/raid1/www/Hosts/bankrupt/TCR_Public/050524.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, May 24, 2005, Vol. 9, No. 121
Headlines
AAIPHARMA INC: Bankruptcy Services Approved as Claims Agent
AAIPHARMA INC: Wants to Hire Rothschild Inc. as Investment Bankers
ACE AVIATION: Plans to Invest $75MM in USAir-America West Merger
ACE AVIATION: Confirms Plan to Divest Portion of Aeroplan Stake
ADELPHIA COMMS: Asks Court to OK DOJ, SEC & Rigas Settlement Pacts
ADELPHIA COMMS: Files Schedule of Intercompany Balances in Court
AMES DEPARTMENT: Asks Court to OK GE Capital L/C Extension Accord
AMH Holdings: Poor Earnings Prompt S&P to Lower Ratings
BDR CORPORATION: Plan Confirmation Hearing Set for June 2
BERRY PLASTICS: S&P Rates Proposed $615 Million Facility at B+
CARRIER ACCESS: Nasdaq Hearing Scheduled on June 2
CHI-CHI'S: Court Okays Settlement Pact with C-C 9 & OS Realty
CLEARLY CANADIAN: March 31 Balance Sheet Upside-Down by $4 Million
CONSECO FINANCE: S&P Cuts Rating on Three Conseco-Related Certs.
CONSOLIDATED COTTON: Voluntary Chapter 11 Case Summary
CONSTITUTION STATE: Improvements Cue Fitch's Positive Outlook
CYCLELOGIC INC: Wants Until Aug. 18 to Remove State Court Actions
D & K STORES: U.S. Trustee Appoints 3-Member Creditors Committee
D & K STORES: Creditors Committee Taps Cozen O'Connor as Counsel
DEEN PREFILLED: Voluntary Chapter 11 Case Summary
DELPHI CORPORATION: Fitch Junks Trust Preferred Rating to CCC+
DIRECT INSITE: March 31 Balance Sheet Upside-Down by $2.7 Million
FEDERAL-MOGUL: U.K. Admin. Wants Cross-Border Protocol Terminated
FREEMAN FARMS: Case Summary & 30 Largest Unsecured Creditors
FUN-4-ALL: Gets Court Nod to Hire Gary R. Lampert as Accountant
GEORGIA-PACIFIC: Strong Finances Prompt S&P's Positive Outlook
GOLESH INC.: Case Summary & 20 Largest Unsecured Creditors
HARRAHS OPERATING: Offers $750 Million of 5-5/8% Senior Notes
HECLA MINING: S&P Withdraws B- Rating at Company's Request
INSURANCE AUTO: Shareholder Demands $50 per Share from Kelso
JACUZZI BRANDS: Sells Eljer Plumbingware Division to Sun Capital
JOSE ALBERTO: Case Summary & 6 Largest Unsecured Creditors
KINSTON HOUSING: Declining Debt Coverage Cues S&P to Cut Ratings
LACLEDE STEEL: Judge Schermer Confirms Chap. 11 Liquidating Plan
LOEWEN GROUP: Liquidating Trust Files First Quarter Status Report
MAYTAG CORP: Ripplewood Holdings Sale Cues Fitch to Watch Ratings
MAYTAG CORP: Ripplewood Holdings Sale Prompts S&P to Watch Ratings
MERRILL LYNCH: Fitch Holds Low-B Ratings on 2 Certificate Classes
MIRANT CORP: $500M California Parties Settlement is Approved
MIRANT CORP: Court Allows RBS to Trade $31.9M of Americas' Debt
MIRANT CORP: Equity Comm. & Phoenix Wants Expert Reports Excluded
OWENS CORNING: U.S. Trustee Amends Creditors' Comm. Membership
PLATINUM WARRANTY: Case Summary & 22 Largest Unsecured Creditors
QUIGLEY COMPANY: Has Until Aug. 8 to File Notices of Removal
REGIONAL DIAGNOSTICS: Wants Howard Wershbale as Accountants
SKILLED HEALTHCARE: S&P Junks Proposed $145 Million Sr. Sec. Loan
SKIN NUVO INT'L: Wants Greg Murray as Chief Restructuring Officer
SOLECTRON CORP.: Completes Redemption of $500 Million Senior Notes
SOLUTIA INC: Wants JP Morgan's Complaint Filed Under Seal
SOLUTIA INC: Gets Court Nod to Implement 2005 Incentive Program
SOLUTIA INC: Triage Capital Discloses 5.8% Equity Stake
SOUTHAVEN POWER: Case Summary & 14 Largest Unsecured Creditors
STANDARD MOTOR: Weak Credit Measures Cue S&P to Junk Ratings
SUITLAND EAST: Voluntary Chapter 11 Case Summary
SUNSET VISTAS: Case Summary & 15 Largest Unsecured Creditors
TARCO PRINTING: Case Summary & 20 Largest Unsecured Creditors
TECTONIC NETWORK: Recurring Losses Trigger Going Concern Doubt
TELESYSTEM INT'L: Gets Court Approval for Plan of Arrangement
TENET HEALTHCARE: Reaches Agreement to Sell Brotman Medical
THOPY FARMS: Voluntary Chapter 11 Case Summary
TRANSMETA CORPORATION: Form 10-Q Filing Delay Cues Nasdaq Notice
TRIAD HOSPITALS: S&P Rates Proposed $1.1 Bil. Sr. Sec. Loan at BB
TRIM TRENDS: Case Summary & 22 Largest Unsecured Creditors
UAL CORP: Inks New Tentative Labor Pact with Mechanics
US AIRWAYS: Inks Merger Agreement with $1.5 Billion in Capital
US AIRWAYS: Outlines Merger Agreement with America West
US AIRWAYS: Asks Court to Okay Plan Funding Solicitation Protocol
USG CORP: Gets Open-Ended Extension of Rule 9027 Remove Period
VILLAS AT HACIENDA: Hires Matthew Waterman as Bankruptcy Counsel
W.R. GRACE: Settles Three Claim Disputes from Jan. to March 2005
WAYNE HARTKE: Voluntary Chapter 11 Case Summary
* Large Companies with Insolvent Balance Sheets
*********
AAIPHARMA INC: Bankruptcy Services Approved as Claims Agent
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave
aaiPharma Inc. and its debtor-affiliates permission to employ
Bankruptcy Services LLC as their claims, noticing and balloting
agent.
Bankruptcy Services will:
a) assist the Debtors in the preparation and distribution of
all required notices in the Debtors' chapter 11 cases,
including notices of commencement of the Debtors' chapter 11
cases, notice of claims bar dates, notice of objection to
claims, and notices of hearings;
b) maintain official registers in each of the Debtors'
respective bankruptcy cases by docketing all proofs of claim
and proofs of interest in the applicable claims database;
d) maintain an up-to-date mailing list for all entities that
have filed proofs of claim or proof of interests and provide
access to the public for examination of the copies of the
proofs of claim or proofs of interest;
e) receive, examine and maintain copies of all proofs of claim
and proofs of interest filed in the Debtors' chapter 11
cases, and record all transfers of claims pursuant to
Bankruptcy Rule 3001(e) and provide notice of transfers as
required by Bankruptcy Rule 3001(e);
f) oversee the distribution of the applicable solicitation
material to each holder of a claims against the Debtors and
respond to mechanical and technical distribution and
solicitation materials; and
g) perform all other claims processing, noticing, disbursing
and related administrative services, and chapter 11 plan
balloting and solicitation services necessary in the
Debtors' chapter 11 cases.
Ron Jacobs, the President of Bankruptcy Services, reports the
Firm's professionals fees:
Designation Hourly Rate
------------ -----------
Senior Managers/On-Site Consultants $225
Other Senior Consultants $185
Programmers $130 - $160
Associates $135
Data Entry/Clerical Staff $40 - $60
Bankruptcy Services assures the Court that it does not represent
any interest materially adverse to the Debtors or their estates.
Headquartered in Wilmington, North Carolina, aaiPharma Inc. --
http://aaipharma.com/-- provides product development services to
the pharmaceutical industry and sells pharmaceutical products
which primarily target pain management. AAI operates two
divisions: AAI Development Services and Pharmaceuticals Division.
The Company and eight of its debtor-affiliates filed for chapter
11 protection on May 10, 2005 (Bankr. D. Del. Case No. 05-11341).
Karen McKinley, Esq., and Mark D. Collins, Esq., at Richards,
Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan,
Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the
firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors
in their restructuring efforts. When the Debtors filed for
bankruptcy, they reported consolidated assets amounting to
$323,323,000 and consolidated debts totaling $446,693,000.
AAIPHARMA INC: Wants to Hire Rothschild Inc. as Investment Bankers
------------------------------------------------------------------
aaiPharma Inc. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the District of Delaware for permission to employ
Rothschild, Inc., as their investment banking advisors and
financial advisors.
