests and claims in parish communities that are participating
in the Committee," Mr. Hedberg says. "Similar claims likely exist
among parish communities that are not participating in the
Committee."
Parishioners Committee Seek Further Extension
Pending before the U.S. Bankruptcy Court for the District of
Oregon is a request by the Tort Claimants Committee to amend the
complaint it filed with the Court -- Adversary Proceeding No.
04-03292-elp. The proposed Amended Complaint would add a class of
defendants comprised of all parishioners in western Oregon, not
simply those represented by the Committee of Catholic Parishes,
Parishioners and Interested Parties in the Archdiocese of Portland
in Oregon. Further refinements are anticipated that, if accepted
by the Court, would result in the establishment of classes, with
the Parishioners Committee acting as the representative of one or
more proposed classes.
Douglas R. Pahl, Esq., at Perkins Coie LLP, in Portland, Oregon,
maintains that if the proposed Amended Complaint is allowed, this
would significantly expand the parties represented by the
Parishioners Committee. In particular, tens of thousands of
parishioners in parish communities not currently participating in
the Parishioners Committee would be represented.
The Parishioners Committee believes that parishes and parishioners
should file contingent claims in the Chapter 11 case. Questions
regarding the appearance by and representation of parties in the
Adversary Proceeding, and whether certain parties exist at all for
purposes of the bankruptcy case, remain unsolved. The institution
of one or more statutorily appropriate classes would possibly
affect the filing of proofs of claim on behalf of parish
communities.
While Portland has the authority to file proofs of claim on behalf
of creditors and may do so, the Parishioners Committee finds it
unlikely that Portland will file proofs of claim on behalf of
parishioners. Furthermore, due to confusion regarding issues
raised in the Adversary Proceeding, it is not clear how parish
claims should be filed or by whom.
These continuing questions regarding parties with potential
interests have frustrated efforts to prepare appropriate proofs of
claim and threaten to impair the ability of parties-in-interest to
effectively assert their rights. For these reasons, the
Parishioners Committee asks the Court to further extend the
deadline by which parishes and parishioners may file claims
against Portland, until the time the Court resolves issues in the
Adversary proceeding related to parties and representation.
The Parishioners Committee anticipates that the Court's
determinations regarding a number of issues in the Adversary
Proceeding will clarify the proper method for filing proofs of
claim on behalf of parishes and parishioners, as well as the
parties for whom claims should be asserted.
DuFresne Also Wants Extension
Paul E. DuFresne, a party-in-interest in Portland's Chapter 11
case, points out that any change in the Claims Bar Date must be
adopted without restricting the change to any particular group or
party. An extension of the Claims Bar Date should apply to all
potential claimants, not just to the Parishioners Committee.
Mr. DuFresne submits that the requested extension not only places
Portland at elevated risk for future litigation, but is also
contrary to the principle of maximum inclusion in the bar date and
notification process expressed by the Court in previous decisions.
Mr. DuFresne notes that previous requests before the Court have
suggested that individuals who are currently children be excluded
from the bar date and notification process, or that the Bar Date
only apply to torts arising from childhood sexual abuse. The
Court denied these requests and expressed a strong preference for
a bar date and notification process that was as inclusive as
possible. "Surely the [Parishioners Committee's] request that
extension in the Claims Bar Date be limited to only a subgroup of
the potential claimants goes against this principle of inclusion,"
Mr. DuFresne says.
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 Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CATHOLIC CHURCH: Portland Gets Court Nod to Execute Covenants
-------------------------------------------------------------
To recall, the Archdiocese of Portland sought Judge Perris'
authority to execute in favor of the City of Tigard, restrictive
covenants for future street improvements and dedication deeds for
road or street purposes on behalf of St. Anthony Church, for the
benefit of the St. Vincent de Paul food storage building.
* * *
Judge Perris authorizes the Archdiocese of Portland, as the record
titleholder of all property disclosed in its request, to execute
in its name:
(a) an application of unbonded property assessment authorizing
the City of Newberg to impose a line adjustment deed lien
against the St. Peter's Church property;
(b) in favor of the City of Tigard, restrictive covenants for
future street improvements and dedication deeds for road
or street purposes regarding the St. Anthony Church
property; and
(c) a property line adjustment deed in favor of Jackson County
to adjust a property line between the Sacred Heart Church
property and a parcel owned by Jackson County on which the
County operates a juvenile detention center, together with
all additional instruments and documents that may be
reasonable necessary or desirable to implement the
transactions.
Judge Perris clarifies that the order does not determine the
rights and claims of any party-in-interest in and to any of the
property described in the request, including Portland, it's
creditors, it's estate, St. Peter Church, St. Anthony Church,
Sacred Heart Church, any parish, any parishioner, any donor, or
others with respect to the property. All rights and claims are
preserved.
The order will not constitute a waiver of the rights of Portland,
the Tort Claimants Committee, any creditor, any parish, any
parishioner, any donor, or any other party-in-interest, with
respect to the property that is the subject of any pending
dispute.
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 Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CENTERPOINT FUNDING: Fitch Withdraws Default Rating on Class M
--------------------------------------------------------------
Fitch Ratings takes rating actions on the following classes of
notes for the Centerpoint Funding Company I, LLC, series 1998-1
and 1999-1 transactions.
Centerpoint Funding Company I, LLC, Series 1998-1(CFS 1998-1)
-- Class M lease-backed notes are downgraded to 'D' from 'C',
simultaneously, the rating is withdrawn.
Principal on the class M notes remains outstanding beyond the
November 2004 legal final maturity date of the notes. The notes
are also significantly undercollateralized due to prior adverse
collateral performance and experiencing interest and principal
payment shortfalls in the most recent reporting period. Fitch
does not anticipate significant recoveries on previously defaulted
leases.
Centerpoint Funding Company I, LLC, series 1999-1 (CFS 1999-1)
-- Class D lease-backed notes are downgraded to 'D' from 'C',
simultaneously, the rating is withdrawn.
Principal on the class D notes remains outstanding beyond the
February 2005 legal final maturity date of the notes. The notes
are significantly undercollateralized due to prior adverse
collateral performance. However, there is a strong likelihood
that expected residual realizations and anticipated recoveries on
previously defaulted leases may generate cash flows sufficient to
pay off the remaining balance of the class.
CITICORP MORTGAGE: Fitch Puts Low-B Ratings on B-4 & B-5 Classes
----------------------------------------------------------------
Citicorp Mortgage Securities, Inc.'s REMIC pass-through
certificates, series 2005-3, is rated by Fitch:
-- $489,949,178 classes IA-1 through IA-15, IA-PO, IIA-1,
IIA-2, and IIA-PO certificates (senior certificates)
'AAA';
-- $6,791,000 class B-1 'AA';
-- $2,515,000 class B-2 'A'
-- $1,510,000 class B-3 'BBB';
-- $755,000 class B-4 'BB';
-- $755,000 class B-5 'B'.
The $754,568 class B-6 is not rated by Fitch.
The 'AAA' rating on the senior certificates reflects the 2.60%
subordination provided by:
* the 1.35% class B-1,
* the 0.50% class B-2,
* the 0.30% class B-3,
* the 0.15% privately offered class B-4,
* the 0.15% privately offered class B-5, and
* the 0.15% privately offered class B-6.
In addition, the ratings reflect the quality of the mortgage
collateral, strength of the legal and financial structures, and
CitiMortgage, Inc.'s servicing capabilities (rated 'RPS1' by
Fitch) as primary servicer.
The mortgage loans have been divided into two pools of mortgage
loans. Pool I, with an unpaid aggregate principal balance of
$413,382,885, consists of 782 recently originated, 25-30-year
fixed-rate mortgage loans secured by one- to four-family
residential properties located primarily in California (34.71%)
and New York (15.67%). The weighted average current loan to value
ratio of the mortgage loans is 67.68%. Condo properties account
for 5.09% of the total pool and co-ops account for 4.28%. Cash-
out refinance loans represent 17.95% of the pool, and there are no
investor properties. The average balance of the mortgage loans in
the pool is approximately $528,623. The weighted average coupon
of the loans is 5.852%, and the weighted average remaining term is
358 months.
Pool II, with an unpaid aggregate principal balance of
$89,646,861, consists of 168 recently originated, 15-year fixed-
rate mortgage loans secured by one- to four-family residential
properties located primarily in California (23.79%) and New York
(9.36%). The weighted average current loan to value ratio of the
mortgage loans is 60.11%. Condo properties account for 6.74% of
the total pool, and co-ops account for 2.29%. Cash-out refinance
loans and investor properties represent 22.29% and 1.26% of the
pool, respectively. The average balance of the mortgage loans in
the pool is approximately $533,612. The weighted average coupon
of the loans is 5.332%, and the weighted average remaining term is
178 months.
None of the mortgage loans are 'high cost' loans as defined under
any local, state, or federal laws. For additional information on
Fitch's rating criteria regarding predatory lending legislation,
see the press release 'Fitch Revises Rating Criteria in Wake of
Predatory Lending Legislation,' dated May 1, 2003, available on
the Fitch Ratings web site at http://www.fitchratings.com/
The mortgage loans were originated or acquired by CMI and in turn
sold to CMSI. A special purpose corporation, CMSI, deposited the
loans into the trust, which then issued the certificates. U.S.
Bank National Association will serve as trustee. For federal
income tax purposes, an election will be made to treat the trust
fund as one or more real estate mortgage investment conduits.
CONE MILLS: Wants Removal Action Period Stretched to May 18
-----------------------------------------------------------
Cone Mills Corp. and its debtor-affiliates ask the United States
Bankruptcy Court for the District of Delaware to extend their
deadline to remove actions through and including May 18, 2005, or
the effective date of the Plan.
As previously reported, the Court confirmed the Second Amended
Chapter 11 Plan of Liquidation filed on Aug. 20, 2004. Until the
Plan is declared effective, the Debtors don't want to lose their
right to remove any prepetition lawsuits or action they might
discover through investigation and review of asserted claims
against Debtors' estates.
Cone Mills says the extension will give the Debtors the
opportunity to make fully informed decisions concerning removal of
any action from a remote court to the District of Delaware for
further litigation, and will assure that they do not forfeit
valuable rights pursuant to Section 1452 of the Judiciary Code.
Headquartered in Greensboro, North Carolina, Cone Mills Corp. --
http://www.cone.com/-- is one of the leading denim manufacturers
in North America and also produces fabrics and operates a
commission finishing business. The Company and its debtor-
affiliates filed for chapter 11 protection on September 24, 2003
(Bankr. Del. Case No. 03-12944). Cone Mills filed a Chapter 11
Liquidation Plan following a sale of substantially all of the
company's assets to WL Ross & Co. in March 2004, for $46 million
plus assumption of certain liabilities. WL Ross, in turn, merged
Cone Mills' assets with Burlington Industries' assets to form
International Textile Group. Pauline K. Morgan, Esq., at Young,
Conaway, Stargatt & Taylor represents the Debtors. When the
Company filed for protection from its creditors, it listed
$318,262,000 in total assets and $224,809,000 in total debts.
CONNECTICUT RESOURCES: Moody's Cuts Ratings on $43.5M Bonds to Ba2
------------------------------------------------------------------
Moody's Investors Service downgraded the rating of American
Ref-Fuel Company LLC's senior secured notes to Ba1 from Baa2.
Moody's downgraded the senior secured notes of MSW Energy Holdings
LLC and MSW Energy Finance Co., Inc.'s (co-issuers hereafter
referred to as MSW Energy) to Ba3 from Ba1 and downgraded the
senior secured notes of MSW Energy Holdings II LLC and MSW Energy
Finance II Co., Inc.'s (co-issuers hereafter referred to as MSW
Energy II) to Ba3 from Ba2. Also downgraded are $43.5 million of
resource recovery bonds issued by the Connecticut Resources
Recovery Authority to Ba2 from Baa2 and $172.4 million of bonds
issued by the Delaware Valley Industrial Development Authority to
Ba2 from Baa3, for which ARC is the underlying obligor. The
rating outlook is stable for ARC, MSW Energy, and MSW Energy II.
The rating actions reflect the pending acquisition of American
Ref-Fuel Holdings Corp. by Covanta Energy Corporation for
$740 million in cash plus the assumption of debt. Covanta is
financing the acquisition with a common stock rights offering by
Covanta's parent, Danielson Holding Corporation, and through the
issuance of $1.1 billion of new credit facilities being issued as
part of an overall refinancing of Covanta's outstanding debt and
letter of credit facilities. These ratings are assigned subject
to the acquisition closing under terms and conditions, which are
in accordance with Moody's current understanding, including the
sizing and terms of the financing.
The downgrade of the ratings of ARC, MSW Energy, and MSW Energy II
considers their acquisition by a more leveraged parent company and
the substantial difference in credit quality between these three
subsidiaries and the new owner. The ratings also reflect
structural subordination of the notes at ARC, MSW Energy, and MSW
Energy II to approximately $865 million of debt at the subsidiary
waste-to-energy projects. In addition, a $75 million revolving
credit facility in place at ARC is being replaced by a credit
facility at Covanta and ARC will have to rely on Covanta's
on-going access to this credit facility for its own liquidity
needs going forward. The downgrade of the ratings of the
Connecticut Resources Recovery Authority bonds and the Delaware
Valley IDA bonds reflects their reliance on a senior unsecured
guarantee from ARC.
Covanta emerged from bankruptcy just over one year ago, on
March 10, 2004, and will continue to have relatively high
consolidated leverage and limited financial flexibility following
the acquisition, with approximately $3.4 billion of total debt,
with $2.0 billion of recourse corporate debt, including
$440 million of undrawn credit facilities, at both Covanta and
American Ref-Fuel Holdings. There is a cash receipts and
disbursements waterfall arrangement administered by a trustee, and
distribution tests for the upstreaming of dividends to Covanta
from ARC, MSW Energy and MSW Energy II. However, the collateral
for the debt of these issuers is limited to the stock of
subsidiaries as the underlying operating assets are pledged to
secure project level debt. Distributions could be restricted by a
number of cash traps if the financial performance of the
underlying projects deteriorates, including a 1.30x debt service
coverage test at the SEMASS project, a 1.75x debt service coverage
test at ARC, and 2.0x consolidated interest coverage tests at both
MSW Energy and MSW Energy II.
Although there are some structural features, which may provide a
degree of insulation between the weaker parent and its
subsidiaries, Moody's does not believe ARC, MSW Energy or MSW
Energy II would be completely insulated from potential financial
problems at the Covanta parent company level under all
circumstances. The ARC operating facilities will represent
important, core strategic assets for the company and constitute a
substantial portion of Covanta's operations and cash flow going
forward. Moody's notes that when Covanta filed for bankruptcy
protection in 2002, the company chose to also make filings for 123
of its domestic project subsidiaries.
The ratings also recognize the limited collateral available to the
ARC, MSW Energy, and MSW Energy II bondholders and a high reliance
on a few projects for most dividends. Cash flow upstreamed to
service this debt is highly concentrated from two key WTE
projects, Hempstead and SEMASS, which together generate over half
of the cash flow distributable to ARC. The Hempstead contracts
currently expire in 2009, six years before the maturity of the ARC
notes and one year before the maturity of the MSW Energy and MSW
Energy II notes.
The stable outlook on the ratings of ARC, MSW Energy, and MSW
Energy II reflects Moody's expectation that:
(i) the waste-to-energy projects' contracts with the
respective municipalities and utilities will remain in
place through their current maturities;
(ii) Covanta management will continue to operate the plants at
high availability levels and generate synergies with
regard to administrative expenses;
(iii) Covanta will de-lever over the next several years at the
subsidiary project level; and
(iv) Covanta will be able to utilize a significant portion of
Danielson's NOLs.
Ratings downgraded include:
* American Ref-Fuel Company LLC's senior secured notes, to Ba1
from Baa2;
* MSW Energy Holdings LLC's senior secured notes, to Ba3 from
Ba1;
* MSW Energy Holdings II LLC's senior secured notes, to Ba3
from Ba2;
* $30 million Connecticut Resources Recovery Authority
Corporate Credit Resource Recovery Bonds (American Ref-Fuel
Company of Southeastern Connecticut Project), to Ba2 from
Baa2;
* $13.5 million Connecticut Resources Recovery Authority
Corporate Credit Resource Recovery Bonds (American Ref-Fuel
Company LLC, I Series A and II Series A), to Ba2 from Baa2;
* $172.4 million Delaware County Industrial Development
Authority Revenue Refunding Bonds Series A 1997, to Ba2 from
Baa3.
American Ref-Fuel Company LLC is an owner and operator of six
waste-to-energy companies in the northeastern United States. It is
jointly owned by MSW Energy Holdings LLC and MSW Energy Holdings
II LLC.
Covanta Energy Corporation, headquartered in Fairfield, New
Jersey, is an energy company with operations in waste-to-energy,
independent power production, and water. Parent company Danielson
Holding Corporation, also headquartered in Fairfield, has
operations in insurance services in addition to Covanta.
CONSTELLATION BRANDS: Planned Allied Buy Cues S&P to Watch Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'A' long-term and
'A-1' short-term corporate credit and other ratings on Louisville,
Kentucky-based Brown-Forman Corp. and the 'BB' corporate credit
rating and other ratings on Fairport, New York-based Constellation
Brands Inc. on CreditWatch with negative implications.
The CreditWatch listings follow the confirmation by both companies
that they are part of a consortium considering a potential
takeover of Allied Domecq PLC (BBB+/Watch Neg/A-2). Although no
offer has been made and no financial details have been disclosed
regarding this potential transaction, Allied's current market
value is substantial, at approximately $14.6 billion.
"We believe that even a partially debt-financed acquisition of
this size could weaken credit measures for both companies below
levels appropriate for their current respective ratings," said
Standard & Poor's credit analyst Nicole Delz Lynch. Furthermore,
competitive bidding may drive the price even higher. On
April 21, 2005, Pernod Ricard (unrated) made a $14.2 billion offer
in conjunction with Fortune Brands Inc. (A/Watch Neg/A-1) for
Allied.
Standard & Poor's will continue to monitor developments and
evaluate the effect of any potential acquisition on Brown-Forman
and Constellation's financial profiles when and if further details
are announced. Constellation's credit measures have weakened, and
the company has limited debt capacity within the ratings following
the company's recent $1.4 billion debt-financed acquisition of The
Robert Mondavi Corp.
In the event that no definitive offer for Allied is made, the
ratings on both companies would be affirmed and taken off
CreditWatch.
COVANTA ENERGY: Moody's Rates Proposed $690MM Facilities at B1
--------------------------------------------------------------
Moody's Investors Service has assigned a B1 rating to Covanta
Energy Corporation's proposed $690 million new First Lien Credit
Facilities, including its $250 million First Lien Term Loan,
$100 million First Lien Revolving Credit Facility, and
$340 million First Lien Synthetic Letter of Credit Facility.
Moody's assigned a B2 rating to Covanta's proposed $425 million
new Second Lien Term Loan Facility.
Moody's upgraded Covanta's Senior Implied rating to Ba3 from B3,
Issuer Rating to B2 from Caa1, and speculative grade liquidity
rating to SGL-2 from SGL-3. The rating outlook is stable.
Moody's also upgraded the rating on Covanta's outstanding Third
Lien 8.25% Senior Secured Notes to B3 from Caa1.
This rating will be withdrawn when the Notes are repaid with the
proceeds of the new credit facilities.
The new credit facilities are being issued to refinance existing
debt at Covanta and finance Covanta's pending acquisition of
American Ref-Fuel Holdings Corp., which owns MSW Energy Holdings
LLC, MSW Energy Holdings II LLC, and American Ref-Fuel Company,
LLC. These ratings are assigned subject to the acquisition
closing under terms and conditions, which are in accordance with
Moody's current understanding, including the sizing and terms of
the financing.
The upgrades reflect these credit strengths:
(1) The substantial improvement that is expected in Covanta's
consolidated financial measures as a result of the
acquisition, the stability of ARC's cash flows, and the
diversification benefits from deriving operating cash flow
from a larger number of underlying operating projects.
(2) Covanta is expected to generate significant cost savings
and economies of scale by managing and operating the six
ARC facilities in conjunction with its existing 25
facilities.
(3) Debt at the project level amortizes relatively quickly,
which will lower consolidated leverage over the next
several years.
(4) The underlying waste-to-energy projects generate relatively
stable cash flow and Covanta management has exhibited a
strong track record with regard to operating performance,
with availability factors consistently at 90% or above over
the past several years.
(5) Many of the waste-to-energy projects are located in the
attractive Northeast region of the country, which is
characterized by dense population and limited waste
disposal alternatives.
(6) Covanta derives two-thirds of its revenues from the waste
side of its business, for the most part from long-term
contracts with a diverse group of municipalities, with the
remaining one-third derived from power sales, most of which
are under long-term contract.
(7) Covanta received an unqualified audit opinion on its 2004
financial statements, in contrast to the "going concern"
audit opinion that was issued with its 2003 financial
statements.
The ratings also reflect these credit risks:
(1) Deep structural subordination of the credit facilities to
$1.7 billion of debt at the waste-to-energy projects held
by a number of operating subsidiaries, and debt at several
intermediate holding companies. The debt at intermediate
holding companies includes $240 million of debt at American
Ref-Fuel Company, LLC, $200 million of debt at MSW Energy
Holdings LLC, and $225 million of debt at MSW Energy
Holdings II LLC.
(2) High consolidated leverage with approximately $3.4 billion
of total debt throughout the Covanta organization following
the acquisition, with $2 billion of recourse corporate
debt, including $440 million of undrawn credit facilities.
(3) Limited financial flexibility, and interest coverage ratios
that are thin unless Covanta is able to utilize a
significant portion of parent company Danielson Holding
Company's net operating loss carry forwards -- NOLs.
(4) Uncertainty related to the availability of these NOLs,
which will be relied upon to offset taxable income at
Covanta. These NOLs could be substantially reduced or
eliminated should there be an ownership change at
Danielson, if taxable income is generated by any future
Danielson subsidiaries, or if their validity was to be
successfully challenged by the Internal Revenue Service.
(5) Although debt at the project level amortizes relatively
quickly, most of the recourse corporate debt at Covanta and
at American Ref-Fuel Holdings Corp. is nonamortizing with
bullet maturities, exposing the company to refinancing risk
beginning in 2010.
(6) Approximately 12% of Covanta's cash flow is derived from a
portfolio of higher risk international power projects, the
largest being the Quezon project in the Philippines.
(7) Although the overall business is highly contracted, the
risk exists that contracts could be modified or abrogated.
Some contracts begin to roll off as early as 2007, exposing
the company to recontracting risk at that time, including a
number of above-market power contracts.
(8) Covanta faces the ongoing challenge of changes in
environmental laws or regulation, or the failure to comply
with existing regulations, and the need to renew
environmental permits on an ongoing basis. However, during
the term of the service agreements, costs associated with a
change in environmental law or regulation are generally
passed through to the client community.
Moody's notes that Covanta has historically pursued an acquisitive
business strategy, which continues with the American Ref-Fuel
Holdings Corp. acquisition. While Covanta's senior management has
changed since bankruptcy and the credit agreement contains
restrictions on acquisitions, additional acquisitions are possible
going forward, increasing event risk for the company.
The upgrade of Covanta's speculative grade liquidity rating to
SGL-2 from SGL-3 reflects relatively good liquidity for the next
twelve months and the risks inherent in Covanta maintaining this
liquidity, including:
(i) limited financial flexibility and free cash flow,
(ii) a dependence on parent company Danielson's NOLs to
provide adequate coverage of long-term debt obligations,
and
(iii) newly increased alternative liquidity sources including a
new $100 million revolving credit for working capital
needs and a $340 million synthetic letter of credit
facilities for letter of credit needs, neither which are
expected to be drawn.
There are few hard assets at the Covanta parent company level or
at American Ref-Fuel Holdings Corp. and most of the assets at the
subsidiaries are pledged to $1.7 billion of project level debt.
Covanta also operates in a very specialized industry niche, with a
limited market for assets to be sold in a timely manner if needed
for liquidity reasons. Offsetting these risk factors is Covanta's
relatively robust current cash position, which has increased from
$44 million immediately following its exit from bankruptcy to
approximately $78 million as of December 31, 2004.
The stable outlook on Covanta's rating reflects Moody's
expectation that:
(i) the waste-to-energy projects' contracts with the
respective municipalities and utilities will remain in
place through their current maturities;
(ii) Covanta management will continue to operate the plants at
high availability levels and maintain stability with
regard to administrative, operating, and maintenance
expenses;
(iii) Covanta will de-lever over the next several years at the
subsidiary project level;
(iv) Covanta will be able to utilize a significant portion of
Danielson's NOLs that are available as of December 31,
2004; and
(v) there will be no incremental debt issued or acquisitions
made by Covanta over the near term.
Covanta Energy Corporation, headquartered in Fairfield, New
Jersey, is an energy company with operations in waste-to-energy,
independent power production, and water. Parent company Danielson
Holding Corporation, also headquartered in Fairfield, has
operations in insurance services in addition to Covanta.
CWMBS INC.: Fitch Assigns Low-B Ratings on $1.4MM Mortgage Certs.
-----------------------------------------------------------------
Fitch rates CWMBS, Inc.'s mortgage pass-through certificates, CHL
Mortgage Pass-Through Trust 2005-13:
-- $386 million classes A-1 - A-11, PO and A-R senior
certificates 'AAA';
-- $8.4 million class M 'AA';
-- $2.4 million class B-1 'A';
-- $1.2 million class B-2 'BBB';
-- $800,000 class B-3 'BB';
-- $600,000 class B-4 'B'.
The 'AAA' rating on the senior certificates reflects the 3.50%
subordination provided by the:
* 2.10% class M,
* 0.60% class B-1,
* 0.30% class B-2,
* 0.20% privately offered class B-3,
* 0.15% privately offered class B-4 and
* 0.15% privately offered class B-5 (not rated by
Fitch).
Classes M, B-1, B-2, B-3 and B-4 are rated 'AA', 'A', 'BBB', 'BB'
and 'B' based on their respective subordination only.
Fitch believes the above credit enhancement will be adequate to
support mortgagor defaults. In addition, the ratings also reflect
the quality of the underlying mortgage collateral, strength of the
legal and financial structures and the master servicing
capabilities of Countrywide Home Loans Servicing LP (Countrywide
Servicing; rated RMS2+ by Fitch), a direct wholly-owned subsidiary
of Countrywide Home Loans, Inc.
The certificates represent an ownership interest in a group of
30-year conventional, fully amortizing mortgage loans. The pool
consists of 30-year fixed-rate mortgage loans totaling
$359,751,913, as of the cut-off date (April 1, 2005), secured by
first liens on one-to four-family residential properties. The
mortgage pool, as of April 1, demonstrates an approximate
weighted-average original loan-to-value ratio of 71.33%. The
weighted average FICO credit score is approximately 744. Cash-out
refinance loans represent 24.11% of the mortgage pool and second
homes 5.47%. The average loan balance is $545,079. The three
states that represent the largest portion of mortgage loans are:
* California (54.82%),
* New Jersey (4.47%) and
* New York (3.68%).
Subsequent to the cut-off date, additional loans were purchased
prior to the closing date (April 28, 2005). The aggregate stated
principal balance of the mortgage loans transferred to the trust
fund on the closing date is $399,997,816.
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws. For additional information on
Fitch's rating criteria regarding predatory lending legislation,
please see the press release issued May 1, 2003, entitled, 'Fitch
Revises Rating Criteria in Wake of Predatory Lending Legislation',
available on the Fitch Ratings web site at
http://www.fitchratings.com/
Approximately 97.99% and 2.01% of the mortgage loans were
originated under CHL's Standard Underwriting Guidelines and
Expanded Underwriting Guidelines, respectively. Mortgage loans
underwritten pursuant to the Expanded Underwriting Guidelines may
have higher loan-to-value ratios, higher loan amounts, higher
debt-to-income ratios and different documentation requirements
than those associated with the Standard Underwriting Guidelines.
In analyzing the collateral pool, Fitch adjusted its frequency of
foreclosure and loss assumptions to account for the presence of
these attributes.
CWMBS purchased the mortgage loans from CHL and deposited the
loans in the trust, which issued the certificates, representing
undivided beneficial ownership in the trust. The Bank of New York
will serve as trustee. For federal income tax purposes, an
election will be made to treat the trust fund as one or more real
estate mortgage investment conduits.
DELAWARE COUNTY: Moody's Slices Ratings on $172.4M Bonds to Ba2
---------------------------------------------------------------
Moody's Investors Service downgraded the rating of American
Ref-Fuel Company LLC's senior secured notes to Ba1 from Baa2.
Moody's downgraded the senior secured notes of MSW Energy Holdings
LLC and MSW Energy Finance Co., Inc.'s (co-issuers hereafter
referred to as MSW Energy) to Ba3 from Ba1 and downgraded the
senior secured notes of MSW Energy Holdings II LLC and MSW Energy
Finance II Co., Inc.'s (co-issuers hereafter referred to as MSW
Energy II) to Ba3 from Ba2. Also downgraded are $43.5 million of
resource recovery bonds issued by the Connecticut Resources
Recovery Authority to Ba2 from Baa2 and $172.4 million of bonds
issued by the Delaware Valley Industrial Development Authority to
Ba2 from Baa3, for which ARC is the underlying obligor. The
rating outlook is stable for ARC, MSW Energy, and MSW Energy II.
The rating actions reflect the pending acquisition of American
Ref-Fuel Holdings Corp. by Covanta Energy Corporation for
$740 million in cash plus the assumption of debt. Covanta is
financing the acquisition with a common stock rights offering by
Covanta's parent, Danielson Holding Corporation, and through the
issuance of $1.1 billion of new credit facilities being issued as
part of an overall refinancing of Covanta's outstanding debt and
letter of credit facilities. These ratings are assigned subject
to the acquisition closing under terms and conditions, which are
in accordance with Moody's current understanding, including the
sizing and terms of the financing.
The downgrade of the ratings of ARC, MSW Energy, and MSW Energy II
considers their acquisition by a more leveraged parent company and
the substantial difference in credit quality between these three
subsidiaries and the new owner. The ratings also reflect
structural subordination of the notes at ARC, MSW Energy, and MSW
Energy II to approximately $865 million of debt at the subsidiary
waste-to-energy projects. In addition, a $75 million revolving
credit facility in place at ARC is being replaced by a credit
facility at Covanta and ARC will have to rely on Covanta's
on-going access to this credit facility for its own liquidity
needs going forward. The downgrade of the ratings of the
Connecticut Resources Recovery Authority bonds and the Delaware
Valley IDA bonds reflects their reliance on a senior unsecured
guarantee from ARC.
Covanta emerged from bankruptcy just over one year ago, on
March 10, 2004, and will continue to have relatively high
consolidated leverage and limited financial flexibility following
the acquisition, with approximately $3.4 billion of total debt,
with $2.0 billion of recourse corporate debt, including
$440 million of undrawn credit facilities, at both Covanta and
American Ref-Fuel Holdings. There is a cash receipts and
disbursements waterfall arrangement administered by a trustee, and
distribution tests for the upstreaming of dividends to Covanta
from ARC, MSW Energy and MSW Energy II. However, the collateral
for the debt of these issuers is limited to the stock of
subsidiaries as the underlying operating assets are pledged to
secure project level debt. Distributions could be restricted by a
number of cash traps if the financial performance of the
underlying projects deteriorates, including a 1.30x debt service
coverage test at the SEMASS project, a 1.75x debt service coverage
test at ARC, and 2.0x consolidated interest coverage tests at both
MSW Energy and MSW Energy II.
Although there are some structural features, which may provide a
degree of insulation between the weaker parent and its
subsidiaries, Moody's does not believe ARC, MSW Energy or MSW
Energy II would be completely insulated from potential financial
problems at the Covanta parent company level under all
circumstances. The ARC operating facilities will represent
important, core strategic assets for the company and constitute a
substantial portion of Covanta's operations and cash flow going
forward. Moody's notes that when Covanta filed for bankruptcy
protection in 2002, the company chose to also make filings for 123
of its domestic project subsidiaries.
The ratings also recognize the limited collateral available to the
ARC, MSW Energy, and MSW Energy II bondholders and a high reliance
on a few projects for most dividends. Cash flow upstreamed to
service this debt is highly concentrated from two key WTE
projects, Hempstead and SEMASS, which together generate over half
of the cash flow distributable to ARC. The Hempstead contracts
currently expire in 2009, six years before the maturity of the ARC
notes and one year before the maturity of the MSW Energy and MSW
Energy II notes.
The stable outlook on the ratings of ARC, MSW Energy, and MSW
Energy II reflects Moody's expectation that:
(i) the waste-to-energy projects' contracts with the
respective municipalities and utilities will remain in
place through their current maturities;
(ii) Covanta management will continue to operate the plants at
high availability levels and generate synergies with
regard to administrative expenses;
(iii) Covanta will de-lever over the next several years at the
subsidiary project level; and
(iv) Covanta will be able to utilize a significant portion of
Danielson's NOLs.
Ratings downgraded include:
* American Ref-Fuel Company LLC's senior secured notes, to Ba1
from Baa2;
* MSW Energy Holdings LLC's senior secured notes, to Ba3 from
Ba1;
* MSW Energy Holdings II LLC's senior secured notes, to Ba3
from Ba2;
* $30 million Connecticut Resources Recovery Authority
Corporate Credit Resource Recovery Bonds (American Ref-Fuel
Company of Southeastern Connecticut Project), to Ba2 from
Baa2;
* $13.5 million Connecticut Resources Recovery Authority
Corporate Credit Resource Recovery Bonds (American Ref-Fuel
Company LLC, I Series A and II Series A), to Ba2 from Baa2;
* $172.4 million Delaware County Industrial Development
Authority Revenue Refunding Bonds Series A 1997, to Ba2 from
Baa3.
American Ref-Fuel Company LLC is an owner and operator of six
waste-to-energy companies in the northeastern United States. It is
jointly owned by MSW Energy Holdings LLC and MSW Energy Holdings
II LLC.
Covanta Energy Corporation, headquartered in Fairfield, New
Jersey, is an energy company with operations in waste-to-energy,
independent power production, and water. Parent company Danielson
Holding Corporation, also headquartered in Fairfield, has
operations in insurance services in addition to Covanta.
DIGITAL VIDEO: Inks $3.42 Million Equity Settlement with Ex-CEO
---------------------------------------------------------------
Digital Video Systems, Inc. (Nasdaq: DVID) reached an agreement
with its former CEO and Co-chairman, Ms. Mali Kuo, to settle her
$3.42 million judgment against the Company by the issuance of
1,001,470 shares of the Company's common stock plus warrants to
purchase 100,147 shares of common stock at $4.50 for one year.
This settlement values the Company's common stock at $3.43 per
share, a premium to the $2.56 per share closing price on of
April 28, 2005. In a separate agreement, Ms. Kuo committed to
arrange an additional $3.42 million in equity investment within
approximately 45 days as the first step of a total equity
financing of up to $25 million that would be available to the
Company over the next 12 months.
As a result of these agreements, the Company's net equity is
projected to remain above $2.5 million as necessary to satisfy
Nasdaq SmallCap listing requirements set forth in Marketplace Rule
4310(c)(2) -- Qualification Requirements for Domestic and Canadian
Securities. The Company believes that the additional financing
Ms. Kuo has committed to raise would be sufficient to satisfy its
operating requirements for the foreseeable future, thereby
mitigating the "going-concern" risk which had been recently
reported by the Company.
Tom Spanier, Chairman and CEO, commented that "We are relieved to
end this difficult and costly chapter in the history of Digital
Video Systems. With the legal uncertainties relating to this
litigation behind us and with the promise of adequate financing
going forward, we can return the focus of our attention to
building the Company's core business and further developing new
products and new business to achieve the substantial potential we
believe Digital Video Systems has always had."
Ms. Kuo and her investors had previously invested approximately
$15 million in the Company between 1998 to 2001.
Established in 1992, Digital Video Systems, Inc. --
http://www.dvsystems.com/-- is a publicly held company
specializing in the development and application of digital video
technologies enabling the convergence of data, digital audio,
digital video and high-end graphics. DVS is headquartered in Palo
Alto, California, with subsidiaries and manufacturing facilities
in South Korea and China and a subsidiary in India.
EAGLEPICHER INC: Hires The Trumbull Group as Noticing Agent
-----------------------------------------------------------
EaglePicher Inc. and its debtor-affiliates sought and obtained
permission from the U.S. Bankruptcy Court for the Southern
District of Ohio, Western Division, permission to employ The
Trumbull Group LLC as their claims, noticing and balloting agent.
The Trumbull Group will:
a) prepare and serve required notices in these chapter 11
cases;
b) file within five day after mailing of a notice, a
certificate or affidavit of service that includes a copy
of the notice served, an alphabetical list of persons upon
whom the notice was served and the date and manner of
service;
c) maintain copies of all proofs of claim and proofs of
interest filed in these cases;
d) maintain official claims registers in these cases by
docketing all scheduled claims, proofs of claims and
interest in a claims database;
e) implement necessary security measures to ensure the
completeness and integrity of the claims registers;
f) transmit to the Clerk's Office a copy of the claims
registers on a weekly basis, unless requested by the Clerk
on a more or less basis;
g) maintain an up-to-date mailing list for all entities that
have filed proofs of claim and interest in these cases and
make the list available upon request to the Clerk's
Office;
h) provide access to the public for examination of copies of
the proofs of claim and interest without charge during
regular business hours;
i) record all transfers of claims pursuant to Bankruptcy Rule
3001(e);
j) comply with applicable federal, state, municipal and local
statutes, ordinances, rules, regulations, orders and other
requirements; and
k) provide temporary employees to process claims as
necessary.
Laura Dibiase, vice president at Trumbull, discloses her Firm's
current hourly rates:
Professional Hourly Rate
------------ -----------
Senior Consultant $245 - $300
Operations Manager $110 - $185
Senior Automation Consultant $155 - $175
Case Manager $100 - $125
Data Specialist $65 - $80
Consultant $225
Automation Consultant $140
Assistant Case Manager $85
Administrative Support $55
To the best of the Debtors' knowledge, The Trumbull Group is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Phoenix, Arizona, EaglePicher Incorporated
-- http://www.eaglepicher.com/-- is a diversified manufacturer
and marketer of innovative advanced technology and industrial
products for space, defense, automotive, filtration,
pharmaceutical, environmental and commercial applications
worldwide. The company along with its affiliates filed for
chapter 11 protection on April 11, 2005 (Bankr. S.D. Ohio Case No.
05-12601). When the Debtors filed for protection from their
creditors, they listed $535 million in consolidated assets and
$730 in consolidated debts.
EAGLEPICHER INC: Taps Sitrick & Company as Communications Advisor
-----------------------------------------------------------------
EaglePicher Holdings, Inc., and its debtor-affiliates sought and
obtained permission from the U.S. Bankruptcy Court for the
Southern District of Ohio, Western Division, to retain Sitrick &
Company Inc. as their communications consultant.
Sitrick & Company will:
(a) develop and implement communications program and related
strategies and initiatives for communications with the
Debtors' key constituencies (including employees, retirees,
unions, vendors, trade and other creditors, counter-parties
to executory contracts and leases, lenders, bondholders,
financial markets, potential investors and governmental
entities) regarding the Debtors' operations, financial
performance and progress through the chapter 11 process to
assist the Debtors in presenting a coherent, consistent
message;
(b) develop corporate communications initiatives for the
Debtors to maintain public confidence and internal morale
during these chapter 11 cases, including initiatives to
correct, counteract, and control damage in regard to rumors
and misinformation that inevitably will arise;
(c) prepare press releases and other public statements for the
Debtors, including statements related to asset sales and
other major chapter 11 events;
(d) prepare other forms of communication to the Debtors' key
constituencies and the media, including telephone call
lines and potentially materials to be posted on the
Debtors' web sites; and
(e) perform other communications consulting services as may be
requested by the Debtors.
Anita-Marie Laurie, a partner at Sitrick & Company, discloses that
her Firm received $75,000 as retainer, $5,000 of which will be
applied as reimbursement of expenses.
Sitrick & Company's professionals' current hourly billing rates
range from $165 to $550.
To the best of the Debtors' knowledge, Sitrick & Company and the
partners, principals and professionals who will work in the
engagement:
(a) do not have connections with the Debtors, their creditors,
or other party-in-interest, or their respective attorneys,
(b) are "disinterested persons" as defined in Section 101(14)
of the U.S. Bankruptcy Code, as modified by Section 1107(b)
of the U.S. Bankruptcy Code, and
(c) do not hold or represent any interest adverse to the
estates.
Headquartered in Phoenix, Arizona, EaglePicher Incorporated --
http://www.eaglepicher.com/-- is a diversified manufacturer and
marketer of innovative advanced technology and industrial products
for space, defense, automotive, filtration, pharmaceutical,
environmental and commercial applications worldwide. The company
along with its affiliates filed for chapter 11 protection on April
11, 2005 (Bankr. S.D. Ohio Case No. 05-12601). When the Debtors
filed for protection from their creditors, they listed $535
million in consolidated assets and $730 in consolidated debts.