Rothschild Inc. is expected to:
a) advise and assist the Debtors with respect to the potential
sale or other business and strategic combination involving
the Debtor's Pharmaceutical Assets;
b) assist the Debtors in structuring a sales transaction,
including providing advice with respect to Rothschild's
judgments as to the potential salability and value of the
Debtors' Pharmaceutical Assets;
c) review and evaluate proposals from potential bidders in a
sale auction and participate on the Debtors' behalf in
negotiations concerning a sale transaction;
d) provide the Debtors' Board of Directors an opinion as to the
fairness from a financial point of view of the consideration
to received in a sale transaction;
e) conduct in conjunction with the Debtors' other professionals
the schedules auction of the Debtors' assets and assist the
parties implementing the sale of the Debtors' Pharmaceutical
Assets; and
f) provide all other investment banking and financial advisory
services as may be agreed upon the Debtors and Rothschild
Inc. in connection with the possible sale of the Debtors'
assets.
Todd R. Snyder, a Managing Director at Rothschild Inc., discloses
that the Firm will be paid:
a) an Upfront Fee of $100,000;
b) a Transaction Fee equal to 1.5% of the Consideration of a
consummated sale transaction provided that:
(i) if the aggregate Consideration payable at consummation
of all current and prior sale transactions involve at
least $60 million but not more than $100 million in
non-escrowed cash, equity securities and other
marketable securities, then the Transaction Fee will
be grossed up to $1,500,000;
(ii) if combined with the aggregate Consideration for all
prior consummated sale transactions exceed $100
million, the Transaction Fees for subsequent sale
transactions will be based solely on 1.5% of the
aggregate Consideration that is above $100 million;
and
c) Reimbursement Expenses up to an aggregate amount of
$160,000.
Rothschild Inc. assures the Court that it does not represent any
interest materially adverse to the Debtors or their estates
Headquartered in Wilmington, North Carolina, aaiPharma Inc. --
http://aaipharma.com/-- provides product development services to
the pharmaceutical industry and sells pharmaceutical products
which primarily target pain management. AAI operates two
divisions: AAI Development Services and Pharmaceuticals Division.
The Company and eight of its debtor-affiliates filed for chapter
11 protection on May 10, 2005 (Bankr. D. Del. Case No. 05-11341).
Karen McKinley, Esq., and Mark D. Collins, Esq., at Richards,
Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan,
Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the
firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors
in their restructuring efforts. When the Debtors filed for
bankruptcy, they reported consolidated assets amounting to
$323,323,000 and consolidated debts totaling $446,693,000.
ACE AVIATION: Plans to Invest $75MM in USAir-America West Merger
----------------------------------------------------------------
ACE Aviation Holdings disclosed its intention to invest
USD$75 million (approximately CAD$95) in the merged US Airways-
America West carrier. Its investment will be made at the time of
US Airways' exit from bankruptcy and in connection with a broad
set of commercial and other arrangements between ACE and the newly
merged entity. ACE's investment will represent approximately
7% of equity, depending on the total amount of new equity capital
raised by the merged entity. The newly-merged entity will be a
well capitalized commercial partner with approximately
$1.5 billion in forecast total liquidity, a competitive low cost
structure and a route network that is highly complementary to Air
Canada.
As a condition of its equity investment, ACE has obtained
commitments, which will result in five-year commercial agreements
with the newly-merged entity regarding maintenance services,
ground handling, regional jet flying, network, training, and
other areas of cooperation. It is expected that ACTS and airport
ground handling/facilities synergies will result in an estimated
annual cash contributions of CAD $65 million.
ACE, through Air Canada Technical Services -- ACTS, is entitled to
provide all available outsourced maintenance, repair and overhaul
services for the merged entity with a combined fleet of 361
aircraft consisting of the Boeing 737, 757 and 767 and the
Airbus A319, A320, A321 and A330 for which ACTS has significant
existing expertise. This agreement will provide ACTS with a
large volume of attractive new MRO work covering component and
airframe maintenance. The new work will result in estimated
additional revenues of CAD$1.5 billion for ACTS over the five-
year term of the agreement. ACTS has the ability to undertake
this work with a minimal capital investment of approximately
$20 million utilizing capacity currently available at existing
ACTS facilities. The agreement also includes the possibility of
extending the work to cover engine maintenance and supply chain
management.
"Our participation in the consolidation of the US airline industry
through the merged US Airways-America West carrier is an exciting
opportunity for ACE," said Robert Milton, Chairman, President and
CEO of ACE Aviation Holdings Inc. "Doug Parker is one of the most
capable airline leaders in the industry today and we look forward
to working closely with Doug and his team to build an even
stronger future for the new US Airways.
"Our investment in US Airways reflects not only our confidence in
the viability of the merged carrier going forward but also
represents a milestone in the implementation of ACE's business
strategy to grow our business units into stand alone profitable
companies," said Mr. Milton.
ACTS, a limited partnership of ACE, is a full-service MRO
organization that provides airframe, engine and component
maintenance and various ancillary services to a wide range of
more than 100 global customers, including Air Canada, Air Canada
Jazz, JetBlue, United Airlines, ABX, Mexicana, Snecma Services,
Chromalloy, Lufthansa Technik, International Lease Finance
Corporation (ILFC) and Canada's Department of National Defence.
Montreal-based ACTS operates maintenance centers across Canada
with a combined workforce of 3,600 employees and has major bases
in Montreal, Toronto, Winnipeg, Calgary and Vancouver. The
maintenance work for this agreement will be undertaken at ACTS
facilities in Montreal, Winnipeg, Calgary and Vancouver creating
an estimated 700 new jobs to be filled principally through
employee recalls.
It is estimated that this agreement will propel ACTS to a position
as one of the top three aircraft MRO providers worldwide in terms
of sales. As a result, it is anticipated that by 2006, ACTS
revenues will exceed $1 billion per annum with less than half
being earned from Air Canada. This investment is consistent with
ACE's strategic plan to grow its business units with an emphasis
on third-party revenues.
"We look forward to the important synergy relationships that will
benefit both the merged entity and Air Canada as a result of the
ACE investment," said Doug Parker, America West Holdings
Corporation Chairman, President and CEO. "ACTS is a world class
MRO business, and we are pleased that they will be providing us a
competitive service offering in this regard. Additionally, we
are very excited about the potential traffic benefits pursuant
from our enhanced network strength, and in the synergies that
should accrue from ground handling and other initiatives."
Air Canada and the newly merged entity will also implement a
broad and cooperative strategy regarding airport facilities and
ground handling which will provide mutual cost benefits and
synergies and, more specifically, provide Air Canada with
improved access to selected gates and facilities at a number of
U.S. airports including New York's LaGuardia Airport, Boston's
Logan Airport and Phoenix International Airport among others.
ACE's regional air carrier, Jazz, will also potentially realize
increased opportunities to partner with the newly-merged entity
on transborder flying.
The agreements will provide both Air Canada and the merged carrier
with significant network and operational benefits, including
enhanced network strength and revenue opportunities in key
transborder markets in the Southwestern U.S., Hawaii, Mexico and
Florida. In particular, the new entity will provide Air Canada
with enhanced access to key north-south markets where it does not
currently have a significant presence most notably along the North
American West Coast from Calgary, Edmonton and Vancouver to the
U.S. Southwest Airlines and Mexico via the America West hubs at
Phoenix and Las Vegas in addition to those markets on the U.S.
East Coast served through the US Airways hubs at Philadelphia and
Charlotte. Furthermore, neither US Airways nor America West
currently operates Trans-Pacific flights while US Airways operates
a limited Trans-Atlantic offering. It is anticipated that Air
Canada's Toronto and Vancouver hubs will benefit from increased
traffic from the combined US Airways-America West networks. These
network benefits complement the existing Air Canada relationship
with United Airlines which provide Air Canada with a strong east-
west presence through their hubs at Chicago O'Hare and Denver.
"It's a win-win all around as the merged airline and Air Canada
will create value for each other through maintenance contracts,
airport handling agreements and the eventual expansion of the Star
Alliance agreement, which will include codesharing between the two
carriers," said Mr. Milton. "The addition of America West to our
current network relationship with US Airways will strengthen Air
Canada's position as a highly connected global network and provide
the newly-merged carrier with enhanced access to Canada and Air
Canada's international network via the Toronto and Vancouver hubs.
It will also provide an important benefit to the Star Alliance by
significantly increasing its network penetration in the Western
United States.
About America West
America West -- http://www.americawest.com/-- operates more than
900 flights daily to 95 destinations in the U.S., Canada, Mexico
and Costa Rica. The airline's 13,500 employees are proud to offer
a range of services including more destinations than any other
low-cost carrier, first-class cabins, assigned seating, airport
clubs and an award-winning frequent flyer program.
About US Airways
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts.
About US Airways
About Air Canada
Air Canada filed for CCAA protection on April 1, 2003 (Ontario
Superior Court of Justice, Case No. 03-4932) and filed a Section
304 petition in the U.S. Bankruptcy Court for the Southern
District of New York (Case No. 03-11971). Mr. Justice Farley
sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004.
Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman
Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier.
Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie
Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the
Debtors filed for protection from their creditors, they listed
C$7,816,000,000 in assets and C$9,704,000,000 in liabilities.
On September 30, 2004, Air Canada successfully completed its
restructuring process and implemented its Plan of Arrangement.
The airline exited from CCAA protection raising $1.1 billion of
new equity capital and, as of September 30, has approximately
$1.9 billion of cash on hand.
As of December 31, 2004, Air Canada's shareholders' deficit
narrowed to CDN$203 million compared to a $4.155 billion deficit
at December 31, 2003.
About ACE Aviation
ACE Aviation is the parent holding company of Air Canada and
certain other subsidiaries including Aeroplan LP, Jazz Air LP and
ACTS LP. Montreal-based Air Canada provides scheduled and charter
air transportation for passengers and cargo to more than 150
destinations on five continents. Canada's flag carrier is the
14th largest commercial airline in the world and serves 29 million
customers annually with a fleet consisting of 293 aircraft. Air
Canada is a founding member of Star Alliance providing the world's
most comprehensive air transportation network.
* * *
As reported in the Troubled Company Reporter on Oct. 5, 2004,
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to Montreal, Quebec-based ACE Aviation
Holdings Inc. and its wholly owned subsidiary, Air Canada. S&P
says the outlook is stable.
ACE AVIATION: Confirms Plan to Divest Portion of Aeroplan Stake
---------------------------------------------------------------
Following considerable media speculation on the subject of the
potential, partial monetization of its Aeroplan unit, the TSX has
requested that ACE Aviation Holdings provide clarification on its
intentions in this regard.
As it has previously stated, ACE is of the view that Aeroplan is
an asset of significant value and has been studying monetization
alternatives. At this time, ACE confirms that it is contemplating
an imminent, partial monetization of Aeroplan.
ACE will provide further information regarding its plans as
developments warrant.
* * *
The Globe and Mail reports that ACE Aviation intends to sell less
than 20% of Aeroplan through an initial public offering, as it
converts the unit into an income trust.
Globe and Mail reporter Brent Jang says the IPO could fetch as
much as CN$300,000,000, giving the unit at least CN$1,500,000,000
in total value.
The sale may be announced next week, according to Bloomberg News.
ACE is expected to file a preliminary prospectus for the IPO.
About ACE Aviation
ACE Aviation is the parent holding company of Air Canada and
certain other subsidiaries including Aeroplan LP, Jazz Air LP and
ACTS LP. Montreal-based Air Canada provides scheduled and charter
air transportation for passengers and cargo to more than 150
destinations on five continents. Canada's flag carrier is the
14th largest commercial airline in the world and serves 29 million
customers annually with a fleet consisting of 293 aircraft. Air
Canada is a founding member of Star Alliance providing the world's
most comprehensive air transportation network.
* * *
As reported in the Troubled Company Reporter on Oct. 5, 2004,
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to Montreal, Quebec-based ACE Aviation
Holdings Inc. and its wholly owned subsidiary, Air Canada. S&P
says the outlook is stable.
ADELPHIA COMMS: Asks Court to OK DOJ, SEC & Rigas Settlement Pacts
------------------------------------------------------------------
As reported in the Troubled Company Reporter on Apr. 26, 2005,
Adelphia Communications Corp. and its debtor-affiliates reached an
agreement with the Securities and Exchange Commission and the U.S.
Attorney's Office for the Southern District of New York, to settle
for $715 million all claims relating to the conduct of ACOM's
prior management.
As a necessary element to the $715-million Settlement, the
Government required the ACOM Debtors to also settle their claims
with the Rigas Family. The Rigas-ACOM Settlement will facilitate
the consensual forfeiture of certain Managed Entities to the
Government as part of a contemporaneous settlement between the
Rigas Family and the Government.
The ACOM Debtors ask the U.S. Bankruptcy Court for the Southern
District of New York to approve three separate but interdependent
agreements with the Department of Justice, the SEC and the Rigas
Family.
A full-text copy of the DoJ-ACOM Settlement Agreement is available
for free at:
http://bankrupt.com/misc/DoJ_ACOM_Settlement_Agreement.pdf
A full-text copy of the SEC-ACOM Settlement Agreement is
available for free at:
http://bankrupt.com/misc/SEC_ACOM_Settlement_Agreement.pdf
A full-text copy of the Rigas-ACOM Settlement Agreement is
available for free at:
http://bankrupt.com/misc/Rigas_ACOM_Settlement_Agreement.pdf
Paul V. Shalhoub, Esq., at Willkie Farr & Gallagher, in New York,
relates that on March 27, 2002, ACOM disclosed that it was liable
for more than $2 billion attributed to certain of the Managed
Entities under co-borrowing facilities that were not reflected as
debt on ACOM's consolidated financial statements. The admission
led to additional disclosures of numerous alleged improprieties
involving members of the family of John J. Rigas or the entities
in which the Rigases held controlling interests.
In connection with the disclosures, certain members of the Rigas
Family resigned their positions as officers and directors of
ACOM. John J. Rigas and Timothy J. Rigas were subsequently
indicted and convicted of federal criminal charges.
Due to the conduct of certain members of the Rigas Family and
then-current management, the SEC and the DoJ each initiated
significant actions against ACOM, the Rigas Management and other
related parties. Specifically, the SEC initiated a civil
enforcement action against ACOM, certain members of the Rigas
Family and the Rigas Management. The DoJ prosecuted certain
members of the Rigas Family and other co-conspirators and
empanelled grand juries to investigate the alleged wrongful
conduct.
Although the DoJ has secured convictions of primary wrongdoers,
the ACOM Debtors have been threatened with the possibility of
being indicted for the wrongful acts of the Rigas Management.
The DoJ has, among others:
-- initiated proceedings to forfeit certain Rigas Family
entities that own cable franchises and are integrated into
the business of, and managed by, the ACOM Debtors; and
-- threatened the Debtors with the possibility of indicting
those entities.
According to Mr. Shalhoub, the inability to include the Managed
Entities (other than Coudersport Television Cable Co. and
Bucktail Broadcasting Corp.) -- the Forfeited Managed Entities --
in the ACOM Debtors' estates, whether through forfeiture or
indictment, would deprive the Debtors of hundreds of millions of
dollars of value and leave the Debtors liable for all of the
Rigas Family entities' liabilities under the Co-Borrowing
Facilities. Worse, Mr. Shalhoub says, the indictment of the
Debtors could devastate any possibility of reorganization.
The ACOM Debtors believe that entering into the Settlement
Agreements will:
-- relieve them of the persistent indictment threat;
-- eliminate the possibility of losing the value of the
Forfeited Managed Entities and having to make restitution
payments to the Government;
-- resolve the SEC's asserted multi-billion dollar claim
against ACOM; and
-- ensure the Forfeited Managed Entities are included in the
Debtors' estates.
The salient terms of the Settlement Agreements are:
A. Forfeited Managed Entities and Real Estate
The Rigas Family will forfeit to the Government their
interests in all of the Forfeited Managed Entities, various
real estate properties and all securities in ACOM. The
Government will transfer to the ACOM Debtors, free and clear
of all liens and encumbrances, the Forfeited Assets, except
for those forfeited real estate not related to the Debtors'
cable operations.
To the extent that any property used in connection with the
ACOM Debtors' businesses is owned by a member of the Rigas
Family, then the Rigas Family will convey to the Debtors title
to the property.
Subject to certain limitations, the ACOM Debtors will hold
these parties harmless from any claims asserted by the
Co-Borrowing Lenders with respect to the Co-Borrowing Debt:
a. Coudersport and Bucktail, and
b. the Rigas Family, other than the Excluded Parties, to
the extent the claim would result in a lien on the
equity of Coudersport or Bucktail.
Through and including December 31, 2005, the ACOM Debtors will
continue to provide management services to Coudersport and
Bucktail for a management fee equal to 5% of gross operating
revenues measured on an accrual basis each month, subject to
certain limitations.
B. Victim Restitution Fund
The Government will establish a fund to provide restitution to
persons or entities who held the ACOM Debtors' publicly traded
securities and were victims of the conduct alleged in the
Indictment. ACOM will contribute $715 million in value to
the fund. The $715 million, conditioned upon ACOM receiving
full and clear title to the Forfeited Managed Entities,
various real estate properties and ACOM securities owned by
members of the Rigas Family, will be comprised of:
a. in the event of a standalone emergence of ACOM from
bankruptcy:
-- $600 million of common stock of the reorganized
ACOM, and
-- $115 million of an interest in the Trust.
The common stock portion of the payment will be valued
at the valuation fixed for that stock by the Court in
connection with ACOM's approved Plan of Reorganization.
b. in the event of a sale of ACOM or substantially all of
its assets:
-- up to $400 million of common stock of ACOM's
purchaser,
-- $115 million of an interest in the Trust, and
-- the balance consisting of not less than $200
million in cash.
The cash portion of the payment is conditioned upon a
sale of ACOM or substantially all of its assets for an
amount that includes at least $10 billion in cash. The
substitution of cash for common stock will be at ACOM's
sole option. The common stock portion of the payment
will be valued at the valuation fixed for the stock by
the Court in connection with ACOM's approved Plan.