EAGLEPICHER INC: Reiterates Commitment on Med. Supply Obligations
-----------------------------------------------------------------
EaglePicher Commercial Power Solutions reiterated their commitment
to supply the medical industry with innovative power systems and
confirmed their ability to meet the demand for battery solutions.
The company projected current supply and key long-term agreements
with customers such as Advanced Neuromodulation Systems Inc. (ANS)
will continue without interruption. The statement was made as
part of a proactive communication effort regarding the April 11
voluntary filing to reorganize under Chapter 11 by EaglePicher
Holding, Inc., and EaglePicher Incorporated.
Jason Sydow, Managing Director of EaglePicher Medical Energy
Products said, "The filing should have no effect on our ability to
continue to meet the needs of all of our customers. We will
continue supplying and collaborating with key industry players
such as ANS without interruption."
EaglePicher MEP has previously announced a long-term supply and
development agreement with ANS. Under this agreement EaglePicher
MEP supplies lithium ion and lithium thionyl chloride batteries to
ANS. These batteries provided the power for ANS's implantable
neuro stimulator devices. EaglePicher MEP's collaboration with
ANS insures reliable supply and industry leading performance for
the Genesisr and Genesis XP(TM) implantable pulse generators.
Recently this collaboration between the companies achieved another
development and commercial success -- the introduction of ANS's
EON(TM) rechargeable stimulator powered by EaglePicher MEP's Li-
Ion battery.
EaglePicher MEP supplies the medical industry primarily from
operations in Vancouver, a facility of EaglePicher's Canadian
subsidiary, which are not included in the filing for Chapter 11
restructuring made by the U.S. parent organization. EaglePicher
MEP's secondary facility, in Joplin Missouri, benefits from the
debtor-in-possession financing secured by EaglePicher U.S. and
expects continuity of operation without interruption. As a result
of this structure the reorganization of the parent company is
expected to be seamless to EaglePicher MEP's customers.
Headquartered in Phoenix, Arizona, EaglePicher Incorporated --
http://www.eaglepicher.com/-- is a diversified manufacturer and
marketer of innovative, advanced technology and industrial
products and services for space, defense, environmental,
automotive, medical, filtration, pharmaceutical, nuclear power,
semi-conductor and commercial applications worldwide. The company
has 4,200 employees and operates more than 30 plants in the U.S.,
Canada, Mexico, Korea, and Germany. The Company and its debtor-
affiliates filed chapter 11 petitions on April 11, 2005 (Bankr.
S.D. Ohio Case Nos.: 05-12601 through 05-12609). Stephen D
Lerner, Esq., at Squire, Sanders & Dempsey L.L.P. represents the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they estimated more than
$100 million in assets and liabilities.
* * *
As reported in the Troubled Company Reporter on Apr. 22, 2005,
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.
As reported in the Troubled Company Reporter on March 29, 2005,
Standard & Poor's Ratings Services lowered its ratings on Eagle
Picher Inc. and Eagle Picher Holdings Inc., including the
corporate credit ratings to 'CCC+' from 'B-', and kept all ratings
on CreditWatch with negative implications. The ratings were
originally placed on CreditWatch on Dec. 28, 2004.
The rating action is based on a combination of several factors:
* Extremely tight liquidity, cash and availability on
its credit agreement totaled only $11 million at
March 10, 2005; Forbearance agreement with senior
lenders expires June 10, 2005;
* "Going concern" opinion from auditors;
* Continued challenges associated with its automotive
supplier businesses;
* Potential tightening of credit from vendors;
* Possibility of alternative financing that could
result in coercive exchange or possible bankruptcy
filing;
* Challenges in selling and obtaining sufficient
proceeds from possible divestitures in a timely
manner.
"The ratings reflect Eagle Picher's vulnerable business position
and weak financial profile, including extremely tight liquidity
and near-term risk of default," said Standard & Poor's credit
analyst John R. Sico. Eagle Picher also has operating challenges
because of heavy exposure to the intensely competitive auto
supplier market, including uncertain prospects for production
levels in 2005.
ENRON CORP: Committee Gets Court Nod on Derrick, et al. Settlement
------------------------------------------------------------------
As previously reported, the U.S. Bankruptcy Court for the Southern
District of New York allowed the Official Committee of Unsecured
Creditors appointed in the chapter 11 cases of Enron Corporation
and its debtor-affiliates to commence state law claims against
certain former Enron officers and employees, including Richard B.
Buy, Enron's Chief Risk Officer. Accordingly, the Committee filed
a complaint in the 9th Judicial District Court of Montgomery
County. The Committee asserted claims for breach of fiduciary
duty, civil conspiracy, fraud, aiding and abetting breaches of
fiduciary duty, gross negligence, among others. The Committee
later amended its complaint to include additional defendants
including James V. Derrick, Jr., Enron's General Counsel. The
Action was removed to the United States District Court for the
Southern District of Texas, Houston Division.
In certain re-opened derivative actions, the Committee alleges
breaches of fiduciary duty, negligence, fraud and professional
malpractice against certain former Enron employees, officers,
directors and professionals that provided advice to Enron. Mr.
Buy, Mr. Derrick, Ken Harrison, and certain Outside Directors are
also defendants in those Derivative Actions.
Enron's director and officer liability insurance is rapidly
depleting, Stephen D. Lerner, Esq., at Squire Sanders & Dempsey,
LLP, in Cincinnati, Ohio, notes. Enron's D&O Insurance had an
original face amount of $350,000,000. The Committee began to
explore the possibility of a global settlement involving the
insured defendants. But the number of parties, the complexity of
claims, and certain obstacles to settlement rendered a global
settlement impossible at this time. The Committee turned to the
exploration of separate settlements. "Rather than see all of the
D&O Insurance consumed by defense costs, it made more sense for
the Committee to select one or more defendants and to propose
individual settlements," Mr. Lerner, says.
After consideration of the insured defendants, the Committee
elected to make a settlement demand on James Derrick -- because
Mr. Derrick had been dismissed from the consolidated action
caption Newby et al., v. Enron Corp., et al., and the allegations
made against him by the Committee did not involve intentional
wrongdoing, but instead claims of professional negligence. The
Committee offered to settle all claims against Mr. Derrick for
$20,000,000.
The Committee later learned that its demand caused great concern
among the director and officer defendants. "The potential for
the D&O Insurance to be rapidly depleted through satisfaction of
separate settlement demands of the Committee caused the director
and officer defendants to consider all possible strategies for
settlement or individual or collective use of the remaining D&O
Insurance," Mr. Lerner relates.
Counsel for the Outside Directors convened a mediation with the
Regents of the University of California, on behalf of the class
in the Newby action, to explore a separate settlement between the
Newby Plaintiffs and the Outside Directors.
Mr. Lerner tells the Court that during the D&O Mediation, counsel
for the Outside Directors contacted counsel for the Committee to
discuss the possible involvement of the Committee in a proposed
separate settlement. The Outside Directors hoped to obtain a
release from the Committee because of the Committee's
substitution as plaintiff real party-in-interest in the
Derivative Actions in which claims against the Outside Directors
were pending.
"The Committee and the Newby Plaintiffs faced a difficult
negotiation over the remaining D&O Insurance," Mr. Lerner
recounts. "The Newby Plaintiffs desired to have the
participation of Enron and the Committee in order to avoid
objections to the proposed settlement. On the other hand, the
Newby Plaintiffs held the view that any settlement with the
Outside Directors should result in the lion's share of the
proceeds going to the Newby Plaintiffs because of their direct
claims under Section 11 of the 1933 Securities Act and the 10b(5)
claims under the 1934 Act."
After negotiations, a tentative split and agreement was made
between the Committee and the Newby Plaintiffs, the terms of
which are embodied in a Stipulation of Settlement. The salient
terms of the Stipulation of Settlement executed by Mr. Derrick,
Mr. Buy, Mr. Harrison, certain Outside Directors, the Newby
Plaintiffs, and the Committee, are:
(1) The Newby Plaintiffs and the Committee will divide the
Available Insurance Proceeds with 82.8% allocated to the
Newby Plaintiffs and 17.2% allocated to the Reorganized
Debtors. Mr. Harrison would pay an additional sum of
$100,000 to the Committee.
(2) The Settling Defendants will receive full releases from
the Committee and the Enron estates. In addition, the
Settling Defendants will be dismissed from the Committee
Action and the Derivative Actions. In turn, the Settling
Defendants will provide releases to the Committee and the
Enron estates.
(3) The Settling Defendants deny any liability whatsoever.
(4) Approximately $13,000,000 will be taken out of the
remaining D&O Insurance to be set aside for the benefit of
certain non-settling defendants, who are also insureds
under the D&O Insurance. In return, the Individual Non-
Settling Defendants have agreed to forego any other claims
to the D&O Insurance, will not object to the settlement
and will agree to the proposed final judgment in the
interpleader action over D&O Insurance.
(5) The Committee and the Newby Plaintiffs will give a
settlement or judgment credit for personals payments that
the Individual Non-Settling Defendants will expend, up to
limited amounts.
* * *
Judge Gonzalez approves the Settlement provided that certain
amendments are included in the proposed judgment dismissing the
derivative claims against the Outside Directors, James Derrick,
Ken Harrison and Richard Buy. According to Judge Gonzalez, the
proposed judgment should provide that:
-- Any person so barred and enjoined, including the defendants
in the adversary proceeding captioned Enron Corp., et al.,
v. Citigroup Inc., et al., Adv. Pro. No. 03-09266 (AJG)
will be entitled to a judgment credit in accordance with
any applicable statutory or common law rule.
-- To the extent that Texas law is found to apply to loss
allocation with respect to any claims asserted in the
Adversary Proceeding, the Released Defendants will be
"settling persons" pursuant to section 33.011(5) and
33.012(b) of the Texas Civil Practice & Remedies Code in
the Adversary Proceeding and accordingly the Released
Defendants will be assigned a percentage of responsibility
in accordance with section 33.003 of the Texas Civil
Practice & Remedies Code in the Adversary Proceeding.
-- To the extent that New York law is found to apply to loss
allocation with respect to any claims asserted in the
Adversary Proceeding, the defendants in the Adversary
Proceeding will be entitled to have the plaintiffs' claims
reduced in accordance with section 15-108(a) of the General
Obligations Law and accordingly the plaintiffs' claims will
be reduced by the greater of the amount of the settlement
payable by or on behalf of the Released Defendants under
the Settlement or the amount of the Released Defendants'
equitable share of the damages under Article 14 of the
Civil Practice Laws and Rules.
Since a joint hearing was held in consideration of the Settlement
by the Bankruptcy Court together with the United States District
Court for the Southern District of Texas, Houston Division, the
Official Committee of Unsecured Creditors still needs Judge
Harmon's approval for the Settlement to become effective.
According to Bloomberg News, the settlement entitles Enron
shareholders to receive $168 million from the company's
directors' and officers' insurance policies. Enron's creditors
will get $32 million. Furthermore, Bloomberg reports that in
return for access to the remaining $200 million in Enron's D&O
policies, the claims against Messrs. Buy, Harrison, and Derrick
will be dropped. Mr. Harrison will also make a $100,000 payment.
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)
FANNIE MAE: S&P Lifts Ratings on Two Series 1998-M6 Class Certs.
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on two
classes of Fannie Mae's REMIC pass-through certificates series
1998-M6. Concurrently, ratings on two other classes from the same
transaction are affirmed.
The raised ratings reflect:
(1) the stable financial performance of the multifamily
properties underlying the trust collateral, along with
low cooperative loan leverage ratios,
(2) seven years of seasoning, and
(3) the lack of delinquent or specially serviced loans.
The affirmed ratings reflect credit enhancement levels that are
appropriate for the given ratings.
As of April 15, 2005, the trust collateral consisted of 128 loans
with an aggregate principal balance of $224.6 million, down from
162 loans totaling $304.3 million at issuance. Cooperative
properties, which are located primarily in New York City, secure
73 of these loans and have an unpaid principal balance of $81.6
million. The master servicer of the cooperative loans, National
Consumer Cooperative Bank (NCB), provided Standard & Poor's with
recent cooperative sales data. Based on this information,
Standard & Poor's calculated a loan-to-value ratio of less than
6.0% for the cooperative portion underlying the collateral, down
from 23.3% at issuance.
Multifamily properties account for the remaining 55 loans and have
an outstanding principal balance of $143.0 million. The master
servicer for the multifamily properties, Orix Capital Markets LLC
(Orix), provided full-year 2003, partial-year 2004, or full-year
2004 financial data for all of the multifamily loans. Based on
this information, Standard & Poor's calculated a weighted-average
net cash flow debt service coverage (DSC) of 1.39x for the
multifamily portion underlying the collateral, up from 1.38x at
issuance.
The top 10 multifamily loans have an outstanding balance of $57.3
million and reported a weighted-average DSC of 1.25x, down from
1.38x at issuance. Additionally, five of the top 10 multifamily
loans are on the master servicer's watchlist. As part of its
surveillance review, Standard & Poor's assessed property
inspections for the top 10 loans. Eight of the properties were
said to be in "good" condition, while one was categorized as
"poor" and one was deemed "unsatisfactory." The "poor" and
"unsatisfactory" properties appear on the watchlist and are
discussed below.
There are no cooperative loans on NCB's watchlist. However, 20
multifamily loans with an aggregate balance of $61.3 million
appear on Orix's watchlist, including five of the top 10
multifamily loans.
The largest multifamily loan in the trust is secured by a 404-unit
property in Atlanta, Georgia, with an outstanding balance of $7.5
million. This loan is on the
watchlist because of deferred maintenance issues and reported a
September 2004 year-to-date (YTD) DSC of 1.50x, up from 1.42x in
2003.
The third largest multifamily loan is secured by a 226-unit
complex in Las Vegas, Nevada, and has a $6.9 million unpaid
principal balance. This loan reported a 0.86x DSC in
2004, down from 1.23x in 2003.
The fourth largest multifamily loan is secured by a 228-unit
facility in Westminster, Colorado, with an outstanding balance of
$6.5 million. This property is on the watchlist due to its
financial performance; it reported a September 2004 YTD DSC of
0.95x, up from 0.87x in 2003.
The sixth largest multifamily loan has an outstanding balance of
$5.5 million and is secured by a 112-unit complex in Mebane, N.C.,
that was built in 1997. This loan was returned to the master
servicer in March 2005 after having been transferred to the
special servicer in March 2004 due to payment delinquency. It now
appears on the watchlist because it reported a 0.88x DSC in 2003.
Additionally, the 2004 property inspection reported that this
property was in "unsatisfactory" condition, citing:
(1) water-damaged carpets,
(2) burst water pipes, and
(3) mold.
Standard & Poor's does not have immediate concerns regarding any
of these four loans.
However, there are immediate concerns with respect to the eighth
largest multifamily loan. This loan has an outstanding balance of
$4.4 million and reported a 2003 DSC of 0.17x; this was the lowest
DSC among the trust collateral. The loan is secured by a 196-unit
property in Raleigh, North Carolina. The 2003 inspection
characterized the property condition as "poor" and noted a lack of
maintenance and repair. The borrower has indicated that it does
not intend to address the deferred maintenance issues, as it would
like to pay off the loan and redevelop the property. However, the
borrower's request for the prepayment penalties to be waived was
denied.
Meanwhile, the remaining loans on the watchlist appear there
primarily because of DSC issues.
The underlying trust collateral is located in 21 states, but is
concentrated in New York (40.2%). California (12.1%) and Nevada
(5.5%) are the only other states that account for more than 5.0%
of the trust's exposure. The trust has incurred one loss to date,
amounting to $1.5 million.
Standard & Poor's stressed the loans on the watchlist, examined
the cooperative loans, and reviewed other loans with credit issues
in its analysis. The results of this analysis appropriately
support the raised and affirmed ratings.
Ratings Raised
Fannie Mae
REMIC pass-thru certificates series 1998-M6
Class To From Credit enhancement(%)
----- -- ---- ---------------------
B BB+ BB 3.40
C BB BB- 2.72
Ratings Affirmed
Fannie Mae
REMIC pass-thru certificates series 1998-M6
Class Rating Credit enhancement(%)
----- ------ ---------------------
D B 2.05
E B- 1.37
FEDERAL-MOGUL CORP: Moody's Withdraws Low-B Ratings
---------------------------------------------------
Moody's Investors Service withdrew all ratings associated with
Federal-Mogul Corporation following the company's cancellation of
all commitments for its exit facilities. The confirmation
hearings on Federal-Mogul's proposed Plan of Reorganization from
Chapter 11 bankruptcy previously scheduled for December 2004 were
postponed.
These specific ratings and the rating outlook were withdrawn:
-- (P)Ba2 rating for Federal-Mogul's proposed $500 million
guaranteed senior secured first-lien asset-based revolving
credit facility due approximately November 2009
-- (P)B1 rating for Federal-Mogul's proposed $933 million
guaranteed senior secured first-lien term loan due
approximately March 2011 (or 6 months prior to the maturity
of the junior secured second-lien tranche A term loan
described below)
-- B1 senior implied rating;
-- B3 senior unsecured issuer rating;
-- SGL-2 speculative grade liquidity rating
Federal-Mogul, headquartered in Southfield, Michigan, is a leading
global supplier of vehicular parts, components, modules, and
systems to customers in the automotive, small engine heavy-duty,
and industrial markets. The company's four operating segments
are: Powertrain Systems, Friction, Sealing Systems and Systems
Protection, and Aftermarket. Annual revenues approximate
$6.2 billion.
FINOVA GROUP: Reports Continuing Progress on Asset Liquidation
--------------------------------------------------------------
The FINOVA Group Inc. advised shareholders and noteholders in a
letter dated April 7, 2005, that the Company continues to make
significant progress in the orderly collection and liquidation of
its asset portfolio during 2004. FINOVA reduced the size of the
portfolio by about 61%, resulting in total financial assets
before reserves of just over $700 million at the end of 2004.
FINOVA reports that it collected about $1.3 billion of cash in
2004. That cash was used to reduce the Company's debt and pay
its operating costs and interest expense. After FINOVA fully
repaid the loan from Berkadia LLC in February 2004, FINOVA began
repaying a portion of its 7.5% Senior Secured Notes. So far,
FINOVA has repaid 37% of the principal due under the Senior
Notes, based on the amount outstanding at December 31, 2003.
FINOVA will be making an additional prepayment of 2% of the
principal balance on May 15, 2005. Although FINOVA will not be
able to repay the full amount due under the Senior Notes, the
Company says it will continue to seek to maximize the value of
its remaining assets for the benefit of the Noteholders.
At year-end, FINOVA owed approximately $2.2 billion of principal
to the Senior Noteholders, but it only had $1.1 billion of total
assets.
"We would have to liquidate our financial assets remaining at
year-end at almost three times their carrying values to generate
sufficient funds to fully repay the Senior Notes, even if there
were no additional operating expenses," Thomas E. Mara, FINOVA's
Chief Executive Officer, said in the letter.
Remaining Assets
FINOVA reports that its portfolio consists of three principal
groups of assets -- transportation, real estate and all other
portfolios. The Company successfully liquidated about
$700 million of the real estate portfolio in 2004. The real
estate portfolio comprised almost half of the portfolio at the
end of 2003. By the end of 2004, it had a carrying value of
about $156 million, comprising only 22% of the remaining
portfolio.
The Company's portfolio other than real estate and transportation
consists mainly of the various loans, leases and investments
generated by our other lines of business that for one reason or
another have not been sold or collected. At year-end, this
portfolio had a $256 million carrying value. This portfolio is
generally more difficult and work intensive to liquidate, and a
substantial portion of it is impaired. Many of the borrowers
have missed payments, including balloon obligations, or are
otherwise in default.
FINOVA has been in workout mode for several years on many of
these transactions, and it anticipates that those efforts will
continue to produce results, as they have in prior years. As a
result, the Company anticipates additional runoff within this
portfolio during 2005. Because this portfolio has been marked
down more heavily, a greater potential exists for recoveries
above current carrying values. Those recoveries, however, may
only occur sporadically and will not be sufficient to eliminate
the shortfall.
In its transportation portfolio -- $294 million year-end carrying
value -- many of the assets are older-vintage aircraft, which
often have outdated equipment and lower fuel efficiency, and
consequently are not favored by commercial airlines. FINOVA is
currently marketing its aircraft, either in whole or in parts to
carriers and repair facilities throughout the world. The
potential for substantial recoveries on those assets continues to
be hampered by the uncertainty in the airline industry. Although
the market for some of those aircraft strengthened in 2004 and
early 2005, that market could change at any time. FINOVA
believes that a market for many of the aircraft assets may never
fully return.
Over 90% Liquidated
FINOVA also reports that the orderly liquidation of the Company
is nearing completion. FINOVA has successfully liquidated over
90% of its portfolio.
FINOVA expects to continue its present course by seeking to
maximize the value of the assets through the orderly collection
or sale of the financial assets in its portfolio.
FINOVA intends to retain sufficient cash to fund operating
expenses and certain other items like interest payments and
existing customer commitments. The remainder, or "excess cash,"
is being used to satisfy principal obligations to the
Noteholders.
"One of our many challenges is to continue to reduce our
operating expenses as cash flows generated from the portfolio
decline, and to do so without eliminating the personnel we need
to carry out our orderly liquidation," Mr. Mara says.
Mr. Mara points out that certain "legacy" costs like the burdens
of remaining a public company, compliance with the requirements
of the Sarbanes-Oxley Act, and other requirements, impact
FINOVA's ability to reduce those expenses.
No Stockholder Payments
"While the Indenture governing our Senior Notes contemplated that
we would make payments to our stockholders as we repay the Senior
Notes, we have not made those payments," Mr. Mara also relates.
"Those stockholder distributions are prohibited due to our
present financial condition. Stockholders should not expect any
payments or return on their common stock."
According to Mr. Mara, those funds are currently being held in a
segregated account pending their final disposition. However,
FINOVA anticipates that the funds will eventually be paid to the
creditors, not the stockholders. If the funds were to be paid to
the stockholders, affiliates of Berkadia -- which are owned by
Berkshire Hathaway and Leucadia -- as owner of 50% of FINOVA's
stock, would receive half those payments. Nevertheless, Berkadia
has advised the Company that it does not believe it is entitled
to those payments when FINOVA cannot satisfy its obligations to
its creditors.
FINOVA further notes that it filed a request with the United
States Bankruptcy Court for the District of Delaware for an order
that (1) FINOVA no longer needs to direct funds into the
Restricted Account, and (2) FINOVA may use the funds in the
Restricted Account to satisfy its obligations to creditors.
Interested parties seeking to intervene in those proceedings must
do so by filing a response to FINOVA's request no later than
June 3, 2005. The Court will convene a hearing June 10 to
consider the request.
No Restructuring Plan Contemplated
FINOVA discloses that Noteholders and others have contacted the
Company to inquire whether it intends to propose a restructuring
plan. FINOVA maintains that its Board remains willing to
consider legitimate proposals presented by Noteholders or others,
but is not currently formulating a restructuring plan intended to
enable FINOVA to emerge as a healthy company. Any reorganization
or bankruptcy proceedings could eliminate the stock ownership in
FINOVA held by stockholders and could affect the rights of
creditors, as well.
Mr. Mara says many obstacles exist to creation of a viable
restructuring plan. A restructuring presumes a sensible business
plan emerging from that process. In light of FINOVA's dwindling
asset base, the composition of the Company's remaining assets and
the competitive environment, the Board believes it would be
difficult in these circumstances to develop a business model that
can produce returns to the creditors or new investors greater
than that expected from the present course. Absent that, or a
substantial new investment in FINOVA, it would be difficult to
obtain the requisite approval to restructure FINOVA's present
debt obligations. The task becomes more difficult as the
portfolio continues to shrink.
The Company anticipates that when all or substantially all of its
assets have been liquidated, it will need to wind-up its affairs.
Management is analyzing potential methods of winding up, which
might involve a sale of all or substantially all the assets, an
assignment for the benefit of its creditors, or some other
proceeding, any of which may or may not be in conjunction with
bankruptcy or state law liquidation proceedings. Management
cannot predict the timing or nature of that final wind-up, but is
working towards accomplishing that end in a prudent manner.
Net Operating Loss Carryforwards
Some investors have speculated that additional value could be
realized from FINOVA's net operating loss carryforwards, in that
the NOL could be used to offset taxable income. FINOVA cautions
investors to carefully evaluate applicable tax regulations, which
restrict the ability to transfer or use NOLs in a variety of
circumstances. The Company's financial statements do not
anticipate using the NOLs for those and other reasons.
Additional Layoffs
FINOVA anticipates significant reductions in the number of
employees during 2005, including the departure of Chief
Operating Officer, Glenn Gray, 7 members of his senior team and
almost half of the remaining workforce. Mr. Gray and his team
provided outstanding leadership to FINOVA during the past few
years, helping to keep FINOVA's employees focused on the orderly
liquidation for the benefit of the creditors.
Headquartered in Scottsdale, Arizona, The Finova Group, Inc.,
provides commercial financing to small and mid-sized businesses;
other services include factoring, accounts receivable management,
and equipment leasing. The firm has three segments: Commercial
Finance, Specialty Finance, and Capital Markets. FINOVA targets
such markets as transportation, wholesaling, communication, health
care, and manufacturing. Loan write-offs had put the firm on
shaky ground. The Company and its debtor-affiliates and
subsidiaries filed for Chapter 11 protection on March 7, 2001
(U.S. Bankr. Del. 01-00697). Daniel J. DeFranceschi, Esq., at
Richards, Layton & Finger, P.A., represents the Debtors. FINOVA
has since emerged from Chapter 11 bankruptcy. Financial giants
Berkshire Hathaway and Leucadia National Corporation (together
doing business as Berkadia) own FINOVA through the almost
$6 billion lent to the commercial finance company. (Finova
Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
FRANKLIN MORTGAGE: Fitch Rates $9,563,000 Class B-1 at BB+
----------------------------------------------------------
First Franklin Mortgage Loan Trust, mortgage pass-through
certificates, series 2005-FF4, are rated by Fitch:
-- $1,018,725,000 classes IA-1, II-A-1, II-A-2, II-A-3, and
II-A-4 'AAA';
-- $66,938,000 class M-1 'AA+';
-- $33,788,000 class M-2 'AA';
-- $23,588,000 class M-3 'AA-';
-- $22,950,000 class M-4 'A+';
-- $23,588,000 class M-5 'A';
-- $16,575,000 class M-6 'A-';
-- $15,300,000 class M-7 'BBB+';
-- $14,663,000 class M-8 'BBB';
-- $12,113,000 class M-9 'BBB-';
-- $9,563,000 class B-1 'BB+'.
The 'AAA' rating on the senior certificates reflects the 20.10%
total credit enhancement provided by:
* the 5.25% class M-1,
* the 2.65% class M-2,
* the 1.85% class M-3,
* the 1.80% class M-4,
* the 1.85% class M-5,
* the 1.30% class M-6,
* the 1.20% class M-7,
* the 1.15% class M-8,
* the 0.95% class M-9,
* the 0.75% class B-1,
* the 0.85% nonrated class B-2, and
* the 0.50% initial overcollateralization.
All certificates have the benefit of monthly excess cash flow to
absorb losses. In addition, the ratings reflect the quality of
the loans and the integrity of the transaction's legal structure,
as well as the primary servicing capabilities of National City
Home Loan Services, Inc. (rated 'RPS2-' by Fitch) and Deutsche
Bank National Trust Company as trustee.
As of the cut-off date, April 1, 2005, the mortgage loans have an
aggregate balance of $759,689,249. The weighted average loan rate
is approximately 6.793%. The weighted average remaining term to
maturity is 358 months. The average cut-off date principal
balance of the mortgage loans is approximately $191,117. The
weighted average original loan-to-value ratio is 83.97%, and the
weighted average Fair, Isaac & Co. score was 649. The properties
are primarily located in:
* California (33.01%),
* Florida (7.09%), and
* Illinois (3.80%).
FRANKLIN MORTGAGE: Fitch Rates $6.6 Million Class B at BB+
----------------------------------------------------------
First Franklin Mortgage Loan Trust's mortgage pass-through
certificates, series 2005-FF5, are rated by Fitch Ratings:
-- $621,918,000 classes A-1, A-2A, A-2B and A-2C 'AAA';
-- $38,556,000 class M-1 'AA+';
-- $28,918,000 class M-2 'AA';
-- $10,025,000 class M-3 'AA-';
-- $16,579,000 class M-4 'A+';
-- $10,410,000 class M-5 'A';
-- $6,940,000 class M-6 'A-';
-- $11,182,000 class M-7 'BBB+';
-- $3,855,000 class M-8 'BBB+';
-- $6,941,000 class M-9 'BBB-';
-- $5,012,000 class M-10 'BBB-';
-- $6,555,000 class B 'BB+'.
The 'AAA' rating on the senior certificates reflects the 19.35%
total credit enhancement provided by the:
* 5.00% class M-1,
* 3.75% class M-2,
* 1.30% class M-3,
* 2.15% class M-4,
* 1.35% class M-5,
* 0.90% class M-6,
* 1.45% class M-7,
* 0.50% class M-8,
* 0.90% class M-9,
* 0.65% class M-10,
* 0.85% class B, and
* the 0.55% initial
overcollateralization -- OC.
All certificates have the benefit of monthly excess cash flow to
absorb losses. In addition, the ratings reflect the quality of
the loans, the integrity of the transaction's legal structure as
well as the primary servicing capabilities of HomeEq Servicing
Corp (rated 'RPS1' by Fitch) and JP Morgan Chase as trustee.
As of the cut-off date April 1, 2005, the mortgage loans have an
aggregate balance of $771,132,371. The weighted average loan rate
is approximately 6.784%. The weighted average remaining term to
maturity is 358 months. The average cut-off date principal
balance of the mortgage loans is approximately $194,093. The
weighted average original loan-to-value ratio (OLTV) is 83.83% and
the weighted average Fair, Isaac & Co. score was 651. The
properties are primarily located in California (34.41%), Florida
(6.54%) and Illinois (4.55%).
GEORGIA GULF: Improved Environment Prompts Moody's to Up Ratings
----------------------------------------------------------------
Moody's Investors Service upgraded Georgia Gulf Corporation's
senior implied rating to Ba2 from Ba3. Moody's also raised the
ratings on the company's credit facility and bonds by one notch as
well. The outlook is stable.
Ratings upgraded:
* Guaranteed senior secured revolver, $170 million due 2009, to
Ba2 from Ba3
* Guaranteed senior secured notes, $100 million due 2005, to
Ba2 from Ba3
* Guaranteed senior unsecured notes, $100 million due 2013, to
Ba3 from B1
* Senior Implied -- to Ba2 from Ba3
* Issuer Rating -- to Ba3 from B1
Ratings withdrawn:
* Guaranteed senior secured term loan D due 2010
The upgrade of Georgia Gulf's ratings reflects the improved
operating environment and prospects for profitability in both of
the company's operating segments. The improved environment, in
terms of pricing and demand, has resulted in higher operating
rates, improved cash flow, and accelerated debt reduction. Hence,
credit metrics have improved substantially over the past 12 months
and are expected to improve further by year-end 2005. The ratings
are also supported by the company's position as an integrated
producer of PVC resins and compounds, as well as its competitive
position in the production of key commodity
chemicals/petrochemicals - acetone, cumene and phenol.
Furthermore, the ratings are supported by management's stated
intent to maintain a target debt to EBITDA ratio of 1.5-3.5 times
throughout the cycle. The ratings are tempered by the cyclical
nature of the market for the commodity chemicals and plastics it
produces, significant exposure to propylene and benzene feedstocks
(which are expected to be in short supply over the next several
years), the need to pursue acquisitions in order to generate
greater than GDP volume growth, significant off-balance sheet
debt, and the company's limited size and business diversity.
The stable outlook reflects Moody's expectation that the company
will experience a cyclical peak in 2005 and 2006, that the
increased profitability from aromatics may be temporary due to new
international capacity additions set to come on-stream later in
2005 and early 2006, and due to the company's limited financial
flexibility at this point in the cycle. Although the company is
expected to have stellar financial metrics in 2005, Moody's is
concerned over the size of the maturing accounts receivable
facility and a near-term debt maturity, relative to availability
under the revolver (less than $75 million as of December 31, 2004)
and projected free cash flow generation. Both the $165 million
accounts receivable facility and $100 million of notes mature in
November of 2005; the company's $170 million credit facility
matures in November of 2009. The stable outlook reflects Moody's
belief that the company will refinance both the maturing notes and
the accounts receivable facility well in advance of the scheduled
November maturity. Moody's believes that the size of the accounts
receivable facility, combined with its one-year term,
fundamentally reduces the company's financial flexibility. Given
this reduced level of financial flexibility, an upgrade is
unlikely over the near-term. However, an upgrade could be
considered if the company improves the structure of its debt and
provides more guidance on the size and scope of future
acquisitions.
Moody's anticipates that financial metrics will improve markedly
by year-end, with adjusted total debt to EBITDA falling to under
2 times from roughly 2.5 times in 2004 (adjusted total debt
includes the accounts receivable program and capitalized operating
leases). EBITDA to interest coverage is unusually high and is
expected to remain well above 10 times. Moody's believes that
EBITDA to interest is not a relevant credit metric for the
company, due to the high level of off-balance sheet liabilities.
For example at year-end 2004, the company had roughly $319 million
balance sheet debt and $325-340 million of off-balance sheet debt.
The off-balance sheet debt includes the $165 million accounts
receivable program, and in Moody's estimate, roughly
$160 to 175 million of capitalized operating leases.
Management's desire to maintain a debt to EBITDA ratio (debt
includes only balance sheet debt and the accounts receivable
program) of 1.5-3.5 times through the cycle should, in Moody's
opinion, enable the company to generate investment grade credit
metrics through most of the cycle. However, Moody's remains
concerned that management may not be able to keep this ratio from
rising above 3.5 in the trough, especially since this is the most
likely time for the company to pursue an acquisition. Hence, it
is unlikely that Moody's would raise the company's ratings to
investment grade without a fundamental change in management's
growth strategy or the anticipated size of future acquisitions.
Georgia Gulf operates two businesses -- Chlorovinyls (66% of sales
revenue) produces polyvinyl chloride -- PVC, PVC compounds and
caustic soda. The company produces only half of the chlorine
required to make PVC. The market for these products is expected
to remain robust until 2007 when Shintech is expected to start-up
a new world-scale PVC facility. Georgia Gulf is the third largest
producer of PVC resins in the US and the second largest supplier
of PVC compounds. Aromatics (34% of sales revenue) manufactures
cumene, phenol and acetone. The company is the largest merchant
supplier of phenol and acetone in the US. While new international
capacity in phenol is expected to start-up later this year, cumene
could remain short in Asia, if demand growth remains robust and
Chevron Phillips' cumene plant remains shut down. In Moody's
opinion, the peak in aromatics is likely to be modest relative to
historical standards with new international capacity and the
restart of CPC's plant limiting the potential upside for Georgia
Gulf's cash margins in 2005 and 2006.
Georgia Gulf Corporation, headquartered in Atlanta, Georgia,
produces commodity chemicals including chlorovinyls (chlorine,
caustic soda, vinyl chloride monomer, vinyl resins and vinyl
compounds) and aromatics (cumene, phenol and acetone). The
company generated revenues of $2.2 billion for the year ended
Dec. 31, 2004.
GREENTREE GAS: Delays Filing Financial Reports to Complete Audit
----------------------------------------------------------------
Greentree Gas & Oil Ltd. (TSXV:GGO) advises that there will be a
delay in the filing of its comparative financial statements for
the fiscal year ended December 31, 2004. Greentree will not be
able to file its annual audited financial statements on or prior
to May 2, 2005, as required by applicable securities laws in the
jurisdictions in which Greentree is a reporting issuer. The
May 2, 2005, filing deadline is the first business day following
the expiry of the 120-day period after the end of Greentree's last
fiscal year. Greentree is issuing this news release further to
the requirements of Ontario Securities Commission Policy 57-603.
The delay in preparing and filing the financial statements is due
to an unanticipated delay in receiving the annual evaluation
report of Greentree's reserves data on its oil and gas properties
for the year ended December 31, 2004. Consequently, Greentree's
auditor, Grant Thornton LLP, requires additional time to complete
its audit of Greentree's 2004 annual financial statements.
Greentree is working with its auditor to complete the audit as
expeditiously as possible.
Issuer Cease Trade Order
Based on discussions with Greentree's auditor, it is anticipated
that the annual financial statements will be finalized and filed
on or before May 16, 2005. Should Greentree fail to file its
annual financial statements by June 30, 2005, an issuer cease
trade order may be imposed by the applicable securities
commissions requiring that all trading in securities of Greentree
cease for such period specified in the order. An issuer cease
trade order may be imposed sooner if Greentree fails to file its
default status reports on time. It is anticipated that during the
period of time that the annual financial statements remain
outstanding, the insiders of Greentree will be subject to a cease
trade order prohibiting such insiders from trading Greentree
securities.
Greentree intends to satisfy the provisions of the alternate
information guidelines of OSC Policy 57-603 for so long as it
remains in default of the financial statement filing requirements
of applicable securities laws.
GSI GROUP: Moody's Rates Proposed $125 Million Senior Notes at B3
-----------------------------------------------------------------
Moody's Investors Service has assigned a B3 rating to the proposed
senior notes of The GSI Group, Inc., which will be used to
refinance existing indebtedness in connection with the company's
pending acquisition by GSI Holdings Corp. (an affiliate of
Charlesbank Capital Partners, LLC). In addition, Moody's has
affirmed GSI's existing ratings, including its B2 senior implied
rating, and assigned a speculative grade liquidity rating of
SGL-2.
The assignment and affirmation of the long-term ratings reflects
the leverage neutral nature of the proposed buyout given the
meaningful equity contribution by Charlesbank and management.
Further, the rating action recognizes the company's leading market
positions, strong recent performance, and favorable near and
long-term business drivers. The ratings also reflect the
substantial transitional risks as the company moves away from its
entrepreneurial ownership, as well as the ongoing volatility
concerns that exist in the agricultural equipment industry. The
rating outlook is stable.
These ratings were assigned:
* $125 million senior notes due 2013, at B3;
* Speculative grade liquidity rating, at SGL-2.
These ratings were affirmed:
* Senior implied, at B2;
* $100 million senior subordinated notes, at Caa1;
* Senior unsecured issuer rating, at B3.
Proceeds from the proposed notes issuance will be used along
with $15 million in revolver borrowings (under a $60 million
asset-based facility) and $56 million in equity contributions to
fund the purchase of GSI from its founder (Craig Sloan) and the
refinancing of existing indebtedness, plus related transaction
expenses and fees. The transactions value GSI at approximately
$197 million, or 6x fiscal 2004 (December 2004) adjusted EBITDA of
$34 million, but result in substantially flat debt levels at
around $140 million (or 4.2x EBITDA). Moody's will withdraw the
Caa1 rating on GSI's $100 million senior subordinated notes upon
their repayment with the closing of the proposed transactions.
The affirmation of the long-term ratings with a stable outlook
reflects the leverage neutral nature of the proposed transaction
and the company's leading market positions. GSI is the largest
manufacturer of grain and swine equipment and the second largest
maker of poultry equipment. Despite its numerous competitors, the
company's broad platform, its reputation for innovation and
quality, and its long-standing relationships with over 2,500
independent dealers provide significant brand loyalty and support
to these positions over time. GSI's ratings also benefit from
long-term demand drivers in the industry, including the conversion
of U.S. farmland from soybean crops to higher-yielding corn crops
(that also require drying equipment), which in turn is fueled by
growth in ethanol usage. Further, GSI's international growth
prospects remain strong due to its leading brands and increasing
demand for modern, efficient equipment.
Lastly, the ratings are supported by GSI's strong operating
momentum. During the past year, GSI has grown sales by over 20%
on the strength of a recovery in farm income and commodity prices.
The company has also gained market share with new product
introductions and has increased sales in key international
markets, such as Brazil. Despite higher input prices on raw
materials, GSI's profits have improved from the leveraging of
higher sales volumes over its fixed cost base, with EBITDA growing
from $19 million (8% of sales) to around $34 million (12%). The
current operating environment should favor continued growth
through fiscal 2005 that, combined with modest capital expenditure
and cash tax requirements, should enable substantial leverage
reduction by year-end.
Notwithstanding these credit strengths, GSI's ratings remain
constrained by its high leverage and modest scale in an industry
that is subject to material volatility due to cyclical, weather-
related, and regulatory/event-driven risks. In fact, prior to
fiscal 2004, the company experienced material operating pressures
from 2000-2003 (a period of depressed farm incomes), with EBITDA
falling from $28 million to $19 million. In addition, ongoing
consolidation within the farming and agricultural industry is
likely to result in long-term margin pressure, as these customers
are more price sensitive, more efficient operators, and less brand
loyal. Moody's also notes the significant transitional risks to
which GSI is exposed as it moves from an entrepreneurial
ownership, which may result in higher than expected costs and
unforeseen charges. In this regard, Moody's considered the
uncertainties related to the CEO position (which is currently
staffed on an interim basis), the execution of cost efficiency
programs, and the weak internal controls environment for GSI, as
evidenced by numerous adjustments and restatements the company has
taken and by its commentary on this issue in its public filings
and offering memorandum.