Unless extended, ACOM will make the payments on or before the
earlier of:
* October 15, 2006,
* 120 days after confirmation of a standalone Plan, or
* seven days after the first distribution of stock or cash
to creditors under any Plan.
C. The SEC Final Judgment
ACOM and the SEC agreed to the entry of a final judgment
resolving the SEC's claims against ACOM in Securities and
Exchange Commission v. Adelphia Communications Corp., et al.,
02 Civ. 5776 (PKC) (S.D.N.Y.).
ACOM will be permanently enjoined from violating various
provisions of the federal securities laws. If ACOM makes the
$715 million payment to the Victim Restitution Fund, it will
not be required to pay disgorgement or a civil money penalty
to satisfy the SEC's claims.
C. Rigas Legal Defense Costs and Indemnities
Within five business days of the Forfeiture Date, ACOM will
pay $11,500,000 to Dilworth Paxson, LLP, to establish the
Legal Defense Fund, which fund will be used to pay the
obligations to professionals retained by the Rigas Family.
ACOM intends to charge the Forfeited Managed Entities for this
payment.
The ACOM Debtors will dismiss, with prejudice, as against the
Rigas Family (other than the Excluded Parties) and Peter
Venetis certain actions and, upon the dismissal, the TROs will
be dissolved. All proofs of claim or interests filed by the
Rigas Family and Peter Venetis against ACOM will be deemed
expunged. The Rigas Family and Peter Venetis will not file
any proofs of claim or interest against ACOM.
E. Non-Prosecution and Continued Cooperation
The Government will not criminally prosecute:
* ACOM,
* the subsidiaries listed in ACOM's Form 10-K for fiscal
year 2003,
* the subsequently-formed or acquired subsidiaries as
listed in the Settlement Agreements; and
* any joint ventures in which the ACOM Debtors have or
acquire a controlling interest for any crimes (except for
criminal tax violations) related to ACOM's participation
in the conduct set forth in the Superseding Indictment
and the SEC Complaint.
In connection with any matter relating to their operations,
finances and corporate governance between 1997 and their
emergence from bankruptcy, the ACOM Debtors will:
-- truthfully and completely disclose all information about
all matters about which the Government inquires;
-- fully cooperate with the Government and use their best
efforts to provide information and testimony as the
Government requests; and
-- bring to the Government's attention all criminal conduct
by or criminal investigations of ACOM or its senior
managerial employees which comes to the attention of
ACOM's Board or senior management.
Those obligations will continue until the later of:
-- a period of two years from the date of the Settlement
Agreements, or
-- the date upon which all prosecutions arising out of the
conduct described in the Superseding Indictment and the
SEC Complaint are final.
The protections of the non-prosecution agreement will not
apply to any successor entities, whether the successor's
interest arises through a merger or plan of reorganization,
unless and until the successor adopts the non-prosecution
agreement. The protections afforded by the non-prosecution
agreement are expected to apply to any purchaser of all or
substantially all of the assets of ACOM and to any entities
included in the purchase if the purchaser formally adopts in
all material respects the Continuing Obligation To Cooperate
provisions of the non-prosecution agreement, except for the
obligation on bringing to the Government's attention all
criminal conduct of ACOM or its senior managerial employees
which comes to the attention of ACOM's Board or senior
management.
At the sentencing of John J. Rigas and Timothy J. Rigas, the
Government will advise the Court of the Settlement Agreements.
Mr. Shalhoub states that the ACOM Debtors repeatedly tried to
negotiate a lower settlement amount with the Government and
agreed only to pay $715 million in value after the Government
rejected ACOM's lower settlement offers and only in the context
of a global settlement that ensured that the Forfeited Managed
Entities would be transferred to the ACOM Debtors.
The ACOM Debtors admit that the $715 million is a substantial
obligation. However, given the tremendous advantages of
settling, the Debtors believe that the benefits far outweigh the
discounted probability of achieving a similar outcome through
litigation.
The Settlement Agreements "resolve the SEC's claims against the
ACOM Debtors' estates of over $5 billion, as well as eliminate
the devastating risks of a criminal prosecution," Mr. Shalhoub
points out. Moreover, the settlements ensures that ACOM does not
face the "double hit" of seeing the Managed Entities forfeited to
the Government and then having to compensate the Government for
the diminished value of these assets in a forced sale.
Mr. Shalhoub assures the Court that the ACOM Debtors' Board of
Directors, in considering the Settlement Agreements, acted with
complete disinterestedness.
Responses
1. Creditors Committee
The Official Committee of Unsecured Creditors complains that
the Settlement Agreements "give far too much to the
Government, take too little from the Rigas Family and the co-
borrowing lenders, and potentially deprive unsecured creditors
of distributions to which they are entitled in favor of
statutorily subordinated 'victims.'"
Specifically, the Committee objects to the Settlements for
these reasons:
* The $715 million settlement payment is grossly excessive;
* The discretion given to the Government to administer the
Victim Restitution Fund may permit distributions that
violate the absolute priority rule set forth in the
Bankruptcy Code;
* Members of the Rigas Family and the members of the co-
borrowing bank syndicates -- the very parties responsible
for the harm suffered by the Debtors and their creditors
-- receive improper benefits that unreasonably shift the
burden of the settlements to the Debtors and their
creditors;
* Certain of the Settlement Agreements' terms may prejudice
the Debtors' and the Creditors Committee's pending
litigation against the co-borrowing lenders; and
* There is no indication whether the settlements meet the
requirements imposed in the asset purchase agreement with
Time Warner or whether the settlements will be deemed by
Time Warner to have met those requirements.
David M. Friedman, Esq., at Kasowitz Benson Torres & Friedman,
in New York, notes that the ACOM Debtors only agreed the
"onerous" settlement terms to avoid the risk that they would
be indicted and to keep the Government from seizing Rigas
Managed Entities in which the Debtors already have an
ownership interest. "Even if the Debtors cannot stand up to
the Government's pressure, the Bankruptcy Court can, and
should, intercede to prevent settlements that are not
reasonable."
The Creditors Committee asks Judge Gerber to reject or, at a
minimum, modify the Settlement Agreements.
2. Equity Committee
The Official Committee of Equity Security Holders supports the
approval of the Settlement Agreements. "The proposed
settlements are within the range of reasonableness and should
be approved by [the Bankruptcy] Court as a valid exercise of
the Debtors' business judgment," the Equity Committee asserts.
While the Equity Committee deems it "repugnant" that the Rigas
Family will retain certain property under the Settlement
Agreements, the Equity Committee considers the compromise as
"necessary to achieve the three-way settlement."
The Equity Committee reserves all of its rights in the event
that the ACOM Debtors propose any substantive modifications to
the Settlement Agreements, including modifications that would
grant liens in the Forfeited Entities to certain prepetition
lenders.
3. Class Plaintiffs
The plaintiffs in a class action pending before the U.S.
District Court for the Southern District of New York captioned
In re ACOM Securities and Derivative Litigation, 03 MD 1529
(LMM) assert that the Settlement Agreements must not be
approve because:
-- the Settlement Agreements are not fair and equitable,
-- certain provisions violate federal law, and
-- the Settlement Agreements undermine the ability of the
victims of the fraud schemes to recover non-forfeited
assets.
John H. Drucker, Esq., at Angel & Frankel PC, in New York,
notes that under the DoJ-ACOM Settlement Agreement, the
Government will give the Forfeited Assets, valued at over $1.5
billion, to ACOM "cleansed of all third-party liens, claims,
encumbrances and adverse interests." Acting as a conduit,
ACOM will then transfer the Forfeited Assets to the buyer, in
turn receiving $967 million. The DoJ-ACOM settlement, rather
than providing for restitution to the victims, instead
allows ACOM to make a profit on the Forfeited Assets in
excess of $367 million. ACOM should give the $367 million to
investors, Mr. Drucker says.
Furthermore, the transfer of the Forfeited Assets is
prohibited under federal criminal and civil forfeiture law,
Mr. Drucker asserts.
4. Century/ML
Century/ML Cable Venture and Century/ML Cable Corp. generally
do not take any position on the merits of the Settlement
Agreements. However, Century/ML notes that several aspects of
the Agreements, unless clarified or modified, could
potentially be construed to negatively and improperly affect
their rights and claims against the ACOM Debtors, the Rigas
Family and the Rigas Family Entities.
To protect their rights, Century/ML ask the Court that any
order approving the Settlement Agreements should make it clear
that all references in the Agreements to "Adelphia," "Adelphia
and all of its subsidiaries," and "Adelphia and any other
person, entity or committee asserting claims through or on
behalf of Adelphia," will not be construed to include
Century/ML, and the parties to the Agreements will make no
argument to the contrary in connection with any of the claims
or defenses of Century/ML.
Century/ML also asks the Court to clarify that its claims are
not waived, prejudiced, diminished or released:
-- in connection with Century/ML's adversary proceeding
against Coudersport Television Cable Company;
-- in Century/ML's adversary proceeding against Highland
Holdings, Highland Holdings II, Highland Communications,
LLC, Highland Preferred Communications, LLC, and
Highland Preferred Communications 2001, LLC, or in
connection with the defense and setoff claims relating
to Highland's proof of claim;
-- in Century/ML's adversary proceeding against any member
of the Rigas Family or Rigas Family Entities; and
-- against the ACOM Debtors or in connection with the
defense and setoff claims related to ACOM's claim in
Century/ML's bankruptcy case.
5. ML Media Partners, LP
ML Media Partners, LP, objects to the DoJ-ACOM Settlement
Agreement to the extent it purports to give ACOM the option to
take title to Highland Holdings, free and clear of the claims
by ML Media and Highland.
Highland, a partnership comprised of several members of the
Rigas Family, is a defendant and counterclaim-plaintiff in an
adversary proceeding that ML Media commenced, which is now
pending before the Bankruptcy Court for the Southern District
of New York. By purporting to give ACOM the option to acquire
title to Highland, cleansed of all its liabilities to ML Media
but with its assets intact, ML Media asserts, the DoJ-ACOM
Settlement deprives ML Media of property without due process
of law.
6. W.R. Huff Asset Management Co.
"It seems that rather than punishing the actual perpetrators
of the fraud at [ACOM], the settlement agreement only serves
to further punish the victims of the fraud," Gregg Weiner,
Esq., representing W.R. Huff Asset Management Co., said.
W.R. Huff tells the Court that the settlement fails to
penalize several banks, including Bank of Montreal, Bank of
America N.A., Chase Manhattan Bank, Wachovia Bank N.A., and
the Bank of Nova Scotia, that loaned the Rigases money to buy
ACOM stock prior to the Petition Date.
By allowing shareholders to receive the settlement funds while
creditors wait to be repaid, Mr. Weiner says, the settlement
agreement violates the Bankruptcy Code. The absolute priority
rule mandates that shareholders can't receive distributions
until general unsecured creditors are paid in full.
Nine other parties also filed objections, asserting similar
arguments:
-- City of Carlsbad
-- Bank of America, NA
-- The Ad Hoc Adelphia Trade Claims Committee
-- U.S. Bank National Association, as Indenture Trustee
-- The Bank of New York, as Indenture Trustee
-- Ad Hoc Committee of ACC Senior Noteholders
-- Ad Hoc Committee of Arahova Noteholders
-- Ad Hoc Senior Preferred Shareholders Committee
-- United States of America
* * *
At the ACOM Debtors' request, the Court:
-- sealed the record of the Settlement Motion;
-- authorized the Debtors to file their witness declarations
under seal; and
-- authorized the Debtors to seek leave to exclude
non-objecting parties from the Courtroom during the hearing
on the motion to the extent necessary to preserve any
applicable evidentiary privileges.
Subsequently, the objecting parties ask the Court for permission
to access unredacted materials filed under seal and to attend the
hearing in its entirety. The Debtors balked at the Objectors'
request. To resolve the dispute, Judge Gerber orders that:
a. an Objector will be given access to unredacted materials
and be permitted to attend the hearing in its entirety if
it executes a Confidentiality Stipulation;
b. members of the Official Committees will be permitted access
to unredacted materials filed under seal provided that
counsel for that Committee executes the Confidentiality
Stipulation and advises its members as to the Stipulation's
terms, and its members agree to be bound by its terms as
if they had executed it individually;
c. neither the Objectors' or a Committee Member's receipt of
unredacted materials filed under seal nor its attendance at
the hearing, will constitute a waiver of the attorney-
client privilege, the work product doctrine or any other
applicable privilege; and
d. any portion of the transcript of the hearing during which
parties are excluded from the Courtroom pursuant to the
Sealing Order will be deemed confidential and will be filed
separately under seal.
A full-text copy of the Confidentiality Stipulation is available
for free at:
http://bankrupt.com/misc/Confidentiality_Stipulation.pdf
District Court Approves Settlement
The U.S. District Court for the Southern District of New York
approved ACOM's $715 million settlement of a fraud lawsuit filed
by the U.S. Securities and Exchange Commission.
"The settlement unquestionably provides the victims of the
fraud with the most expeditious, certain recovery that can be
obtained," U.S. District Judge Leonard Sand said at a hearing,
Bloomberg News reports.
The settlement needs the approval of two more New York judges to
take effect -- Bankruptcy Judge Robert Gerber and District Judge
Kevin Castel.
According to Tom Becker at Bloomberg, Judge Sand oversees the
criminal cases, Judge Castel oversees the SEC case and Judge
Gerber oversees ACOM's bankruptcy proceedings.
Mr. Becker relates that Judge Sand's ruling focused primarily on
the settlement as it relates to the Rigas family and their
criminal cases.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than
200 affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue
No. 92; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ADELPHIA COMMS: Files Schedule of Intercompany Balances in Court
----------------------------------------------------------------
Adelphia Communications Corporation delivered to Judge Gerber
of the U.S. Bankruptcy Court for the Southern District of New
York a schedule of intercompany balances and related notes on
May 11, 2005.
The balances in the Schedule reflect amounts that each of the
entities comprising the ACOM Debtors owes to any of the other
Debtor entities as well as affiliate balances with certain Rigas-
owned affiliates.
A full-text copy of the Schedule is available for free at
http://tinyurl.com/b4m9q
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than
200 affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue
No. 92; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AMES DEPARTMENT: Asks Court to OK GE Capital L/C Extension Accord
-----------------------------------------------------------------
Beginning in August 2002, Ames Department Stores and its debtor-
affiliates conducted going out of business sales in all of their
remaining store locations. The proceeds of the sale were used to
repay the Debtors' outstanding loans under the DIP Financing
Agreement with General Electric Capital Corporation and other
lenders and the escrows.
At the Debtors' request, GE Capital issued, or caused to be
issued, letters of credit for the account of Ames Merchandising
Corp. The L/Cs, guaranteed by GE Capital, were issued for the
benefit of various insurance companies to support Ames
Merchandising's self-insured workers' compensation obligations.
Frank A. Oswald, Esq., at Togut, Segal & Segal LLP, in New York,
relates that Ames Merchandising's reimbursement obligations to
GE Capital with respect to the L/Cs are secured by cash
collateral held in an account at Wells Fargo Bank, National
Association. As of April 14, 2005, outstanding obligations in
respect of the L/Cs were $37,589,498. The Wells Fargo Cash
Collateral account balance as of March 31, 2005, was $39,358,792.
GE Capital had the right to cancel the L/Cs at any time,
Mr. Oswald says. After all obligations under the DIP Agreement
were satisfied, GE Capital retained the right to cancel the
existing L/Cs as they come up for renewal.
In January 2005, GE Capital issued non-renewal notices for four
L/Cs. Another four L/Cs are set to expire between May and
November 2005, but as of May 6, 2005, GE Capital has not issued
their non-renewal notices. These continuing L/Cs were issued for
the benefit of Old Republic Insurance Company and Travelers
Indemnity Company.
Ames Merchandising wants an extension of each of the Continuing
L/Cs. GE Capital is willing to extend the Continuing L/Cs for up
to an additional three years pursuant to the terms of an L/C
Extension Agreement.
By this motion, the Debtors seek the U.S. Bankruptcy Court for the
Southern District of New York's permission to enter into the L/C
Extension Agreement and pay the related fees.
The salient terms of the L/C Extension Agreement are:
(a) GE Capital will cause each of the Continuing L/Cs to be
continued from its expiry date, provided that GE Capital
will be under no obligation to incur obligations for
Continuing L/Cs having an expiry date that is later
than November 1, 2008 -- Termination Date -- or to
continue any Continuing L/Cs beyond the Termination Date.
(b) Each of the Continuing L/Cs provides for an automatic
renewal unless a notice of cancellation is delivered. GE
Capital will cause the cancellation of the Continuing L/Cs
during the applicable notice period first occurring on or
after November 1, 2007.
(c) Ames Merchandising will pay GE Capital:
(1) an L/C fee of 1.50% per annum on the face amount of
the Continuing L/Cs, payable monthly in arrears;
(2) its out-of-pocket expenses including reasonable legal
and other costs and fees incurred in connection with
the transactions; and
(3) any fees and charges that may be imposed by any of the
L/C Issuers.
(d) As security for the L/C Extensions, GE Capital will
continue to hold the Cash Collateral in an account at a
financial institution acceptable to GE Capital in an
amount equal to 104% prior to June 30, 2005, and at least
105% thereafter, of the maximum amount then available to
be drawn under the Continuing L/Cs.
(e) If the total amount of Cash Collateral will at any time
fall below the minimum amount, GE Capital will have the
right to require Ames Merchandising to deposit the
deficient amount. If the total amount of Cash Collateral
will at any time fall below 103% of the maximum amount
then available to be drawn under each applicable L/C
outstanding, GE Capital will have the right to cause the
cancellation of the Continuing L/Cs.