Given the company's limited scale, significant transitional
challenges, and the volatility exposure due to exogenous threats,
Moody's views ratings upgrades as unlikely over the coming
twelve-to-eighteen month period. Longer-term upward rating
pressures could be possible with a successful management/ownership
transition and the successful implementation of new operating
strategies, particularly if GSI builds cash balances to provide
financial flexibility or uses cash flows for acquisitions that
broaden its product offerings, while maintaining debt-to-EBITDA
below 3.0x. Conversely, a rating downgrade would be likely if
cyclical, transitional, or competitive challenges result in
negative free cash flow, debt-to-EBITDA over 5.5x, or restrained
access to borrowing lines.
GSI's speculative grade liquidity rating of SGL-2 reflects the
company's good liquidity profile through the June 2006 quarter.
This view is supported by favorable near-term industry conditions
and GSI's strong operating momentum, with run-rate EBITDA of
$34 million comfortably covering projected interest expense
(around $13 million) and capex (around $6 million). Further,
Moody's notes the cash flow benefits of minimal cash tax
requirements (due to tax shields created by the transaction) and
limited near term debt maturities. Support for the SGL-2 rating
also stems from the ample size of GSI's $60 million revolving
credit facility, and the modest financial maintenance covenants in
the credit agreement. Notwithstanding borrowing base limitations,
Moody's expects availability to be well in excess of $20 million
during all periods through June 2006. During this time Moody's
also anticipates an EBITDA cushion of at least 40% relative to
GSI's sole covenant under the credit agreement, minimum fixed
charge coverage of 1.0x, and notes that this covenant only tests
if availability falls below $7.5 million.
The significant seasonality and volatility that are inherent in
GSI's business result in substantial reliance on the facility,
limit upward pressure on the SGL rating, and could cause downward
rating pressure if the aforementioned favorable operating
environment changes. Additional SGL rating restraints are also
present in GSI's limited cash balances and its modest alternative
liquidity sources, with the vast majority of its assets pledged to
the credit facility or in restricted subsidiaries.
The B3 rating on the proposed senior notes reflects the effective
subordination of the notes to a potentially large amount of
secured indebtedness. In this regard Moody's notes GSI's expected
usage of the secured credit facility for seasonal needs, and the
potential for even greater secured borrowings during cyclical
downturns or for acquisitions. GSI can increase the facility size
to $75 million at its discretion. The notes will be guaranteed by
GSI Holdings Corp. and by future domestic subsidiaries. The
indenture governing the notes is expected to contain customary
terms and limitations, including restrictions on additional
indebtedness, dividends, investments, affiliate transactions,
liens, asset sales, and mergers and acquisitions.
The GSI Group, Inc., is headquartered in Assumption, Illinois and
is a leading manufacturer and supplier of agricultural equipment.
The company's products are sold in the grain (62% of sales), swine
(16%), and poultry (22%) markets through a long-standing network
of 2,500 independent dealers in around 75 countries. The
company's main brands are GSI, DMC, FFI, Zimmerman, AP and
Cumberland. For the fiscal year ended December 31, 2004, sales
were approximately $288 million, with international sales
representing around one-third of the volume.
HAWAIIAN AIRLINES: Inks Revised Labor Pact with Pilots Union
------------------------------------------------------------
Hawaiian Airlines has negotiated a revised contract with the Air
Line Pilots Association, just before the bankruptcy court was
expected to decide on the company's motion to impose a new
contract on its pilots. Hawaiian and ALPA had previously reached
an agreement, but the original agreement did not get the necessary
majority vote of the membership.
Hawaiian Trustee Joshua Gotbaum said, "We're very pleased that, as
we've done with Hawaiian's other unions, we were able to negotiate
a contract both sides think is fair. Hawaiian's pilots and other
employees are essential to the airline's success, and it's
important they have contracts that recognize their contributions."
Hawaiian did not disclose the terms of the tentative agreement
pending its presentation to pilots. The company did note that, as
with its other union contracts and unlike other contracts being
negotiated in the industry, this new agreement includes pay
increases, not pay cuts or overall cost cuts. It also includes
productivity improvements to offset the costs of benefit and pay
increases.
Captain Jim Giddings, the lead negotiator for the Air Line Pilots
Association, told Janis L. Magin at the Associated Press that the
tentative three-year agreement will give the pilots an annual 1%
salary increase for the next three years. The contract period
starts from June 30, 2004, to June 30, 2007.
ALPA expects to hold a ratification vote within the next two
weeks. Mr. Gotbaum said he would ask the court to defer its
decision on the company's motion to impose a contract until after
the ratification vote was taken, since the company would much
prefer a negotiated contract to one imposed by the court.
Hawaiian has already negotiated ratified agreements with the
International Association of Machinists, the Transport Workers
Union, the Network Engineering Group and the Association of Flight
Attendants. The Bankruptcy Court confirmed Hawaiian Airlines
Inc.'s plan of reorganization on March 10, 2005. Since all other
labor contracts and financing are in place, once the contract is
ratified, Hawaiian will be able to emerge from Chapter 11.
About Hawaiian Airlines
Hawaiian Airlines, the nation's number one on-time carrier, is
recognized as one of the best airlines in America. Readers of two
prominent national travel magazines, Cond, Nast Traveler and
Travel + Leisure, have both rated Hawaiian as the top domestic
airline serving Hawaii in their most recent rankings, and the
fifth best domestic airline overall.
Celebrating its 76th year of continuous service, Hawaiian is
Hawaii's biggest and longest-serving airline, and the second
largest provider of passenger air service between Hawaii and the
U.S. mainland. Hawaiian offers nonstop service to Hawaii from more
U.S. gateway cities than any other airline. Hawaiian also provides
approximately 100 daily jet flights among the Hawaiian Islands, as
well as service to Australia, American Samoa and Tahiti.
Hawaiian Airlines, Inc. -- http://www.HawaiianAir.com/-- is a
subsidiary of Hawaiian Holdings, Inc. (AMEX and PCX: HA). Since
the appointment of a bankruptcy trustee in May 2003, Hawaiian
Holdings has had no responsibility for the management of Hawaiian
Airlines and has had limited access to information concerning the
airline.
On March 21, 2003, Hawaiian Airlines, Inc., filed a voluntary
petition for reorganization under Chapter 11 of the United States
Bankruptcy Code in the U.S. Bankruptcy Court for the District of
Hawaii (Case No. 03-00827). Joshua Gotbaum serves as the chapter
11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum is represented
by Tom E. Roesser, Esq., and Katherine G. Leonard, Esq., at
Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson,
Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at
Hennigan, Bennett & Dorman LLP. The Bankruptcy Court confirmed
the Chapter 11 Trustee's Plan of Reorganization on March 10, 2005.
HEILIG-MEYERS: Judge Tice Approves Disclosure Statement
-------------------------------------------------------
The Honorable Douglas O. Tice, Jr., of the U.S. Bankruptcy Court
for the Eastern District of Virginia approved, on April 29, 2005,
the Amended Disclosure Statement explaining the Amended Joint Plan
of Reorganization filed by Heilig-Meyers Company and its debtor-
affiliates. Judge Tice found the Disclosure Statement contains
adequate information for creditors to make informed decisions
about whether to vote to accept or reject the Plan.
Heilig-Meyers is now authorized to distribute the Plan to its
creditors and solicit their acceptances of that Plan.
Objections to the Plan, if any, must be filed by Sept. 19, 2005.
The Court will convene a hearing to discuss the merits of the Plan
on Sept. 26, 2005, at 10:00 a.m.
As previously reported in the Troubled Company Reporter, Heilig-
Meyers Company and its wholly owned subsidiaries, Heilig-
Meyers Furniture Company, Heilig-Meyers Furniture West, Inc., HMY
Star, Inc., HMY RoomStore, Inc., and MacSaver Financial Services,
Inc., and their Official Committee of Unsecured Creditors filed a
Joint Plan of Reorganization and Disclosure Statement with the
Bankruptcy Court.
Under the terms of the proposed Plan, pre-petition creditors will
receive beneficial interests in a Liquidation Trust in settlement
of their claims. The proposed Plan contemplates that only one of
the Companies, HMY RoomStore, Inc., will emerge as a reorganized
business enterprise. All other assets will be transferred to a
Liquidation Trust to be converted to cash over time for
distribution to the beneficiaries of the Liquidation Trust.
Additionally, the Reorganized RoomStore common stock will be
transferred to the Liquidation Trust for the benefit of the
holders of allowed unsecured claims under the Plan. The holders
of existing common stock of Heilig-Meyers Company will receive no
distribution under the proposed Plan and will have no interest in
the Liquidation Trust, and it is anticipated that the existing
shares of common stock will be cancelled. Reorganized RoomStore
will continue to operate stores under The RoomStore name.
The Debtors' Plan provides for full payment of all:
* Administrative Expense Claims;
* Priority Tax Claims;
* Other Priority Claims;
* Secured Claims held by Wachovia Bank, N.A.;
* Secured Claims held by Prudential;
* Secured Claims arising under Synthetic Lease Transactions;
* Secured Bondholder Claims; and
* all other Secured Claims.
Unsecured Creditors are grouped into three subclasses and the
Debtors' Disclosure Statement describes their treatment:
Estimated
Class Type of Claim Proposed Treatment Recovery
----- ------------- ------------------ ---------
5(a) RoomStore A distribution of 48%
Unsecured 0.008065% of the shares
Claims of New RoomStore Common
Stock for every $10,000
RoomStore Unsecured
Claims held in the
Liquidation Trust.
5(b) Funded Debt Subject to dilution on 10%
Unsecured account of the Master
Claims Trust Claim, and without
accounting for any recovery
on account of the Lender
Avoidance Action, and
subject to adjustment for
additional cash paid to
holders of Secured Claims,
a Cash Distribution from
the Liquidation Trust.
5(c) Heilig Subject to dilution on 7%
Unsecured account of the Master
Claims Trust Claim, and without
accounting for any recovery
on account of the Lender
Avoidance Action, and
subject to adjustment for
additional cash paid to
holders of Secured Claims,
a Cash Distribution from
the Liquidation Trust.
Capstone Corporate Recovery, LLC, the Debtors' financial advisor,
estimates that the value of the equity in Reorganized RoomStore
will be approximately $60 million as of March 1, 2005, which is
the Plan's assumed Effective Date. The key driver behind that
estimate is management's earnings projections for Reorganized
RoomStore:
Reorganized RoomStore
Projected Consolidated Statements of Operations
(Amounts in Millions)
FY2004 FY2005 FY2006 FY2007 FY2008 FY2009
------ ------ ------ ------ ------ ------
Total Revenues $354.9 $372.3 $411.8 $480.1 $543.0 $586.3
Net Income $1.9 $2.7 $1.0 $2.7 $4.5 $7.4
EBITDA $5.6 $6.1 $6.5 $10.5 $14.2 $19.5
The Debtors are convinced that creditors recover more under their
plan than they would in a chapter 7 liquidation. In a
hypothetical chapter 7 liquidation, Capstone concludes, the
Debtors' estates would be reduced to a $36 to $39 million pile of
cash, and the estates would be administratively insolvent,
returning between 64% and 90% of what's owed to postpetition
creditors.
Heilig-Meyers Company filed for chapter 11 protection on Aug. 16,
2000 (Bankr. E.D. Va. Case No. 00-34533), reporting $1.3 billion
in assets and $839 million in liabilities. When the Company filed
for bankruptcy protection it operated hundreds of retail stores in
more than half of the 50 states. In April 2001, the company shut
down its Heilig-Meyers business format. In June 2001, the Debtors
sold its Homemakers chain to Rhodes, Inc. GOB sales have been
concluded and the Debtors are liquidating their remaining Heilig-
Meyers assets. The Debtors are working to effect a restructuring
of their RoomStore business operations with the expectation of
bringing that business out of bankruptcy as a reorganized company.
The RoomStore offers a wide selection of professionally
coordinated home furnishings in complete room packages at value-
oriented prices. The RoomStore operates 64 stores located in
Pennsylvania, Maryland, Virginia, North Carolina, South Carolina
and Texas. Bruce H. Matson, Esq., Troy Savenko, Esq., and
Katherine Macaulay Mueller, Esq., at LeClair Ryan, P.C., in
Richmond, Va., represent the Debtors.
HOLLYWOOD ENT: Movie Gallery Completes $1.25 Billion Acquisition
----------------------------------------------------------------
Movie Gallery, Inc. (Nasdaq: MOVI) successfully completed its
acquisition of Hollywood Entertainment Corporation. The
transaction is valued at $1.25 billion, including $862.1 million
for Hollywood's outstanding common stock and the assumption of
$384.7 million of Hollywood's existing indebtedness. The merger
with Hollywood creates a leading North American home video
retailer that can successfully compete in the urban, suburban and
rural markets.
Joe Malugen, Chairman, President and CEO of Movie Gallery, said,
"We are pleased that Hollywood shareholders voted to approve the
merger and that we were able to quickly close the transaction so
that we can begin to realize the benefits inherent in this
combination. The acquisition increases our geographic presence
and will greatly improve our distribution capabilities, making us
a stronger competitor, well-positioned for continued profitable
growth."
Hollywood is now a subsidiary of Movie Gallery but will continue
to operate under the Hollywood brand name. Hollywood will remain
headquartered in Wilsonville, Oregon.
Merrill Lynch & Co. and Wachovia Securities, Inc., acted as M&A
and financial advisors, while Alston & Bird LLP and Troy & Gould
PC acted as legal counsel to Movie Gallery. In addition, Alston &
Bird LLP and Axinn, Veltrop & Harkrider LLP acted as anti-trust
legal counsel to Movie Gallery. Ernst & Young LLP serves as Movie
Gallery's independent auditors. Dixon Hughes PLLC and Warren,
Averett, Kimbrough & Marino, LLC provided various accounting and
tax consulting services in connection with the acquisition.
Hollywood Entertainment Corporation's (Nadsaq: HLYW) shareholders
approved the merger of Hollywood with an affiliate of Movie
Gallery, Inc.
At the special meeting of shareholders held on Apr. 22,
shareholders representing 44,412,245 shares or approximately 70%
of the total issued and outstanding shares of Hollywood, with
39,332,517 shares or 88.5% of those represented voted to approve
the Agreement and Plan of Merger, dated as of January 9, 2005, by
and among Movie Gallery, Inc., TG Holdings, Inc., and Hollywood
Entertainment Corporation and the related merger.
About Movie Gallery
The combined company is the second largest North American video
rental company with annual revenue in excess of $2.5 billion and
approximately 4,500 stores located in all 50 U.S. states, Mexico
and Canada. Since the company's initial public offering in August
1994, Movie Gallery has grown from 97 stores to its present size
through acquisitions and new store openings.
* * *
As reported in the Troubled Company Reporter on Apr. 20, 2005,
Moody's Investors Services confirmed the debt ratings of Hollywood
Entertainment. Moody's said the outlook is stable.
In addition, Moody's assigned first time ratings to Movie Gallery,
Inc., in connection with its proposed acquisition of Hollywood
Entertainment.
On January 9, 2005, Movie Gallery executed a merger agreement
to acquire Hollywood Entertainment for $13.25 per share or
approximately $1 billion (including the retirement of
$384.2 million of debt but net of cash). The acquisition will be
financed with $795 million of senior secured bank facilities,
$325 million of senior unsecured notes, and $185 million of on
balance sheet cash. As a part of the acquisition, Movie Gallery
will tender for Hollywood Entertainment's $225million of senior
subordinated notes. Shortly after this transaction, Movie Gallery
will also be acquiring VHQ Entertainment for $19.2 million. VHQ
operates 61 stores in Canada as well as a website VHQonline.ca.
These ratings are assigned:
-- Movie Gallery, Inc.
* Senior Implied of B1;
* $870 Million of Senior Secured Credit Facilities of B1;
* $325 Million of Guaranteed Senior Notes of B2;
* Issuer Rating of B3;
* Speculative Grade Liquidity Rating of SGL-2.
These ratings are confirmed:
-- Hollywood Entertainment Corp.
* Senior Implied of B1;
* Senior Secured Credit Facilities of Ba3;
* Senior Subordinated Notes of B3;
* Issuer Ratings of B2.
HUGHES NETWORK: S&P Puts Low-B Ratings on $375 Million Loans
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' bank loan
rating and '3' recovery rating to satellite services provider
Hughes Network Systems LLC's (HNS) $325 million first-lien credit
facility due 2012. A 'B' rating and a '3' recovery rating also
were assigned to the company's $50 million second-lien term loan
due 2013.
The ratings indicate the expectation for a meaningful recovery of
principal (50%-80%) in the event of a payment default. The loans
are rated the same because of second-lien loan covenants that
could enable second-lien holders to potentially interfere with
first-lien holders' access to collateral in the event of
insolvency. The bank loans replace the $325 million senior notes
offering recently withdrawn by the company.
At the same time, the rating outlook on HNS was revised to
negative from stable. The 'B' corporate credit rating on the
company was affirmed. The outlook change is based on the concern
that loan provisions in the all-bank financing could provide less
financial flexibility than under the previously proposed public
deal if the company does not realize growth in the consumer and
small business segments, or if the core enterprise segment
falters.
Bank financing proceeds of $325 million, plus $50 million cash
equity from SkyTerra Communications Inc., were used to finance
SkyTerra's $255.9 million purchase of 50% of HNS from its former
100% owner, The DIRECTV Group Inc. Remaining proceeds were used
to partly fund a cash balance totaling about $150 million and to
pay transaction expenses. SkyTerra, an affiliate of investment
firm Apollo Management L.P., will manage HNS.
The ratings continue to reflect:
(1) Competitive telecommunications industry conditions
characterized by declining pricing;
(2) Mature revenue prospects for core enterprise services;
(3) Uncertain growth potential for small business and consumer
applications given rising competition from faster, more
economical phone and cable TV company data alternatives;
(4) A leveraged financial profile from acquisition-related
debt;
(5) Low profitability compared with other telecommunications
companies;
(6) A lack of near-term discretionary cash flow generation due
to capital expenditures needed to complete the Spaceway
broadband satellite project, as well as associated
operating risk; and
(7) Potential satellite failure risk.
Tempering factors include:
(1) HNS's leading position in the very small aperture terminal
(VSAT) industry;
(2) A degree of revenue stability from three- to five-year
contracts with large enterprise customers;
(3) VSAT technology's ability to provide economical, quickly
deployable, ubiquitous, point-to-multipoint connectivity,
which partly buffers competitive pressure from terrestrial
networks; and
(4) Revenue diversity from a mix of domestic and international
customers.
HNS is the leading provider of VSAT satellite networking services
to domestic and international enterprises, small and medium-size
businesses, and consumers. "The North American enterprise VSAT
business generated about 44% of total revenues in 2004 and a
majority of overall EBITDA, and is relatively stable because of
contract-based revenue and healthy renewal rates," said Standard &
Poor's credit analyst Eric Geil. Revenue is roughly split between
equipment and services. Chain retailers, oil companies, and
financial services firms use VSATs for point-to-multipoint
communication links between central hubs and geographically
dispersed sites, including stores, filling stations, and automated
teller machines. VSATs are economical, can be more quickly
deployed then terrestrial network solutions, and offer ubiquitous
coverage well suited to serving geographic areas that lack up-to-
date terrestrial network infrastructure.
IKON OFFICE: Poor Finances Cue S&P to Change Outlook to Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' corporate
credit rating on Valley Forge, Pennsylvania-based IKON Office
Solutions Inc., and revised its outlook to negative from stable.
As of March 31, 2005, IKON had total debt outstanding (including
capitalized operating leases) of approximately $1.7 billion.
"The outlook revision reflects our concerns about IKON's ability
to achieve expected non-financing profitability improvements given
highly competitive industry conditions and lack of revenue
growth," said Standard & Poor's credit analyst Martha Toll-Reed.
The ratings on IKON reflect mature industry conditions, lack of
revenue and non-financing earnings growth, and a high operating
cost structure. These factors partly are offset by IKON's good
position as the leading independent office equipment distributor,
and good liquidity.
In the quarter ended March 31, 2005, IKON reported preliminary
revenues (excluding exited operations) approximately flat with the
prior-year period. Despite moderate growth prospects in the
document management solutions business, Standard & Poor's expects
revenue and earnings growth will be challenged by highly
competitive industry conditions and cost-reduction execution
issues. Non-financing EBITDA margins of approximately 4% remain
sub-par for the rating.
Standard & Poor's includes earnings from IKON's portfolio of
retained equipment leases in its leverage calculation. However,
during the next two years, income from IKON's retained financing
portfolio is expected to materially decline as leasing assets
mature. The current rating incorporates the expectation that
cost-reduction and restructuring actions will result in non-
financing operating performance improvement over the near term.
IMPATH INC: Judge Beatty Confirms Third Amended Plan
----------------------------------------------------
The Honorable Prudence Carter Beatty of the U.S. Bankruptcy Court
for the Southern District of New York approved Impath Inc. and its
debtor-affiliates' Third Amended Joint Plan of Liquidation filed
on Jan. 20. 2005.
Judge Beatty determined that the Plan:
* properly classifies the claims,
* specifies the unimpaired classes of claims,
* specifies the treatment of unimpaired classes of claims,
* provides for the same treatment of each claim in each
class,
* provides adequate and proper means for its
implementation,
* is not inconsistent with applicable provisions of the
Bankruptcy Code,
* complies with applicable provisions of the Bankruptcy
Code,
* was proposed in good-faith,
* provides for the payment for services or costs and
expenses in connection with the Debtors Chapter 11 cases,
* provides for the proper treatment of administrative and
tax claims pursuant to the requirements of Section
1129((a)(9) of the Bankruptcy Code,
* is feasible,
* calls for the payment of fees payable under Section 1930
of the Judiciary Procedures Code,
* does not alter retiree benefits,
* is fair and equitable, and
* does not call for the avoidance of taxes or the
application of Section 5 of the Securities Act of 1933.
Review of the Plan
The Plan proposes to monetize the Debtors' assets for distribution
to its creditors and equity holders.
Secured and unsecured creditors will recover everything they're
owed, together with post-petition interest. As previously
reported, the Court allowed for the advanced payment of general
unsecured claims amounting to $35 to $40 million with postpetition
interest at 6-5/8%.
The residual value of the Debtors' estates after paying the
unsecured creditors -- estimated at $87 million -- will be
transferred to a liquidating trust.
The Debtors will cease to operate and the liquidating trust will
be used to settle allowed securities litigation claims and equity
interests.
Headquartered in New York, New York, Impath Inc., together with
its subsidiaries, is in the business of improving outcomes for
cancer patients by providing patient-specific diagnostic and
prognostic services to pathologists and oncologists, providing
products and services to biotechnology and pharmaceutical
companies, and licensing software to hospitals, laboratories, and
academic medical centers. The Company filed for chapter 11
protection on Sept. 28, 2003 (Bankr. S.D.N.Y. Case No.
03-16113). George A. Davis, Esq., at Weil, Gotshal & Manges, LLP
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$192,883,742 in total assets and $127,335,423 in total debts.
INGLES MARKETS: Likely Weak Cash Flow Cues Moody's to Pare Ratings
------------------------------------------------------------------
Moody's Investors Service downgraded all ratings of Ingles Markets
Inc. including the 8.875% senior subordinated notes (2011) to B3
from Ba3. The downgrade reflects the expectation that credit
metrics and free cash flow generation will remain significantly
weaker than Moody's had anticipated as capital investment and
dividends consume most operating cash flow, ongoing reliance on
bilateral lines of credit, and the increasing challenges for
conventional supermarket operators. The recent restatement of
financial results for the 2004, 2003, and 2002 fiscal years did
not adversely affect Moody's credit opinion. The rating outlook
is stable. This rating action concludes the review that commenced
on January 21, 2005.
Ratings lowered are:
* $350 million of 8.875% Senior Subordinated Notes (2011) to B3
from Ba3,
* Senior implied rating to B1 from Ba2, and the
* Long-term unsecured issuer rating to B2 from Ba3.
Moody's does not rate any of the secured or unsecured bank debt.
Debt protection measures are meaningfully weaker than Moody's
expected at this point when ratings were initially assigned in
November 2001. Moody's had anticipated a more conservative
allocation of operating cash flow between debt reduction,
dividends, and capital investment so lease adjusted leverage was
now expected to come close to 4 times and fixed charge coverage
would approach 2 times. In spite of good operating performance in
recent years, free cash flow has generally been negative and
leverage has remained relatively high due to substantial cash
outflows for real estate purchases and dividends. For the twelve
months ending December 2004, lease adjusted leverage equaled
around 5 times (based on gross rent without netting out subrental
income) and fixed charge coverage was about 1.5 times. Given the
company's real estate policy and financial strategy, Moody's
expects balance sheet improvement from free cash flow to remain
modest over the medium-term. Although the company makes
significant ongoing investments in its store base, enjoys a solid
share of its local markets, and consistently has an EBITDAR margin
greater than 8%, it faces increased competition as larger
traditional and non-traditional grocery retailers continue opening
stores. While Ingles has sufficient external sources of finance
in the form of bilateral lines of credit, a committed syndicated
bank loan facility would be more typical for a company with
revenue in excess of $2 billion.
Constraining the ratings are:
(1) the limited cash flow available for balance sheet
improvement because of the strategies of owning most real
estate and having a high dividend payout ratio,
(2) the potential uncertainty of relying on bilateral lines of
credit in a hypothetical distress scenario, and
(3) the substantial competitive challenges that the company
faces.
Moody's believes that the high level of competition from
supercenters, other non-traditional grocery retailers, and other
conventional supermarket operators such as Kroger (senior
unsecured Baa2), Publix (unrated), Bi-Lo (unrated), Food Lion
(senior implied rating of parent Delhaize America Ba1), and
Wal-Mart (senior unsecured rating Aa2) will challenge the
company's ability to grow cash flow and reduce capital investment.
Debt protection measures that are significantly weaker than
Moody's had expected at this point following the initial rating
assignment in November 2001 and the exposure to economic
conditions within a relatively small geographic region (primarily
the western halves of the Carolinas plus adjacent areas of
neighboring states) also negatively affect Moody's opinion of
Ingles.
However, credit strengths are the potential medium-term liquidity
from the company's large real estate portfolio given that
unencumbered asset fair market value meaningfully exceeds book
value, Moody's expectation that the long-term stability of
operating strategy will continue during the ongoing transition to
a second generation of management and ownership, and the company's
important position in an economically vibrant region. Moody's
confidence that Ingles should be able to maintain solid operating
margins and a strong market position, even as competitors continue
opening stores in line with the growing regional population, also
support the ratings.
The stable rating outlook reflects our expectation that
(1) operating performance and market share will remain near
current levels,
(2) returns to shareholders will not increase from current
levels, and
(3) asset fair market valuation will remain strong relative to
total debt commitments.
If cash outflows for dividends and capital investment prompt
leverage increases, the current level of operating performance
falters, or returns on capital investment fall below expectations,
then the ratings would be adjusted downward. Over the longer
term, an upgrade would require meaningfully positive free cash
flow generation, improved debt protection measures (such as fixed
charge coverage comfortably exceeding 2 times and lease adjusted
leverage falling well below 5 times), a strong liquidity profile
that includes a committed syndicated bank loan facility, and
continued profitable share of its local markets.
The B3 rating on the senior subordinated notes considers that this
debt is contractually subordinated to significant amounts of more
senior obligations. Ingles Markets, Inc., which directly runs all
material operations except for the non-guarantor dairy subsidiary,
is the note issuer. The more senior claims are principally
comprised of $246 million of mortgages and other secured debt,
five bilateral unsecured credit lines totaling $135 million, and
$157 million of accounts payable. Given that about half of the
company's real estate is unencumbered and our belief that real
estate fair market value substantially exceeds book value, Moody's
expects that this subordinated debt class has a good level of
protection in a distress scenario.
Ingles Markets, Inc., with headquarters in Asheville, North
Carolina, operates 197 supermarkets principally in North Carolina,
South Carolina, Georgia, and Tennessee. Revenue for the four
quarters ending December 2004 was almost $2.2 billion.
JARETT R. LEZDEY: Case Summary & 13 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: Jarett R. Lezdey
140 Marcdale Boulevard
Indian Rocks Beach, Florida 33785
Bankruptcy Case No.: 05-08711
Debtor affiliate filing separate chapter 11 petitions:
Entity Case No.
------ --------
Darren B. Lezdey 05-08716
Type of Business: The Debtors disclose in their chapter 11
petitions that they are witnesses in In re
J&D Sciences, Inc. (Bankr. M.D. Fla. Case No.
02-00342). J&D Sciences filed for chapter 11
protection on Jan. 8, 2002, and the case
converted to a chapter 7 liquidation proceeding
on Apr. 23, 2002. V. John Brook, the chapter 7
trustee, is currently litigating a patent
dispute. Mr. Brook's lawyers are:
Donald R Kirk, Esq.
Fowler, White, Boggs, Banker, PA
PO Box 1438
Tampa, FL 33601
Tel: (813) 228-7411
- and -
Herbert R Donica, Esq.
Donica Law Firm PA
106 S. Tampania Avenue #250
Tampa, FL 33609
Tel: (813) 878-9790
Chapter 11 Petition Date: April 29, 2005
Court: Middle District of Florida (Tampa)
Judge: K. Rodney May
Debtors' Counsel: Steven M Berman, Esq.
Berman & Norton Breman, PA
401 South Florida Avenue, Suite 300
Tampa, Florida 33602
Tel: (813) 301-0043
Estimated Assets Estimated Debts
---------------- ---------------
Jarett R. Lezdey $100,000 to $10 Million to
$500,000 $50 Million to
Darren B. Lezdey $100,000 to $10 Million to
$500,000 $50 Million to
A. Jarett R. Lezdey's 6 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Allan Wachter, M.D. $17,444,949
c/o Sacks Tierney, P.A.
4250 North Drinkwater Blvd., 4th Floor
Scottsdale, AZ 85251
MBNA America $32,727
PO Box 15137
Wilmington, DE 19886
Bank of America $26,567
PO Box 30770
Tampa, FL 33630
Wachovia Visa $10,142
PO Box 15021
Wilmington, DE 19850
Hands, Inc. $3,299
c/o James N. Casesa, PA
3845 Fifth Avenue North
St. Petersburg, FL 33713
Central Credit Services, Inc. $2,568
PO Box 189
St. Charles, MO 63302
B. Darren B. Lezdey's 7 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Allan Wachter, M.D. $17,444,949
c/o Sacks Tierney, P.A.
4250 North Drinkwater Blvd., 4th Floor
Scottsdale, AZ 85251
Internal Revenue Service $90,972
Department of Treasury
Atlanta, GA 39901
Citifinancial $26,000
PO Box 6062
Sioux Falls, SD 57117
Wachovia Visa $10,142
PO Box 15021
Wilmington, DE 19850
Bank of America, NA $8,366
c/o Zakheim& Associates
1045 South University Drive
#202
Plantation, FL 33324
Burdines/Macys $124
c/o Northland Group
PO Box 390846
Edina, MN 55439
Sprint Conference Services $64
PO Box 101343
Atlanta, GA 30392
JOHNSONDIVERSEY: Moody's Junks $406.3MM Senior Discount Notes
-------------------------------------------------------------
Moody's Investors Service lowered the ratings of JohnsonDiversey,
Inc., and JohnsonDiversey Holdings, Inc., concluding the review
for possible downgrade begun on March 31, 2005. The downgrade is
primarily based on Moody's expectation that free cash flow for
2005 and 2006 will be weaker than originally forecast when the
outlook on the ratings was changed to negative in August 2003 and
because of the limited reduction of debt over the past three
years. The outlook remains negative.
Ratings downgraded:
-- JohnsonDiversey Holdings, Inc.
* $406.3 million aggregate principal amount at maturity
10.67% senior discount notes due 2013 -- to Caa1 from B3
-- JohnsonDiversey, Inc.
* Senior implied rating -- to B1 from Ba3
* $1.2 billion senior secured credit facilities due 2008-
2009 -- to B1 from Ba3
* $300 million senior subordinated notes due 2012 -- to B3
from B2
* EUR225 million senior subordinated notes due 2012 -- to B3
from B2
The downgrade reflects our expectation that near term free cash
generation (cash from operations less capital expenditures and
dividends) will remain weaker than originally projected, primarily
because of earnings pressure from higher raw material costs.
Continued price increases for crude oil and natural gas -- two key
inputs for the products manufactured by the company's polymer
division and the floor care unit of the professional services
business -- are expected to continue to constrain gross margins
over the near term.
Moody's notes that total debt adjusted for accounts receivable
securitization, including the discount notes at the holding
company level, has been stagnant since the May 2002 merger of S.C.
Johnson Commercial Markets Inc. and DiverseyLever Inc. This is
largely a result of limited free cash flow generation, adverse
currency impact on the dollar value of euro denominated debt and
accretion of the holding company discount notes over the past
three years.
Moody's estimates that cash flow from operations before
receivables securitization was $162 million for the fiscal year
ended December 31, 2004, which was approximately flat compared to
fiscal 2003 when adjusted for the timing of certain post-merger
payments between Unilever and JohnsonDiversey and pension plan
contributions. Free cash flow was $19 million and $73 million in
fiscal years 2004 and 2003, respectively. As of December 31,
2004, total debt of approximately $1.76 billion remained close to
levels at closing of the merger.
As a consequence, debt protection measures did not improve during
fiscal 2003 and fiscal 2004, as previously mentioned. For the
fiscal year ended December 31, 2004, free cash flow to total debt
and EBITDA less capital expenditures to cash interest were 1.2%
and 2.4 times, respectively. These measures are reflective of the
single B rating category. Moody's notes that the cumulative
currency impact on term debt from the time of the merger until
December 31, 2004 was an increase of approximately $189 million.
The negative outlook reflects the significant challenges
JohnsonDiversey faces in meeting earnings, cash generation and
covenant targets in the near term.
Moody's believes there will continue to be a lag between the
likely increase of input costs and the company's pricing actions.
JohnsonDiversey implemented several pricing actions and took other
corrective measures (such as raising fuel and freight surcharges,
increasing focus on higher margin products, and substituting lower
cost inputs) in late 2004 and early 2005. Moody's understands
that the company plans to raise prices throughout the remainder of
2005 as needed to offset the rise in raw material costs. Moody's
anticipateS that these actions will positively affect earnings and
cash flow, but not until the second half of 2005. It is also
Moody's expectation that JohnsonDiversey will successfully
finalize its integration and cost reduction efforts as scheduled,
continue to maintain solid working capital management, and retain
full access to required raw materials.
Moody's views the amendment of JohnsonDiversey's credit agreement
(dated April 8, 2005) as a positive development because it
provides the company with cumulative interest savings of about
$18 million over the next four years and favorable adjustments to
leverage and interest coverage covenants. Moody's note, however,
that flexibility under the financial covenants remains very
limited. This is particularly the case in the first semester of
2005 because most earnings benefits from pricing and other
corrective measures will not materialize before the latter half of
2005.
For the twelve months ending June 30, 2005 (end of second
quarter), Moody's estimates that the company will have very
limited flexibility under its minimum interest coverage covenant,
with an estimated EBITDA cushion of less than 10%. This is
mitigated to some extent by our expectation of improved
covenant-implied availability under the revolving credit facility
at the end of the first quarter.
The ratings continue to be supported by JohnsonDiversey's strong
market positions (generally #1 or #2) in the relatively stable
institutional and industrial cleaning industry. The company's
broad product array, innovation expertise, and global resources
permit the company to compete as a one-stop shop when customers
consolidate vendors or expand geographically. At the same time,
JohnsonDiversey's geographic and customer diversification allows
for limited exposure to client losses or regional economic
concerns. Long-term trends toward outsourcing and regulatory and
safety compliance should continue to favor modest, but stable
top-line growth, with limited exposure to economic downturns.
The ratings are constrained by JohnsonDiversey's substantial
financial leverage, particularly when adjusted for the discount
notes at the holding level and off-balance sheet obligations.
Off-balance sheet debt includes operating leases, asset
securitizations and unfunded pension obligations. In addition,
Moody's views the company's Class B common stock as debt because
of the put rights held by Unilever under a stockholders'
agreement. The company participates in a highly competitive and
fragmented industry, with well-resourced Ecolab (A2, stable)
representing a powerful and aggressive #1 or #2 player in most of
its key markets. As noted, JohnsonDiversey 's global operations
are exposed to the risks of foreign currency fluctuations and the
price volatility of raw materials. Lastly, the nature of the
company's business presents moderate concerns regarding
environmental, product liability and regulatory risks.
The Caa1 rating on the holding level discount notes reflects the
lack of subsidiary guarantees, which leave the notes structurally
subordinated to a substantial amount of indebtedness and
liabilities at the holding company's subsidiaries. Cash interest
on the notes is not payable until November 2007, when payment will
not be required if JohnsonDiversey, Inc., is restricted under its
debt agreements from paying sufficient dividends to
JohnsonDiversey Holdings, Inc. Other terms and conditions are
customary for such securities and are aligned with
JohnsonDiversey's subordinated notes indenture.
Ratings could be raised if the company weathers current cost
pressures well, and returns to levels of free cash flow that will
allow for substantial reduction of debt, both on an adjusted and
unadjusted basis. An upgrade may be considered, once adjusted
free cash flow to adjusted debt approaches 10% on a sustainable
basis.
Ratings could be lowered if the company's pricing actions and
other corrective measures fail to more than offset higher material
costs and improve profit margins, resulting in continued weak free
cash generation and stable or increasing debt levels. A downgrade
is likely if adjusted free cash flow to adjusted debt fails to
approach or exceed 5% on a sustainable basis over the next nine to
twelve months.
Headquartered in Sturtevant, Wisconsin, JohnsonDiversey, Inc., is
a leading manufacturer and marketer of cleaning products and
services for the global institutional and industrial cleaning and
sanitation market. The company is also a leading worldwide
supplier of water-based acrylic polymer resins, primarily for the
industrial printing and packaging markets. The company was formed
in May 2002 through the acquisition of Unilever's DiverseyLever by
S.C. Johnson Commercial Markets (a previously spun-off subsidiary
of S.C. Johnson & Son, Inc.). JohnsonDiversey, Inc., is a wholly
owned subsidiary of JohnsonDiversey Holdings, Inc., which in turn
is owned by Johnson family affiliates (67%) and Unilever (33%).
Unilever has put rights with respect to its equity stake at 8x LTM
EBITDA beginning in 2007. Sales for the fiscal year ended December
31, 2004 were approximately $3.2 billion.
JOSE DE LEON: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Jose Vargas de Leon
Luz Rodriguez Merced
PMB 165
1507 Ponce de Leon Avenue
San Juan, Puerto Rico 00909
Bankruptcy Case No.: 05-03639
Chapter 11 Petition Date: April 21, 2005
Court: District of Puerto Rico (Old San Juan)
Judge: Sara E. de Jesus
Debtor's Counsel: Carlos A. Piovanetti Dohnert, Esq.
Carlos Piovanetti Law Offices
Banco Coop Plaza, Suite 804-B
623 Ponce de Leon Avenue
San Juan, Puerto Rico 00917
Tel: (787) 758-1835
Total Assets: $900,500
Total Debts: $1,179,806
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Firstbank Personal Guarantee $517,000
c/o Carmen A. Guzman, Esq.
Enrique, Nazar, Rizek & Ass.
P.O. Box 191017
San Juan, PR 00919
Corp. Ama de Llaves Personal Guarantee $78,104
c/o Roberto Palou Bosch, Esq.
Cond Lemans 308
602 Mu¤oz Rivera Avenue
San Juan, PR 00918
Department of the Treasury 1998 Tax Form $23,927
Internal Revenue Service 1040 PR
P.O. Box 245, Droppoint 819
Bensalem, PA 19020
Citigold Card/Academy Credit Card $7,043
Collection
Sprint PCS/Diversified Cellphone Utilities $3,524
Adjustments
Asociacion Residentes Monte Maintenance Fees Debtor $3,300
Alvernia and/or Preferred Residence
Home Service Inc.
BBVA Visa Card $2,329
Sears-Premier Card Credit Card $2,090
Mutual of Omaha Insurance Life $1,550
Retail Service/Rooms to Go Furniture $1,492
Melia Vacation Club Maintenance fee for $1,437
Apartment MT 0907
Melia Vacation Club Maintenance fee for $1,046
Apartment MT 0908
Centennial/NCO Financial Cellphone Utilities $997
AT&T/NCO Financial Systems Cellphone Utilities $737
Komodidad Distributors Clothing $557
Macy's Credit Card $543
WFNNB-Victorias Secret Clothing $454
Zales Corp. Jewelry $194
Radio Shack Credit Plan Credit Card $191
El Jibarito Solar Services $170
/Transworld
JOSE RIVERA: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Jose Rivera
Condominio Alambra Plaza, Apartamento 901
Ponce, Puerto Rico 00732
Bankruptcy Case No.: 05-03710
Chapter 11 Petition Date: April 18, 2005
Court: District of Puerto Rico (Old San Juan)
Debtor's Counsel: Carlos Rodriguez Quesada, Esq.