(f) If the credit rating of the bank, or financial institution
will at any time fall below AAA as rated by Standard &
Poor or Aaa as rated by Moody's, GE Capital will have the
right to withdraw the Cash Collateral and deposit it in a
financial institution of its choice.
(g) In the event that GE Capital makes any payments with
respect to any L/C Obligations or if they become due and
payable, GE Capital will apply the Cash Collateral to the
payment of the amounts. If the Cash Collateral is
insufficient to pay the amounts in full, Ames
Merchandising will, upon demand from GE Capital, reimburse
GE Capital within two business days.
(h) Upon receipt by GE Capital of reasonably satisfactory
written evidence that a Continuing L/C has expired or been
terminated and that no L/C Obligations remain outstanding,
GE Capital will pay Ames Merchandising any Cash Collateral
exceeding 105% of the maximum aggregate amount then
available to be drawn under all Continuing L/C's that are
then outstanding.
(i) On the Termination Date, upon receipt by GE Capital of
evidence of the termination or expiration and that no L/C
Obligations remain outstanding, GE Capital will pay any
remaining amount of the Cash Collateral, less the amount
of any fees, expenses or other obligations that Ames
Merchandising is required to pay or reimburse to GE
Capital or to indemnify GE Capital against, that may
remain outstanding and unpaid at the time.
(j) The obligation of Ames Merchandising to reimburse GE
Capital for payments made with respect to any L/C
Obligation will be absolute, unconditional and
irrevocable, without necessity of presentment, demand,
protest or other formalities.
(k) Ames Merchandising will indemnify GE Capital from any
claims, demands, liabilities and expenses that GE Capital
may incur or be subject to as a consequence of:
(1) the deemed issuance or continuance of any L/C or its
guaranty;
(2) its entering into and performing in accordance with
the Extension Agreement; or
(3) the failure of GE Capital to seek indemnification or
of any L/C Issuer to honor a demand for payment under
any L/C or guaranty as a result of any act or
omission, whether rightful or wrongful, of any present
or future de jure or de facto government or
governmental authority, in each case other than to the
extent solely as a result of the gross negligence or
willful misconduct of GE Capital.
(l) Ames Merchandising assumes all risks of the acts and
omissions of, or misuse of any L/C by any beneficiaries.
GE Capital will not be responsible for:
(1) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document issued by any party in
connection with the application for and issuance of
any L/C, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate,
fraudulent or forged;
(2) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or
assign any L/C or the rights or benefits or proceeds
that may prove to be invalid or ineffective for any
reason;
(3) the L/C beneficiary's failure to comply fully with the
conditions required to demand payment under the L/C.
In the case of any payment by GE Capital under any L/C
or guaranty, GE Capital will be liable to the extent
the payment was made solely as a result of its gross
negligence or willful misconduct in determining that
the demand for payment under the L/C or guaranty
complies on its face with any applicable requirements
for a demand for payment under the L/C or guaranty;
(4) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not
they may be in cipher;
(5) errors in interpretation of technical terms;
(6) any loss or delay in the transmission or otherwise of
any document required in order to make a payment under
any L/C or guaranty thereof or of the proceeds;
(7) the credit of the proceeds of any drawing under any
L/C or guaranty; and
(8) any consequences arising from causes beyond GE
Capital's control.
As part of the DIP Financing Agreement, GE Capital held Ames
Merchandising funds for the payment of related fees and expenses.
GE Capital continues to hold $507,356 as of March 31, 2005. GE
Capital has agreed to apply first to the payment of its Legal
Fees, and the balance toward satisfying Ames' Cash Collateral
requirements under the L/C Extension Agreement.
Consistent with the practice under the DIP Financing Agreement,
GE Capital will provide Ames Merchandising with periodic
statements with respect to the GE Capital Legal Fees and any
Issuer Fees.
The Debtors believe that entering into the L/C Extension
Agreement is in the ordinary course of their business. The
Debtors also deem it "appropriate and necessary" to use estate
assets to pay for the fees required to obtain the L/C Extensions.
Ames Department Stores filed for chapter 11 protection on
August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert
Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP
and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at
Weil, Gotshal & Manges LLP represent the Debtors in their
restructuring efforts. When the Company filed for protection
from their creditors, they listed $1,901,573,000 in assets and
$1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No.
68; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AMH Holdings: Poor Earnings Prompt S&P to Lower Ratings
-------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
ratings on AMH Holdings Inc. and its operating subsidiary,
Cuyahoga Falls, Ohio-based Associated Materials Inc. to 'B' from
'B+'. Other ratings were also lowered. The outlooks were revised
to stable from negative.
"The downgrade reflects our expectation that near-term earnings
and cash flows will not be sufficient to improve credit metrics to
levels appropriate for the prior ratings," said Standard & Poor's
credit analyst Lisa Wright. "Raw-material cost pressures combined
with sluggish demand in the Midwest, an important market for the
company, are hurting AMI's 2005 results."
AMI is a midsize manufacturer of exterior residential building
products. Its products benefit from vinyl's increasing
penetration of markets formerly dominated by wood and metal.
AMI's businesses are seasonal, with the majority of its free cash
flow generated during the second half of the year as working
capital balances decline.
"Although we believe that AMI's high debt leverage makes the
company vulnerable to industry cyclicality, its relatively strong
business position for the current ratings and ability to generate
free cash flow provide support for the ratings," Ms Wright said.
"The outlook could be revised to negative if peak liquidity drops
below current expectations of about $15 million-$20 million, or if
deteriorating end-markets cause earnings to weaken to the point
where total debt begins to increase meaningfully. The outlook
could be revised to positive or the ratings raised slightly if
earnings and end markets strengthen substantially and debt
leverage is reduced."
BDR CORPORATION: Plan Confirmation Hearing Set for June 2
---------------------------------------------------------
The Honorable Patricia C. Williams of the U.S. Bankruptcy Court
for the Eastern District of Washington approved the Disclosure
Statement explaining the Second Amended Plan of Reorganization
proposed by BDR Corporation.
With a Court-approved Disclosure Statement in hand, the Debtor
will now transmit copies of the Plan and the disclosure document
to its impaired creditors and ask them to vote to accept the plan.
Objections to the Plan, if any, must be submitted to the Court by
May 31, 2005. The Court will convene a telephonic conference call
on June 2, 2005, at 10:30 a.m. to discuss the merits of the Plan.
About the Plan
The Plan contemplates the sale of substantially all of BDR's real
estate and certain Dellen Wood Products equipment to Pristina
Pine.
Pursuant to the Plan, Administrative and Priority tax claims will
be paid in full on the confirmation date.
Bank of America asserts a $2.6 million claim against BDR. The
Bank holds the mortgage on DBR's Building I-6 located on East
Flora Road which serves as its headquarters. The Debtor will
fully pay the Bank's claim on the confirmation date.
General Electric Capital Corporation is owed about $1,609,796 on
account of equipment lease obligations. The Debtor will pay GE
$1.4 million upon the closing of the "Woodeye" equipment sale to
Pristina Pine. The rest of GE's claim will not be paid.
The estates of:
Claim
-----
Ellen Lentes $1,623,481
William E. Lentes 521,863
Richard B. Lentes 314,800
Randal S. Lentes 312,400
will be given replacement real estate after claims held by of the
Bank of America, GECC and general unsecured creditors are paid in
full.
General unsecured creditors Inland Empire Fire Protection and
Ellsworth Wright will be paid in full.
Equity interest holders and insider claims that will be paid in
full after these four claims are satisfied:
Claim Holder Claim Amount
------------ ------------
Dellen Wood Products $59,449
William E. Lentes 62,010
Randal S. Lentes 39,926
Richard B. Lentes 39,961
Headquartered in Veradale, Washington, BDR Corporation, filed for
chapter 11 protection on May 5, 2004 (Bankr. E.D. Wash. Case No.
04-03639). John F. Bury, Esq., at Murphy, Bantz & Bury, P.S.,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed
$6,919,609 in assets and $6,925,123 in debts.
BERRY PLASTICS: S&P Rates Proposed $615 Million Facility at B+
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' rating and
its recovery rating of '3' to Berry Plastics Corp.'s proposed $465
million add-on senior secured term loan C due July 2010 and $150
million revolving credit facility due March 2010, based on
preliminary terms and conditions. The ratings on the senior
secured term loan and revolving credit facility are the same as
the corporate credit rating; this and the '3' recovery rating
indicate the expectation of a meaningful (50% to 80%) recovery of
principal in the event of a payment default.
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit rating on the company. Berry, a 100%-owned operating
subsidiary of BPC Holding Corp. (B+/Stable/--), recently announced
that it had entered into a definitive agreement to acquire Kerr
Group Inc. (BB-/Watch Neg/--) for $445 million, including
repayment of existing debt. The acquisition will be funded with
the add-on term loan C and is expected to close in the second
quarter of 2005, subject to customary closing conditions.
Pro forma for the transaction, Evansville, Ind.-based Berry had
total debt outstanding of about $1.2 billion at April 2, 2005.