Law Office Of Carlos Rodriguez Ques
P.O. Box 9023115
San Juan, Puerto Rico 00902-3115
Tel: (787) 724-2867
Total Assets: $672,500
Total Debts: $11,026,927
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Damaris Echevarria/ Civil Action $2,800,000
Ledo. Velazquez
#37 Calle Sol
Ponce, PR 00717
Edna Saez Lopez/ Civil Action $2,451,000
Ledo. Velazquez
#37 Calle Sol
Ponce, PR 00717
Madeline Ruiz Rivera/ Civil Action $1,170,000
Ledo Velazquez
#37 Calle Sol
Ponce, PR 00717
Noemi Garcia Perez/ Civil Action $1,145,000
Ledo. Velazquez
#37 Calle Sol
Ponce, PR 00717
Maria M. Gonzalez Vasquez/ Civil Action $1,095,000
Ledo. Velazquez
#37 Calle Sol
Ponce, PR 00717
Maria E. Torres Morales/ Civil Action $960,000
Ledo. Velazquez
#37 Calle Sol
Ponce, PR 00717
Ramona Mercado Rivera/ Civil Action $850,000
Ledo. Felix Toro
P.O. Box 7719
Ponce, PR 00717
Sallie Mae Servicing Student Loan $138,000
Progressive Financial Financing of $60,716
insurance policy
Eurobank Personal Loan $51,112
Popular Auto Auto Lease $39,098
Scotiabank Personal Loan $30,179
Sallie Mae Servicing Student Loan $17,010
Internal Revenue Service Personal Social $14,122
Security
JUNIPER GROUP: Recurring Losses Trigger Going Concern Doubt
-----------------------------------------------------------
Juniper Group, Inc., had a working capital deficit of $1,144,000,
at December 31, 2004, compared to a working capital deficit of
$1,422,000 at December 31, 2003. The ratio of current assets to
current liabilities was 0.25:1 at December 31, 2004, and 0.16:1 at
December 31, 2003.
Cash flow used for operations during 2004 was $1,270,000, compared
to cash flow used for operations during 2003 of $1,321,000. The
Company's operations in 2004 were funded primarily by Convertible
Debentures of $1,335,000. The Company has incurred losses in the
last several years and has funded its operations primarily from
the sale of securities in private transactions.
The Company invested all of its resources in 2004 in capital
purchases and providing working capital for Juniper to cover the
costs of insurance, vehicles, equipment, working gear, training
facilities, personnel and related costs. Juniper also continued
refining its cable services business model, reducing its costs for
vehicles, facilities, phones, personnel and administration, and it
has made substantial progress towards improving the profitability,
performance and scalability of its service business.
The Company invested in the expansion of its executives and
management capabilities, and incurred recruitment and initial
expenses of adding personnel to its management team. During 2004
the Company also invested its resources in the business planning
for participation in the implementation of Wireless Broadband
Services, especially in the attractive field of Wireless Antenna
and Tower surveys and installations. The Company signed a
Professional Services Agreement with Motorola and was appointed as
an exclusive Motorola-Canopy Provider for Installations and
Services contracted nationwide by Canopy's direct sales
organization, which is focusing on major telecommunications
companies.
Juniper supported several pilot programs in Kansas and North
Carolina performing site surveys and tower installations for
Motorola Canopy's project with Sprint. These initial services were
highly successful and Motorola anticipated a major rollout of
Canopy systems in many Sprint territories in 2005, which will be
installed by Juniper.
The Company has no material commitments for capital expenditures
or the acquisition of films. If cash flow permits however, the
Company plans to enhance its information and telecommunications
system capabilities to more efficiently and effectively provide
for Juniper Services.
During 2004, the Company did not have sufficient cash to pay for
the cost of its operations, or to pay its current debt
obligations. The Company raised approximately $1,335,000 for
working capital, for capital purchases and for the payment of debt
through the sale of unregistered securities (7% convertible
debentures, notes payable and common stock).
Among the debt obligations for which the Company has not had
sufficient cash is the obligation to meet its payroll, payroll
taxes and the funding of its subsidiary. Certain employees have
agreed, from time to time, to receive the Company's common stock
in lieu of cash. In these instances the Company has determined
the number of shares to be issued to employees based upon the
unpaid net pay and the current market price of the stock.
Additionally, the Company registered these shares so that the
employees can immediately sell their stock in the open market. A
plan of payment for the past due payroll taxes is currently being
negotiated. During the first quarter of 2005, approximately
$31,000 was paid for past due payroll taxes. These funds
originated from the operations of JCOM. The Company currently
does not have any lines of credit.
Going Concern Doubt
The Company has suffered recurring losses from operations, which
raised substantial doubt about its ability to continue as a going
concern, GOLDSTEIN & GANZ, CPA's, P.C., Juniper Group's auditors,
say. The Company believes that it will need additional financing
to meet its operating cash requirements for the current level of
operations during the next twelve months and will require
additional capital in order to complete its planned expansion. The
Company has developed a plan to reduce its liabilities and improve
cash flow through expanding operations. This program has been
implemented throughout the Company in all executive, management,
administrative and operational groups. During the first quarter
2005, Juniper has taken advantage of the slowed pace of broadband
installations by redirecting its objectives to adjust for new
opportunities in the broadband industry and by restructuring its
direct and overhead expenses. Juniper has instituted a series of
operational refinements, which are aimed at increasing its gross
margins from both its cable and wireless implementation services.
Juniper has reorganized its staffing model for more efficient use
of its field personnel. It has adjusted its mix of fixed and
variable costs to assure that its operational expenses more
closely match customer workflow demands.
As of December 31, 2004, the Company had $135,000 principal amount
of capitalized leases payable and $1,710,000 of notes payable
outstanding. The Company's capital leases and notes accrue
interest at rates ranging from 9% to 24% per annum, and mature at
varying dates, through 2008. If the Company is unable to fund its
cash flow needs, the Company may have to reduce, or stop, planned
expansion, or possibly scale back operations.
The businesses of Juniper Group, Inc., are composed of two
segments: (1) technology services and (2) entertainment. The
Company and its subsidiaries operate their businesses from the
Company's Great Neck location in New York. The Company's
technology operations are conducted through two wholly owned
subsidiaries of Juniper Entertainment, Inc. The Company's
technology segment is conducted through Juniper Communications,
Inc., which is owned 100% by JEI. The Company's entertainment
operations are conducted through one wholly owned subsidiary of
JEI, which is a wholly owned subsidiary of the Company. Juniper
Pictures, Inc., engages in the acquisition, exploitation and
distribution of rights to films to the various media (i.e., DVD,
Domestic and International, satellite, home video, pay-per view,
pay television, cable television, networks and independent
syndicated television stations) in the domestic and foreign
marketplace.
KB TOYS: Plan Negotiations with Big Lots Crumble
------------------------------------------------
Talks to formulate a consensual plan of reorganization between KB
Toys Inc. and its largest creditor Big Lots Inc. came to a halt
last week, according to a MarketWatch report. Big Lots asserts a
$50 million claim against KB Toys.
The plan talks were recommended by the Honorable Donal D. Sullivan
of the U.S. Bankruptcy Court for the District of Delaware to see
if the parties could settle their dispute over Bain Capital's
alleged looting of KB Toys. Big Lots charges that Bain Capital
Partners -- which owns 1/3 of KB Toys -- and top KB executives
(including CEO Michael Glazer) took $121 million from KB Toys.
Big Lots is represented by Jeff Marwil, Esq., at Jenner & Block
LLP. "The negotiations failed," Mr. Jenner told the Court at a
hearing on April 21, MarketWatch relates. "They don't want to
make a deal with us," Mr. Marwil continued.
The Official Committee of Unsecured Creditors supported Big Lots
but changed its mind after reaching a favorable agreement with KB
Toys on a chapter 11 plan that Big Lots doesn't like. Big Lots
resigned from the Committee and says the Committee is incapable of
protecting its interests in the bankruptcy proceeding.
Big Lots also made a pitch for a chapter 11 trustee. Judge
Sullivan declined that invitation at the April 21 hearing.
One of the largest toy retailers in the United States, KB Toys
-- http://www.kbtoys.com/-- (which once boasted 1,200 stores)
operates about 650 stores under four formats:
* KB Toys mall stores,
* KB Toy Works neighborhood stores,
* KB Toy Outlets and KB Toy Liquidator, and
* KB Toy Express (in malls during the holiday season).
The company along with its affiliates filed for chapter 11
protection on January 14, 2004 (Bankr. Del. Case No. 04-10120).
The chapter 11 filing resulted in nearly 600 store closures and
4,000 layoffs. In March 2004, KB Toys sold its KBToys.com
Internet business to an affiliate of D. E. Shaw, which renamed the
company eToys Direct. Joel A. Waite, Esq., at Young, Conaway,
Stargatt, & Taylor, represents the toy retailer. When the Debtors
filed for protection from its creditors, they listed consolidated
assets of $507 million and consolidated debts of $461 million.
KRISPY KREME: Kroll Zolfo Bonus Talk Deadline Pushed to May 31
--------------------------------------------------------------
Krispy Kreme Doughnuts, Inc. (NYSE: KKD), Kroll Zolfo Cooper LLC,
Stephen F. Cooper and Steven G. Panagos, have agreed to extend the
deadline to negotiate a Success Fee under the terms of their
Services Agreement dated January 18, 2005, as supplemented and
amended.
As previously reported in the Troubled Company Reporter, Krispy
Kreme hired Kroll Zolfo Cooper LLC as its financial advisor and
interim management consultant. Stephen F. Cooper has been named
Chief Executive Officer, and Steven G. Panagos now serves as
President and Chief Operating Officer. Mr. Cooper is the
Chairman and Mr. Panagos is a Managing Director of KZC.
Since KZC's arrival, Krispy Kreme has announced cash conservation
and cost-cutting measures. Earlier this month, Krispy Kreme said
it was closing five of six test locations operated inside Wal-Mart
stores.
Founded in 1937 in Winton-Salem, North Carolina, Krispy Kreme is a
leading branded specialty retailer of premium quality doughnuts,
including the Company's signature Hot Original Glazed. Krispy
Kreme currently operates approximately 400 stores in 45 U.S.
states, Australia, Canada, Mexico and the United Kingdom.
Krispy Kreme's Web site is at http://www.krispykreme.com/
KRISPY KREME: Delays Annual Report Filing Due to Ongoing Analysis
-----------------------------------------------------------------
Krispy Kreme Doughnuts, Inc. (NYSE: KKD) was unable to file its
Form 10-K for the fiscal year ended January 30, 2005, within the
prescribed time period and provided a financial update.
Annual Report on Form 10-K Update
The Company has filed a Notification of Late Filing on Form 12b-25
stating that its annual report on Form 10-K for fiscal 2005 could
not be filed timely due to ongoing analysis related to the proper
application of generally accepted accounting principles to certain
transactions which occurred in the fiscal year ended Feb. 1, 2004,
and earlier years as well as in fiscal 2005. Until such analyses
are complete, the Company is unable to finalize its financial
statements for fiscal 2005. The Company's Audit Committee and
management have concluded that the Company's financial statements
for fiscal 2001, 2002 and 2003 and the first three quarters of
fiscal 2005, in addition to the financial statements for fiscal
2004, should no longer be relied upon.
Financial Restatements
In a Current Report on Form 8-K dated December 28, 2004, the
Company disclosed that its Board of Directors had concluded that
the Company's previously issued financial statements for fiscal
2004 should be restated to correct certain errors contained
therein. The Company further disclosed that the Company was
conducting analyses of additional matters which could give rise to
additional restatement adjustments to previously issued financial
statements, and that certain investigations were ongoing which
also could give rise to additional restatement adjustments. The
Company's analyses and the investigations are ongoing; in
addition, the Company is conducting discussions with the Staff of
the Division of Corporation Finance of the Securities and Exchange
Commission regarding the Staff's inquiries concerning certain
accounting matters, including certain of the matters giving rise
to the adjustments described below.
On Dec. 28, 2004, the Board of Directors determined that
adjustments should be made to reduce pre-tax income for fiscal
2004. The principal adjustments, which relate to the Company's
accounting for the acquisitions of certain franchisees, are:
-- a pre-tax adjustment of between $3.4 million and
$4.8 million to record as compensation expense, rather than
as purchase price, some or all of the disproportionate
consideration paid to an individual who was the prior
operating manager and one of the former owners of the
Michigan franchise and who subsequently worked for the
Company for a short period of time after the acquisition;
-- a pre-tax adjustment of approximately $0.5 million to
reverse certain income and to record as expense amounts that
were improperly accounted for as part of the Company's
acquisition of the Michigan franchise
-- a pre-tax adjustment of $1.0 million (previously estimated
at between $0.5 million and $1.0 million) to record as
compensation expense, rather than as purchase price, the
disproportionate consideration paid to one of the former
owners of the minority interest in the Northern California
franchise, who was its former operating manager and who
worked for the Company for a short period of time;
-- a pre-tax adjustment of approximately $1.9 million
(previously estimated at $0.8 million) to record as expense,
rather than as purchase price, part of the consideration
paid to another former owner of the Northern California
franchise;
-- a pre-tax adjustment of approximately $0.6 million to
reverse income recorded as a management fee in connection
with the Company's acquisition of the minority interest in
the Northern California franchise;
-- a pre-tax adjustment of approximately $0.5 million to record
as expense, rather than as purchase price, part of the
consideration in the Company's acquisition of the
Charlottesville franchise.
The first and third adjustments listed above, with a combined pre-
tax effect of $4.4 million to $5.8 million, reflect the
application of judgment in determining the amount of compensation
or other expense embedded in the payments to the sellers who were
employed by the Company for a short period of time and/or received
a disproportionately higher purchase price compared to other
sellers.
In addition to the foregoing adjustments, the Company's ongoing
analyses have resulted in conclusions that additional restatement
adjustments are necessary, as follows:
* pre-tax adjustments to increase earnings for fiscal 2004 by
approximately $1.2 million and to decrease earnings for
years prior to fiscal 2004 by approximately $0.2 million to
record mark-to-market adjustments on certain derivative
transaction which previously had not been recorded;
correlative adjustments are expected to reduce fiscal 2005
first quarter and second quarter pre-tax earnings by
approximately $0.4 million and $1.0 million, respectively,
and increase fiscal 2005 third quarter pre-tax earnings by
approximately $0.2 million;
* pre-tax adjustments currently estimated to be approximately
$1.4 million to decrease earnings for fiscal 2004 to
correct errors in the application of accounting principles
to certain leases and leasehold improvements; these
adjustments are necessary principally to account properly
for lease renewal options and/or rent escalations in
computing rent expense for operating leases, to determine
properly the depreciable lives of leasehold improvements
when renewal options are present in leases and to require
use of the same lease term in determining the operating or
capital classification of a lease, rent expense thereunder
and depreciable lives of related leasehold improvements;
the Company estimates that correlative adjustments to the
first, second and third quarters of fiscal 2005 will reduce
pre-tax earnings by approximately $0.5 million, $0.5
million and $0.6 million, respectively; the Company
currently is computing the effects of correlative
adjustments on years prior to fiscal 2004, and expects the
annual amount of such adjustments to be significantly less
than for fiscal 2004;
* a pre-tax adjustment of between $0.6 million and
$0.8 million in fiscal 2004 to reverse income related to
certain equipment sold by the Company to its Dallas
franchisee prior to the Company's acquisition of such
franchise.
Restatement of the Company's financial statements to reflect all
of the adjustments referred to above and certain other minor
adjustments is expected to reduce net income for fiscal 2004 by
between approximately $5.2 million and $6.2 million (between 9.2%
and 10.9%). The adjustments are expected to reduce diluted
earnings per share for fiscal 2004 by between approximately $0.09
and $0.10. Certain restatement adjustments the Company has
identified but not enumerated above will affect reported earnings
for interim periods within fiscal years but have an immaterial
effect on earnings for the full fiscal year.
The Company also has concluded that under the provisions of
FIN46(R), it should have consolidated the financial statements of
KremeKo Inc., its area developer for Central and Eastern Canada,
effective as of the end of the first quarter of fiscal 2005 rather
than as of the end of the third quarter of fiscal 2005. The
Company currently expects that restatement adjustments to
previously issued interim financial information for fiscal 2005 to
correct this error will not have a material effect on pre-tax
earnings for such interim periods. On April 15, 2005, the Company
announced that KremeKo was commencing a financial restructuring.
The Company is in the process of assessing the impact of the
pending restructuring on the carrying value of KremeKo's assets
and liabilities.
The Company also believes it is likely that additional restatement
adjustments to previously issued financial statements for fiscal
2004 and earlier years, and potentially to interim financial
information for fiscal 2005, will be required to correct the
timing of revenue recognition with respect to certain sales of
equipment to franchisees. While the Company's analysis of this
matter is not complete, the Company expects that adjustments will
be recorded to recognize revenue from certain equipment sales on
or after the installation of the equipment rather than when the
equipment was either shipped or delivered. The Company currently
is reviewing the accounting and quantifying the effects of such
potential adjustments which, if necessary and recorded, are
expected to affect principally fiscal 2004 and earlier years.
The Company currently is conducting impairment testing of the
reported amounts of goodwill, and anticipates that it will
conclude that goodwill is impaired and that an impairment charge
will be reflected in fiscal 2005 earnings; however, the Company
has not concluded in which interim period or periods of fiscal
2005 such charge or charges, if any, should be recorded. The
interim financial information previously published by the Company
for fiscal 2005 does not reflect any such impairment charges.
Because the investigation by the Special Committee of independent
directors of the Company (discussed in the Company's Current
Report on Form 8- K dated December 15, 2004) is ongoing, there can
be no assurance that, upon completion of the investigation, the
Special Committee will not conclude, either for quantitative or
qualitative reasons, that the Company's historical financial
statements require restatement with respect to matters beyond
those discussed above. In such event, there can be no assurance
that the amount of any additional adjustments will not be material
individually or in the aggregate.
In addition, the previously disclosed investigations of the
Company by the Division of Enforcement of the Commission and the
United States Attorney's Office for the Southern District of New
York are ongoing.
In order that all restatements of previously issued financial
statements be accomplished at one time, the Company has concluded
that the completion of the fiscal 2005 financial statements and
the filing of its annual report on Form 10-K for fiscal 2005 (as
well as the quarterly report on Form 10-Q for the period ended
October 31, 2004) should await the completion of the Company's
analyses discussed above, the conclusion of the Special
Committee's investigation and the conclusion of the Company's
discussions with the Commission staff regarding accounting
matters. The completion of such ongoing work could result in
adjustments of previously issued financial statements in addition
to the adjustments described herein and such adjustments could,
individually or in the aggregate, be material.
As a result of the foregoing, the Company was not able to file its
annual report on Form 10-K by April 15, 2005, and it does not
expect to be able to file its Form 10-K by April 30, 2005. The
Company is not at this time able to predict when the Form 10-K
will be filed, but intends to file the report at the earliest
practicable date.
Delisting
The Company's failure to file timely its quarterly report on
Form 10-Q or its annual report on Form 10-K may constitute failure
to comply with the continued listing requirements of the New York
Stock Exchange, on which the Company's common stock is listed.
The Company has communicated informally with the Exchange
regarding the filing of the Company's periodic reports; however,
the Company cannot predict what action, if any, the Exchange may
take regarding the Company's failure to file its required reports
on a timely basis.
Sarbanes-Oxley Act
Section 404 of the Sarbanes-Oxley Act of 2002 requires the Company
to include "Management's Report on Internal Control over Financial
Reporting" in its annual report on Form 10-K for fiscal 2005,
which must include, among other things, an assessment of the
effectiveness, as of the end of the fiscal year, of the Company's
internal control over financial reporting. In making its
assessment, management is using the criteria described in Internal
Control--Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Management's
evaluation of the Company's internal control over financial
reporting as of January 30, 2005 is not complete. Audit Standard
No. 2 states that a restatement of previously issued financial
statements to reflect the correction of an error should be
regarded as at least a significant deficiency and as a strong
indicator that a material weakness in internal control over
financial reporting exists. A material weakness is a control
deficiency, or combination of control deficiencies, that results
in more than a remote likelihood that a material misstatement of
the annual or interim financial statements will not be prevented
or detected. The Company believes that, because of the number and
magnitude of the restatement adjustments identified to date, it is
highly likely that it will conclude that there were one or more
material weaknesses in the Company's internal control over
financial reporting at January 30, 2005. If the Company's
management concludes that one or more material weaknesses existed,
it will be unable to conclude that the Company maintained
effective internal control over financial reporting as of
January 30, 2005. Also, if one or more material weaknesses
existed, the Company's independent registered public accounting
firm will issue an adverse opinion with respect to the
effectiveness of the Company's internal control over financial
reporting as of January 30, 2005.
Failure to comply fully with Section 404 might subject the Company
to sanctions or investigation by regulatory authorities, such as
the Commission or the Exchange. Any such action could adversely
affect the Company's financial results and the market price of the
Company's common stock. In addition, any failure to implement new
or improved controls, or difficulties encountered in their
implementation, could adversely affect the Company's operating
results and/or cause the Company to fail to meet its reporting
obligations.
Financial Update
Results for fiscal 2005 were adversely impacted by significant
sales declines. For the full fiscal year, systemwide and Company
average weekly sales per factory store decreased approximately 13%
and 19%, respectively, compared to fiscal 2004. For the fourth
fiscal quarter ended January 30, 2005, systemwide and Company
average weekly sales per factory store decreased approximately 20%
and 27%, respectively, compared to the fourth quarter of fiscal
2004.
On a preliminary basis, the Company expects to report fiscal
fourth quarter revenues of approximately $153 million,
representing a 16% decrease from the prior year comparable period,
and fiscal 2005 revenues of approximately $685 million,
representing a 4% increase from fiscal 2004. The annual revenue
increase was primarily attributable to an increase in Company
store revenues, which was due to sales from new stores as well as
the inclusion of sales from New England Dough, LLC, the Company's
consolidated joint venture partner in Connecticut, Maine,
Massachusetts, Rhode Island, Vermont and New Hampshire, which was
consolidated in May 2004 pursuant to FIN 46(R) and the inclusion
of sales from the Michigan market, which was acquired in October
2003, partially offset by decreased sales from existing stores.
The Company expects to report a net loss for the fourth fiscal
quarter ended January 30, 2005. The Company's financial results
are also being adversely impacted by the substantial costs
associated with the legal and regulatory matters previously
disclosed by the Company.
Systemwide average weekly sales per factory store is a non-GAAP
financial measure. Systemwide sales data include sales at all
company and franchise stores. The Company believes systemwide
sales information is useful in assessing the Company's market
share and concept growth.
Founded in 1937 in Winton-Salem, North Carolina, Krispy Kreme is
a leading branded specialty retailer of premium quality doughnuts,
including the Company's signature Hot Original Glazed. Krispy
Kreme currently operates approximately 400 stores in 45 U.S.
states, Australia, Canada, Mexico and the United Kingdom.
Krispy Kreme's Web site is at http://www.krispykreme.com/
LAC D'AMIANTE: Court Okays Appointment of Future Representative
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
approved the appointment of former Texas State District Judge
Robert C. Pate, Esq., as the Future Claims Legal Representative
for future asbestos-related claimants of Lac d'Amiante Du Quebec
Ltee and its debtor-affiliates chapter 11 cases on April 19, 2005.
The Debtors filed their request with the Court to appoint Judge
Pate as the Future Representative on April 13, 2005.
The Debtors explain that Judge Pate's appointment as the Future
Representative is necessary because the identities of Future
Asbestos Claimants are currently unknown. The Future
Representative will act as the fiduciary to protect those unknown
Future Asbestos Claimants' interests with regard to the treatment
of asbestos claims in the company's chapter 11 proceeding.
The Debtors relate that Judge Pate is highly qualified because of
his extensive experience in complex business and personal injury
cases. Judge Pate currently serves as the Future Claims
Representative in the silicosis mass-tort bankruptcy case, In re
Clemtex, Inc. (Bankr. S.D. Tex. Case No. 01-21794-C-11).
Judge Pate will:
a) have the duty and right to participate in the formulation,
negotiation and confirmation process for any plan of
reorganization, and act as the spokesperson for the Future
Claimants; and
b) represent the Future Claimants for the purpose of binding
the Future Claimants to all orders as part of that process,
and perform the functions of a legal representative for
those Future Claimants that might assert Demands against any
of the Debtors or their estates.
The Court orders that Judge Pate will be compensated in accordance
with Sections 105(a) and 331 of the Bankruptcy Code, and he and
his counsel will be entitled to receive all notices and pleadings
which are served upon the Official Committee of Unsecured
Creditors and their respective counsel pursuant to any and all
orders entered in the Debtors' chapter 11 cases.
Headquartered in Tucson, Arizona, Lac d'Amiante Du Quebec Ltee,
fka Lake Asbestos of Quebec, Ltd., and its affiliates, are all
non-operational and dormant subsidiaries of ASARCO Inc., nka
ASARCO LLC. ASARCO mines, smelts and refines copper and
molybdenum in the United States and Peru. The Company and its
debtor-affiliates filed for chapter 11 protection on April 11,
2005 (Bankr. D. Ariz. Case No. 05-20521). Nathaniel Peter Holzer,
Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represents the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they each estimated assets
and debts of more than $100 million.
LAC D'AMIANTE: Judge Pate Taps Oppenheimer Blend as Counsel
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas gave
Judge Robert C. Pate, Esq., the Future Claims Legal Representative
for future asbestos-related claimants of Lac d'Amiante Du Quebec
Ltee and its debtor-affiliates' chapter 11 cases permission to
employ Oppenheimer, Blend, Harrison & Tate Inc. as his counsel.
Oppenheimer Blend will:
a) provide Judge Pate with legal advice with respect to his
duties and obligations in the Debtors' chapter 11 cases;
b) prepare on behalf of Judge Pate all necessary applications,
notices, answers, orders, reports and other legal papers,
and advise him in the administration of the Debtors' chapter
11 cases,
b) assist Judge Pate in his investigation of the acts, conduct,
assets, liabilities and financial condition of the Debtors'
businesses, and any other matters relevant to the
formulation of a plan of reorganization;
c) provide advice and assistance regarding the tax, trust,
litigation, and other non-bankruptcy law aspects that may be
required in the performance of Judge Pate's duties; and
d) perform all other legal services for Judge Pate which may be
appropriate and necessary in the Debtors' chapter 11 cases.
John H. Tate, Esq., a Shareholder at Oppenheimer Blend, is the
lead attorney for Judge Pate. Mr. Tate discloses that the Firm
received a $50,000 retainer from the Debtors. Mr. Tate charges
$350 per hour for his services.
Mr. Tate reports Oppenheimer Blend's professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Raymond W. Battaglia Shareholder $350
Debra L. Innocenti Associate $150
Sharie Ripley Legal Assistant $110
Cherry Stewart Legal Assistant $110
Designation Hourly Rate
------------ -----------
Shareholders/Counsel $260 - $395
Associates $150 - $240
Oppenheimer Blend assures the Court that it does not represent any
interest materially adverse to Judge Pate, the Debtors or their
estates.
Headquartered in Tucson, Arizona, Lac d'Amiante Du Quebec Ltee,
fka Lake Asbestos of Quebec, Ltd., and its affiliates, are all
non-operational and dormant subsidiaries of ASARCO Inc., nka
ASARCO LLC. ASARCO mines, smelts and refines copper and
molybdenum in the United States and Peru. The Company and its
debtor-affiliates filed for chapter 11 protection on April 11,
2005 (Bankr. D. Ariz. Case No. 05-20521). Nathaniel Peter Holzer,
Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represents the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they each estimated assets
and debts of more than $100 million.
LOGOATHLETIC INC: Court Formally Closes Chapter 11 Cases
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware entered
a final decree formally closing the bankruptcy proceedings of
LogoAthletic of Nevada, Inc., dba Collegiate Graphics, and its
debtor-affiliates.
The Court determined that the Debtors' cases demonstrate cause to
formally the chapter 11 proceedings pursuant to Bankruptcy Rule
3022 and Section 350(a) of the Bankruptcy Code:
a) the Debtors have substantially consummated the Plan, with:
(i) all objections to claims resolved, and all allowed
administrative claims, priority tax and non-tax claims,
and secured claims fully paid in accordance with the
Plan, and
(ii) a distribution to general unsecured creditors was
completed on Feb. 28, 2005, with more than 69% of their
allowed claims paid;
b) the Debtors have paid all U.S. Trustee's fees due and owing
for the year ending 2004, and they will soon file the
quarterly report for the first quarter of 2005 and pay all
the related fees prior to the closing of their chapter 11
cases;
c) the Debtors filed a final report on March 3, 2005; and
d) there is no further need for Donlin Recano as agent for the
Clerk of the Court because in the event that any further
distributions to general unsecured creditors are required,
the Plan Administrator will be able to handle those
distributions.
Headquartered in Indianapolis, Indiana, LogoAthletic, Inc., filed
for chapter 11 protection on Nov. 6, 2000 (Bankr. D. Del. Case No.
00-04126). Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub, P.C., represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they estimated assets and liabilities of over
$100 million. The Debtors' Amended Chapter 11 Liquidating Plan of
Reorganization was confirmed on Nov. 17, 2003.
MAGNETITE CBO: Overcollateralization Rises & Moody's Lifts Rating
-----------------------------------------------------------------
Moody's Investors Service upgraded its rating of these Classes of
Notes and Blended Securities issued by Magnetite CBO II, Ltd., a
collateralized debt obligation issuance:
* $184,000,000 Senior Secured Class A-1 Floating Rate Notes due
2012 from Aa1 on watch for possible upgrade to Aaa;
* $45,000,000 Senior Secured Class A-2 Fixed Rate Notes due
2012 from Aa1 on watch for possible upgrade to Aaa.
* $30,000,000 Class B Floating Rate Notes due 2012 from Baa1 on
watch for possible upgrade to A3 remaining on watch for
possible upgrade.
* $7,000,000 Class C-1 Floating Rate Notes due 2012 from Ba3 on
watch for possible upgrade to Ba2 remaining on watch for
possible upgrade.
* $10,000,000 Class C-2 Blended Securities from Ba3 on watch
for possible upgrade to Ba2 remaining on watch for possible
upgrade.
Moody's noted that the transaction, which closed in July of 2000,
has experienced improvement in overcollateralization due to
amortization of the Class A Notes. The ratings of the Class A
Notes, the Class B Notes, the Class C-1 Notes and the Class C-2
Blended Securities were placed on the Moody's watchlist for
possible upgrade on December 29, 2004.
Moody's stated that the ratings assigned to the Class A Notes, the
Class B Notes, the Class C-1 Notes and to the Class C-2 Blended
Securities, prior to the rating actions taken, are no longer
consistent with the credit risk posed to investors.
Rating Action: Upgrade
Issuer: Magnetite CBO II, Ltd.
The ratings of these Classes of Notes and Blended Securities have
been upgraded:
Class Description:
* U.S. $184,000,000 Senior Secured Class A-1 Floating Rate
Notes due 2012 from Aa1 on watch for possible upgrade to Aaa.
* U.S. $45,000,000 Senior Secured Class A-2 Fixed Rate Notes
due 2012 from Aa1 on watch for possible upgrade to Aaa.
* U.S. $30,000,000 Senior Secured Class B Floating Rate Notes
due 2012 from Baa1 on watch for possible upgrade to A3
remaining on watch for possible upgrade.
* U.S. $7,000,000 Senior Secured Class C-1 Floating Rate Notes
due 2012 from Ba3 on watch for possible upgrade to Ba2
remaining on watch for possible upgrade.
* U.S. $10,000,000 Class C-2 Blended Securities from Ba3 on
watch for possible upgrade to Ba2 remaining on watch for
possible upgrade.
MANUFACTURING TECHNOLOGY: Case Summary & 20 Unsecured Creditors
---------------------------------------------------------------
Debtor: Manufacturing Technology Services Inc.
URB Villa Blanca
100 Aquamarina
Caguas, Puerto Rico 00725
Bankruptcy Case No.: 05-03663
Type of Business: The Debtor manufactures biometric devices,
digital and electronic meters, and special-
purpose computers and laptops. See
http://www.mtspr.com/
Chapter 11 Petition Date: April 18, 2005
Court: District of Puerto Rico (Old San Juan)
Judge: Sara E. de Jesus
Debtor's Counsel: Jose Raul Cancio Bigas, Esq.
134 Mayaguez Street
Hato Rey, Puerto Rico 00917
Tel: (787) 763-1940
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Arrow Electronic Trade $1,074,813
P.O. Box 905078
Charlotte, NC 28290
Nationwide Electronics, Inc. Trade $457,919
1611 12th Street East Unit C
Palmetto, FL 34221
Future Electronic Corp. Trade $338,071
237 Hymus Boulevard
Pointe Claire
Quebec, Canada H9R 5C7
CTS Carib. Temporary Services $256,765
Services
P.O. Box 11873
San Juan, PR 00910
Autoridad De Energia Services $174,547
Electrica
Cruz Fire Sprinkler Repair Contract $171,200
Brothers Electronics Trade $165,179
CNC2000, Inc. Trade $165,522
Red Board Trade $147,920
Boardtech Trade $125,067
NU Horizons Trade $121,004
Kimball Electronics Trade $98,789
Kawai Electric (HK) Ltd. Trade $97,106
Federal Express-Latin Trade $86,636
America & Caribbean
AVNET Trace $80,980
Richardson Electronics Trade $67,240
America II Trade $64,208
Elec & Eltek Co. Ltd. Trade $60,550
Emerging Display Tech Corp. Trade $56,445
Zoppas Industries Trade $52,976
MARKET CENTRAL: Auditors Raises Going Concern Doubt
---------------------------------------------------
In April 2005, Market Central, Inc., entered into a binding
commitment to sell its call center operations. The Company's call
center operations were contained within eCommerce Support Centers,
Inc., its subsidiary. In May 2004, the Company sold a subsidiary,
U.S. Convergion, Inc., to Sylvia Holding Co., Inc., a Nevada
Corporation, in exchange for 500,000 shares of Sylvia's common
stock, and other goods and valuable consideration.
The Company's on-going operations are conducted within Market
Central, Inc. Market Central, Inc., will be changing its name,
with appropriate shareholder approval to Scientigo, Inc. This
change is expected to be effective in May 2005. The Company is
now primarily focused in intelligent Business Process Automation
technologies, specializing in developing and licensing
intellectual property to partners whose products and services
complement the Company's technologies for the benefit of clients.
These customizable solutions enable organizations to convert data
from a processing and storage burden into a competitive advantage,
whether structured, semi-structured, or unstructured, whether it
is in paper or digital form, and regardless of volume. The
Company's believes its technology provides next generation
artificial intelligence and collaboration capabilities today.
In addition, the Company provides customer support and
professional services to support its products. Scientigo product
strategy is to focus on developing and licensing technologies from
its valuable intellectual property portfolio.
Balance Sheet Upside-Down
The Company's balance sheet dated February 28, 2005, shows $2.7
million in assets and $7.5 million in total liabilities.
The Company is not currently generating positive cash flow and its
cash resources on hand are insufficient for its long term needs.
As a result, certain vendor payables, capital leases and other
obligations are in arrears and in default. Sale of Series A
Convertible Preferred shares since November 2004 has resulted in
approximately $1,717,000 in capital for the Company through
April 4, 2005. These have been the primary source of capital for
the Company and approximately $500,000 remains to be sold unless
additional shares are authorized by the Board of Directors.
The Company's decision to sell its call center operations will
result in improved cash flows but the Company must, and is
continuing to, pursue other capital sources to enable it to grow
and enhance its operations going forward. The Company's Board of
Directors has approved a term sheet for a convertible debt
offering that if successfully completed should provide the Company
with long-term financial stability.
The Company's principal cash requirements are for selling, general
and administrative expenses, employee costs, funding of accounts
receivable and capital expenditures. The Company's redirection to
a technology enterprise that includes both software products and
licensing of intellectual property will dramatically alter all
phases of the Company's operations and cash flow issues.
While the Company has continued to raise capital to meet its
working capital requirements, additional financing is required in
order to meet future needs. There are no assurances the Company
will be successful in raising the funds required and any equity
raised would be substantially dilutive to existing shareholders.
Going Concern Doubt
The Company's independent certified public accountants have stated
in their report included in the Company's August 31, 2004
Financial Statements, that the Company has incurred operating
losses in the last two years, and that the Company is dependent
upon management's ability to develop profitable operations. These
factors, among others, may raise substantial doubt about the
Company's ability to continue as a going concern. RUSSELL BEDFORD
STEFANOU MIRCHANDANI LLP, the Company's auditing firm located in
McLean, Virginia, raised these doubts in August 2004.
Market Central, Inc., formerly known as Paladyne Corp., has two
wholly owned subsidiaries, eCommerce Support Centers, Inc., and
Convey Systems International, Inc. The ecom subsidiary's
activities have been reflected as discontinued operations in the
Company's financial statements due to a binding commitment to sell
its call center operations. Convey Systems International, Inc. is
inactive at this time.
MARTHA SPITLER: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Martha H. Spitler
145 Milbeck Drive
Washington, Pennsylvania 15301
Bankruptcy Case No.: 05-24934
Chapter 11 Petition Date: April 20, 2005
Court: Western District of Pennsylvania (Pittsburgh)
Judge: Judith K. Fitzgerald
Debtor's Counsel: John P. Vetica, Jr., Esq.
600 Commerce Drive, Suite 601
Moon Township, Pennsylvania 15108-3106
Tel: (412) 299-3820
Fax: (412) 299-3823
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
MCI INC: 11 Officers Dispose of 40,990 Shares of Common Stock
-------------------------------------------------------------
In separate filings with the Securities and Exchange Commission,
eleven officers of MCI, Inc., disclose that they recently sold or
otherwise disposed of their shares of common stock in the company:
No. of Amount of
Shares Securities
Officer Designation Disposed Price Now Owned
-------- ----------- -------- ----- ----------
Blakely,
Robert T. Exec-VP & CFO 4,266 $26.27 274,755
Briggs, Pres.-Operations
Fred M. & Technology 1,882 26.27 171,783
Capellas,
Michael D. Pres. & CEO 22,581 26.27 1,106,785
Casaccia, Executive VP,
Daniel, L. Human Resources 1,757 26.27 141,883
Crane, EVP, Strategy
Jonathan C. Corp., Dev. 1,882 26.27 172,488
Hackenson,
Elizabeth EVP, CIO 377 26.27 83,790
Huyard, Pres-US Sales &
Wayne Service 2,510 26.27 249,790
Higgins, Exec-VP, Ethics
Nancy and Bus Conduct 1,563 26.27 129,935
Kelly, Exec-VP & Gen.
Anastasia D. Counsel 2,039 26.27 200,824
Slusser, Sr. VP &
Eric Controller 753 26.27 53,421
Trent, Grace SVP Comm & Chief
Chen of Staff 1,380 26.27 108,420
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. 85; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
* * *
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.
MCI INC: Will Pay South Korean Firm $2-Bil for Technology Rights
----------------------------------------------------------------
According to Bloomberg News, JoongAng Newspaper reports that MCI,
Inc., through a subsidiary, will pay $2 billion for
telecommunications technology rights from Exscoms -- a
telecommunications company based in South Korea. The agreement
permits MCI's subsidiary to sell its products to North and South
America and Europe using Exscoms' technology, which allows data to
flow via electricity transmission lines.
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. 85; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
* * *
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.
MERIDIAN AUTOMOTIVE: Can Maintain Existing Bank Accounts
--------------------------------------------------------
The United States Trustee for Region 3, as the administrator of
all Chapter 11 cases filed in the District of Delaware, has
issued certain bankruptcy operating guidelines, which include a
requirement that Chapter 11 debtors close all existing bank
accounts upon filing of their petitions and open new "debtor-in-
possession" accounts in certain financial institutions designated
as authorized depositories by the U.S. Trustee.
Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware, says these requirements are designed to
provide a clear line of demarcation between prepetition and
postpetition claims and payments, and help to protect against the
inadvertent payment of prepetition claims by preventing banks
from honoring checks drawn before the petition date.
However, Mr. Morton contends that requiring Meridian Automotive
Systems, Inc., and its debtor-affiliates to comply with the U.S.
Trustee Guidelines by closing existing accounts would create
significant and undue hardship on the Debtors. Conversely,
allowing the Debtors to maintain their existing bank accounts
would:
(a) greatly facilitate the Debtors' "seamless transition" to
postpetition operations;
(b) allow the Debtors to avoid delays in paying debts incurred
postpetition; and
(c) ensure a smooth transition into Chapter 11.
Accordingly, the Debtors sought and obtained authority from the
U.S. Bankruptcy Court for the District of Delaware to continue
maintaining their existing Bank Accounts and, if necessary, to
open new accounts and close existing accounts in the normal course
of their business operations.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed
for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case
Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MERIDIAN AUTOMOTIVE: Can Pay $75,000 Prepetition Tax Obligations
----------------------------------------------------------------
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware, relates that Meridian Automotive Systems,
Inc., and its debtor-affiliates, in the ordinary course of their
business, incur certain sales, use and franchises taxes that are
payable directly to various state and local taxing authorities as
the payments become due.
"Although the Debtors' book and records reflect that they are
current on all of their Taxes as of the Petition Date, there is a
lag between the time when the Debtors incur an obligation to pay
the Taxes and the date such Taxes become due," Mr. Brady notes.
"Various Taxing Authorities may therefore have claims against the
Debtors that are accrued and owing but remain unpaid as of the
Petition Date."
Hence, the Debtors sought and obtained authority from the U.S.
Bankruptcy Court for the District of Delaware to pay the relevant
Taxing Authorities any Taxes that accrued prepetition but were not
yet due and owing or were not paid in full, as of the Petition
Date. The Debtors estimate that the total amount of prepetition
accrued and unpaid Taxes owing to the various taxing Authorities,
if any, will not exceed $75,000.
To the extent that any transfers, deposits or checks issued by
the Debtors on account of prepetition Taxes have not cleared as
of the Petition Date, the Court directs the banks and other
financial institutions to honor and process those payments.
According to Mr. Brady, the Debtors need to pay the Taxes
because:
(1) a portion of the Taxes may be entitled to priority status
under Section 507(a)(8) of the Bankruptcy Code and
therefore must be paid in full under any plan of
reorganization;
(2) certain Taxing Authorities may asserts that the Taxes are
so-called "trust fund" taxes that the Debtors are required
to collect from third parties and hold in trust for the
benefit of the Taxing Authorities;
(3) some Taxing Authorities may audit the Debtors and,
needlessly divert the Debtors' attention from their
reorganization efforts, if payment of "trust fund" taxes
is not authorized and timely made;
(4) some Taxing Authorities may also seek to impose liens on
the Debtors' assets on account of unpaid Taxes, which
would require time, effort and expense for the Debtors to
challenge and remove; and
(5) an improper lien or the failure to pay certain Taxes might
negatively affect the Debtors' good standing in a
particular state, potentially affecting the Debtors'
ability to engage in certain transactions.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed
for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case
Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MERIDIAN AUTOMOTIVE: Deposit Requirements Waived Until June 11
--------------------------------------------------------------
Section 345(a) of the Bankruptcy Code authorizes deposits or
investments of money of a bankruptcy estate, such as cash, in a
manner that will "yield the maximum reasonable net return on such
money, taking into account the safety of such deposit or
investment."
For deposits or investments that are not "insured or guaranteed
by the United States or by a department agent or instrumentality
of the United States or backed by the full faith and credit of
the United States," Section 345(b) provides that the estate must
require from the entity with which the money is deposited or
invested a bond in favor of the United States secured by the
undertaking of an adequate corporate surety.
Meridian Automotive Systems, Inc., and its debtor-affiliates,
however, believe that there is "cause" to relieve them from the
restrictions imposed by Section 345(b), since they have in excess
of 200 creditors. At the Debtors' request, the U.S. Bankruptcy
Court for the District of Delaware waives Section 345(b)
requirements for 45 days, on an interim basis, without prejudice
to the Debtors' ability to seek further interim or final waiver.
The Debtors will continue maintaining their deposits in the Fifth
Third Concentration Account in accordance with their existing
deposit practices until the time as they obtain Court approval to
deviate from the guidelines imposed under Section 345(b) on a
further interim or final basis.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed
for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case
Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
METOKOTE CORP: Moody's Rates Planned $162 Mil. Term Loan at B2
--------------------------------------------------------------
Moody's Investors Service assigned B2 ratings for MetoKote
Corporation's $192 million of newly proposed guaranteed first-lien
senior secured credit facilities, of which only the $162 million
term loan is expected to be drawn at closing. These new credit
facilities, together with the net proceeds from a pending
$40 million sale/leaseback transaction and about $4 million of
balance sheet cash, will be used to refinance approximately
$175 million of existing first- and second-lien debt plus fund
an approximately $26 million shareholder dividend. While the
$26 million shareholder dividend currently proposed remains
material to the company, it is substantially smaller than the
originally proposed amount. The rating outlook remains stable.
The previously proposed refinancing facilities for MetoKote that
were rated on March 16, 2005 were cancelled primarily due to
deterioration in second-lien loan market demand. Moody's
therefore withdrew all of the ratings for the proposed facilities
that were subsequently canceled. Moody's affirmed all ratings for
MetoKote's existing credit facilities, but will then proceed with
withdrawing these ratings once the refinancing transactions are
executed.
These specific rating actions were taken with regard to MetoKote
Corporation:
-- Assignment of the B2 ratings for MetoKote's $192 million of
newly-proposed guaranteed first-lien senior secured credit
facilities, consisting of:
* $30 million revolving credit due approximately May 2010;
* $162 million term loan B due November 2011;
-- Withdrawal of the B2 ratings assigned on March 16, 2005 for
MetoKote's $170 million of cancelled guaranteed first-lien
senior secured credit facilities consisting of:
* $30 million revolving credit facility due March 2010;
* $140 million term loan B due September 2011;
-- Withdrawal of the Caa1 rating assigned on March 16, 2005 for
MetoKote's proposed new $65 million guaranteed second-lien
senior secured credit facility due March 2012;
-- Affirmation of the B2 rating for MetoKote's $160 million
aggregate of existing first-lien credit facilities, which
ratings will be withdrawn upon prepayment and termination of
the facilities;
-- Affirmation of the Caa1 rating for MetoKote's $45 million
existing second-lien facility, which rating will be
withdrawn upon prepayment and termination of the facility;
-- Affirmation of MetoKote's B2 senior implied rating;
-- Upgrade to Caa1, from Caa2 of MetoKote's senior unsecured
issuer rating
The affirmation of the B2 senior implied rating reflects that
while the revised transaction will lower pro forma all-in
debt/EBITDAR leverage to about 4.1x versus the approximately 4.9x
under the March 2005 proposal, Moody's expects that MetoKote will
maintain an aggressive financial policy and thereby seek to do
additional dividends and/or share repurchases over the near-to-
intermediate term. While the current proposal was downsized,
MetoKote still plans to proceed with an approximately $26 million
shareholder dividend. The company had notably completed a similar
dividend in early 2004, which approximated $31.5 million. Given
the small absolute size of the company with revenues approximating
about $210 million, pro forma debt/revenues (including operating
leases as debt) is high at about 90%.
Moody's particularly notes that pressures are escalating within
MetoKote's cyclical end markets, most notably including the North
American automotive suppliers. There are also recent indications
that demand within the construction markets may be peaking, but
existing contracts contain certain downside protection clauses.
The company may be at risk of reducing its flexibility to react to
difficult industry conditions as a result of focusing on returning
capital to shareholders instead of on achieving meaningful debt
reduction.
Moody's believes that MetoKote's proposed liquidity is fair. The
company will apply about $4 million of its balance sheet cash to
the revised transaction and has also entered a period of rapid
growth of InSites. The $30 million revolver should be undrawn at
closing, presuming that company's representation that the
sale/leaseback will either close concurrently with the amendment
to the credit agreement or the full amount of the proposed
dividend will not paid until the sale/leaseback subsequently
closes.
To MetoKote's credit, the ratings also reflect that pro forma and
projected EBIT coverage of cash interest is expected to exceed
2.5x, that the company's business model is becoming increasingly
well accepted by its potential base of customers, and that the
pace of organic growth of InSites is escalating. MetoKote's
business model requires very little inventory investment, and
capital spending can be managed if growth does not materialize.
MetoKote's financial covenants will be also be reset to provide a
cushion versus the company's current base case plan.
MetoKote, headquartered in Lima, Ohio, provides a full suite of
outsourced industrial coating services to manufacturers in North
America, Brazil, Mexico, and Europe. The company offers solutions
either within a customer's facility or at one of MetoKote's
regional facilities. End markets served include automotive, heavy
truck, agricultural and construction, metal furniture, appliances,
and consumer products. Annual revenues currently approximate
$210 million.
MICHIGAN HEALTH: Chapter 7 Trustee Wants to Pay Malpractice Claims
------------------------------------------------------------------
Homer W. McClarty, the Chapter 7 Trustee overseeing the
liquidation of Michigan Health Care Corporation and its debtor-
affiliates' estates, asks the U.S. Bankruptcy Court for the
Eastern District of Michigan for authority to use $2 million
sitting in a Medical Malpractice Trust to pay $17.3 million of
medical malpractice claims and some administrative costs related
to those malpractice claims.
The Malpractice Trust was established under the Michigan Health
Care Corporation Trust Agreement for Pooled Self-Insurance Fund on
July 23, 1996.
Mr. McClarty explains that during the Debtors' chapter 11
proceedings, the Court approved the establishment of a claims
procedure for resolution of tort claims to partly identify medical
malpractice claims that are subject to payment from the
Malpractice Trust.
The Court allowed the tort claims procedures to continue after the
case was converted to a chapter 7 proceeding, with the only
substantive change being the provision for non-binding mediation
was replaced with a provision for non-binding facilitation.
The Court has resolved all of the claims and Mr. McClarty has
identified approximately $17,360,142.98 of medical malpractice
claims. The Malpractice Trust remains intact and as of March 15,
2005, contains $2,066,673.36 and continues to accrue interest.
The Malpractice Trust originally contemplated paying all claims in
full, in order of occurrence and, once depleted, no distribution
would be made until the Trust was replenished. Mr. McClarty
reminds the Court that payments to medical malpractice claimants
were stayed by the filing of the chapter 11 proceedings and
subsequent conversion to chapter 7, and suggests it would be
unfair to pay claims in order of occurrence.
Mr. McClarty asks the Court for authority:
a) to use proceeds directly from the Trust to pay attorney fees
and associated costs of administering the Trust and all
direct costs of resolving all medical malpractice claims
that enjoy priority as chapter 7 administrative claims;
b) to pay all medical malpractice claims Pro Rata from the
Malpractice Trust with the unpaid portion of those claims to
be included with general unsecured claims for a final
distribution from the remaining assets of the estate; and
c) to maintain the trust proceeds in an interest bearing
account until the Court enters an order approving payment of
medical malpractice claims from the Malpractice Trust
proceeds.
Headquartered in Detroit, Mich., Michigan Health Care Corporation
and its debtor-affiliates filed for chapter 11 protection on
March 31, 1995 (Bankr. E.D. Mich. Case No. 95-43295). The case
was converted to a chapter 7 liquidation proceeding on March 11,
1998. Homer W. McClarty is the Chapter 7 Trustee overseeing the
liquidation of the Debtors' estates. Dana A. Donohue, Esq., at
Hertz, Schram & Saretsky, P.C., and Robert S. Hertzberg, Esq.,
represent the Chapter 7 Trustee.
MIRANT CORP: Wants Kern River to Disgorge $5MM of "Overpayments"
----------------------------------------------------------------
Mirant Corporation and Mirant Americas Energy Marketing, LP, ask
the U.S. Bankruptcy Court for the Northern District of Texas to
compel Kern River Gas Transmission Company to disgorge certain
overpayments.
MAEM and Kern River are parties to a Firm Transportation Service
Agreement where Kern River provided pipeline capacity for the
transport of natural gas and was obligated to transport a maximum
quantity of 90,000 Dth of natural gas per day. The term of the
Kern River Agreement was scheduled to expire April 30, 2018.
MAEM's obligations under the Kern River Agreement were secured by
a letter of credit.
On November 26, 2003, Kern River sought payment for its October
2003 Invoice No. 23684 in the amount of $1,392,402, plus interest
and attorney's fees as allowed by applicable law, for the
reservation and use of capacity and the daily transportation
services to MAEM pursuant to the Agreement, as an administrative
expense claim under Section 503 of the Bankruptcy Code.
Prior to filing the Administrative Expense Claim Motion, Kern
River drew on the Letter of Credit on October 30, 2003, and held
$14,751,589 as cash security for MAEM's obligations.
On December 18, 2003, the Court permitted the Debtors to reject
the Kern River Agreement. Kern River filed claims for damages.
Kern River's Claim No. 6693 originally included an administrative
expense claim filed against MAEM, for $1,392,401 for the period
October 1, 2003, to October 31, 2003. On January 21, 2004, Kern
River withdrew the charges to the Debtors for the period
October 1 through October 31, 2003.
Pursuant to an Agreed Order, the Debtors allowed Kern River to
apply the Cash Security toward the alleged amounts owed in the
Rejection Claim. All of the obligations under the Kern River
Agreement were satisfied in full as of the Rejection Date.
Michelle C. Campbell, Esq., at White & Case, LLP, in Miami,
Florida, tells Judge Lynn that, given the Debtors' rejection of
the Kern River Agreement, they should have been charged market
prices -- rather than the contract price specified in the Kern
River Agreement for fuel purchased during the period of July 15,
2003, through December 18, 2003 -- Stub Period Transactions. The
Debtors' books and records indicate that Kern River's
postpetition invoices and purchased fuel costs totaled $8,631,823
for the Stub Period Transactions. However, Kern River's
Administrative Expense Claim reflects contract prices under the
Agreement, rather than the market value of the Stub Period
Transactions, thereby resulting in the Debtors' overpayment on
the Administrative Claim.
Ms. Campbell says the Debtors overpaid $5,477,356 to Kern River.
As a result of the withdrawal of the Administrative Expense Claim
for charges to the Debtors for the period October 1 through
October 31, 2003, none of Kern River's postpetition charges were
subject to a determination of whether those charges enabled Kern
River's Rejection Claim to receive priority -- rather than
general unsecured -- status as an allowed claim. Ms. Campbell
contends that the Overpayment, once returned, would be included
in any allowed rejection claim asserted by Kern River.
Ms. Campbell argues that the Overpayment constitutes a "transfer
of property of the estate" within the meaning of Sections 549(a)
and 101(54) of the Bankruptcy Code. In addition, Ms. Campbell
says, the Overpayment was not an actual, necessary cost and
expense for the services provided by Kern River to the Debtors
after the Petition Date. The Debtors are entitled to avoidance
of the Overpayment, Ms. Campbell asserts.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines. Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally. Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White &
Case LLP, represents the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $20,574,000,000 in assets and $11,401,000,000 in debts.
(Mirant Bankruptcy News, Issue No. 60; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ML CLO: Moody's May Downgrade Low-B Ratings After Review
--------------------------------------------------------
Moody's has taken these rating actions on five classes of notes
issued by Delano Company and ML CLO XVI in connection with the ML
CLO Series 1998-Delano-1 transaction:
* The rating on the $366,000,000 Class A-1 Floating Rate Senior
Secured Notes due 2009 is withdrawn;
* $30,000,000 Class A-2 Floating Rate Second Senior Secured
Notes due 2009, formerly rated Aa2 on watch for possible
upgrade, are now rated Aaa;
* $64,500,000 Class A-3 Fixed Rate Second Senior Secured Notes
due 2009, formerly rated Aa2 on watch for possible upgrade,
are now rated Aaa;
* U.S. $31,500,000 Class B-1 Floating Rate Third Senior Secured
Notes due 2009, currently rated B1, are now B1 on watch for
possible downgrade; and
* U.S. $47,000,000 CLASS B-2 Fixed Senior Secured Notes due
2009, currently rated B1, are now B1 on watch for possible
downgrade.
Moody's explained that the rating withdrawal on the Class A-1
Notes is due to prepayments that reduced the aggregate outstanding
amount of the Class A-1 Notes to zero.
Moody's noted that the transaction, which closed in June of 1998,
has experienced improvement in overcollateralization at the senior
level of the capital structure due to amortization of the Class
A-1, A-2, and A-3 Notes. Following the last payment date in
March 23, 2005, approximately 24% of the Class A-2 and A-3 Notes
have amortized.
Moody's also noted that since the Class B-1 and B-2 Notes were
downgraded on September 12, 2003, the overcollateralization levels
at the junior level have not improved despite the improvement at
the senior level. The Class B Overcollateralization Test as of
the September 16, 2003 trustee report and as of the March 16, 2005
trustee report were 99.97% and 100.63%, respectively. However,
during the same time period, the Weighted Average Rating Factor
has increased from 3487 to 3783.
MOONEY AEROSPACE: Equity Deficit Tops $23 Million at Dec. 31
------------------------------------------------------------
Mooney Aerospace Group had a negative working capital of
$3,840,000 and stockholders' deficiency of $23,797,000 at
December 31, 2004. Since its inception in January 1990, the
Company has experienced continuing negative cash flow from
operations, which have resulted in an inability to pay certain
existing liabilities in a timely manner. The Company has financed
its operations through private funding of equity and debt and
through the proceeds generated from its December 1996 initial
public offering.
Management expects the Company to continue to incur losses until
such time as it increases production to planned levels and
increases market acceptance of its aircraft at selling prices and
volumes which provide adequate gross profit to cover operating
costs and generate positive cash flow. Working capital
requirements will depend upon numerous factors, including the
level of resources devoted to the scale-up of manufacturing and
the establishment of sales and marketing. No assurance can be
made that Mooney will be able to restore MAC's production
processes to planned levels, regain market acceptance for its
aircraft or generate positive cash flow in the foreseeable future,
or ever. If unable to generate cash flow through its operations
as necessary, the Company will have to continue to obtain
financing through equity or debt financing. No assurance can be
made that the Company will be able to obtain sufficient equity or
debt financing under terms acceptable to it to allow it to
maintain operations according to its current operating plans, or
at all.
Mooney's management team has developed a financial plan to address
its working capital requirements. Since early 2001, this has
included the issuance of convertible debentures. The secured
debentures are convertible into shares of common stock at
a fixed price set at $2.22 per share and must be converted by
August 30, 2005, in accordance with the Amended Plan of
Reorganization that was confirmed and effective December 15, 2004.
The notes earn interest at the rate of 8% per annum and the
payment terms vary with each agreement.
The interest is payable in cash at the maturity date which is
either in June or November 2006 depending upon the terms of the
particular note. The unsecured debenture holders and the
preferred stockholders were issued stock effective December 15,
2004 to satisfy the Company's obligations to them as provided for
in the Amended Plan of Reorganization.
Mooney Aerospace Group's current cash balance, along with amounts
available to it under a revolving loan, will not be sufficient to
meet its operating needs for the next 12 months. If additional
funding is required, according to management, it may be obtained
either through additional stock issuances or debt financing
provided by certain private parties.
Mooney Aerospace Group Ltd. was organized in 1990 to design,
develop, manufacture and market general aviation aircraft. During
2002, the Company recognized a unique opportunity and purchased
the assets of Mooney Aircraft Corporation -- MACorp. MACorp
produced high-performance, single engine piston aircraft for more
that 50 years.
Mooney aircraft are recognized as the highest performance four-
place piston engine aircraft in commercial production. Over 10,000
airplanes have been manufactured, with over 7,000 now in operation
around the world.
Management believes that there is a unique market opportunity to
manufacture, sell and support the Mooney aircraft, due to these
factors:
1) the deteriorating comfort and convenience of airline travel,
and the resurgence of interest in purchasing light aircraft
for business and personal transportation for small and
medium sized businesses and high net worth individuals;
2) reduction of product liability legal exposure to
manufacturers of general aviation aircraft as a result of
the General Aviation Revitalization Act of 1994, and
3) an excellent competitive position in the retractable gear,
all-metal, four place, high performance piston powered
aircraft market.
To take advantage of this opportunity, the Company hired an
experienced management team to provide leadership to efficiently
manufacture and profitably market the five Mooney models, the
Ovation, Ovation 2 DX and GX, and the high performance Bravo DX
and GX.
The Company's management team has developed a financial plan to
address its working capital requirements and believes that if
executed successfully, the plan will substantially improve the
Company's ability to meet its working capital requirements
throughout the year ended December 31, 2005. The plan includes
obtaining additional short term funding for increased working
capital consistent with the planned growth of the Company,
additional long term funding which may be obtained under the USDA
guaranteed loan program, and additional capital raising.
Headquartered in Kerrville, Texas, Mooney Aerospace Group, Ltd.
-- http://www.mooney.com/-- is a general aviation holding company
that owns Mooney Airplane Co., located in Kerrville, Texas. The
Company filed for chapter 11 protection on June 10, 2004 (Bankr.
Del. Case No. 04-11733). Mark A. Frankel, Esq., at Backenroth
Frankel & Krinsky LLP, represented the Debtor in its
restructuring. When the Company filed for protection from its
creditors, it listed $16,757,000 in total assets and $69,802,000
in total debts. The Court confirmed Mooney's Plan of
Reorganization on Dec. 15, 2004, allowing the Company to emerge on
Dec. 16, 2004.
MOVIE GALLERY: Completes Hollywood Entertainment Acquisition
------------------------------------------------------------
Movie Gallery, Inc. (Nasdaq: MOVI) successfully completed its
acquisition of Hollywood Entertainment Corporation. The
transaction is valued at $1.25 billion, including $862.1 million
for Hollywood's outstanding common stock and the assumption of
$384.7 million of Hollywood's existing indebtedness. The merger
with Hollywood creates a leading North American home video
retailer that can successfully compete in the urban, suburban and
rural markets.
Joe Malugen, Chairman, President and CEO of Movie Gallery, said,
"We are pleased that Hollywood shareholders voted to approve the
merger and that we were able to quickly close the transaction so
that we can begin to realize the benefits inherent in this
combination. The acquisition increases our geographic presence
and will greatly improve our distribution capabilities, making us
a stronger competitor, well-positioned for continued profitable
growth."
Hollywood is now a subsidiary of Movie Gallery but will continue
to operate under the Hollywood brand name. Hollywood will remain
headquartered in Wilsonville, Oregon.
Merrill Lynch & Co. and Wachovia Securities, Inc., acted as M&A
and financial advisors, while Alston & Bird LLP and Troy & Gould
PC acted as legal counsel to Movie Gallery. In addition, Alston &
Bird LLP and Axinn, Veltrop & Harkrider LLP acted as anti-trust
legal counsel to Movie Gallery. Ernst & Young LLP serves as Movie
Gallery's independent auditors. Dixon Hughes PLLC and Warren,
Averett, Kimbrough & Marino, LLC provided various accounting and
tax consulting services in connection with the acquisition.
Hollywood Entertainment Corporation's (Nadsaq: HLYW) shareholders
approved the merger of Hollywood with an affiliate of Movie
Gallery, Inc.
At the special meeting of shareholders held on Apr. 22,
shareholders representing 44,412,245 shares or approximately 70%
of the total issued and outstanding shares of Hollywood, with
39,332,517 shares or 88.5% of those represented voted to approve
the Agreement and Plan of Merger, dated as of January 9, 2005, by
and among Movie Gallery, Inc., TG Holdings, Inc., and Hollywood
Entertainment Corporation and the related merger.
About Movie Gallery
The combined company is the second largest North American video
rental company with annual revenue in excess of $2.5 billion and
approximately 4,500 stores located in all 50 U.S. states, Mexico
and Canada. Since the company's initial public offering in August
1994, Movie Gallery has grown from 97 stores to its present size
through acquisitions and new store openings.
* * *
As reported in the Troubled Company Reporter on Apr. 20, 2005,
Moody's Investors Services confirmed the debt ratings of Hollywood
Entertainment. Moody's said the outlook is stable.
In addition, Moody's assigned first time ratings to Movie Gallery,
Inc., in connection with its proposed acquisition of Hollywood
Entertainment.
On January 9, 2005, Movie Gallery executed a merger agreement
to acquire Hollywood Entertainment for $13.25 per share or
approximately $1 billion (including the retirement of
$384.2 million of debt but net of cash). The acquisition will be
financed with $795 million of senior secured bank facilities,
$325 million of senior unsecured notes, and $185 million of on
balance sheet cash. As a part of the acquisition, Movie Gallery
will tender for Hollywood Entertainment's $225million of senior
subordinated notes. Shortly after this transaction, Movie Gallery
will also be acquiring VHQ Entertainment for $19.2 million. VHQ
operates 61 stores in Canada as well as a website VHQonline.ca.
These ratings are assigned:
-- Movie Gallery, Inc.
* Senior Implied of B1;
* $870 Million of Senior Secured Credit Facilities of B1;
* $325 Million of Guaranteed Senior Notes of B2;
* Issuer Rating of B3;
* Speculative Grade Liquidity Rating of SGL-2.
These ratings are confirmed:
-- Hollywood Entertainment Corp.
* Senior Implied of B1;
* Senior Secured Credit Facilities of Ba3;
* Senior Subordinated Notes of B3;
* Issuer Ratings of B2.
At the same time, Standard & Poor's Ratings Services assigned its
'B+' corporate credit rating to Movie Gallery Inc. S&P said the
outlook is stable.
At the same time, Standard & Poor's assigned its 'B+' rating to
Movie Gallery's proposed $870 million credit facility due in 2010
and 2011. A recovery rating of '3' also was assigned to the
credit facility, indicating the expectation for meaningful
recovery of principal (50%-80%) in the event of a payment default.
In addition, a 'B-' rating was assigned to the company's proposed
$325 million senior unsecured floating-rate notes due 2012. The
unsecured notes are rated two-notches below the corporate credit
rating because the holders are disadvantaged by the substantial
amount of priority debt ahead of the notes. Proceeds from the
transactions will be used to finance the acquisition of Hollywood
Entertainment, to refinance existing indebtedness, and for general
corporate purposes.
"The ratings on Movie Gallery Inc. reflect the risks of operating
in a mature and declining video rental industry, the company's
dependence on decisions made by movie studios, increased operating
risk due to its acquisition of Hollywood Entertainment, its high
leverage, and the technology risks associated with delivery of
video movies to the home," said Standard & Poor's credit analyst
Diane Shand.
MSW ENERGY: Moody's Pares Senior Sec. Notes Rating to Ba3
---------------------------------------------------------
Moody's Investors Service downgraded the rating of American
Ref-Fuel Company LLC's senior secured notes to Ba1 from Baa2.
Moody's downgraded the senior secured notes of MSW Energy Holdings
LLC and MSW Energy Finance Co., Inc.'s (co-issuers hereafter
referred to as MSW Energy) to Ba3 from Ba1 and downgraded the
senior secured notes of MSW Energy Holdings II LLC and MSW Energy
Finance II Co., Inc.'s (co-issuers hereafter referred to as MSW
Energy II) to Ba3 from Ba2. Also downgraded are $43.5 million of
resource recovery bonds issued by the Connecticut Resources
Recovery Authority to Ba2 from Baa2 and $172.4 million of bonds
issued by the Delaware Valley Industrial Development Authority to
Ba2 from Baa3, for which ARC is the underlying obligor. The
rating outlook is stable for ARC, MSW Energy, and MSW Energy II.
The rating actions reflect the pending acquisition of American
Ref-Fuel Holdings Corp. by Covanta Energy Corporation for
$740 million in cash plus the assumption of debt. Covanta is
financing the acquisition with a common stock rights offering by
Covanta's parent, Danielson Holding Corporation, and through the
issuance of $1.1 billion of new credit facilities being issued as
part of an overall refinancing of Covanta's outstanding debt and
letter of credit facilities. These ratings are assigned subject
to the acquisition closing under terms and conditions, which are
in accordance with Moody's current understanding, including the
sizing and terms of the financing.
The downgrade of the ratings of ARC, MSW Energy, and MSW Energy II
considers their acquisition by a more leveraged parent company and
the substantial difference in credit quality between these three
subsidiaries and the new owner. The ratings also reflect
structural subordination of the notes at ARC, MSW Energy, and MSW
Energy II to approximately $865 million of debt at the subsidiary
waste-to-energy projects. In addition, a $75 million revolving
credit facility in place at ARC is being replaced by a credit
facility at Covanta and ARC will have to rely on Covanta's
on-going access to this credit facility for its own liquidity
needs going forward. The downgrade of the ratings of the
Connecticut Resources Recovery Authority bonds and the Delaware
Valley IDA bonds reflects their reliance on a senior unsecured
guarantee from ARC.
Covanta emerged from bankruptcy just over one year ago, on
March 10, 2004, and will continue to have relatively high
consolidated leverage and limited financial flexibility following
the acquisition, with approximately $3.4 billion of total debt,
with $2.0 billion of recourse corporate debt, including
$440 million of undrawn credit facilities, at both Covanta and
American Ref-Fuel Holdings. There is a cash receipts and
disbursements waterfall arrangement administered by a trustee, and
distribution tests for the upstreaming of dividends to Covanta
from ARC, MSW Energy and MSW Energy II. However, the collateral
for the debt of these issuers is limited to the stock of
subsidiaries as the underlying operating assets are pledged to
secure project level debt. Distributions could be restricted by a
number of cash traps if the financial performance of the
underlying projects deteriorates, including a 1.30x debt service
coverage test at the SEMASS project, a 1.75x debt service coverage
test at ARC, and 2.0x consolidated interest coverage tests at both
MSW Energy and MSW Energy II.
Although there are some structural features, which may provide a
degree of insulation between the weaker parent and its
subsidiaries, Moody's does not believe ARC, MSW Energy or MSW
Energy II would be completely insulated from potential financial
problems at the Covanta parent company level under all
circumstances. The ARC operating facilities will represent
important, core strategic assets for the company and constitute a
substantial portion of Covanta's operations and cash flow going
forward. Moody's notes that when Covanta filed for bankruptcy
protection in 2002, the company chose to also make filings for 123
of its domestic project subsidiaries.
The ratings also recognize the limited collateral available to the
ARC, MSW Energy, and MSW Energy II bondholders and a high reliance
on a few projects for most dividends. Cash flow upstreamed to
service this debt is highly concentrated from two key WTE
projects, Hempstead and SEMASS, which together generate over half
of the cash flow distributable to ARC. The Hempstead contracts
currently expire in 2009, six years before the maturity of the ARC
notes and one year before the maturity of the MSW Energy and MSW
Energy II notes.
The stable outlook on the ratings of ARC, MSW Energy, and MSW
Energy II reflects Moody's expectation that:
(i) the waste-to-energy projects' contracts with the
respective municipalities and utilities will remain in
place through their current maturities;
(ii) Covanta management will continue to operate the plants at
high availability levels and generate synergies with
regard to administrative expenses;
(iii) Covanta will de-lever over the next several years at the
subsidiary project level; and
(iv) Covanta will be able to utilize a significant portion of
Danielson's NOLs.
Ratings downgraded include:
* American Ref-Fuel Company LLC's senior secured notes, to Ba1
from Baa2;
* MSW Energy Holdings LLC's senior secured notes, to Ba3 from
Ba1;
* MSW Energy Holdings II LLC's senior secured notes, to Ba3
from Ba2;
* $30 million Connecticut Resources Recovery Authority
Corporate Credit Resource Recovery Bonds (American Ref-Fuel
Company of Southeastern Connecticut Project), to Ba2 from
Baa2;
* $13.5 million Connecticut Resources Recovery Authority
Corporate Credit Resource Recovery Bonds (American Ref-Fuel
Company LLC, I Series A and II Series A), to Ba2 from Baa2;
* $172.4 million Delaware County Industrial Development
Authority Revenue Refunding Bonds Series A 1997, to Ba2 from
Baa3.
American Ref-Fuel Company LLC is an owner and operator of six
waste-to-energy companies in the northeastern United States. It is
jointly owned by MSW Energy Holdings LLC and MSW Energy Holdings
II LLC.
Covanta Energy Corporation, headquartered in Fairfield, New
Jersey, is an energy company with operations in waste-to-energy,
independent power production, and water. Parent company Danielson
Holding Corporation, also headquartered in Fairfield, has
operations in insurance services in addition to Covanta.
NETCON INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: NetCon, Inc.
650 North Cannon Avenue
Lansdale, Pennsylvania 19446
Bankruptcy Case No.: 05-15687
Chapter 11 Petition Date: April 21, 2005
Court: Eastern District of Pennsylvania (Philadelphia)
Judge: Stephen Raslavich
Debtor's Counsel: Steven D. Usdin, Esq.
Adelman Lavine Gold and Levin
Four Penn Center, Suite 900
Philadelphia, Pennsylvania 19103-2808
Tel: (215) 568-7515
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
------ --------------- ------------
Valley Forge Investment Corp. Note $850,000
P.O. Box 286
Valley Forge, PA 19482
David S. Foulke Note and advances $720,000
2907 Maryannes Court
Lansdale, PA 19454
Stuart H. Malone Note $250,000
Valley Forge Investment Corp.
P.O. Box 286
Valley Forge, PA 19482
Angelo & Rose D. Rossi Note $121,250
Christa Badger Ireland Note $121,250
David R. Campbell MD IRA Note $121,250
J. Michael & Christina Note $121,250
Corcoran
John S. & Mary P. McGinness Note $121,250
Michael F. Avallone Sr. IRA Note $121,250
William B. Bruce MD SEP IRA Note $121,250
Abdoul Khaleel MD IRA Note $97,000
Bob Butterworth Note $60,625
Lionel Simmons Note $60,625
Martin J. Porcelli IRA Note $60,625
Philip Pearlstein Assoc. Note $60,625
Trust u/d 4/15/77
Mohammad Munir MD & Note $60,625
Mohammad A. Samad MD
Profit Sharing Trust
Dennis L. Moyer MD IRA Note $60,625
Paul L. Schell, MD IRA Note $60,625
Remo BP Leomporra MD IRA Note $60,625
George C. Connell Note $60,625
NEXTWAVE: Final Bankruptcy Professional Fees Top $61 Million
------------------------------------------------------------
The lawyers, accountants and investments bankers involved in the
successful chapter 11 restructuring of NextWave Personal
Communications, Inc., NextWave Telecom, Inc., and their debtor-
affiliates, will ask the Honorable Adlai S. Hardin, Jr., to
approve payment of their fees, expenses and bonuses at a hearing
in White Plains, N.Y., on May 11, 2005.
The restructuring professionals ask Judge Hardin to approve
payment of their final applications for compensation totaling
$46,336,513:
Debtors' Professionals:
Andrews & Kurth, LLP $12,852,159
Bankruptcy Co-Counsel
Schrier-Rape, P.C. 4,833,726
Bankruptcy Co-Counsel
Weil, Gotshal & Manges LLP 6,943,490
Special corporate and finance counsel
Knobbe, Martens, Olson & Bear 267,867
Special patent & intellectual property counsel
Skadden, Arps, Slate, Meagher & Flom 699,403
Special regulatory counsel
Jenner & Block 3,795,029
Special regulatory counsel
Gibson Dunn & Crutcher LLP 2,759,607
Special appellate counsel
Bingham McCutchen LLP
Special appellate counsel 1,931,437
Lukas, Nace, Gutierrz & Sachs, Chartered 892,018
Special FCC counsel
Willkie Farr & Gallagher LLP 233,263
Special strategic FCC counsel
Deloitte & Touche LLP 1,671,094
Accountants
Deloitte Tax LLP 903,988
Tax advisors
Creditors Committee's Professionals:
Kasowitz, Benson, Torres & Friedman 1,940,594
Bankruptcy counsel
Lazard Freres & Co. LLC 6,612,838
Investment banker
------------
$46,336,513
============
This $46.3 million amount includes all professional fees billed by
the firms' professionals and includes their requests for
reimbursement of expenses.
Additionally, the Professional Fee Committee organized in
NextWaves cases (comprised NTI's CEI, the Chairman of the Official
Committee of Unsecured Creditors, and a NextWave shareholder) is
recommending fee enhancements totaling $15,100,000 for the nine
professionals who, the Professional Fee Committee says, "provided
extraordinary effort . . . with exceptional expedience":
Approximate
Proposed Fee Percentage
Professional Enhancement of Actual Fees
------------ ------------- --------------
Schrier-Rape, P.C. $8,000,000 176%
Gibson Dunn & Crutcher LLP 1,400,000 54%
Weil, Gotshal & Manges LLP 1,100,000 17%
Jenner & Block 1,600,000 43%
Bingham McCutchen LLP 600,000 33%
Lukas, Nace, Gutierrz & Sachs 100,000 12%
Andrews & Kurth, LLP 1,100,000 11%
Deloitte & Touche LLP 100,000 6%
Kasowitz, Benson, Torres & Friedman 100,000 5%
-----------
$15,100,000
===========
The fee applications and the requested fee enhancements total
$61.4 million.
NextWave Personal Communications, Inc., and its sister companies
filed their voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code on June 8, 1998. On December 23, 1998, NextWave
Telecom, Inc., filed its voluntary Chapter 11 petition (Bankr.
S.D.N.Y. Case No. 98-23303).
NextWave's cases took a circuitous and arduous route to their
ultimate resolution. The Company proposed several plans and plan
modifications. One plan, in fact, proceeding all the way through
voting by creditors to the eve of confirmation before events
outside of the Debtors' control sidetracked it. A settlement
with the Federal Communications Commission and many of the large
telecommunications carriers also paved the way for resolution of
NextWave's cases at the end of 2001. Again, however, outside
events led to the settlement not proceeding and the Debtors being
again forced to pursue alternative strategies for resolution.
Subsequent to the termination of the settlement agreement, the
United States Supreme Court granted the petitions for certiorari
of the FCC and Arctic Slope Regional Corporation, et al., which
asked the High Court to review the decision of the United Slates
Court of Appeals for the District of Columbia which held that the
FCC's cancellation of the Debtors' C and F Block licenses violated
Section 525 of the Bankruptcy Code. Following extensive briefing
by the parties, interveners, and amici, the U.S. Supreme Court
held oral argument on the matter on October 8, 2002. The High
Court handed down an 8-1 on January 27, 2003, affirming the
opinion of the D.C. Circuit finding that the FCC's cancellation of
the Debtors' licenses violated Section 525 of the Bankruptcy Code.
Immediately following receipt of the Supreme Court Decision, the
Debtors recommenced their non-litigation efforts to resolve their
reorganization proceedings. These efforts included pursuing
negotiations with the FCC, exploring potential transactions with
third parties, seeking to raise financing, and continued
operational activities related to both maintenance of the Debtors
existing network and the evolution of the Debtors' business plan
to address market and technological advances which had occurred
while litigation stymied the Debtors' business efforts.
Those efforts culminated in confirmation of a Plan on March 1,
2005, that provides significant value to creditors and interest
holders. Creditors were paid in full in cash with interest on
March 14, 2005, and interest holders are scheduled to receive, on
the Effective Date, cash or a combination of cash and interests in
the reorganized company valued at over $7.79 per share.
Deborah L. Schrier-Rape, Esq., makes it clear that no one person
or professional can take full credit for the inordinately
successful results in NextWave's cases. "The results achieved . .
. could not have been achieved without all of the pieces coming
together and the just force of the reorganization laws," Ms.
Schrier-Rape says. "From the key members of senior management and
management of the Debtors and other outside counsel, to the
Committee, its Chair and their counsel, the lenders, the
government and its counsel, certain critical shareholders, and
ultimately Verizon and its counsel, in addition to this Court and
its support system and the various district court judges,
appellate panels and the United States Supreme Court, the case
tapped a wide variety of resources and demanded contributions and
sacrifices, big and small, from a variety of areas. Ultimately
. . . the results speak for themselves, and the system worked,"
Ms. Schrier-Rape continues. "Debts have been paid, investments
returned, policies protected, jobs salvaged and created, and a
vibrant new company is emerging from these proceedings. One could
have asked for it to occur more quickly, but not for a result that
is more consistent with and a testament to the bankruptcy system
and the participants in these proceedings."
Jason S. Brookner, Esq., at Andrews Kurth LLP, notes that the
value of NextWave's estate increased by $13 billion from Petition
Date to Plan Confirmation. "Although the journey took almost
seven years to complete, the results achieved are truly
remarkable," Mr. Brookner says, "and the swing in value perhaps
unprecedented."
As a result of Nextwave Telecom's bankruptcy reorganization, the
Company's PCS licenses are its only assets. Pursuant to the
reorganization, NextWave Telecom's other assets were transferred
to the control of a separate entity, NextWave Wireless LLC, which
was not acquired by Verizon Wireless. NextWave Wireless LLC --
http://www.nextwavetel.com/-- was formed in 2004 to provide the
next generation of broadband wireless and other mobile
communications products and services to consumer and business
markets.
NN SOOD: Case Summary & 5 Largest Unsecured Creditors
-----------------------------------------------------
Debtor: NN Sood, LLC, a California Corporation
aka EKTA Center
557 North Cleveland Street
Oceanside, California 92054
Bankruptcy Case No.: 05-03781
Type of Business: The Debtor operates a one-stop shop.
Chapter 11 Petition Date: April 29, 2005
Court: Southern District of California (San Diego)
Judge: Peter W. Bowie
Debtor's Counsel: Jeffrey T. Vanderveen, Esq.
Law Offices of Jeffrey T. Vanderveen
380 So. Melrose Dr., Suite 202
Vista, California 92081
Tel: (760) 643-4044
Fax: (760) 643-4094
Total Assets: $3,301,500
Total Debts: $4,881,728
Debtor's 5 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Nick Sood $600,000
656 Benet Road
Oceanside CA 92056
Falcon Fuel Utilities $50,000
c/o Richard P. Wagner
111 West Ocean Boulevard,
1300
Long Beach, CA 90801-2210
Mompos Construction, Inc. Loan $28,000
39315 Calle de Suenos
Murrieta CA 92562
Core Mark International $9,078
c/o Thomas A. Kuehn
2029 Century Park East,
34th F
Los Angeles CA 90067-3039
County of San Diego Weights & Measurement $2,650
Attn: John J. Sansone
1600 Pacific Highway,
Room 355
San Diego CA 92101
OCTANE ENERGY: Wants to Change Name to NX Capital Corp.