"The ratings on Berry incorporate its fair business profile with
large market shares in its niche segments, a well-diversified
customer base, strong customer relationships, and a highly
leveraged financial profile," said Standard & Poor's credit
analyst Liley Mehta.
Privately held Berry is a leading manufacturer and supplier of
rigid plastic injection-molded and thermoformed open-top
containers, closures, aerosol overcaps, drinking cups, and
housewares. Kerr, with about $375 million in annual sales, is a
domestic producer of closures for the health care and food and
beverage segments; pharmaceutical bottles; and prescription vials.
Berry's and Kerr's top 10 customers each account for about 35% of
sales. With pro forma sales of about $1.2 billion, the
acquisition is expected to further strengthen Berry's market
position in closures, broaden its product mix with vials, bottles
and tubes, expand its customer base, and provide cross-selling
opportunities across products and end markets.
CARRIER ACCESS: Nasdaq Hearing Scheduled on June 2
--------------------------------------------------
Carrier Access Corporation (Nasdaq: CACSE) released an update on
its previously reported financial review.
Carrier Access is in the process of performing a detailed review
of all significant customer relationships and as part of those
reviews is evaluating the propriety of the timing of revenue and
cost recognition and other revenue recognition issues. At this
point in time, the Company has determined that certain revenues
and direct costs have been recorded in incorrect periods. The
amounts that have been quantified to date are significant and, as
a result, previously issued financial statements for the year
ended December 31, 2004, and certain interim periods in each of
the years ended December 31, 2004, and 2003, will be restated.
Carrier Access expects to file an amendment to its 2004 Form 10-K
and its Form 10-Q for the first quarter of 2005 as soon as
reasonably possible.
Delisting Update
Carrier Access Networks reported on May 5, 2005, that the Company
received a notice on May 4, 2005, from the staff of The Nasdaq
Stock Market which stated that although the company filed its 2004
Form 10-K, the filing did not include management's assessment of
its internal controls over financial reporting and the associated
auditor attestation report. Therefore, it was not in compliance
with the filing requirements for continued listing on Nasdaq as
required by Nasdaq Marketplace Rule 4310(c)(14) due to the
Company's inability to timely file its Form 10-K /A with the
Attestations for the 2004 fiscal year.
The Company appealed the delisting notification to the Nasdaq
Listings Qualifications Panel and is currently in the appeals
process, which will address the delinquency of both the Form 10-
K/A and the Form 10-Q. On May 17, 2005, the Company received a
notice of a hearing date from the staff of The Nasdaq Stock Market
for the Company's appeal of the Nasdaq Listing Qualifications
Staff determination to delist the Company's securities from The
Nasdaq National Market. The hearing will be held on Thursday,
June 2, 2005. The Company intends to submit materials and attend
the hearing in support of its appeal. There can be no assurance
that the Panel will grant a request for continued listing.
Carrier Access' securities will remain listed pending a decision.
The Company is continuing to work diligently to complete the
previously announced detailed review of its financial statements,
to comply with applicable Nasdaq rules and to cooperate with
Nasdaq.
About the Company
Carrier Access (NASDAQ: CACSE) provides consolidated access
technology designed to streamline the communication network
operations of service providers, enterprises and government
agencies. Carrier Access products enable customers to consolidate
and upgrade access capacity, and implement converged IP services
while lowering costs and accelerating service revenue. Carrier
Access' technologies help our customers do more with less. For
more information, visit http://www.carrieraccess.com/
CHI-CHI'S: Court Okays Settlement Pact with C-C 9 & OS Realty
-------------------------------------------------------------
On Dec. 10, 1985, Chi-Chi's, Inc., and nine of its subsidiaries
entered into a Real Estate Sale and Leaseback Agreement with C-C
Restaurant Ltd.-9. Under the Agreement, subsidiaries of Chi-Chi's
sold 15 restaurant properties to C-C 9. Chi-Chi's was given the
option to lease back the properties for 20 years commencing on
Dec. 10, 1985, and terminating on Dec. 31, 2005. Chi-Chi's was
also given the option to repurchase each of the properties.
In consideration of the purchase transactions, C-C 9 paid Chi-
Chi's by delivering:
* a 12% note for $16,255,000 financed by Eagle Savings
Bank;
* fifteen 14% no-recourse purchase money notes totaling
$2,132,000;
* a bridge note for $2.9 million; and
* fifteen non-recourse maintenance fee notes.
The subsidiaries of Chi-Chi's then merged into the parent company.
As a result, Chi-Chi's became the sole tenant under the Lease
Agreement and the sole owner and holder of the purchase money
notes, maintenance notes and the mortgages securing those notes.
In June 2004, Chi-Chi's sold substantially all of its properties
to OS Realty. The sale of the properties gave OS Realty the right
to assume ownership of the Sale Leaseback Agreement, the purchase
notes, the maintenance notes and other rights related to the
properties.
The Dispute
In July 1995, Chi-Chi's sued C-C 9, Robinson and the Robinson Co.
for alleged defaults under the bridge note. C-C 9, in defense,
asserted that the bridge note has been modified to reduce its
interest rate. C-C 9, in turn, alleged that Chi-Chi's breached
the Lease Agreements.
The parties reached a resolution in February 1999. However, new
disputes arose in February 2002. Chi-Chi's sought to enforce the
Court's ruling in 2002. C-C 9 disputed the Court's ruling
involving its obligations under the various notes.
In June 2004, C-C 9 filed proofs of claim asserting an unsecured
claim of more than $1.3 million against Chi-Chi's.
The Adversary Proceeding
Chi-Chi's commenced an adversary proceeding against C-C 9 on
February 14, 2005, to resolve:
-- the amount OS Realty must pay to exercise its purchase
options; and
-- how much C-C 9 owes Chi-Chi's under the purchase money
notes and maintenance notes.
C-C 9 claims the total purchase price for the properties is
$16,255,000.
Chi-Chi's and OS Realty's calculations differ from C-C 9's. Chi-
Chi's claims that the amount due on the notes as of January 1,
2006, totals $36,737,900.
The Settlement Agreement
On April 27, 2005, the parties decided to settle, compromise and
release their claims against each other.
C-C 9 agreed to pay Chi-Chi's the first mortgage note in full plus
$650,000 in cash.
OS Realty has the option to either take the properties subject to
the first mortgage and pay it off over time or satisfy the first
mortgage note at closing.
Accordingly, the parties sought and obtained approval of the
settlement from the U.S. Bankruptcy Court for the District of
Delaware.
About OS Realty
OS Realty, a Florida corporation, is a wholly owned subsidiary of
Outback Steakhouse, Inc., a leading operator of restaurants in the
United States and abroad with restaurant concepts that include the
flagship Outback Steakhouse, Carraba's Italian Grill, Bonefish
Grill, Fleming's, Roy's, Paul Lee's Chinese Kitchen, Lee Roy
Selmon's Barbecue, and Cheeseburger in Paradise.
About C-C 9
C-C 9, a California limited partnership, was created for the
purpose of entering into the 1985 Sale/Leaseback transaction with
Chi-Chi's. JHR is the sole general partner of C-C 9 and Robinson
is the sole general partner of JHR.
Headquartered in Irvine California, Chi-Chi's, Inc., is a direct
or indirect operating subsidiary of Prandium and FRI-MRD
Corporation and each engages in the restaurant business. The
Debtors filed for chapter 11 protection on October 8, 2003 (Bankr.
Del. Case No. 03-13063-CGC). Bruce Grohsgal, Esq., Laura Davis
Jones, Esq., Rachel Lowy Werkheiser, Esq., and Sandra Gail McLamb,
Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtor filed for bankruptcy, it estimated $50 to $100 million in
assets and more than $100 million in liabilities.
CLEARLY CANADIAN: March 31 Balance Sheet Upside-Down by $4 Million
------------------------------------------------------------------
Clearly Canadian Beverage Corporation (OTCBB:CCBEF) reported
unaudited consolidated financial results for its first fiscal
quarter ended March 31, 2005.
Net loss from operations for the three months ended March 31, 2005
was $881,000 on sales revenues of $1,728,000, compared to a loss
of $497,000 on sales revenues of $2,934,000 for the three months
ended March 31, 2004. Operating loss for the three months ended
March 31, 2005 was $738,000 compared to $430,000 for the three
months ended March 31, 2004. The Company attributes the decline
in sales to working capital constraints that prevented the Company
from providing more funding for field marketing activities and
sales drives in the first quarter.
In the first quarter, the Company completed certain additional
debt and equity financing that facilitated some of the Company's
more immediate working capital needs. However, in order to
successfully and effectively complete the implementation of the
Company's corporate restructuring plan, significant additional
funding was necessary. Subsequent to the first quarter ending,
Clearly Canadian held its annual and special general meeting on
April 29, 2005 and presented a corporate restructuring and
financing plan to shareholders. The resolutions put forth at the
meeting were favourably passed by the shareholders and, in light
of such shareholder approval, the Company is now proceeding with
matters related to completing its transactions involving BG
Capital Group Ltd. and Standard Securities Corporation.