-------------------------------------------------------
Octane Energy Services Ltd. (TSX-V:OES) will be seeking
shareholder approval at the Annual General Meeting to change the
name of the company to NX Capital Corp.
Octane said it has accepted the resignations of Myron T,treault
and John Hooks as directors of the Company. The Company wishes to
thank these directors for their service on behalf of the Company.
On April 22, Octane received the approval of its creditors and the
Court of Queen's Bench of Alberta for its plan of arrangement.
The Company expects to implement the plan under the arrangement
and then terminate proceedings under the Companies' Creditor
Arrangement Act.
Subsequent to termination of the CCAA, Octane will continue to
be listed on the TSX Venture Exchange and will have some real
estate holdings and cash along with certain available tax
losses. Management of Octane intends to pursue certain
identified opportunities to enhance shareholder value.
Octane Energy Services Ltd.'s wholly owned subsidiary, Pronghorn
Controls Ltd., remains intact and outside of the CCAA process.
Octane Energy Services Ltd.'s wholly owned subsidiaries, Octane
Energy Services, Inc., and Octane Energy Services (BC), Inc.,
were placed into receivership by consent after close of business
on December 4, 2004. In addition, the role of the court-appointed
monitor was expanded at the parent company (Octane
Energy Services Ltd.) and includes a receivership over the
equipment held in that corporate entity.
Octane is an oilfield services company whose main business is
providing electrical and instrumentation services through its
subsidiary Pronghorn, Pronghorn remains outside of the CCAA
process and continues to operate in the ordinary course of
business. The common shares of Octane trade on the TSX Venture
Exchange under the symbol "OES".
OMNICARE INC: Earns $58 Million of Net Income in First Quarter
--------------------------------------------------------------
Omnicare, Inc. (NYSE:OCR), a leading provider of pharmaceutical
care for the elderly, reported financial results for its first
quarter ended March 31, 2005.
Financial results for the quarter ended March 31, 2005, as
compared with the prior-year period, including the special charge
and an accounting change noted below, were:
-- Earnings per diluted share were 54 cents versus 58 cents
-- Net income was $58.0 million as compared with $63.5 million
-- Sales reached $1,096.1 million as compared with
$982.3 million
The first quarter of 2005 includes a special charge of
$1.2 million pretax. In addition, for the first quarter of both
years, the diluted earnings per share reflect the adoption of
Emerging Issues Task Force Issue No. 04-8 (EITF No. 04-8) related
to the calculation of diluted earnings per share for contingently
convertible securities as discussed below. Adjusting for the
special item and the accounting change in both periods, results
for the quarter ended March 31, 2005 were:
-- Adjusted earnings per diluted share were 57 cents versus
61 cents
-- Adjusted net income was $58.8 million as compared with
$63.5 million
-- Sales reached $1,096.1 million as compared with
$982.3 million
Commenting on the results for the quarter, Joel F. Gemunder,
Omnicare's president and chief executive officer, said, "We are
pleased that our financial performance for the first quarter
reflects a continuation of the stability that we saw beginning in
the fourth quarter of last year. Our sales continued to be
strong, once again reaching record levels, and our cash flow was
excellent. Moreover, our margins, on a sequential basis, were
stable to improving, reflecting the progress we are making in cost
savings and productivity enhancement initiatives. As a result,
our first-quarter earnings per share (excluding the special item
and accounting change) were in line with our guidance and
consensus estimates."
Financial Position
Cash flow from operations for the quarter ended March 31, 2005 was
$65.1 million versus $25.5 million in the first quarter of 2004.
The first quarter of 2005 included $14.2 million in advance
purchases of pharmaceuticals (pre-buys) as compared with
$25.6 million in pre-buys in the comparable 2004 quarter. Free
cash flow, defined as operating cash flow less capital
expenditures and cash dividends, for the first quarter of 2005 was
$59.6 million versus $18.1 million in the prior-year quarter.
"Our cash flow in the first quarter met our expectations despite
the continuation of a slowdown in payments from the Illinois
Department of Public Aid (Illinois Medicaid) which resulted in a
delay in cash receipts of approximately $27 million in the first
quarter of 2005. We continue to work with Illinois Medicaid to
minimize these delays," said Mr. Gemunder.
Gemunder also noted that at March 31, 2005, the Company had $148.8
million in cash on its balance sheet, and that total debt to total
capitalization was 39.7%, down 110 basis points from the
comparable prior-year quarter.
Earnings before interest, income taxes, depreciation and
amortization (EBITDA) for the first quarter of 2005, including the
special item discussed below, was $125.8 million versus $129.9
million in the first quarter of 2004. Excluding the special item,
adjusted EBITDA in the 2005 first quarter was $127.1 million
versus $129.9 million in the 2004 quarter.
Special Item and Accounting Change
As noted earlier, results for the first quarter of 2005 included a
special charge totaling $1.2 million pretax for professional fees
and expenses associated with the Company's offer to exchange its
4% junior subordinated convertible debentures due 2033 underlying
the Trust Preferred Income Equity Redeemable Securities (Trust
PIERS). On March 8, 2005, the Company completed the exchange
offer. Under the exchange offer, 96.7% of the old Trust PIERS
were exchanged for new Trust PIERS that are substantially similar
to the old Trust PIERS, except for a new net cash settlement
feature that allows for the treasury stock method of accounting
for these new securities, which is significantly less dilutive.
As noted previously, the Emerging Issues Task Force (EITF) of the
Financial Accounting Standards Board ratified EITF No. 04-8, "The
Effect of Contingently Convertible Instruments on Diluted Earnings
per Share," effective for periods ending after December 15, 2004.
EITF No. 04-8 requires the shares underlying contingently
convertible debt instruments to be included in diluted earnings
per share computations using the "if-converted" accounting method,
regardless of whether the market price trigger has been met.
Accordingly, diluted earnings per share have been retroactively
restated for all prior periods back to the issuance of the
Company's old Trust PIERS in June 2003. The effect of the
adoption of EITF No. 04-8 for the periods presented was to reduce
diluted earnings per share by 2 cents in the first quarter of 2005
and by 3 cents in the first quarter of 2004.
Institutional Pharmacy Business
Omnicare's institutional pharmacy business generated record
revenues of $1,050.1 million for the first quarter, 11% higher
than the $948.5 million reported in the comparable prior-year
quarter. Operating profit in this business reached $124.9
million, as compared with the $123.4 million recorded in the first
quarter of 2004. At March 31, 2005, Omnicare served long-term
care and other facilities comprising approximately 1,090,000 beds
versus approximately 1,050,000 at March 31, 2004, an increase of
4%.
"The strong sales growth we have seen in our pharmacy business
continues to be driven largely by the ongoing execution of our
acquisition strategy along with improved occupancy and acuity, the
expansion of our clinical and other service programs, drug price
inflation and market penetration of newer branded drugs, offset in
part by increasing use of generic drugs," said Mr. Gemunder.
"This sales growth was achieved despite the ongoing impact of the
trends we have seen over the last several quarters, namely
government reimbursement reductions, both state and federal, as
well as intense competitive pricing pressures. That said, we are
realigning our operating costs to bring them in line with these
pricing and reimbursement dynamics. Cost reduction and
productivity enhancement initiatives are now in place or are in
the process of being implemented. We believe these programs are
serving to stabilize our margins and should continue to have a
salutary effect on our results as we progress through 2005 and
beyond."
CRO Business
The Company's contract research (CRO) business, including Omnicare
Clinical Research and Clinimetrics Research Associates, Inc.,
generated revenues of $46.0 million on a GAAP basis for the 2005
first quarter, a 36% increase over the prior-year quarter's
revenues of $33.8 million. Included in both periods were
reimbursable out-of-pocket expenses totaling $7.3 million in the
2005 period and $4.5 million in the 2004 period. Excluding these
reimbursable out-of-pocket expenses, adjusted revenues of $38.8
million in the 2005 first quarter were up 33% when compared with
revenues of $29.2 million in the 2004 first quarter. Operating
profit in the 2005 first quarter was $2.6 million versus the $3.2
million earned in the comparable 2004 period. Backlog at March 31,
2005 was $261.9 million.
"Our larger CRO business, Omnicare Clinical Research, achieved
solid first quarter results, with revenues and backlog higher than
in the first quarter of 2004 and increased operating profit owing
to greater productivity and cost management throughout the
organization," said Mr. Gemunder.
"Our CRO results also reflect the first full quarter with
Clinimetrics Research Associates, which was acquired in mid-
December 2004. Clinimetrics' contribution for the quarter was
lower than expected, due largely to the early completion of a
large data management project, the results of which were accepted
by the Food and Drug Administration more rapidly than anticipated.
Operating cost infrastructure has been adjusted to reflect the
completion of this project and this, along with recent new
business wins, should generate significantly improved performance
as the year progresses.
"We continue to see a positive long-term outlook for our CRO
business, given our strong presence in the overall drug
development marketplace, our expanded access to the biotechnology
industry, our unique capabilities in the geriatric research market
and the streamlining and globalization of our business."
NeighborCare Transaction
On June 4, 2004, Omnicare commenced a tender offer for all of the
outstanding shares of the common stock of NeighborCare, Inc.
(NASDAQ:NCRX) for $30.00 per share in cash. Omnicare's tender
offer price represents a 70% premium over NeighborCare's closing
stock price on May 21, 2004, the last day of trading before
Omnicare's proposed offer to acquire NeighborCare was made public
on May 24, 2004. It also represents a 40% premium over the 30-day
trading average prior to the announcement of the offer and $4.00
more per share than NeighborCare's previous all-time high.
As previously announced, Omnicare received a request for
additional information from the Federal Trade Commission (FTC)
relating to its filing under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (HSR Act) in connection with its tender
offer for NeighborCare. Omnicare is continuing to work with the
FTC to complete its review.
Omnicare has also proposed a slate of three highly qualified
independent directors for election at NeighborCare's upcoming
shareholder meeting. "This slate will help ensure that the
interests of NeighborCare's shareholders, which we believe have
been made quite clear through a series of tender results, are well
represented," said Gemunder.
The Company's tender offer is scheduled to expire at 5:00 p.m.,
New York City time, on April 29, 2005, unless extended.
Commenting on the tender offer for NeighborCare, Gemunder said,
"We have always been - and remain today - confident in our ability
to consummate the offer. We are a determined, disciplined buyer
and we continue to believe that this transaction makes compelling
business sense."
Omnicare Outlook
"With regard to the long-term care industry, we have continued to
see a relatively stable environment, with much progress being made
in addressing higher acuity levels, in advancing the quality of
care and in increasing occupancy in many areas," said Mr.
Gemunder. "As we look ahead, we continue to monitor developments
on key issues relating to healthcare funding, including the
efforts of the federal government and state Medicaid programs to
contain or reduce costs, either through the legislative process or
other means.
"Most importantly, we are focused on the upcoming implementation
of the Medicare drug benefit effective January 1, 2006. On
January 28, 2005, the Centers for Medicare & Medicaid Services
(CMS) released its final regulations governing the new Medicare
Part D benefit. As detailed in these regulations, Prescription
Drug Plans, or PDPs, sponsored by commercial insurers or other
risk-bearing entities approved by CMS, are scheduled to begin
offering a drug benefit to Medicare-eligible beneficiaries,
including those dually eligible under Medicaid, which will include
many residents of the skilled nursing facilities we serve."
Mr. Gemunder noted that on March 16, 2005, CMS issued sub-
regulatory guidance on requirements for pharmacies serving skilled
nursing and other long-term care facilities as well as guidance on
appropriate transition plans. "We are pleased to note that CMS'
long-term care requirements reflect the standards of practice in
our industry today and that Omnicare not only meets, but exceeds,
these standards," he stated. "In fact, we believe Omnicare has
much to offer the PDPs - from providing required long-term care
pharmacy services to sophisticated programs that help manage both
drug costs and quality of care."
"That having been said, there are still many specifics yet to be
determined through sub-regulatory guidance from CMS, from its
long-term care study due in June and through the outcome of our
negotiations with PDPs over the next several months," said Mr.
Gemunder. "All things considered, we see nothing materially
adverse about the regulations at this time and believe we are
well-positioned to add value under the new Medicare Part D
benefit. We will monitor developments and continue to ready our
company as the year progresses."
Mr. Gemunder added, "It is important to remember that
pharmaceuticals remain among the most cost-effective means of
treating the chronic illnesses of the frailest members of our
society and, as such, should be appropriately funded. The
geriatric pharmaceutical business offers meaningful solutions to
containing healthcare costs while ensuring the well-being of the
nation's growing elderly population. Omnicare is well-positioned
to address these trends, and has demonstrated its commitment to
payors to advance clinical programs that can yield substantially
lower overall costs while enhancing quality of care."
"While we continue to address the challenges presented by pricing
and reimbursement issues, we remain focused on Omnicare's proven
growth strategy - one that has allowed us to provide long-term
shareholder value through all types of industry conditions. Our
revenue and earnings growth outlook remains positive given the
solid underlying fundamentals of our business, and our proven
growth strategy, combined with our financial strength and
flexibility, and the numerous opportunities to leverage our
business," Mr. Gemunder concluded.
Omnicare, Inc. (NYSE:OCR), a Fortune 500 company based in
Covington, Kentucky, is a leading provider of pharmaceutical care
for the elderly. Omnicare serves residents in long-term care
facilities comprising approximately 1,090,000 beds in 47 states in
the United States and in Canada, making it the largest U.S.
provider of professional pharmacy, related consulting and data
management services for skilled nursing, assisted living and other
institutional healthcare providers. Omnicare also provides
clinical research services for the pharmaceutical and
biotechnology industries in 30 countries worldwide.
* * *
Omnicare's 6-1/8% senior subordinated notes due 2013 currently
carry Standard & Poor's 'BB+' rating and Moody's Ba2 rating.
As reported in the Troubled Company Reporter on Feb. 10, 2005,
Standard & Poor's Ratings Services assigned its 'BB' rating to
Omnicare Inc.'s proposed $345 million of Series B 4.00% trust
preferred income equity redeemable securities due June 15, 2033.
These securities are being offered in exchange for an existing
PIERS issue. Unlike the existing PIERS, these are primarily
convertible into cash. A change in accounting treatment for these
"contingently convertible" securities has rendered them less
attractive to issuers as the potential conversion is now dilutive
to earnings. Otherwise, the new issue is identical to the old
PIERS.
"All the ratings assigned to Omnicare, including this one, remain
on CreditWatch with negative implications where they were placed
May 24, 2004, in light of the company's hostile bid for 'BB' rated
competitor NeighborCare, Inc.," said Standard & Poor's credit
analyst David Lugg. If successful, debt could increase by
$1.5 billion, markedly weakening credit measures, with total debt
to EBITDA possibly rising to almost 4.5x, from 2.5x. At the same
time, changes in state Medicaid practices have pressured margins
and the implementation of the Medicare drug benefit in 2006 will
have an uncertain impact.
ORION HEALTHCORP: Losses & Cash Deficit Prompt Going Concern Doubt
------------------------------------------------------------------
Orion HealthCorp, Inc. (AMEX: ONH) initiated a strategic plan
designed to accelerate the Company's growth and enhance its future
earnings potential. The plan focuses on the Company's strengths,
which include providing billing, collections and complementary
business management services to physician practices in addition to
the provision of development and management services to ambulatory
surgery centers. A fundamental component of Orion's plan is the
selective consideration of accretive acquisition opportunities in
these core business sectors. The Company will begin to divest
certain non-strategic assets and use the proceeds to repay debt,
provide working capital and fund growth. In addition, the Company
will cease investment in business lines that do not complement the
Company's strategic plan and will redirect financial resources and
company personnel to areas that management believes enhances long-
term growth potential. Currently, and consistent with the
initiation of its strategic plan, the Company is evaluating
strategic alternatives for its software services business.
The Company does not anticipate a significant reduction of revenue
as a result of the implementation of these strategic initiatives.
However, Orion anticipates a reduction of over $1.45 million in
annual expenses attributable to a combination of these initiatives
and the consolidation of corporate functions currently duplicated
at the Company's Houston and Atlanta facilities.
Form 10-K Filing
The Company also announced that it had filed its Form 10-KSB.
On April 20, 2005, the Company had received a letter from the
American Stock Exchange indicating that Orion was not in
compliance with AMEX requirements as set forth in Section 134 and
1101 of the AMEX Guide due to the Company's failure to timely file
its Form 10-KSB. The Company believes that today's filing of Form
10-KSB satisfies conditions for regaining compliance with AMEX
requirements.
In commenting on the strategic plan, Terry Bauer, Orion
HealthCorp's chief executive officer, said, "Our management and
Board of Directors remain committed to the integration of the
businesses that were combined in December 2004 to form Orion
HealthCorp. The physician services marketplace remains fragmented
and underserved, and it is our objective to provide superior
quality and highly valued business and management services to
physicians practicing in all settings. We believe that
streamlining our business will better position us for future
growth and profitability."
Keith LeBlanc, Orion HealthCorp's president, added, "Our current
physician customers are our greatest asset. The simplification of
our business model, as a result of the strategic initiatives we
are implementing, will allow us to better serve our existing
customers and better position Orion HealthCorp for future growth
initiatives including joint ventures, development projects and
strategic acquisitions. We believe there is substantial
opportunity to expand our business by focusing on the physician
practice services sector of the healthcare market."
Going Concern Doubt
In addition, the Company has received a going concern opinion from
its auditors with respect to its 2004 audited financial
statements, due to the Company's recurring losses from operations
and negative cash flows. "With the challenges of the
restructuring and the redeployment of our operating assets, this
is an appropriate opinion from our auditors," said Mr. Bauer. "As
we execute our plan, we believe that our operating performance
will improve and that the value of our enterprise will become
evident."
Orion HealthCorp, Inc., is a healthcare services organization
resulting from a recent combination of four different operating
companies. The Company provides complementary business services
to physicians through three business units: SurgiCare, Inc.,
serving the freestanding ambulatory surgery center market;
Integrated Physician Solutions, Inc., providing business services
to pediatric practices and technology solutions to general and
specialized medical practices; and Medical Billing Services, Inc.,
providing physician billing and collection services and practice
management solutions to hospital-based physicians. The core
competency of the Company is its long-term experience and success
in working with and creating value for physicians. For more
information on Orion HealthCorp, Inc., visit the Company's Web
site at http://www.orionhealthcorp.com/
PACIFIC LUMBER: New Financing Cues S&P to Review Ratings
--------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'CCC-' corporate
credit rating on Pacific Lumber Co. and removed the rating from
CreditWatch with negative implications.
"This action follows the company's announcement that it has
secured new financing, alleviating Standard & Poor's short-term
liquidity concerns, and retired its $35 million borrowing-based
revolving credit facility, ending its default under the credit
agreement," said Standard & Poor's credit analyst Dominick
D'Ascoli.
The outlook is developing, meaning that ratings cold be raised,
lowered, or affirmed. The Scotia, California-based company is a
redwood and Douglas-fir lumber producer.
The rating on Pacific Lumber reflects the following weaknesses:
(1) Very weak financial performance during the past few years.
(2) Financial difficulties at its wholly owned subsidiary and
primary log supplier, Scotia Pacific Co. LLC.
Scotia has announced it is looking into restructuring its timber
notes. The public's environmental sensitivity regarding
harvesting trees in California. Consequently, environmental
lawsuits will likely continue for the near future.
Onerous environmental regulations with multiple governmental
agencies involved in the harvest permitting process. Narrow
product focus with little operating diversity in the highly
cyclical lumber market.
Pacific Lumber's and Scotia Pacific's financial condition worsened
recently because of Scotia Pacific's inability to harvest at
planned levels in the first half of 2005. This was due to the
lack of sufficient timber harvest permit approvals from the North
Coast Regional Water Quality Board in two watersheds. The company
will be moving into different watersheds in the second half of
2005, but this problem is indicative of the environmental
sensitivity of harvesting trees in California. Standard & Poor's
believes environmental issues and lawsuits will continue to plague
the company and disrupt operations.
The rating could be raised if Scotia Pacific successfully
restructures its debt and is able to provide Pacific Lumber with
adequate log volumes, and Pacific Lumber's financial performance
improves. However, the rating could be lowered if Scotia
Pacific's harvest activities are significantly restricted or if
Pacific Lumber's financial condition weakens further by its
financial support of Scotia Pacific or through restructuring or
bankruptcy proceedings at Scotia Pacific.
PETROLEUM GEO-SERVICES: Court Closes Chapter 11 Cases
-----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
closed Petroleum Geo-Services ASA's chapter 11 case at the
Debtor's behest.
Paul V. Shalhoub, Esq., at Willkie Farr & Gallagher, LLP, at New
York, reported that the Debtor's case is already fully
administered.
The Debtor paid these firms all fees and expense reimbursements
approved by the Court:
Willkie Farr & Gallagher, LLP $1,182,230
Debtor's Counsel
Baker Botts LLP 207,707
Debtor's Counsel
Linklaters 197,085
Debtor's Counsel
Arntzen de Besche 227,455
Debtor's Counsel
Ernst & Young AS (Norway) 623,991
Debtor's Accounting Consultant
Ernst & Young 56,098
Debtor's Accounting Consultant
Ernst & Young LLP (US) 1,342,958
Debtor's Accounting Consultant
Ernst & Young LLP (UK) 238,858
Debtor's Accounting Consultant
Ernst & Young Corporate Finance LLC 19,515
Debtor's Accounting Consultant
Bingham McCutchen LLP 428,772
Counsel
Official Committee of Unsecured Creditor
Thommessen Krefting Greve Lund 44,917
Norwegian Counsel
Official Committee of Unsecured Creditor
Houlihan Lokey Howard & Zukin Capital 8,201,217
Financial Advisor
Official Committee of Unsecured Creditor
Holders of general unsecured claims recovered 100% of their
claims. Bank Lenders backing a $475 million loan facility
recovered 73% of the face value of the Term Loan, or 61% based on
estimated market value. Holders of senior unsecured notes
recovered 64% of their claims. Holders of junior subordinated
debenture claims recovered 11% of their claims. Holders of
existing security law claims and equity interests did not receive
anything.
Petroleum Geo-Services ASA is a technology-based service provider
that assists oil and gas companies across the world. The Company
filed for chapter 11 protection on July 29, 2003 (Bankr. S.D.N.Y.
Case No. 03-14786). When the Company filed for bankruptcy, it
disclosed assets amounting to $3,686,621,000 and debts amounting
to $2,444,341,000.
PRIME CAMPUS: Files Schedules of Assets & Liabilities in Texas
--------------------------------------------------------------
Prime Campus Housing, LLC, delivered its Schedule of Assets and
Liabilities with the U.S. Bankruptcy Court for the Northern
District of Texas, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property $15,000,000
B. Personal Property $ 963,311
C. Property Claimed
as Exempt
D. Creditors Holding
Secured Claims $10,936,931
E. Creditors Holding
Unsecured Priority
Claims $ 3,088
F. Creditors Holding
Unsecured Nonpriority
Claims $ 150,104
----------- -----------
Total $15,963,311 $11,090,123
Headquartered in Omaha, Nebraska, Prime Campus Housing, LLC,
operates a 1,017-bed coeducational full-service dormitory located
at Lubbock County, Texas. Prime Campus filed for chapter 11
protection on March 21, 2005 (Bankr. N.D. Tex. Case No. 05-50311).
Joseph F. Postnikoff, Esq., at Goodrich, Postnikoff & Albertson
represents the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it estimated
assets and debts between $10 million to $50 million.
PRUDENTIAL SECURITIES: S&P Lifts Ratings on Three Class Certs.
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on seven
classes of Prudential Securities Secured Financing Corp.'s
commercial mortgage pass-through certificates series 1998-C1. At
the same time, ratings are affirmed on six other classes from the
same transaction.
The raised and affirmed ratings reflect seasoning and credit
enhancement levels that provide adequate support through various
stress scenarios.
As of the April 15, 2005, remittance report, the collateral pool
consisted of 223 loans with an aggregate principal balance of
$842.8 million, down from 254 loans totaling $1.15 billion at
issuance. The pool has paid down by 26.63%. KeyBank Real Estate
Capital (KeyBank), the master servicer, reported full-year and
interim 2004 information for 93.42% of the pool. Based on this
information, Standard & Poor's calculated a current weighted
average debt service coverage (DSC) of 1.49x, up from 1.41x at
issuance. The current DSC figure excludes 2.9% ($24.4 million) of
the pool, which has been defeased. To date, the trust has
experienced six losses totaling $7.25 million. All of the loans
in the pool are current.
The top 10 exposures in the pool have an aggregate outstanding
balance of $179.5 million (21.3%). The weighted average DSC for
the top 10 increased to 1.42x, up from 1.37x at issuance. Despite
the improvement, Standard & Poor's has concerns about the largest
and fourth largest exposures in the pool. The fourth largest
exposure is specially serviced and is discussed below.
The largest exposure, the AIP portfolio (with a current balance of
$27.8 million, 3.30% of the pool), consists of nine office
properties, all located in Texas. The portfolio has experienced
occupancy issues and decreased rental rates, and it will be
subject to additional lease roll in the future, which may cause
its full-year 2004 1.21x DSC to decline.
The third largest exposure ($21.5 million) is on the servicer's
watchlist and is discussed later in this release. Standard &
Poor's reviewed property inspections provided by the master
servicer for all of the assets underlying the top 10 loans and all
were characterized as "good" or "excellent."
There are two loans ($22.8 million, 2.7%) with the special
servicer (KeyBank). The first is the fourth largest loan in the
pool. It is a $20.8 million loan secured by a 242,032-square-foot
office building in Dallas, Texas. The loan was transferred to the
special servicer on Nov. 4, 2004, after Vartec, the sole tenant,
declared bankruptcy. Vartec recently filed a motion to reject its
lease. The property is a single-tenant building and was ranked in
excellent condition in the August 2004 inspection report. The
special servicer is in negotiations with the owner to discuss a
payoff. The resolution of the loan could lead to a significant
loss, given current market conditions.
The remaining specially serviced loan, at $2 million, is secured
by two multifamily properties (112 units and 217 units) in
Woodward, Oklahoma. The loan was transferred to the special
servicer in January 2003 due to an erratic payment history. One
of the properties is encumbered by an unauthorized second mortgage
in the amount of $2.4 million. The DSC for both properties is
1.59x, and payments are current. The special servicer has
negotiated a payoff, which it has extended to the end of April
2005. The most recent appraisal indicates a full recovery of the
principal balance.
KeyBank reported a watchlist of 53 loans ($162.1 million, 19.23%).
The watchlist includes the third largest exposure, which
encompasses 18 cross-collateralized and cross-defaulted mortgages
totaling $21.6 million. Six of the mortgages appear on the
watchlist due to occupancy issues and low DSC resulting from
increased expenses. DSC for the portfolio is 1.56x. This figure
excludes one of the loans, with a balance of $177,857, which has
been defeased. The inspection report characterized all the
properties as "good," with the exception of one that was ranked
"fair."
The sixth largest exposure (the Holiday Inn portfolio, $15.7
million) has one loan ($2.9 million) on the watchlist due to a low
DSC of 0.63x. However, the DSC for the Holiday Inn portfolio,
which encompasses four cross-collateralized and cross-defaulted
mortgages, is 1.47x.
The remaining loans are on the watchlist due to low occupancy,
lease expirations, and/or low DSC levels.
Standard & Poor's stressed various loans in the mortgage pool,
paying closer attention to the specially serviced loans and those
on the watchlist. The expected losses and resultant credit
enhancement levels adequately support the raised and affirmed
ratings.
Ratings Raised
Prudential Securities Secured Financing Corp.
Commercial mortgage pass-through certs series 1998-C1
Rating
------
Class To From Credit enhancement(%)
----- -- ---- --------------------
C AAA AA+ 23.98
D AA A 16.83
E A+ A- 14.78
F BBB+ BBB 11.71
G BBB- BB+ 8.31
H BB+ BB 7.28
J BB BB- 5.92
RATINGS AFFIRMED
Prudential Securities Secured Financing Corp.
Commercial mortgage pass-through certs series 1998-C1
Class Rating Credit enhancement(%)
----- ------ --------------------
A-1A3 AAA 38.29
A-1B AAA 38.29
A-2MF AAA 38.29
A-EC AAA N.A.
B AAA 31.48
K B+ 3.88
N.A. - Not applicable.
RAM VENTURE: Continuing Losses Trigger Going Concern Doubt
----------------------------------------------------------
RAM Venture Holdings Corp. f/k/a American Apparel and Accessories,
Inc., delivered an amended annual report for its fiscal year
ending March 31, 2004, and amended quarterly reports for its
fiscal quarters ending December 31, 2004, September 30, 2004 and
June 30, 2004, to the Securities and Exchange Commission last
week.
The Company's Dec. 31, 2004, balance sheet shows $1.6 million in
assets and liabilities of more than 10 times that amount. In the
nine-month period ending Dec. 31, 2004, the company reported a
$3.5 million net loss.
Auditors at MOORE STEPHENS, P.C., in Cranford, New Jersey,
expressed substantial doubt about RAM Venture's ability to
continue as a going concern when they audited the company's fiscal
2004 financial statements. That expression of doubt is repeated
in each of the three fiscal 2005 quarterly reports delivered to
the SEC last week.
"Management expects cash flows from operating activities
to improve in 2005," the company's third quarter financial
statements relate, "primarily as a result of an increase in
sales."
"We also have plans to raise capital through various methods to
payoff certain existing debt and to finance the planned
acquisition of two businesses in the outdoors industry,"
management says. "If we fail to generate positive cash flows or
obtain additional capital when required, we could continue to
modify, delay or abandon some or all of our business and expansion
plans," management cautions.
RAM Venture Holdings Corp., and its wholly-owned subsidiaries,
including Natural Gear, LLC, Wildlife Quest, Inc., is a camouflage
hunting and outdoor apparel manufacturer in its developmental
stage. Natural Gear also offers licensees the opportunity to use
their trademarked camouflage patterns on a variety of hunting and
outdoor goods. Wildlife Quest Productions, Inc. is a dormant
television production company, which produced an outdoor program
shown on ESPN2 under the name "Wildlife Quest."
REDDY ICE: Extends 8-7/8% Senior Debt Tender Offer Until May 13
---------------------------------------------------------------
Reddy Ice Group, Inc., is amending its previously announced tender
offer and consent solicitation for its outstanding 8-7/8% senior
subordinated notes due 2011 by extending the Expiration Date to
5:00 p.m., New York City time, on May 13, 2005, unless further
extended or terminated. Reddy Ice also will also pay the consent
payment to all holders of the Notes who validly tender their Notes
prior to 5:00 p.m., New York City time, on May 13, 2005, the new
Expiration Date.
As of 5:00 p.m., New York City time, on April 27, 2005, tenders
and consents had been received with respect to approximately 97.9%
of the outstanding principal amount of the Notes. The consent
condition has been satisfied with respect to the Notes. The
Consent Date was 5:00 p.m., New York City time, on April 12, 2005,
and any Notes that were tendered prior to, or that are tendered
after, the Consent Date may not be withdrawn and the related
consents may not be revoked.
Reddy Ice also announced that assuming a Payment Date of May 16,
2005, the first business day after the new Expiration Date, the
Total Consideration for each $1,000 principal amount of Notes
validly tendered and not validly withdrawn prior to the Expiration
Date is $1,120.04. In addition, each tendering holder of Notes
will be paid accrued and unpaid interest from the last interest
payment date up to, but not including, the Payment Date. The
Total Consideration was determined based on the formula set forth
in the Offer to Purchase with a Price Determination Date of
April 13, 2005. The Total Consideration may be higher or lower,
based on this formula, depending on the actual Payment Date.
The Notes are being tendered pursuant to Reddy Ice's Offer to
Purchase and Consent Solicitation Statement dated March 22, 2005,
as amended by the Supplement and Amendment to the Offer to
Purchase and Consent Solicitation Statement, dated April 5, 2005
which more fully sets forth the terms and conditions of the cash
tender offer to purchase any and all of the outstanding principal
amount of the Notes as well as the consent solicitation to
eliminate substantially all of the restrictive covenants and
certain events of default contained in the Indenture.
The tender offer and consent solicitation are subject to the
satisfaction of certain additional conditions, including Reddy Ice
having available funds sufficient to pay the aggregate Total
Consideration from the anticipated proceeds of a new senior credit
facility and from an offering of equity by Reddy Ice Holdings,
Inc., in connection with the initial public offering of its common
stock. In the event that the tender offer and consent
solicitation are withdrawn or otherwise not completed, the Total
Consideration, including the consent payment, will not be paid or
become payable to holders of the Notes who have tendered their
Notes and delivered consents.
Credit Suisse First Boston LLC is the sole Dealer Manager and
Solicitation Agent for the tender offer and consent solicitation.
Questions regarding the tender offer and consent solicitation may
be directed to Credit Suisse First Boston LLC, Liability
Management Group, at (800) 820-1653 (US toll-free) and (212) 538-
0652 (collect). Copies of the Offer to Purchase and Consent
Solicitation Statement and related documents may be obtained from
the Information Agent for the tender offer and consent
solicitation, Morrow & Co., Inc., at (800) 654-2468 (US toll-free)
and (212) 754-8000 (collect).
Headquartered in Dallas, Texas, Reddy Ice Holdings, Inc., and its
subsidiaries manufacture and distribute packaged ice in the United
States serving approximately 82,000 customer locations in
32 states and the District of Columbia under the Reddy Ice brand
name. The company is the largest of its kind in the United
States. Typical end markets include supermarkets, mass merchants,
and convenience stores. For the last twelve months ended
June 30, 2004, consolidated revenue was approximately
$260 million.
* * *
Reddy Ice Group's 8-7/8% senior subordinated notes due Aug. 11,
2011, carry Moody's B3 rating and Standard & Poor's B- rating.
RESIDENTIAL ACCREDIT: Fitch Puts Low-B Ratings on 2 Cert. Classes
-----------------------------------------------------------------
Fitch rates Residential Accredit Loans, Inc. mortgage pass-through
certificates, series 2005-QS4:
-- $200,573,440 classes A-1 through A-6, A-P, A-V, and R
certificates (senior certificates) 'AAA';
-- $5,504,000 class M-1 'AA';
-- $1,905,200 class M-2 'A';
-- $1,058,500 class M-3 'BBB';
-- $1,058,400 privately offered class B-1 'BB';
-- $635,100 privately offered class B-2 'B'.
Additionally, the privately offered $952,600 class B-3 is not
rated by Fitch.
The 'AAA' rating on the senior certificates reflects the 5.25%
subordination provided by:
* the 2.60% class M-1,
* the 0.90% class M-2,
* the 0.50% class M-3,
* the privately offered 0.50% class B-1,
* the 0.30% privately offered class B-2, and
* the 0.45% privately offered class B-3.
Fitch believes the above credit enhancement will be adequate to
support mortgagor defaults, as well as bankruptcy, fraud, and
special hazard losses in limited amounts. In addition, the
ratings reflect the quality of the mortgage collateral, strength
of the legal and financial structures, and Residential Funding
Corp.'s servicing capabilities (rated 'RMS1' by Fitch) as master
servicer.
As of the cut-off date, April 1, 2005, the mortgage pool consists
of 1,261 conventional, fully amortizing, 30-year fixed-rate,
mortgage loans secured by first liens on one- to four- family
residential properties with an aggregate principal balance of
$211,687,240. The mortgage pool has a weighted average original
loan-to-value ratio of 76.00%. The pool has a weighted average
FICO score of 725, and approximately 55.55% and 5.97% of the
mortgage loans possess FICO scores greater than or equal to 720
and less than 660, respectively. Equity refinance loans account
for 39.95%, and second homes account for 2.81%. The average loan
balance of the loans in the pool is $167,873.
The three states that represent the largest portion of the loans
in the pool are:
* California (19.24%),
* Texas (9.47%), and
* Florida (8.16%).
All of the mortgage loans were purchased by the depositor through
its affiliate, Residential Funding, from unaffiliated sellers as
described in this prospectus supplement and in the prospectus,
except in the case of 33.9% of the mortgage loans, which were
purchased by the depositor through its affiliate, Residential
Funding, from HomeComings Financial Network, Inc., a wholly owned
subsidiary of the master servicer. Approximately 30.9% of the
mortgage loans were purchased from National City Mortgage Company.
Except as described in the preceding sentence, no unaffiliated
seller sold more than 7.4% of the mortgage loans to Residential
Funding. Approximately 30.9% of the mortgage loans are being
subserviced by National City Mortgage Company, an unaffiliated
servicer. 59.0% of the mortgage loans are being subserviced by
HomeComings Financial Network, Inc.
None of the mortgage loans were subject to the Home Ownership and
Equity Protection Act of 1994. Furthermore, none of the mortgage
loans are loans that, under applicable state or local law in
effect at the time of origination of the loan, are referred to as
'high-cost' or 'covered' loans or any other similar designation if
the law imposes greater restrictions or additional legal liability
for residential mortgage loans with high interest rates, points,
and/or fees. For additional information on Fitch's rating
criteria regarding predatory lending legislation, see the press
release 'Fitch Revises Rating Criteria in Wake of Predatory
Lending Legislation,' dated May 1, 2003, available on the Fitch
Ratings web site at http://www.fitchratings.com/
The mortgage loans were originated under GMAC-RFC's Expanded
Criteria Mortgage Program (Alt-A program). Alt-A program loans
are often marked by one or more of the following attributes:
* a non-owner-occupied property;
* the absence of income verification;
* or a loan-to-value ratio or debt service/income
ratio that is higher than other guidelines permit.
In analyzing the collateral pool, Fitch adjusted its frequency of
foreclosure and loss assumptions to account for the presence of
these attributes.
Deutsche Bank Trust Company Americas will serve as trustee. RALI,
a special purpose corporation, deposited the loans in the trust,
which issued the certificates. For federal income tax purposes,
an election will be made to treat the trust fund as one real
estate mortgage investment conduit.
RESIDENTIAL ACCREDIT: Fitch Puts Low-B Ratings on Two Mort. Certs.
------------------------------------------------------------------
Fitch rates Residential Accredit Loans, Inc. mortgage pass-through
certificates, series 2005-QS5:
-- $202,474,134 classes A-1 through A-6, A-P, A-V, R-I, and
R-II certificates (senior certificates) 'AAA';
-- $5,886,200 class M-1 'AA';
-- $1,926,300 class M-2 'A';
-- $1,070,200 class M-3 'BBB';
-- $1,070,100 privately offered class B-1 'BB';
-- $642,100 privately offered class B-2 'B';
-- $963,235 privately offered class B-3 are not rated by
Fitch.
The 'AAA' rating on the senior certificates reflects the 5.40%
subordination provided by:
* the 2.75% class M-1,
* the 0.90% class M-2,
* the 0.50% class M-3,
* the 0.50% privately offered class B-1,
* the 0.30% privately offered class B-2, and
* the 0.45% privately offered class B-3.
Fitch believes the above credit enhancement will be adequate to
support mortgagor defaults, as well as bankruptcy, fraud, and
special hazard losses in limited amounts. In addition, the
ratings reflect the quality of the mortgage collateral, strength
of the legal and financial structures, and Residential Funding
Corp.'s servicing capabilities (rated 'RMS1' by Fitch) as master
servicer.
As of the cut-off date, April 1, 2005, the mortgage pool consists
of 1,276 conventional, fully amortizing, 30-year fixed-rate,
mortgage loans secured by first liens on one- to four- family
residential properties with an aggregate principal balance of
$214,032,269. The mortgage pool has a weighted average original
loan-to-value ratio of 76.05%. The pool has a weighted average
FICO score of 722, and approximately 51.82% and 6.12% of the
mortgage loans possess FICO scores greater than or equal to 720
and less than 660, respectively. Loans originated under a reduced
loan documentation program account for approximately 64.97% of the
pool, equity refinance loans account for 39.92%, and second homes
account for 2.97%. The average loan balance of the loans in the
pool is $167,737.
The three states that represent the largest portion of the loans
in the pool are:
* California (21.39%),
* Florida (8.49%), and
* Texas (7.47%).
All of the mortgage loans were purchased by the depositor through
its affiliate, Residential Funding, from unaffiliated sellers as
described in this prospectus supplement and in the prospectus,
except in the case of 37.4% of the mortgage loans, which were
purchased by the depositor through its affiliate, Residential
Funding, from HomeComings Financial Network, Inc., a wholly owned
subsidiary of the master servicer. Approximately 31.0% of the
mortgage loans were purchased from National City Mortgage Company.
Except as described in the preceding sentence, no unaffiliated
seller sold more than 7.5% of the mortgage loans to Residential
Funding. Approximately, 31.0% of the mortgage loans are being
subserviced by National City Mortgage Company and 60.7% of the
mortgage loans are being subserviced by HomeComings Financial
Network, Inc.
None of the mortgage loans were subject to the Home Ownership and
Equity Protection Act of 1994. Furthermore, none of the mortgage
loans are loans that, under applicable state or local law in
effect at the time of origination of the loan are referred to as
'high-cost' or 'covered' loans or any other similar designation if
the law imposes greater restrictions or additional legal liability
for residential mortgage loans with high interest rates, points,
and/or fees. For additional information on Fitch's rating
criteria regarding predatory lending legislation, see the press
release 'Fitch Revises Rating Criteria in Wake of Predatory
Lending Legislation,' dated May 1, 2003, available on the Fitch
Ratings web site at http://www.fitchratings.com/
The mortgage loans were originated under GMAC-RFC's Expanded
Criteria Mortgage Program (Alt-A program). Alt-A program loans
are often marked by one or more of the following attributes:
* a non-owner-occupied property;
* the absence of income verification; or
* a loan-to-value ratio or debt service/income
ratio that is higher than other guidelines
permit.
In analyzing the collateral pool, Fitch adjusted its frequency of
foreclosure and loss assumptions to account for the presence of
these attributes.
Deutsche Bank Trust Company Americas will serve as trustee. RALI,
a special purpose corporation, deposited the loans in the trust,
which issued the certificates. For federal income tax purposes,
an election will be made to treat the trust fund as two real
estate mortgage investment conduits.
ROCK-TENN CO.: Gulf States Transaction Cues S&P to Pare Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Rock-Tenn Co. to 'BB' from
'BBB-' and placed them on CreditWatch with negative implications.
The rating action followed the company's announcement that it will
finance $490 million of the $540 million acquisition of unrated
Gulf States Paper Corp.'s pulp, paperboard, and packaging
businesses with debt. This transaction, which is expected to
close in June, substantially increases Rock-Tenn's financial
leverage. Pro forma for the transaction, total debt to
EBITDA is approximately 4.5x for the 12 months ended Dec. 31,
2004.
While Rock-Tenn's business position will be improved by this
transaction, the use of financial leverage is very aggressive.
"The CreditWatch placement reflects Standard & Poor's concerns
about how quickly financial leverage can be reduced given Rock-
Tenn's historically low level of free cash flow and the negative
trend in its operating margins over the last six years," said
Standard & Poor's credit analyst Dominick D'Ascoli.
In resolving the CreditWatch, Standard & Poor's will focus on
Rock-Tenn's ability and willingness to reduce debt and potential
synergies and their associated costs. Unless there is a clear
path to reduced financial leverage in a relatively short time
frame, ratings could be lowered further.
Standard & Poor's plans to meet with management and resolve the
CreditWatch listing within the next few weeks.
SAKS INC: Moody's Cuts Ratings, Citing Tardy Form 10-K & Problems
-----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Saks Inc. and
placed the company on review direction uncertain. The downgrade
is based upon:
(1) concerns over the company's internal controls and
(2) the company's inability to file its 10K on a timely basis
which places it at risk for an event of default as defined
under its bond indentures.
Saks recently announced that it does not expect it will file its
10K by the April 29th deadline. The Company's inability to file
its 10K on time relates to the previously disclosed internal
investigation, which is continuing. Initially the focus was just
on vendor allowances from one merchandising division of SFAE and a
2002 initial investigation of this matter. The company's
preliminary estimates of this matter were $21.5 million relating
to 1999 to 2003, with the majority of the amount being prior to
2003. However, the audit committee is now also examining related
accounting and financial matters that have arisen during the
course of the investigation. It is uncertain when the
investigation will be brought to a close and when the company will
therefore be able to file its 10K.
If Saks Inc. is unable to file its 10K for the last fiscal year by
April 29, it will have a default under all its bond indentures,
which would become an event of default after sixty days following
notice by either the trustee or 25% of the bond holders under any
single indenture. If an event of default occurs, all debt becomes
due and payable under cross default provisions in the company's
indentures and bank agreement. The SEC has also launched a formal
investigation.
The review direction uncertain reflects:
(1) the high degree of uncertainty at this time regarding the
events that have caused the internal investigation,
(2) the adequacy of Saks' internal controls,
(3) the scope and timing of the SEC investigation,
(4) the outcome of the internal and external investigations,
(5) the timing of the company's eventual filing of its 10K and
first quarter 10Q, and
(6) whether the trustee or 25% of bondholders under any single
indenture issues a notice of default.
Moody's ongoing review will focus on all of these issues, as well
as the liquidity profile of the company as developments unfold and
any potential strategic alternatives that may be available to the
company.
Moody's notes that Saks has received a waiver under its
$800 million committed bank facility for matters that relate to
the late filing of its 10K. The company currently has
$130 million of letters of credit outstanding under the revolver
and had $257 million of cash-on-hand as of year-end.
Ratings could move upward to the Ba3 senior implied level should
the outcome of the investigation be limited to the initial
$21.5 million of irregularities from vendor allowances, as well as
any associated material weakness noted being limited to accounting
for leases and an immaterial amount of vendor allowances.
Ratings could be confirmed at the senior implied B1 level should
material weakness noted be more widespread or should the company's
reported results support a B1 rating category. Ratings could move
further down should the investigation uncover more significant
irregularities, the trustees or bondholders serve the company with
notice of a default, the company's liquidity profile weakens, or
reported results are significantly weaker than the company has
announced to date.
These ratings are downgraded:
* Saks, Inc.:
-- Senior implied to B1 from Ba3;
-- Senior unsecured debt guaranteed by operating subsidiaries
to B1 from Ba3;
-- Senior unsecured long-term issuer rating to B2 from B1;
Prospective ratings for prospective senior unsecured debt,
subordinated debt and preferred stock issued from the company's
shelf registration to (P) B1; (P) B3, (P) B3 from (P) Ba3; (P) B2;
(P) B2.
Proffit's Capital Trust I, II, III, IV, and V:
* Preferred Stock Shelf to (P) B3 from (P) B2.
Saks Inc., headquartered in Birmingham, Alabama, operated about
381 department stores and specialty stores under the names Saks,
Proffit's, Parisian, McRae's, Carson Pirie Scott, Bergners, Off
5th, and Club Libby Lu. Revenues for fiscal year 2004 were
$6.4 billion.
SHAW GROUP: Closes New Five-Year $450 Million Credit Facility
-------------------------------------------------------------
The Shaw Group Inc. (NYSE: SGR) disclosed the closing of its new
five-year $450 million credit facility with BNP Paribas and Harris
Nesbitt acting as co-lead arrangers and BNP Paribas acting as sole
book runner. The entire $450 million is available for performance
letters of credit and up to $200 million is available for working
capital revolving credit loans. The new credit facility is
effective immediately and expires April 25, 2010.
J. M. Bernhard, Jr., Chairman and Chief Executive Officer, of
Shaw, said, "With this new $450 million credit agreement in place,
and the expected repurchase of our Senior Notes facilitated by our
recent equity offering, we will have significantly strengthened
our balance sheet and increased our financial flexibility. We are
now very favorably positioned to pursue and attract significant
business opportunities in the industrial markets we serve,
especially the increasing opportunities we see in the energy and
chemicals markets. Shaw is uniquely qualified to serve these
industries and to benefit from the market opportunities."
The Company's obligations under the Credit Agreement are secured
by, among other things:
(i) guarantees by certain of the Company's domestic
subsidiaries;
(ii) a pledge of all of the capital stock of its domestic
subsidiaries and 66% of the capital stock in certain of
its foreign subsidiaries;
(iii) a security interest in all of its personal property and
the personal property of its domestic subsidiaries
(including equipment); and
(iv) mortgages over certain domestic real property.
The Company also has the ability to obtain unsecured performance
letters of credit outside of the Credit Agreement of up to
$150 million.
Affiliates of Credit Suisse First Boston, Merrill Lynch Capital
Corporation (a lender under the Credit Agreement) and UBS
Securities LLC have served as underwriters in the past for the
Company's underwritten offerings. Also, affiliates of Credit
Suisse First Boston and Merrill Lynch Capital Corporation have
entered into financial advisory agreements with the Company.
About the Company
The Shaw Group Inc. -- http://www.shawgrp.com/-- is a global
provider of technology, engineering, procurement, construction,
maintenance, fabrication, manufacturing, consulting, remediation,
and facilities management services for government and private
sector clients in the power, process, environmental,
infrastructure and emergency response markets. A Fortune 500
Company, The Shaw Group is headquartered in Baton Rouge,
Louisiana, and employs approximately 18,000 people at its offices
and operations in North America, South America, Europe, the Middle
East and the Asia-Pacific region.
* * *
As reported in the Troubled Company Reporter on Apr. 11, 2005,
Moody's Investors Service has placed the long-term ratings of The
Shaw Group Inc. on review for possible upgrade following the
company's announcement that it intends to utilize the proceeds
from an approximately $270 million secondary equity offering to
tender for all outstanding 10.75% senior unsecured notes due 2010,
effectively retiring virtually all long-term debt.
Ratings placed on review include:
* Ba3 -- senior implied
* Ba3 -- 10.75% senior unsecured notes due 2010
* B1 -- senior unsecured issuer rating
As reported in the Troubled Company Reporter on Apr. 8, 2005,
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit and senior secured ratings on The Shaw Group Inc. on
CreditWatch with positive implications. At the same time, we also
placed our 'B+' senior unsecured and 'B' preliminary subordinated
shelf ratings on CreditWatch with positive implications.
SPICES FINANCE: Moody's Slices Rating on $10M Sec. Notes to Ba1
---------------------------------------------------------------
Moody's has taken this rating action on one class of notes issued
by Spices Finance Limited under Series 2001-4:
-- USD 10,000,000 Series 2001-4 Secured Floating Rate Notes due
2007 from Ba1 to Baa1.
This rating action was prompted by the moderate improvement of the
credit quality of the reference portfolio and by the shortened
time to maturity.
This class of notes is protected by 3.2% of remaining credit
threshold. 9.1% of the portfolio bears a non-investment grade
rating (no rating is below Ba3).
STAAR SURGICAL: Fresh Equity Prompts Auditors to Remove Doubt
-------------------------------------------------------------
STAAR Surgical Company (Nasdaq: STAA) reported financial results
for its first quarter ended April 1, 2005.
Total product sales for the first quarter were $13,678,000
compared with $13,569,000 for the same quarter last year and
$13,951,000 for the fourth quarter of 2004. Excluding the impact
of changes in currency, first quarter 2005 total product sales
were $13,363,000, a decrease of 1.5% compared with the first
quarter of 2004.
During the first quarter, international ICL sales increased 30%
compared with the first quarter of 2004 and 19% compared with the
fourth quarter of 2004. In addition, international sales of the
Company's preloaded silicone IOL continued to increase and grew to
9% of total IOL sales compared with the first quarter of 2004 when
they were 3% of total IOL sales.
Net loss for the first quarter of 2005 was $2,338,000, compared
with a net loss of $1,299,000, or $0.07 per share, for the same
period last year and a net loss of $4,384,000 for the fourth
quarter of 2004.
STAAR exited the first quarter with approximately $5,276,000 in
cash, cash equivalents and short-term investments compared with
$9,312,000 in cash and cash equivalents at December 31, 2004. The
Company utilized approximately $2,600,000 for operating activities
during the first quarter, which is approximately $900,000 below
the Company's previous estimate of $3,500,000. To minimize
interest expense, the Company used $1,200,000 during the quarter
to pay down its line of credit with UBS. Total cash used during
the quarter was $4,000,000. Currently, the Company believes total
cash flow for 2005 will be at or favorable to 2004 levels.
STAAR's bank debt at the end of the first quarter of 2005 was
approximately $1,800,000. Total current liabilities, including the
bank debt, were $11,500,0 00.
Equity Financing
During the second quarter of 2005, the Company sold 4.1 million
shares of its common stock in a private placement transaction
resulting in $14.35 million in gross proceeds. The Company plans
to use the proceeds for general working capital purposes. As a of
result of this financing, the Company's independent auditors re-
issued their opinion on the Company's financial statements for
fiscal 2004 to remove a qualifying paragraph that expressed
substantial doubt about the Company's ability to continue as a
going concern. The Company has re-filed its annual report on form
10-K to reflect the removal of the qualifying language.
Gross profit margin was 47.2% for the first quarter of 2005
compared with 53.9% for the same quarter last year and equal to
the 47.2% reported for the fourth quarter of 2004. The decline in
gross profit from the first quarter of 2004 was primarily due to
higher unit costs as a result of manufacturing process changes and
reduced volume and a shift in geographical and product mix.
Selling, general, and administrative expenses for the first
quarter of 2005 increased $194,000, or 2%, compared with the first
quarter of 2004 and decreased $1.9 million or 18%, compared with
the fourth quarter of 2004. The increase compared with the first
quarter of 2004 is the result of an increase in general and
administrative expenses due to increased professional fees,
insurance premiums, and Board travel expenses which were partially
offset by decreased marketing and selling and research and
development expenses.
The $1.9 million decrease in selling, general, and administrative
expenses compared with the fourth quarter of 2004 is due to a
decrease in general and administrative costs associated with the
implementation of the Sarbanes-Oxley Act of 2002, many of which
did not recur in the first quarter of 2005, decreased marketing
and selling expenses and a decrease in other charges which
included a $500,000 reserve against the partially collateralized
notes of a former director.
As announced earlier, as part of its cost reduction strategy,
during the quarter the Company reduced its direct sales force
which will result in an approximate $1 million in annualized cost
savings, although the impact of this cost savings will not be
fully realized until the second quarter of 2005. During the
quarter, the Company successfully reduced its total marketing and
selling expenses by 2% to $4.85 million compared with the first
quarter of 2004 and by approximately 15% compared with the fourth
quarter of 2004. The Company reduced its U.S. marketing and
selling expenses by 13% compared with the first quarter of 2004,
in part, due to reduced commissions on lower sales, but also due
to an overall strategy to control spending. However, much of the
benefit of the U.S. expense reduction was offset by the negative
impact of currency on international marketing and selling
expenses.
Research and development expense for the first quarter of 2005 was
comparable to the first quarter of 2004 and the fourth quarter of
2004 at $1,300,000, reflecting a return to normalized levels of
expense compared with the second and third quarters of 2004.
New General Counsel
The Company also recently announced that Charles Kaufman has
joined STAAR in the newly created role of General Counsel,
Corporate Compliance Officer. Mr. Kaufman was formerly a member
of the Corporate Practice Group at Sheppard Mullin Richter &
Hampton, LLP and served as STAAR's outside counsel. In his role
as Corporate Compliance Officer, Mr. Kaufman will oversee all
compliance activities at STAAR. As a result of this new role, the
Company believes that it will be able to further reduce expenses
associated with corporate governance and compliance activities as
well as begin to reduce legal and professional services expenses
compared with first quarter levels.
"We remain committed to enhancing shareholder value and believe
that we have taken some critical steps that will allow us to reach
this goal," said David Bailey, President and CEO of STAAR
Surgical. "As we announced separately today, we have made some
important changes to our senior management team that we believe
will position us well to execute on our overall strategic plan.
With Charles leading our corporate governance, compliance and
legal departments, we believe that we will be able to increase
efficiencies and reduce costs associated with these activities.
Furthermore, with the successful implementation of several cost-
saving initiatives during the first quarter, we believe that we
are on track to realize our goal of achieving $3 million in
annualized savings. In addition, with Don Bailey assuming the
position of Chairman of the Board, I am excited that I will now be
able to focus my time on overseeing the implementation of our
operational strategies. With this appointment, and the dividing
of the responsibilities of the chairman and the chief executive
officer, the Board has demonstrated its commitment to the highest
standards of corporate governance as well as its commitment to
increasing our ability to successfully manage the complex set of
challenges we face.
"During the quarter, we continued to work toward approval for our
Visian(TM) ICL by the Food and Drug Administration, but
unfortunately timing is still uncertain," continued Mr. Bailey.
"As we announced in March, we are encouraged that the Office of
Device Evaluation in Washington, DC has decided to allow our trial
investigators to continue enrollment of up to 75 eyes each month
in the ICL clinical investigation while the pre-market approval is
pending. During the American Society of Cataract and Refractive
Surgery (ASCRS) symposium we made several notable podium and
general session presentations on the ICL and the Toric ICL that
were very well received. Based upon our conversations with
surgeons that attended the meeting, they remain excited about the
potential approval of the ICL because they believe that the
technology will be very beneficial to their patients. In
addition, they are very interested and impressed with the most
recent Toric ICL results, which have been very positive.
Internationally we continue to see demand grow for both lenses and
with approvals in additional geographic regions expected later
this year, we believe demand will further increase."
"Similar to last quarter, domestic IOL sales remain challenging,"
continued Mr. Bailey. "Sales of our silicone and Collamer IOLs
were down 11.7% during the first quarter of 2005 compared with the
same period last year. However, we continue to post strong sales
of our Preloaded Injector and based upon our recent activity at
the ASCRS, we are very encouraged about the opportunities for our
three-piece Collamer IOL. In the week prior to the ASCRS meeting
ophthalmic surgeons conducted the first surgeries in a clinical
setting with the new system. During the ASCRS meeting, we
provided surgical demonstrations using the product and have
received a lot of very positive feedback regarding the quality of
the lens and injector system. Further clinical evaluations are
taking place this week and we are currently building our inventory
to position us to begin shipping the lenses and injector system in
the second quarter. We continue to believe that the introduction
of both will greatly enhance our competitive positioning within
the domestic cataract market."
About STAAR Surgical
STAAR Surgical is a leader in the development, manufacture and
marketing of minimally invasive ophthalmic products employing
proprietary technologies. STAAR's products are used by ophthalmic
surgeons and include the revolutionary VISIAN ICL(TM) as well as
innovative products designed to improve patient outcomes for
cataracts and glaucoma. STAAR's ICL has received CE Marking, is
approved for sale in 37 countries and has been implanted in more
than 40,000 eyes worldwide. It is currently under review by the
FDA for use in the United States.
SYRATECH CORP: Committee Taps Anderson Kill as Co-Counsel
---------------------------------------------------------
The Official Committee of Unsecured Creditors in Syratech
Corporation and its debtor-affiliates' chapter 11 cases asks the
U.S. Bankruptcy Court for the District of Massachusetts, Eastern
Division, for authority to employ Anderson Kill and Olick, P.C.,
as its co-counsel.
Anderson Kill is expected to represent the Committee's interests
in all aspects of the Debtors' chapter 11 cases and perform all
other necessary legal services that are not covered by the
Committee's lead counsel, Bowditch & Dewey, LLP.
Anderson Kill will work closely with Bowditch & Dewey to avoid any
duplication of work rendered on the Committee's behalf.
J. Andrew Rahl, Jr., Esq., a Shareholder at Anderson Kill, is the
lead professional from the Firm performing services to the
Committee. Mr. Rahl charges $700 per hour for his services.
Mr. Rahl reports Anderson Kill's professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Gloria J. Frank Shareholder $475
Michael Venditto Shareholder $475
Designation Hourly Rate
------------ -----------
Shareholders $340 - $700
Associates $180 - $320
Paraprofessionals $90 - $165
Anderson Kill assures the Court that it does not represent any
interest materially adverse to the Committee, the Debtors or their
estates.
Headquartered in Boston, Massachusetts, Syratech Corporation --
http://www.syratech.com/-- manufactures, markets, imports and
sells tabletop giftware and home decor products. The Debtor,
along with its affiliates, filed for chapter 11 protection on Feb.
16, 2005 (Bankr. D. Mass. Case No. 05-11062). Andrew M. Troop,
Esq. Arthur R. Cormier, Jr., Esq., Christopher R. Mirick, Esq.,
at Weil, Gotshal & Manges LLPWhen the Debtors filed for protection
from their creditors, they listed $86,845,512 in total assets and
$251,387,015 in total debts.
SYRATECH CORP: Committee Taps Houlihan Lokey as Financial Advisors
------------------------------------------------------------------
The Official Committee of Unsecured Creditors in Syratech
Corporation and its debtor-affiliates' chapter 11 cases asks the
U.S. Bankruptcy Court for the District of Massachusetts, Eastern
Division, for authority to employ Houlihan Lokey Howard & Zukin
Financial Advisors, Inc., as its financial advisors.
Houlihan Lokey is expected to:
a) evaluate the assets and liabilities of the Debtors and
analyze their business plans and forecasts;
b) analyze and review the financial and operating statements of
the Debtors and evaluate all aspects of their near-term
liquidity, including financing alternatives available to the
Debtors;
c) participate in negotiations with the Debtors and third
parties and providers of post-petition financing, and assess
strategic alternatives available to the Debtors;
d) assess and analyze the financial issues and options
regarding the Debtors' proposed reorganization; and
e) provide all other specific valuation and financial advisory
services to the Committee in connection with the Debtors'
chapter 11 cases.
Jonathan Cleveland, an HLHZ Member, reports that the Firm will be
paid:
a) a Monthly Fee of $100,000; and
b) a Transaction Fee equal to 3% of the aggregate value above
$70,962,000 received by holders of the Senior Notes for
every Financing Transaction consummated, and in no event
will the Transaction Fee be less than $500,000 or more than
$700,000.
Houlihan Lokey assures the Court that it does not represent any
interest materially adverse to the Committee, the Debtors or their
estates.
Headquartered in Boston, Massachusetts, Syratech Corporation --
http://www.syratech.com/-- manufactures, markets, imports and
sells tabletop giftware and home decor products. The Debtor,
along with its affiliates, filed for chapter 11 protection on Feb.
16, 2005 (Bankr. D. Mass. Case No. 05-11062). Andrew M. Troop,
Esq. Arthur R. Cormier, Jr., Esq., Christopher R. Mirick, Esq.,
at Weil, Gotshal & Manges LLPWhen the Debtors filed for protection
from their creditors, they listed $86,845,512 in total assets and
$251,387,015 in total debts.
TRAVIS W. HAZLEWOOD: Case Summary & 8 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Travis Wilbanks Hazlewood
4805 Dobbs Valley Road
Millsap, Texas 76066
Bankruptcy Case No.: 05-44265
Chapter 11 Petition Date: April 28, 2005
Court: Northern District of Texas (Ft. Worth)
Judge: D. Michael Lynn
Debtor's Counsel: Edwin Paul Keiffer, Esq.
Hance, Scarborough, Wright,
Ginsberg & Brusilow, LLP
1401 Elm Street, Suite 4750
Dallas, Texas 75202
Tel: (214) 651-6517
Fax: (214)744-2615
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $500,000 to $1 Million
Debtor's 8 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Jose, Henry, Attorney Fees $132,344
Brantley & Keltner LLP
675 North Henderson Street
Fort Worth, TX 76107-8495
Bank One Line of Credit $28,489
P.O. Box 78059
Phoenix, AZ 85062-8039
Tim Malone Attorney Fees $5,000
301 Commerce Street, Suite 3500
Fort Worth, TX 76102
Sweet-Water Well Service Loan $2,800
P.O. Box 584
Keller, TX 76244
Burton Gilbert Attorney Fees $2,500
306 West 7th Street, Suite 614
Fort Worth, TX 76102
Alpha-Keller Self Storage Storage Fees $480
P.O. Box 364
Roanoke, TX 76262
Nextel Communications Cellular Telephone $150
P.O. Box 54977
Los Angeles, CA 90054-0977
Cingular Wireless Cellular Telephone $150
P.O. Box 650553
Dallas, TX 75265-0553
UNION AVENUE AUTO: Taps Yablonsky & Associates as Counsel
---------------------------------------------------------
Union Avenue Auto Body, Inc. and its debtor-affiliates sought and
obtained permission from the U.S. Bankruptcy Court for the
District of New Jersey, to employ Yablonsky & Associates, LLC, as
their bankruptcy counsel.
Daniel J. Yablonsky, Esq. will be paid $275 per hour for his
services. In addition, the Debtors will compensate Yablonsky &
Associates' professionals at these hourly rates:
Designation Rates
----------- -----
Associates $175
Law Clerks $105
Paralegals $ 95
To the best of the Debtors' knowledge, Yablonsky & Associates does
not hold any interest adverse to the Debtors or their estates.
Headquartered in East Rutherford, New Jersey, Union Avenue Auto
Body, Inc. filed for chapter 11 protection on December 29, 2004
(Bankr. D. N.J. Case No. 04-50195). When the Company filed for
protection, it estimated total assets at $1 Million to $10 Million
and debts at $1 Million to $10 Million.
U.S. MINERAL: Chapter 11 Trustee & Committee File Amended Plan
--------------------------------------------------------------
Anthony R. Calascibetta, the Chapter 11 Trustee for the estate of
United States Mineral Products Company, and the Official Committee
of Asbestos Bodily Injury and Property Damage Claimants filed an
Amended Disclosure Statement explaining the Third Amended Plan of
Reorganization with the U.S. Bankruptcy Court for the District of
Delaware on March 18, 2005.
About the Amended Plan
The Third Amended Plan of Reorganization contemplates the
formation of two Asbestos Trusts, one for the benefit of property
personal injury claims and demands, and one for the benefit of
property damage claims, each having the status of a qualified
settlement fund under the Internal Revenue Code. The two Trusts
will assume all liabilities and obligations of the Debtor with
respect to all past, present and future Asbestos-Related Claims
and Demands, and will provide for the equitable distribution of
the Trust assets in partial payment for all Asbestos Related
Claims and Demands.
The Amended Plan groups claims and interests into nine classes.
Unimpaired Claims consist of:
a) Priority Claims will be paid in full in Cash on the
Effective Date;
b) Secured Claims will either retain their legal, equitable and
contractual rights, or will be paid in full in Cash on the
Effective Date, or the Debtor will release the holders of
those claims the collateral securing those claims, or the
Debtor will provide other treatment that will render those
claims unimpaired;
Impaired Claims consist of:
a) General Unsecured Claims will either be paid 70% of the
principal amount of those holders' claims without interest
after the Effective Date, or will receive their Pro Rata
share of $1.5 million from the Class 3 Disputed Claims
Reserve;
b) Asbestos Related Personal Injury and Asbestos Related
Personal Contribution Claims and PI Demands Claims will be
fully paid on the Effective Date;
c) Asbestos Related Property Damage Claims will be fully paid
on the Effective Date;
d) Settled Asbestos Claims will be paid 35% of the face amount
of those claims as established by the Debtor's Schedules
dated Sept. 5, 2001, except to the extent that the Debtor or
the Chapter 11 Trustee proves that those claims have been
paid, dismissed or withdrawn prior to the Petition Date;
e) Non-Asbestos Related-Priority Liability Claims and Other
Non-Insider Litigation Claims will receive after the
Effective Date the proceeds of any insurance that covers
those claims and a Cash payment from the Reorganized Debtor
equal to 4% of the uninsured amount of those claims;
f) Insider, Affiliate and Related Party Claims will receive a
Cash payment equal to 4% of the amount of those claims
without interest; and
g) Equity Interests will be cancelled on the Effective Date and
will not receive or retain any property or distribution
under the Plan.
The Court has yet to schedule a hearing to approve the adequacy of
the Amended Disclosure Statement and a confirmation hearing for
the Amended Plan.
A full-text copy of the Amended Disclosure Statement is available
for a fee at:
http://www.researcharchives.com/bin/download?id=050429053907
Headquartered in Stanhope, New Jersey, United States Mineral
Products Company manufactures and sells spray-applied fire
resistive material to the constructions industry in North America
and South America. The Company filed for chapter 11 protection on
July 23, 2001 (Bankr. D. Del. Case No. 01-2471). Henry Jon
DeWerth-Jaffe, Esq., at Pepper Hamilton LLP, represent the Debtor
in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed total assets of
$23,773,000 and total debts of $13,864,000.
USG CORP.: Asbestos Claimants Say USG Corp. is Likely Insolvent
---------------------------------------------------------------
The Asbestos Constituencies in USG Corporation's chapter 11 cases
tell Judge Fitzgerald that U.S. Gypsum's asbestos liabilities are
so high that that they migrate up to USG Corporation and will
render those entities insolvent, leaving nothing for equity and
delivering less than par to commercial creditors.
The Official Committee of Asbestos Personal Injury Claimants and
Dean M. Trafelet, the legal representative for future claimants,
made this statement Friday in an objection to a pitch by the
Unsecured Creditors' Committee to let undisputed commercial claims
be paid now.
It is impossible to predict at this time whether any Debtors will
be solvent at the end of the day, the asbestos constituencies say.
Based on the unknown paths of the litigation, the PI Committee and
the Futures Representative add, it is equally unpredictable
whether the non-asbestos creditors will be paid in full, let alone
entitled to postpetition interest.
The PI Committee and the Futures Representative assert that there
is no basis in law or equity to allow payment of any non-asbestos
general unsecured claims prior to confirmation of a Chapter 11
Plan. Thus, the Creditors' Committee's representation that there
is a consensus among the Debtors and the Asbestos PI Committee
that non-asbestos unsecured claims should be paid in full, in
cash, plus postpetition interest, is disingenuous and misleading.
The PI Committee and the Futures Representative clarify that the
term sheet they submitted, which contains their proposed payment
of non-asbestos unsecured claims in full, plus interest at the
applicable rate, was predicated on the Creditors Committee's
joining their request to terminate the Debtors' exclusivity and
supporting their proposed Chapter 11 plan, as well as the Court's
terminating the Debtors' exclusive filing and solicitation
periods. These two events, however, never occurred.
The PI Committee and the Futures Representative also maintain that
the Creditors Committee's request is misleading because it
presumes both the Debtors' solvency and that non-asbestos
unsecured claims would be entitled to postpetition interest. The
Motion fails to acknowledge that the Debtors' cases are now in a
litigation posture, which could drastically impact the Debtors'
balance sheet. The PI Committee and the Futures Representative
believe that the litigation over the appropriate manner to
estimate the Debtors' asbestos liabilities and the value of those
liabilities, and which Debtor-entities are liable for the asbestos
claims, based on, inter alia, theories of successor liability,
piercing the corporate veil, and substantive consolidation, will
likely result in the Debtors' having vastly greater asbestos
liability.
Accordingly, the PI Committee and the Futures Representative ask
the Court to deny the Creditors' Committee's request.
Headquartered in Chicago, Illinois, USG Corporation
-- http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes. The Company filed
for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No.
01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at
Jones Day represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG
Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
USG CORP.: Property Claimants Balk at Proposal to Pay Claims Now
----------------------------------------------------------------
The Official Committee of Asbestos Property Damage Claimants tells
Judge Fitzgerald that the Creditors' Committee's proposal to pay
undisputed commercial claims now is premised on a series of faulty
assumptions that ignores established Bankruptcy Code principles
and is a concoction that would impermissibly favor non-asbestos
unsecured creditors over asbestos creditors. Therefore, the PD
Committee asks the Court to deny the Creditors' Committee's
request.
The PD Committee contends that the doctrine of necessity has
absolutely no bearing on the matter. Other than to suggest that
the Debtors would save approximately $5 million a year by bringing
current the accrual of postpetition interest, the PD Committee
asserts, the Creditors' Committee "does not (and cannot) offer a
scintilla of support behind the almost comical assertion that the
payment of post-petition interest to the Debtors' lenders is
necessary to advance [the Debtors'] cases."
Furthermore, the PD Committee continues, contrary to the limited
law relied on in the Motion, without express proof of solvency and
not a supposition to that fact, Section 105 of the Bankruptcy Code
cannot expand the limited, exceptional circumstances warranting
the payment of postpetition interest to unsecured creditors.
The PD Committee asserts that the Debtors' solvency on a
consolidated or stand-alone basis is far from being resolved. In
addition, the PD Committee says, the question of which Debtors are
liable for the asbestos liabilities remains at issue. Thus, the
PD Committee concludes, no credence can be given to statements by
the Debtors regarding their solvency and which among them are
liable for asbestos claims until a decision on the merits is
issued. Due to the infancy of the litigation, the PD Committee
believes, it is entirely premature to award unprecedented relief
based on clearly positional statements the Debtors made.
Headquartered in Chicago, Illinois, USG Corporation
-- http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes. The Company filed
for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No.
01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at
Jones Day represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG
Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
VELOCITA CORP: Wants Until October 31 to Object to Claims
---------------------------------------------------------
Anthony R. Calascibetta, the Liquidating Trustee for the Company
Liquidation Trust and the Affiliate Debtors Liquidation Trust,
through his attorneys at Drinker Biddle & Reath LLP, the Plan
Administrator, by and through its attorneys at Ravin Greenberg PC,
and Velocita Corp. and its subsidiaries and affiliates ask the
U.S. Bankruptcy Court for the District of New Jersey to extend the
deadline for filing objections to Claims until October 31, 2005.
The Liquidation Trustee says he needs more time to complete the
proper review and analysis of the proofs of claim and determine
whether objections are appropriate because:
* Approximately $260 million of unsecured proofs of claim were
filed in Velocita's Case; and
* Although substantially all of the administrative claims have
been resolved (and paid 50% in accordance with the Plan),
there are still unresolved secured and priority claims which
are still being investigated and ultimately may be the
subject of a claims objection.
The Liquidation Trustee is also vigorously prosecuting and
resolving preference actions. Approximately 200 preference
actions were filed; 50 need to be resolved.
Background
Pursuant to section 6.14 and 6.15 of the Plan, the Liquidation
Trustee has the right to object to Company and Affiliate Debtors
General Unsecured Claims.
Pursuant to paragraph 28 of the Confirmation Order, the Movants
had 60 days after the Confirmation Date to object to Claims, as
defined in the Plan. Accordingly, the initial Claims Objection
Deadline was September 19, 2003. On November 17, 2004, the Court
granted a third extension of the Claims Objection Deadline to
April 29, 2004 without prejudice to any request for a further
extension. This is the Liquidation Trustee and Plan
Administrator's fourth request for an extension.
Velocita Corp., is in the business of building a nationwide
broadband fiber-optic network aimed at serving communications
carriers, internet service providers, data providers, television
and video providers, as well as corporate and government
customers. The Company, along with its debtor-affiliates, filed
for chapter 11 protection on May 30, 2002 (Bankr. N.J. Case No.
02-35895). Howard S. Greenberg, Esq., Morris S. Bauer, Esq., at
Ravin Greenberg PC and Gary T. Holtzer, Esq., at Weil, Gotshal &
Manges LLP represent the Debtors in their restructuring efforts.
A. Dennis Terrell, Esq., at Drinkle Biddle & Reath LLP represents
Anthony R. Calascibetta, the Liquidation Trustee. As of March 31,
2002, the Debtors listed $482,807,000 in total assets and
$827,000,000 in total debts. On July 21, 2003, Hon. Donald H.
Steckroth confirmed the Debtors' First Modified Plan of
Liquidation.
VERILINK CORP: Posts $2.6 Million Net Loss in Third Quarter
-----------------------------------------------------------
Verilink Corporation (Nasdaq: VRLK) reported its financial results
for the third quarter ended April 1, 2005.
Net sales were $13.8 million, an increase of 4% over the previous
quarter and 1% over the year ago Q3 fiscal 2004. Net loss
computed in accordance with generally accepted accounting
principles (GAAP) for the third quarter of fiscal 2005 was
$2.6 million, compared to a net loss of $2.2 million for the
previous quarter and net loss of $1.4 million in the third quarter
of fiscal 2004.
Third quarter GAAP results included acquisition-related and other
items totaling $282,000, which includes intangible assets
amortization of $645,000, credit to restructuring charges of
$(42,000), compensation expense of $207,000 related to restricted
stock awards, and change in valuation of warrants liability issued
in connection with the March 2005 senior convertible notes of
$(528,000). Excluding the effects of these items, non-GAAP loss
was $2.3 million, compared to a non-GAAP loss for the previous
quarter of $1.1 million. For the previous quarter, the net
adjustments to reconcile to the GAAP loss were intangible assets
amortization of $684,000, restructuring charges of $291,000, and
compensation expense of $36,000 related to restricted stock
awards. Third quarter fiscal 2004 non-GAAP loss was $1.1 million.
For the year-ago quarter, the net adjustment to reconcile to GAAP
net loss was intangible assets amortization, which totaled
$265,000.
"We are pleased with our progress on the execution of our strategy
to become the access partner of choice for tomorrow's converged
voice and data networks, and to have reduced our dependency on
legacy Nortel business," said Leigh S. Belden, President and CEO
of Verilink. "Excluding the $3.5M in Nortel revenues in Q3 of
FY04, sales grew 34% from the year ago quarter. New customers
totaled more than 30, and our International business grew by more
than 26% from the previous quarter."
About the Company
Verilink Corporation -- http://www.verilink.com/-- develops,
manufactures and markets a broad suite of products that enable
carriers (ILECs, CLECs, IXCs, and IOCs) and enterprises to build
converged access networks to cost-effectively deliver next-
generation communications services to their end customers. The
company's products include a complete line of VoIP, VoATM, VoDSL
and TDM-based integrated access devices (IADs), optical access
products, wire-speed routers, and bandwidth aggregation solutions
including CSU/DSUs, multiplexers and DACS. The company also
provides turnkey professional services to help carriers plan,
manage and accelerate the deployment of new services. Verilink is
headquartered in Centennial, CO (metro Denver area) with
operations in Madison, AL and Newark, CA and sales offices in the
U.S., Europe and Asia.
* * *
Going Concern Doubt
PricewaterhouseCoopers LLP, the Company's registered independent
public accounting firm on the Company's financial statements as of
July 2, 2004, express substantial doubt about the Company's
ability to continue as a going concern due to uncertain revenue
streams and a low level of liquidity and notes.
VESTA INSURANCE: Fitch Withdraws Ratings Absent Sufficient Info.
----------------------------------------------------------------
Fitch Ratings has withdrawn the 'CCC' long-term issuer and debt
ratings of the Vesta Insurance Group (NYSE: VTA), as well as the
'BB-' insurer financial strength ratings of VTA's property/
casualty insurance subsidiaries and the 'CCC-' capital securities
rating of Vesta Capital Trust I. The ratings were withdrawn
because there is insufficient information to maintain the ratings.
VTA has not yet filed its Form 10-Q for third quarter 2004 or its
2004 Form 10-K.
Vesta Insurance Group, Inc., headquartered in Birmingham, Alabama,
is a holding company for a group of insurance companies.
Withdrawn ratings include:
Florida Select Insurance Co.
Hawaiian Ins. & Guaranty Co.
Shelby Casualty Insurance Co.
The Shelby Insurance Co.
Vesta Fire Insurance Corporation
Vesta Insurance Corporation
Texas Select Lloyds Insurance Co.
-- Insurer financial strength 'BB-'.
Vesta Insurance Group, Inc.
-- Long-term issuer 'CCC';
-- Senior debentures 8.75% fixed due July 15, 2025 'CCC'.
Vesta Capital Trust I
-- Deferrable capital securities 8.525% fixed due Jan.
15, 2027 'CCC-'.
VISION METALS: Court Sets May 17 as Administrative Claims Bar Date
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware fixed
May 17, 2005, as the deadline for filing of all administrative
expense claims in Vision Metals, Inc., and Vision Metals Holdings,
Inc.'s chapter 11 cases.
Creditors asserting an administrative expense claim must file a
request for allowance of the claim on or before the May 17
Administrative Claims Bar Date or they'll be forever barred from
asserting the claim. Requests must be delivered to the:
U.S. Bankruptcy Court for the District of Delaware
824 Market Street, 3rd Floor
Wilmington, Delaware 19801
and copies must be served on the Debtors' counsel:
Steven M. Yoder, Esq.
The Bayard Firm
222 Delaware Avenue, Suite 900
P.O. Box 25130
Wilmington, Delaware 19899
- and -
Salvatore A. Barbatano, Esq.
Foley & Lardner
150 W. Jefferson Ave., Suite 1000
Detroit, MI 48226
- and -
Donald A. Workman, Esq.
Foley & Lardner
3000 K Street, NW, Suite 500
Washington, DC 20007
Vision Metals, Inc., and Vision Metals Holdings, Inc., filed for
chapter 11 protection on Nov. 13, 2000 (Bankr. D. Del. Case No.
00-04205). Michigan Seamless Tube LLC purchased the assets of the
Michigan Specialty Tube Division of Vision Metals, Inc., in a
Section 363 sale in 2002. Salvatore A. Barbatano, Esq., at
Foley & Lardner LLP, represents the Debtors. Sharon L. Levine,
Esq., at Lowenstein Sandler PC, represents the Official Committee
of Unsecured Creditors.
WERNER HOLDING: Moody's Junks $100M Senior Secured Term Loan
------------------------------------------------------------
Moody's Investors Service assigned a Caa1 rating to the proposed
new $100 million senior secured second lien term loan to Werner
Holding Company, Inc. Additionally, Moody's has downgraded all of
the debt ratings for the company. The downgrade reflects the
concern related to the pace and timing of the company's rebuilding
efforts post the loss of the Home Depot business particularly in
light of the competitive environment, high raw material prices,
and the company's competitive cost structure. The rating action
concludes Moody's review of Werner Holding Company that was
initiated on April 7, 2005.
This rating was assigned:
* $100 million senior secured second lien term loan, due 2009,
rated Caa1.
These ratings were downgraded:
* Senior Implied, lowered to B3 from B2;
* $50 million senior secured revolving credit facility, due
2008, lowered to B3 from B2;
* $165 million ($90 million post the transaction) senior
secured term loan, due 2009, lowered to B3 from B2;
* $135 million of 10% senior subordinated notes, due 2007,
lowered to Caa2 from Caa1;
* Unsecured Issuer rating for non-guaranteed debt, lowered to
Caa2.
The rating outlook is stable.
Proceeds from the second lien term loan will be used to repay
$26.7 million drawn on the company's revolver, to satisfy
$65 million of 2005, 2006, and 2007 amortization requirements of
the existing senior credit facility, and to fund various other
fees and expenses.
The downgrade of the company's senior implied rating reflects the
challenging competitive environment, concerns related to the
company's manufacturing costs vs. its competitors, and difficulty
in passing along higher raw material costs. The company has had
some difficulty in offsetting the loss of the Home Depot business
in the past 18 months. The loss of the Home Depot affected the
company's sales mix, resulted in lower margins, and may affect the
company's market share given the scale and scope of the Home
Depot. Although Werner is making strides in its cost reduction
efforts including reallocating production to lower cost plants,
the company has had difficulty in passing along higher aluminum
and various other commodity material prices. Moody's anticipates
that these efforts will be slow in producing a material
improvement in the company's cash flow generation and balance
sheet.
The ratings benefit from the enhanced liquidity resulting from the
transaction, position as the top supplier of climbing products,
and plans to sell non-core assets. The rating considers the
company's plans to improve its competitive position through
expense reduction and plant rationalization. The company's
covenant requirements at the close of the transaction include a
maximum consolidated total leverage covenant of 9.3 times adjusted
EBITDA and a maximum secured debt to EBITDA covenant of 6 times.
The ratings further reflect the company's high leverage of over
7 times expected unadjusted EBITDA and free cash flow to total
debt of less than 1% for 2006. Interest coverage is projected to
be around 1 time. Furthermore, Moody's does not consider the
company's unencumbered assets to be large enough to warrant
notching up of the first lien above the senior implied level.
The ratings and or outlook may deteriorate if the company is not
able to improve its operating cost structure and generate positive
free cash flow on a sustainable basis. The ratings and or outlook
may improve if the company successfully addresses its cost
structure, maintains its competitive position, and generates
positive free cash flow to total debt on an ongoing basis.
The second lien facility has a second priority secured interest in
all of the collateral securing the first lien facilities. The
facility will be unconditionally guaranteed by the holdings and
each existing and subsequently acquired subsidiary with certain
limitations on foreign subsidiary guarantees if an adverse tax
consequence exists. The second lien facility has been rated one
notch below to reflect their junior status relative to the first
lien facilities.
Headquartered in Greenville, Pennsylvania, Werner Holding Co.,
Inc., is the nation's largest manufacturer and marketer of ladders
and other climbing equipment. In addition, Werner manufactures
and sells aluminum extruded products. Total proforma debt as of
March 31, 2005 was approximately $347 million.
WESTERN STEEL: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Western Steel Erection, Inc.
2687 West Wayzata Boulevard
P.O. Box 575
Long Lake, Minnesota 55356
Bankruptcy Case No.: 05-32831
Type of Business: The Debtor is a commercial building contractor,
assembling steel structures used to build
schools, retail centers, bridges, skyways,
warehouses, office buildings and hospitals.
Western Steel has been in business for 60 years
and completed projects in Minnesota, Colorado,
and Arizona. See http://www.westernsteelers.com/
Chapter 11 Petition Date: April 27, 2005
Court: District of Minnesota (St. Paul)
Judge: Dennis D. O'Brien
Debtor's Counsel: Thomas J. Flynn, Esq.
Larkin Hoffman Daly & Lindgren Ltd.
1500 Wells Fargo Plaza
7900 Xerxes Avenue South, Suite 1500
Minneapolis, Minnesota 55431
Tel: (952) 835-3800
Fax: (952) 896-3333
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Iron Workers Local 512 Union Dues & $308,915
Wilson McShane Corporation Benefits
2850 Metro Drive
Bloomington, MN 55425
Tel: (952) 854-0795
LeJeune Steel Company Subcontractor $206,084
P.O. Box 19070
Minneapolis, MN 55419
Toll Gas & Welding Supply Weld Supplies $64,310
3005 Niagara Lane North
Plymouth, MN 55447
Olson Chain & Cable Construction Supplies $47,735
Premium Financing Workers' Compensation $47,253
Insurance
Hertz Equipment Rental $46,805
Mayer Distributing Fuel $41,436
GE Productivity Card/GECF $22,190
Operators Local #49 Union Dues & $21,168
Wilson McShane Corporation Benefits
American Express $18,877
Here-U-Lift Equipment Rental $8,107
Road Machinery Equipment Repair $7,525
Total Tool Tools $7,476
DG Welding Steel Fabrication $5,980
Waco Scaffolding Scaffolding $5,710
Brock White Construction Supplies $5,405
Hilti, Inc. Masonry Tools $4,189
Discount Steel, Inc. Stock Material $3,008
Chase Automotive Financing $2,619
Northwest Laser, Inc. $2,499
WILLIAM LYON: S&P Puts Low-B Ratings on Creditwatch
---------------------------------------------------
Standard & Poor's Ratings Services placed its corporate credit and
senior unsecured ratings on William Lyon Homes on CreditWatch with
developing implications.
The rating actions impact roughly $550 million of senior notes and
follows the recent announcement that the company's Chairman, CEO,
and controlling shareholder, General William Lyon, has proposed
taking the company private, and reflects uncertainty surrounding
the terms of the proposed transaction.
General Lyon and certain trusts, of which his son is sole
beneficiary, control more than 70% of the company's common shares.
General Lyon has offered to acquire all of the outstanding
publicly held minority stake in the company for $82 per share.
There is uncertainty with regard to the consummation of the
proposed transaction. Specifically, it is uncertain how the
roughly $180 million needed to acquire the minority position will
be ultimately financed in light of certain senior note bond
covenants. Depending on its restricted payments covenant, a
portion of the financing may come from cash that is currently on
the company's balance sheet. Additionally, there is the
possibility that another bidder could enter the arena.
The company's senior notes are currently rated one notch below the
corporate credit rating. Secured debt levels average in the 15%-
30% range. Consequently, Standard & Poor's criteria require its
rating on the senior notes to be one notch below the corporate
credit rating.
The company's ratings do reflect its good position within its
markets, albeit a concentrated geographic business, and improved
balance sheet and liquidity, which have contributed to improved
flexibility and reduced reliance on joint ventures. These factors
were the primary drivers behind Standard & Poor's previous
positive ratings outlook.
WLS has no meaningful near-term debt maturities and has more than
$200 million currently available under its revolving credit
facilities. Profitability has improved, benefiting from strong
demand and pricing in its markets. Secured debt levels and
leverage have moderated, but remain somewhat higher than the
company's peers.
However, at the current corporate credit rating, there is
flexibility should overall leverage increase modestly. Standard &
Poor's will meet with management shortly to discuss the company's
intended financing strategy. The range of possible outcomes
includes affirming the current ratings, a lowering the unsecured
note rating (if financing adds more secured debt), or lowering all
ratings if leverage ultimately climbs to unacceptable levels.
Ratings Placed On Creditwatch Developing
William Lyon Homes
To From
-- ----
Corporate credit rating B+/Watch Dev B+/Positive
Senior unsecured rating B/Watch Dev B
WINN-DIXIE: 11 Creditors File Reclamation Demands
-------------------------------------------------
Between February 24, 2005, and April 15, 2005, the Clerk of the
Bankruptcy Court recorded at least 11 notices of reclamation
demand/claim filed against Winn-Dixie Stores, Inc., and its
debtor-affiliates. The Reclamation Claimants include:
* Inteplast Group, Ltd.,
* Dale R. Baringer Kleinpeter Farms Dairy, L.L.C.,
* Doane Pet Care Company,
* Rich-SeaPak Corporation,
* Pharmacare Heath Services, Inc.,
* L&R Farms, Inc.,
* Florida Crystals Food Corporation,
* Domino Foods, Inc.,
* United Sugars Corporation,
* Michael Foods, Inc., and
* Maryland & Virginia Milk Producers
Cooperative Association, Inc.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. --
http://www.winn-dixie.com/-- is one of the nation's largest food
retailers. The Company operates stores across the Southeastern
United States and in the Bahamas and employs approximately 90,000
people. The Company, along with 23 of its U.S. subsidiaries,
filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y.
Case No. 05-11063). The Honorable Judge Robert D. Drain ordered
the transfer of Winn-Dixie's chapter 11 cases from Manhattan to
Jacksonville. On April 14, 2005, Winn-Dixie and its debtor-
affiliates filed for chapter 11 protection in M.D. Florida (Case
No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps
Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and
Brian C. Walsh, Esq., at King & Spalding LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $2,235,557,000 in
total assets and $1,870,785,000 in total debts. (Winn-Dixie
Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WINN-DIXIE: Wants to Sell Some Prescriptions & Inventory to CVS
---------------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates ask permission
from the U.S. Bankruptcy Court for the Southern District of New
York to sell certain pharmaceutical prescriptions and inventory,
which are not necessary for their reorganization.
Store #2091 in Reidsville, North Carolina, is a supermarket store
slated for sale or closure under the Debtors' Asset
Rationalization Plan. The lease on the North Carolina Store
expires at the end of April 2005. According to Cynthia C.
Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida,
the Debtors do not believe that the North Carolina Store fits
into their long-term business plans. Thus, the Debtors decided
to cease operations there.
Because North Carolina state law requires the Debtors to properly
transition customer prescriptions at the date of a store closing,
Ms. Jackson says, the Court should approve the sale of Store
#2091's pharmaceutical prescriptions and inventory immediately to
permit the Debtors to ensure a seamless transition of these
assets for the benefit of consumers and creditors of the estate,
and to avoid potential criminal and civil penalties. If the sale
is not consummated immediately, Ms. Jackson relates, the Debtors
may be forced to abandon the prescriptions to maintain compliance
with applicable law.
According to Ms. Jackson, the Debtors have conducted marketing
efforts under extreme time constraints to further their goal of
selling the Assets for the most attractive price commercially
attainable. The Debtors have attempted to identify and contact
all third party purchasers that might be interested in purchasing
the Assets. These efforts culminated in an offer from CVS Realty
Co. to purchase the Assets for $147,619 -- $85,000 for the
prescriptions and $62,600 for the inventory. After reviewing all
offers for the Assets, the Debtors determined that CVS's offer
was the highest and otherwise best bid for the Assets.
Proceeds from the sale of the Assets will be applied in
accordance with the terms of the credit agreement governing the
DIP financing facility, as amended.
Accordingly, the Debtors ask the Court to:
(a) authorize the sale of the Assets to CVS Realty, or to the
party that submits a higher or otherwise better offer; and
(b) make these determinations, among others, with respect to
the Sale:
* that the Sale has been agreed upon, and will be made
and completed, in good faith, for purposes of the
provisions of Section 363(m) of the Bankruptcy Code;
* that the Sale will be made, and the Assets will be
delivered to CVS Realty or to the party submitting the
highest or otherwise better offer for the Assets, free
and clear of any and all liens, claims, encumbrances and
interests;
* that CVS Realty or the party submitting the highest or
otherwise better offer for the Assets will receive good,
valid and marketable title to the Assets; and
* that the 10-day stay period provided for in Rule 6004(g)
of the Federal Rules of Bankruptcy Procedure will not be
in effect with respect to the Sale Order and the Sale
Order will be effective and enforceable immediately upon
its entry.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. --
http://www.winn-dixie.com/-- is one of the nation's largest food
retailers. The Company operates stores across the Southeastern
United States and in the Bahamas and employs approximately 90,000
people. The Company, along with 23 of its U.S. subsidiaries,
filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y.
Case No. 05-11063). The Honorable Judge Robert D. Drain ordered
the transfer of Winn-Dixie's chapter 11 cases from Manhattan to
Jacksonville. On April 14, 2005, Winn-Dixie and its debtor-
affiliates filed for chapter 11 protection in M.D. Florida (Case
No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps
Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and
Brian C. Walsh, Esq., at King & Spalding LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $2,235,557,000 in
total assets and $1,870,785,000 in total debts. (Winn-Dixie
Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WOMAN'S MEDICAL: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Woman's Medical Hospital
3300 Henry Avenue
Philadelphia, Pennsylvania 19129
Bankruptcy Case No.: 05-15521
Type of Business: The Debtor operates a medical facility on
Drexel University's campus. The
womansmedicalhospital.com domain name is
registered to Daniel E. Goldberg in Flourtown,
Pennsylvania.
Chapter 11 Petition Date: April 19, 2005
Court: Eastern District of Pennsylvania (Philadelphia)
Judge: Diane W. Sigmund
Debtor's Counsel: Marnie E. Simon, Esq.
Stevens & Lee, P.C.
1818 Market Street, 29th Floor
Philadelphia, Pennsylvania 19103
Tel: (215) 751-2885
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
------ --------------- ------------
Tenet HealthSystem Corp. Trade debt $1,091,392
Dallas Operations Center
13737 Noel Road, Suite 100
Dallas, TX 75240
PECO Energy Utility $751,782
2301 Market Street
P.O. Box 8699
Philadelphia, PA 19101
District 1199C Benefits Fund Trade debt $568,947
1319 Locust Street
Philadelphia, PA 19107
Philadelphia Gas Works Utility $401,261
P.O. Box 7789
Philadelphia, PA 19101
ACSS/Foulke Associates Trade debt $373,969
323 West Front Street
Media, PA 19063
Sodexho Marriot Svcs. Inc. Trade debt $247,456
P.O. Box 905374
Charlotte, NC 28290
Crothall Healthcare Inc. Trade debt $170,709
Verizon Trade debt $164,929
Fastaff Nursing Trade debt $162,414
Pension Fund for Hosp. & Trade debt $147,296
Health Benefit Fund-Phila
& Vicin.
Progressive Nursing Trade debt $106,457
Siemens Medical Systems Trade debt $106,457
Biomagnetics Ltd. Trade debt $94,080
Water Revenue Board Utility $86,279
Owens & Minor Trade debt $78,749
Women's Medical Emergency Trade debt $70,000
Physicians Association
Phila College of Trade debt $60,480
Osteopathic Med
The McFaul & Lyons Group Trade debt $58,096
Metrocall Inc./Mt Laurel Trade debt $56,583
General Healthcare Resources Trade debt $56,388
W.R. GRACE: Names Richard Brown VP & Grace Performance President
----------------------------------------------------------------
W. R. Grace & Co. (NYSE:GRA) elected Richard C. Brown as vice
president and has been named president of Grace Performance
Chemicals.
Mr. Brown joins Grace following a nineteen-year career at General
Electric Company, where he last served as president of GE
Silicones - Core Products. "Rick brings a strong commercial
orientation that is critical to running the businesses that
comprise our performance chemicals unit, and he also knows the
construction industry," said Fred Festa, President and Chief
Operating Officer. Mr. Brown succeeds Robert J. Bettacchi, who
last week announced that he was stepping down as president of
Grace Performance Chemicals.
Grace Performance Chemicals' products include specialty
construction chemicals, building materials, and can sealants and
coatings. Sales for 2004 were approximately $1.1 billion with
3,000 employees in 39 countries.
The Company also elected Mark A. Shelnitz as the Company's vice
president and general counsel and continues his job as the
Company's corporate secretary.
Mr. Shelnitz has been with Grace since 1983. He most recently
served as associate general counsel, managing all corporate legal
matters for the Company. He replaces David B. Siegel, who
announced his retirement effective April 26, 2005 following
twenty-eight years of service with the Company. Mr. Siegel
expects to continue his relationship with Grace by providing
consulting services related to the Company's Chapter 11
reorganization.
"I am very pleased with how we have transitioned the leadership
within our legal department," said Fred Festa. "Mark and Dave
have worked with each other for more than twenty years and have
been key contributors to our business strategy and managing the
many complex legal issues faced by the Company."
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.
XTREME COS: Subsidiary Secures First International Reseller
-----------------------------------------------------------
First Responders, Inc., a wholly owned subsidiary of Xtreme
Companies, Inc. (OTC Bulletin Board: XTME), secured an agreement
with Izmir, Turkey-based Taskin Ticaret LTD. to market FRI's Fire-
Rescue and Patrol Boats internationally.
Xtreme CEO Kevin Ryan stated, "We believe that as a result of our
early success this year with high profile sales of our Fire-Rescue
and Patrol boats through homeland security grants, that we are
beginning to see opportunities for international distribution as
well. Our agreement with Taskin Ticaret should begin to give us
exposure throughout the Mediterranean region which would allow us
to expand into other markets abroad."
Taskin Ticaret President Semih Taskin, commented "We are impressed
with the versatility and performance of the First Responder boats
and believe the markets here will react favorably towards their
quality marine craft. We look forward to a rewarding relationship
with Xtreme."
About Taskin Ticaret LTD.
Taskin Ticaret LTD. sells and distributes a broad range of fire
and hazmat products in Turkey and throughout the Mediterranean
region. They additionally provide other forms of security and
safety products for ports, marinas and oil companies.
About Xtreme Companies, Inc.
Xtreme Companies, Inc. -- http://www.xtremecos.com/-- is engaged
in manufacturing and marketing of mission-specific Fire-Rescue and
Patrol boats used in emergency, surveillance and defense
deployments. The boats have been marketed and sold directly to
fire and police departments, the U.S. Military and coastal port
authorities throughout the United States.
Additionally, Xtreme is the exclusive marketer and distributor for
Marine Holdings, Inc. (MHI) d/b/a Challenger Offshore which
manufactures semi-custom fiberglass boats of 19' to 97' in length,
which include leisure, performance, fishing and motor yachts. MHI
is best known for their products that compete directly with the
industry's largest boat producers. Internationally known race
driver and designer Don Aronow, credited as being the architect of
the performance boat industry, designed and created some of the
hull technologies today used by Challenger Offshore. Mr. Aronow
has also been credited with creating companies such as Cigarette,
Donzi, Formula, Apache and Magnum.
Xtreme holds an option to purchase 100% of the outstanding shares
of MHI by March 2006.
At Sept. 30, 2004, Xtreme Companies' balance sheet showed a
$1,201,029 stockholders' deficit, compared to a $739,249 deficit
at Dec. 31, 2003.
* Mark Hootnick Joins Greenhill as Managing Director
----------------------------------------------------
Greenhill and Co., Inc. (NYSE: GHL) welcomes Mark Hootnick as the
Firm's Managing Director. Mr. Hootnick was previously a Managing
Director with Miller Buckfire Ying, where he specialized in
financial restructuring.
"We intend to increase our recruiting efforts to build up our
restructuring capabilities in preparation for the potential
increase in corporate defaults that credit market observers
increasingly expect. Bringing Mark on board is an important step
in that effort," said Robert F. Greenhill, Chairman and CEO of
Greenhill.
Mr. Hootnick, has been with Miller Buckfire Ying and its
predecessor firms for 7 years, where he has worked for debtors,
creditors and other interested parties on a wide variety of
restructuring assignments, both in Chapter 11 and in negotiated
out-of-court processes. He began his career as a lawyer with
Kramer, Levin, Naftalis & Frankel.
Mr. Hootnick is a graduate of New York University School of Law
and received his undergraduate degree in finance from Lehigh
University.
Mr. Hootnick will join Harvey R. Miller, Vice Chairman of
Greenhill, and Bradley A. Robins, a Managing Director of the Firm,
as Greenhill partners leading its restructuring activities.
Separately, Greenhill announced that Michael A. Kramer, a Managing
Director of the Firm, would leave the Firm shortly by mutual
agreement, the terms of which are subject to documentation.
Greenhill and Mr. Kramer agreed that he will continue to assist
the Firm on certain current client engagements. In connection
with Mr. Kramer's departure, and in consideration for releasing
Mr. Kramer from certain obligations he entered into at the time of
the Firm's initial public offering, the Firm will repurchase from
him 800,000 shares of Greenhill common stock at a 33% discount to
its market value during an agreed time period.
Greenhill & Co., Inc., founded in 1996, is a leading independent
investment bank that provides financial advisory and merchant
banking fund management services. It acts for clients located
throughout the world from its offices in New York, London,
Frankfurt and Dallas.
* BOND PRICING: For the week of April 25 - April 29, 2005
---------------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
AAIPharma Inc. 11.000% 04/01/10 38
ABC Rail Product 10.500% 01/15/04 0
Adelphia Comm. 3.250% 05/01/21 6
Adelphia Comm. 6.000% 02/15/06 5
Advanced Access 10.750% 06/15/11 72
Aetna Industries 11.875% 10/01/06 7
Allegiance Tel. 11.750% 02/15/08 25
Allegiance Tel. 12.875% 05/15/08 31
Allied Holdings 8.625% 10/01/07 55
Amer. Color Graph. 10.000% 06/15/10 65
Amer. Plumbing 11.625% 10/15/08 14
Amer. Restaurant 11.500% 11/01/06 58
Amer. Tissue Inc. 12.500% 07/15/06 62
American Airline 7.377% 05/23/19 66
American Airline 7.379% 05/23/16 65
American Airline 8.839% 01/02/17 73
American Airline 8.800% 09/16/15 74
American Airline 9.070% 03/11/16 72
American Airline 10.180% 01/02/13 72
American Airline 10.190% 05/26/16 73
American Airline 10.600% 03/04/09 70
American Airline 10.610% 03/04/11 67
American Airline 11.000% 05/06/15 75
AMR Corp. 4.500% 02/15/24 65
AMR Corp. 9.000% 09/15/16 74
AMR Corp. 9.200% 01/30/12 66
AMR Corp. 9.750% 08/15/21 62
AMR Corp. 9.800% 10/01/21 67
AMR Corp. 9.880% 06/15/20 64
AMR Corp. 10.000% 04/15/21 64
AMR Corp. 10.125% 06/01/21 60
AMR Corp. 10.150% 05/15/20 60
AMR Corp. 10.200% 03/15/20 64
AMR Corp. 10.290% 03/08/21 63
AMR Corp. 10.450% 11/15/11 56
AMR Corp. 10.550% 03/12/21 57
Anadigics 5.000% 10/15/09 69
Apple South Inc. 9.750% 06/01/06 20
AT Home Corp. 0.525% 12/28/18 7
AT Home Corp. 4.750% 12/15/06 5
ATA Holdings 12.125% 06/15/10 45
ATA Holdings 13.000% 02/01/09 45
Atlantic Coast 6.000% 02/15/34 16
Atlas Air Inc. 9.702% 01/02/08 51
B&G Foods Holding 12.000% 10/30/16 8
Bank New England 8.750% 04/01/99 10
Bank New England 9.500% 02/15/96 9
Bearingpoint Inc. 2.500% 12/15/24 74
Bearingpoint Inc. 2.750% 12/15/24 74
Bethlehem Steel 10.375% 09/01/03 0
Borden Chemical 9.500% 05/01/05 1
Broadband Tech. 5.000% 05/15/01 0
Budget Group Inc. 9.125% 04/01/06 0
Burlington Northern 3.200% 01/01/45 61
Calpine Corp. 4.750% 11/15/23 47
Calpine Corp. 7.750% 04/15/09 54
Calpine Corp. 7.875% 04/01/08 53
Calpine Corp. 8.500% 07/15/10 70
Calpine Corp. 8.500% 02/15/11 53
Calpine Corp. 8.625% 08/15/10 54
Calpine Corp. 8.750% 07/15/07 61
Calpine Corp. 8.750% 07/15/13 68
Calpine Corp. 9.875% 12/01/11 72
Charter Comm Inc. 5.875% 11/16/09 70
Charter Comm Hld. 8.625% 04/01/09 74
Charter Comm Hld. 9.625% 11/15/09 74
Charter Comm Hld. 10.000% 05/15/11 72
Chic East ILL RR 5.000% 01/01/54 55
Coeur D'Alene 1.250% 01/15/24 72
Collins & Aikman 10.750% 12/31/11 75
Collins & Aikman 12.875% 08/15/12 35
Color Tile Inc. 10.750% 12/15/01 0
Comcast Corp. 2.000% 10/15/29 44
Comprehens Care 7.500% 04/15/10 0
Cone Mills Corp. 8.125% 03/15/05 10
Continental Airlines 8.312% 04/02/11 72
CoreComm. Limited 6.000% 10/01/06 5
Covad Communication 3.000% 03/15/24 73
Cray Research 6.125% 02/01/11 63
Curagen Corp. 4.000% 02/15/11 57
Delta Air Lines 2.875% 02/18/24 49
Delta Air Lines 7.299% 09/18/06 58
Delta Air Lines 7.711% 09/18/11 60
Delta Air Lines 7.779% 11/18/05 75
Delta Air Lines 7.779% 01/02/12 48
Delta Air Lines 7.900% 12/15/09 33
Delta Air Lines 7.920% 11/18/10 49
Delta Air Lines 8.000% 06/03/23 37
Delta Air Lines 8.270% 09/23/07 70
Delta Air Lines 8.300% 12/15/29 26
Delta Air Lines 8.540% 01/02/07 67
Delta Air Lines 8.540% 01/02/07 70
Delta Air Lines 8.540% 01/02/07 45
Delta Air Lines 8.950% 01/12/12 61
Delta Air Lines 9.000% 05/15/16 28
Delta Air Lines 9.200% 09/23/14 43
Delta Air Lines 9.250% 03/15/22 26
Delta Air Lines 9.300% 01/02/10 63
Delta Air Lines 9.300% 01/02/10 68
Delta Air Lines 9.375% 09/11/07 66
Delta Air Lines 9.750% 05/15/21 28
Delta Air Lines 9.875% 04/30/08 73
Delta Air Lines 10.000% 08/15/08 35
Delta Air Lines 10.000% 06/01/10 36
Delta Air Lines 10.125% 05/15/10 36
Delta Air Lines 10.140% 08/14/11 68
Delta Air Lines 10.140% 08/26/12 50
Delta Air Lines 10.375% 02/01/11 36
Delta Air Lines 10.375% 12/15/22 34
Delta Air Lines 10.500% 04/30/16 45
Delta Air Lines 10.790% 03/26/14 28
Delta Air Lines 10.790% 03/26/14 37
Delta Mills Inc. 9.625% 09/01/07 48
Delphi Auto System 7.125% 05/01/29 71
Delphi Corp. 6.500% 08/15/13 75
Delphi Trust II 6.197% 11/15/33 43
Diva Systems 12.625% 03/01/08 1
Dura Operating 9.000% 05/01/09 72
Duty Free Int'l 7.000% 01/15/04 25
DVI Inc. 9.875% 02/01/04 9
E. Spire Comm Inc. 10.625% 07/01/08 0
E. Spire Comm Inc. 12.750% 04/01/06 0
E. Spire Comm Inc. 13.000% 11/01/05 0
E&S Holdings 10.375% 10/01/06 51
Eagle-Picher Inc. 9.750% 09/01/13 63
Eagle Food Center 11.000% 04/15/05 6
Edison Brothers 11.000% 09/26/07 0
Encompass Service 10.500% 05/01/09 0
Enron Corp. 6.400% 07/15/06 32
Enron Corp. 6.500% 08/01/02 28
Enron Corp. 6.625% 10/15/03 32
Enron Corp. 6.625% 11/15/05 33
Enron Corp. 6.725% 11/17/08 33
Enron Corp. 6.750% 09/01/04 29
Enron Corp. 6.750% 09/15/04 30
Enron Corp. 6.750% 07/01/05 0
Enron Corp. 6.750% 08/01/09 30
Enron Corp. 6.875% 10/15/07 32
Enron Corp. 6.950% 07/15/28 33
Enron Corp. 6.950% 07/15/28 30
Enron Corp. 7.000% 08/15/23 33
Enron Corp. 7.125% 05/15/07 34
Enron Corp. 7.375% 05/15/19 33
Enron Corp. 7.625% 09/10/04 33
Enron Corp. 7.875% 06/15/03 34
Enron Corp. 8.375% 05/23/05 33
Enron Corp. 9.125% 04/01/03 33
Enron Corp. 9.875% 06/15/03 11
Epic Resorts LLC 13.000% 06/15/05 2
Evergreen Intl. Avi. 12.000% 05/15/10 74
Exodus Comm. Inc. 10.750% 12/15/09 0
Exodus Comm. Inc. 11.625% 07/15/10 0
Falcon Products 11.375% 06/15/09 42
Fedders North Am. 9.875% 03/01/14 69
Federal-Mogul Co. 7.375% 01/15/06 27
Federal-Mogul Co. 7.500% 01/15/09 22
Federal-Mogul Co. 8.120% 03/06/03 28
Federal-Mogul Co. 8.160% 03/06/03 28
Federal-Mogul Co. 8.250% 03/03/05 28
Federal-Mogul Co. 8.370% 11/15/01 28
Federal-Mogul Co. 8.370% 11/15/01 24
Federal-Mogul Co. 8.460% 10/27/02 28
Federal-Mogul Co. 8.800% 04/15/07 24
Fibermark Inc. 10.750% 04/15/11 72
Finova Group 7.500% 11/15/09 43
Fleming Cos. Inc. 10.125% 04/01/08 3
Flooring America 9.250% 10/15/07 0
Foamex L.P. 9.875% 06/15/07 50
Ford Motor Co 7.700% 05/15/97 74
Ford Motor Credit 5.900% 02/20/14 75
Fruit of the Loom 8.875% 04/15/06 0
General Motors 7.400% 09/01/25 74
GMAC 5.250% 01/15/14 70
GMAC 5.350% 01/15/14 72
GMAC 5.850% 06/15/13 74
GMAC 5.900% 12/15/13 74
GMAC 5.950% 01/15/19 74
GMAC 5.900% 01/15/19 70
GMAC 5.900% 02/15/19 72
GMAC 5.900% 10/15/19 70
GMAC 6.000% 12/15/13 74
GMAC 6.000% 02/15/19 69
GMAC 6.000% 02/15/19 72
GMAC 6.000% 02/15/19 69
GMAC 6.000% 03/15/19 70
GMAC 6.000% 03/15/19 72
GMAC 6.000% 03/15/19 70
GMAC 6.000% 03/15/19 71
GMAC 6.000% 03/15/19 71
GMAC 6.000% 04/15/19 70
GMAC 6.000% 09/15/19 70
GMAC 6.000% 09/15/19 70
GMAC 6.050% 08/15/19 72
GMAC 6.050% 08/15/19 72
GMAC 6.050% 10/15/19 70
GMAC 6.100% 09/15/19 68
GMAC 6.125% 10/15/19 67
GMAC 6.150% 08/15/19 68
GMAC 6.150% 09/15/19 72
GMAC 6.150% 10/15/19 69
GMAC 6.200% 04/15/19 69
GMAC 6.250% 12/15/18 74
GMAC 6.250% 01/15/19 68
GMAC 6.250% 04/15/19 74
GMAC 6.250% 05/15/19 68
GMAC 6.250% 07/15/19 74
GMAC 6.300% 08/15/19 65
GMAC 6.300% 08/15/19 73
GMAC 6.350% 04/15/19 71
GMAC 6.350% 07/15/19 71
GMAC 6.350% 07/15/19 74
GMAC 6.400% 12/15/18 70
GMAC 6.400% 11/15/19 73
GMAC 6.400% 11/15/19 73
GMAC 6.500% 11/15/18 71
GMAC 6.500% 12/15/18 74
GMAC 6.500% 01/15/20 73
GMAC 6.500% 02/15/20 74
GMAC 6.550% 12/15/19 73
GMAC 6.650% 06/15/18 75
GMAC 6.650% 10/15/18 72
GMAC 6.650% 10/15/18 75
GMAC 6.650% 02/15/20 74
GMAC 6.700% 11/15/18 66
GMAC 6.700% 12/15/19 74
GMAC 6.750% 06/15/17 74
GMAC 6.750% 09/15/18 73
GMAC 6.750% 05/15/19 72
GMAC 6.750% 06/15/19 72
GMAC 6.750% 06/15/19 72
GMAC 6.800% 10/15/18 75
GMAC 7.000% 02/15/18 74
GMAC 7.000% 09/15/18 74
GMAC 7.000% 09/15/21 69
GMAC 7.000% 06/15/22 69
GMAC 7.000% 11/15/24 74
GMAC 7.000% 11/15/24 71
GMAC 7.250% 03/15/25 73
GMAC 7.500% 03/15/25 72
Golden Northwest 12.000% 12/15/06 10
Graftech Int'l 1.625% 01/15/24 64
GST Network Funding 10.500% 05/01/08 0
Guilford Pharma 5.000% 07/01/08 74
Gulf States STL 13.500% 04/15/03 0
HNG Internorth. 9.625% 03/15/06 31
Icon Health & Fit 11.250% 04/01/12 71
Imperial Credit 9.875% 01/15/07 0
Imperial Credit 12.000% 06/30/05 0
Impsat Fiber 6.000% 03/15/11 74
Inland Fiber 9.625% 11/15/07 49
Intermet Corp. 9.750% 06/15/09 52
Intermune Inc. 0.250% 03/01/11 69
Iridium LLC/CAP 10.875% 07/15/05 16
Iridium LLC/CAP 11.250% 07/15/05 16
Iridium LLC/CAP 13.000% 07/15/05 16
Iridium LLC/CAP 14.000% 07/15/05 16
Kaiser Aluminum & Chem. 12.750% 02/01/03 11
Key Plastics 10.250% 03/15/07 1
Kmart Corp. 6.000% 01/01/08 16
Kmart Corp. 8.990% 07/05/10 70
Kmart Corp. 9.350% 01/02/20 25
Kmart Funding 8.800% 07/01/10 75
Kmart Funding 9.440% 07/01/18 40
Kulicke & Soffa 0.500% 11/30/08 72
Lehman Bros. Holding 6.000% 05/25/05 58
Lehman Bros. Holding 7.500% 09/03/05 36
Level 3 Comm. Inc. 2.875% 07/15/10 48
Level 3 Comm. Inc. 6.000% 09/15/09 53
Level 3 Comm. Inc. 6.000% 03/15/10 51
Liberty Media 3.750% 02/15/30 62
Liberty Media 4.000% 11/15/29 65
Loral Cyberstar 10.000% 07/15/06 75
Lukens Inc. 7.625% 08/01/04 0
LTV Corp. 8.200% 09/15/07 0
MacSaver Financial 7.600% 08/01/07 8
MacSaver Financial 7.875% 08/01/03 5
Metamor Worldwide 2.940% 08/15/04 1
Mississippi Chem. 7.250% 11/15/17 4
Molten Metal Tec 5.500% 05/01/06 0
Muzak LLC 9.875% 03/15/09 54
New Orl Grt N RR 5.000% 07/01/32 75
North Atl Trading 9.250% 03/01/12 72
Northern Pacific Railway 3.000% 01/01/47 61
Northpoint Comm. 12.875% 02/15/10 1
Northwest Airlines 7.248% 01/02/12 72
Northwest Airlines 7.875% 03/15/08 58
Northwest Airlines 8.070% 01/02/15 58
Northwest Airlines 8.130% 02/01/14 51
Northwest Airlines 8.700% 03/15/07 68
Northwest Airlines 9.875% 03/15/07 70
Northwest Airlines 10.000% 02/01/09 59
Northwest Airlines 10.500% 04/01/09 72
Northwest Steel & Wir. 9.500% 06/15/01 0
Nutritional Src. 10.125% 08/01/09 74
Oakwood Homes 7.875% 03/01/04 30
Oakwood Homes 8.125% 03/01/09 25
Oscient Pharm 3.500% 04/15/11 74
O'Sullivan Ind. 13.375% 10/15/09 40
Orion Network 11.250% 01/15/07 50
Orion Network 12.500% 01/15/07 54
Outboard Marine 9.125% 04/15/17 1
Owens Corning 7.000% 03/15/09 74
Owens Corning Fiber 8.875% 06/01/02 75
Owens Corning Fiber 9.375% 06/01/12 65
Pegasus Satellite 9.625% 10/15/05 58
Pegasus Satellite 9.750% 12/01/06 60
Pegasus Satellite 12.375% 08/01/06 57
Pegasus Satellite 12.500% 08/01/07 60
Pegasus Satellite 13.500% 03/01/07 0
Pen Holdings Inc. 9.875% 06/15/08 64
Penn Traffic Co. 11.000% 06/29/09 26
Piedmont Aviat 9.900% 11/08/06 8
Piedmont Aviat 10.250% 01/15/07 23
Piedmont Aviat 10.350% 03/28/12 0
Pixelworks Inc. 1.750% 05/15/24 68
Polaroid Corp. 6.750% 01/15/02 0
Polaroid Corp. 7.250% 01/15/07 0
Polaroid Corp. 11.500% 02/15/06 0
Portola Packaging 8.250% 02/01/12 67
Primedex Health 11.500% 06/30/08 46
Primus Telecom 3.750% 09/15/10 46
Primus Telecom 8.000% 01/15/14 66
Psinet Inc 10.000% 02/15/05 0
Psinet Inc 11.500% 11/01/08 0
Railworks Corp. 11.500% 04/15/09 0
Radnor Holdings 11.000% 03/15/10 72
Read-Rite Corp. 6.500% 09/01/04 56
Reliance Group Holdings 9.000% 11/15/00 24
Reliance Group Holdings 9.750% 11/15/03 2
RJ Tower Corp. 12.000% 06/01/13 54
Safety-Kleen Corp. 9.250% 06/01/08 0
Safety-Kleen Corp. 9.250% 05/15/09 0
Salton Inc. 10.750% 12/15/05 64
Salton Inc. 12.250% 04/15/08 56
Silverleaf Res. 10.500% 04/01/08 0
Solectron Corp. 0.500% 02/15/34 65
Specialty Paperb. 9.375% 10/15/06 75
Startec Global 12.000% 05/15/08 0
Syratech Corp. 11.000% 04/15/07 32
Teligent Inc. 11.500% 12/01/07 0
Teligent Inc. 11.500% 03/01/08 1
Tops Appliance 6.500% 11/30/03 0
Tower Automotive 5.750% 05/15/24 20
Triton PCS Inc. 8.750% 11/15/11 61
Triton PCS Inc. 9.375% 02/01/11 62
Tropical SportsW 11.000% 06/15/08 35
Twin Labs Inc. 10.250% 05/15/06 17
United Air Lines 6.831% 09/01/08 14
United Air Lines 6.932% 09/01/11 51
United Air Lines 7.270% 01/30/13 41
United Air Lines 7.811% 10/01/09 38
United Air Lines 8.030% 07/01/11 15
United Air Lines 8.250% 04/26/08 21
United Air Lines 8.310% 06/17/09 53
United Air Lines 8.700% 10/07/08 48
United Air Lines 9.000% 12/15/03 8
United Air Lines 9.020% 04/19/12 32
United Air Lines 9.060% 09/26/14 46
United Air Lines 9.125% 01/15/12 7
United Air Lines 9.300% 03/22/08 38
United Air Lines 9.350% 04/07/16 48
United Air Lines 9.560% 10/19/18 38
United Air Lines 9.750% 08/15/21 8
United Air Lines 10.110% 01/05/06 41
United Air Lines 10.110% 02/19/06 36
United Air Lines 10.125% 03/22/15 45
United Air Lines 10.250% 07/15/21 8
United Air Lines 10.360% 11/13/12 54
United Air Lines 10.360% 11/20/12 54
United Air Lines 10.670% 05/01/04 8
United Air Lines 11.210% 05/01/14 8
Univ. Health Services 0.426% 06/23/20 62
United Homes Inc. 11.000% 03/15/05 0
Uromed Corp. 6.000% 10/15/03 0
US Air Inc. 7.500% 04/15/08 0
US Air Inc. 8.930% 04/15/08 0
US Air Inc. 9.330% 01/01/06 42
US Air Inc. 10.250% 01/15/07 4
US Air Inc. 10.250% 01/15/07 1
US Air Inc. 10.490% 06/27/05 3
US Air Inc. 10.610% 06/27/07 0
US Air Inc. 10.680% 06/27/08 6
US Air Inc. 10.700% 01/15/07 23
US Air Inc. 10.900% 01/01/08 3
US Air Inc. 10.900% 01/01/09 5
US Air Inc. 10.900% 01/01/10 5
US Airways Inc. 7.960% 01/20/18 48
US Airways Pass. 6.820% 01/30/14 40
US West Cap. Fdg 6.875% 07/15/28 75
Venture Hldgs 9.500% 07/01/05 1
Visteon Corp. 7.000% 03/15/25 72
WCI Steel Inc. 10.000% 12/10/14 73
Werner Holdings 10.000% 11/15/07 72
Westpoint Stevens 7.875% 06/15/05 0
Westpoint Stevens 7.875% 06/15/08 0
Winn-Dixie Store 8.875% 04/01/08 50
Winsloew Furniture 12.750% 08/15/07 20
Winstar Comm 14.000% 10/15/05 1
Winstar Comm Inc. 10.000% 03/15/08 0
Winstar Comm Inc. 12.500% 04/15/08 0
World Access Inc. 4.500% 10/01/02 7
World Access Inc. 13.250% 01/15/08 4
Xerox Corp. 0.570% 04/21/18 47
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Pinili,
Jr., and Peter A. Chapman, Editors.
Copyright 2005. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
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$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***