"We believe that our current financial restructuring will place
Clearly Canadian on a more solid foundation to move forward as a
competitive player in the alternative beverage industry. Upon
completion of the anticipated equity financings, Clearly Canadian
will be in a position to implement strategic regional marketing
and sales programs and to build our inventory base to support our
more aggressive selling efforts," said Douglas L. Mason, President
and C.E.O. of Clearly Canadian Beverage Corporation. "In the
second quarter, we will concentrate on expanding availability of
brand Clearly Canadian by working closely with our distributor
network in a collaborative effort to develop additional focus on
the brand and open new accounts. These efforts will be
complemented by the hiring of Area Market Specialists in key
selling regions across the United States, whose role is to
increase distribution of brand Clearly Canadian and to provide
brand building support at the selling level within the Company's
distribution network in an effort to promote increased sell
through and sales volume," said Mason.
Selling, general and administrative expenses from operations were
$1,274,000 for the first quarter ended March 31, 2005 compared to
$1,303,000 for the same period in 2004. The Company is continuing
to closely control its spending in many areas of selling, general
and administrative expenses.
Gross profit margins from operations were 31.0% for the three
months ended March 31, 2005 compared with 29.8% for the
corresponding period in 2004. This represents gross profit of
$536,000 for the three months ended March 31, 2005 compared to
$873,000 for the corresponding period in 2004. The increase in
gross profit margin in 2005 is attributable for the most part to a
change in the Company's sales mix, with a higher percentage of
total sales being from its private label and oxygenated water
segments (as compared to the first quarter of 2004, which included
sales from its Reebok brands during its sell off period with lower
gross profit margins).
About the Company
Based in Vancouver, British Columbia, Clearly Canadian Beverage
Corporation markets premium alternative beverages and products,
including Clearly Canadian(R) sparkling flavoured water and
Clearly Canadian O+2(R) oxygen enhanced water beverage, which are
distributed in the United States, Canada and various other
countries. Additional information about Clearly Canadian may be
obtained at http://www.clearly.ca/
At Mar. 31, 2005, Clearly Canadian Beverage Corporation's balance
sheet showed a $4,286,000 stockholders' deficit, compared to a
$3,515,000 deficit at Dec. 31, 2004.
CONSECO FINANCE: S&P Cuts Rating on Three Conseco-Related Certs.
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on 18
classes from 11 series of various Home Improvement Loan Trusts,
Home Improvement & Home Equity Loan Trusts, or Home
Equity Loan Trusts originally issued by Green Tree Financial
Corp., or its successor, Conseco Finance Corp. In addition,
ratings are lowered on the B-2 classes from Conseco Finance Home
Equity Loan Trust 2001-C and 2001-D, and Conseco Finance Home
Improvement Loan Trust 2000-E. Finally, the remaining non-
defaulted public ratings are affirmed on various classes of Home
Improvement Loan Trust, Home Improvement & Home Equity Loan Trust,
and Home Equity Loan Trust certificates issued by either Green
Tree Financial Corp, or its successor, Conseco Finance Corp.
Credit support for each of the classes with raised ratings exceeds
the original loss coverage percentage associated with the new
rating level. In addition to the monthly excess spread,
subordination is the primary credit support for each of the
upgraded classes. Rapid prepayments have resulted in significant
paydowns of the remaining pool principal balances. Since the
subordinate classes generally do not receive any principal
reductions until the senior classes have been paid in full, this
has yielded significant increases in remaining credit support,
which Standard & Poor's anticipates will be sufficient to support
the certificates at their new rating levels.
The three lowered ratings all occurred on B-2 classes, which are
only supported by monthly excess spread and overcollateralization,
and do not benefit from credit support that would be provided by
additional subordinate classes. The remaining credit support is
no longer consistent with the original 'BB' or 'BB+' ratings.
Based upon the present delinquencies and cumulative realized
losses, these three classes may possibly require further rating
adjustments in the future.
The rating affirmations reflect the stable performance of the
pools and the ability of each pool's credit support to sustain the
respective class' assigned rating level.
It should be noted that for most of the series issued through
series 2001-B, there is a footnote on the monthly reports stating:
"The servicer has determined that advances, if made, would be
nonrecoverable from funds subsequently available therefore in the
certificate account and, therefore, in accordance with the terms
of the pooling and servicing agreement, such advances have not
been made for this payment period."
In many cases, this has resulted in the bottommost B-2 classes in
those transactions not receiving their full monthly interest
payments, thus creating an ever-increasing unpaid interest
shortfall. Those classes had previously defaulted, due to the
removal of the limited guarantee by Conseco Finance Corp. In
addition, as of the May 16, 2005 distribution, the following
series and classes have interest deficiency amounts, which means
the servicer is utilizing other cash from the certificate
accounts, in addition to that month's mortgagor payments to pay
that month's interest to the certificateholders:
* series 1996-C, class HE:B-1;
* 1996-D, HE:B-1;
* 1996-F, HE:B-1;
* 1997-C, HE B-1; and
* 1997-E, HE:B-1.
All series utilize monthly excess spread to cover losses, and
series 1999-A and the more recently issued series (starting with
series 1999-G) have overcollateralization. Standard & Poor's
anticipates the remaining credit support will be sufficient to
support the certificates at their current rating levels
Ratings Raised
Home Improvement Loan Trust
Rating
------
Series Class To From
------ ----- -- ----
1999-E M-2 AAA A
Home Improvement and Home Equity Loan Trust
Rating
------
Series Class To From
------ ----- -- ----
1996-D HI:B-1 AAA AA+
1997-D HI:M-2 AAA AA+
1997-E HI:B-1 AA BBB+
Home Equity Loan Trust
Rating
------
Series Class To From
------ ----- -- ----
1997-B B-1 A BBB
1998-C M-2 AAA AA+
1999-C M-2 AAA A+
1999-D M-1 AAA AA+
1999-D M-2 AA- A
Green Tree Home Improvement & Home Equity Loan Trust
Rating
------
Series Class To From
------ ----- -- ----
1999-B M-2 AAA A
Green Tree Home Equity Loan Trust
Rating
------
Series Class To From
------ ----- -- ----
1999-A M-2 AA A+
Conseco Finance Home Equity Loan Trust
Rating
------
Series Class To From
------ ----- -- ----
2001-A II-M-1 AAA AA+
2002-C MF-1 AA+ AA
2002-C MV-1 AAA AA
2002-C MV-2 AA A
2002-C BV-1 BBB+ BBB
Conseco Finance Home Equity & Home Improvement Loan Trust
Rating
------
Series Class To From
------ ----- -- ----
2001-B II-M-1 AAA AA
2001-B II-M-2 AA A
Ratings Lowered
Conseco Finance Home Equity Loan Trust
Rating
------
Series Class To From
------ ----- -- ----
2001-C B-2 B BB+
2001-D B-2 B- BB
Conseco Finance Home Improvement Loan Trust
Rating
------
Series Class To From
------ ----- -- ----
2000-E B-2 B- BB
Ratings Affirmed
Home Improvement Loan Trust
Series Class Rating
------ ----- ------
1999-E B-1 BBB
Home Improvement & Home Equity Loan Trust
Series Class Rating
------ ----- ------
1996-C HE:M-2 AAA
1996-C HE:B-1 A
1996-D HE:M-2 AAA
1996-D HE:B-1 A
1996-F HE:M-2 AAA
1996-F HE:B-1, HI:B-1 A
1997-C HE M-2 AAA
1997-C HE B-1, HI B-1 A
1997-D HE: M-2 AAA
1997-D HE: B-1, HI: B-1 BBB+
1997-E HE:M-2 AAA
1997-E HE:B-1 BBB
1998-B HE:M2 AAA
1998-B HE:B1 A
1998-B HI:B1 BBB
Home Equity Loan Trust
Series Class Rating
------ ----- ------
1997-B M-2 AAA
1998-C B-1 BBB
1999-C B-1 BBB
1999-D B-1 BBB
Green Tree Home Improvement & Home Equity Loan Trust
Series Class Rating
------ ----- ------
1998-F B-1 BBB
1999-B B-1 BBB
Green Tree Home Equity Loan Trust
Series Class Rating
------ ----- ------
1999-A B-1 BBB
Conseco Finance Home Loan Trust
Series Class Rating
------ ----- ------
1999-G B-1 BBB
Conseco Finance Home Equity Loan Trust
Series Class Rating
------ ----- ------
2000-C A AAA
2000-C M-1 AA+
2000-C M-2 A+
2000-C B-1 BBB+
2001-A I-A-5, I-M-1 AAA
2001-A I-M-2 AA
2001-A I-B-1 A
2001-A II-M-2 A+
2001-A II-B-1 BBB+
2001-C A-4, A-5 AAA
2001-C M-1 AA+
2001-C M-2 A
2001-C B-1 BBB
2001-D A-4, A-5 AAA
2001-D M-1 AA
2001-D M-2 A
2001-D B-1 BBB
2002-A A-5, A-IO AAA
2002-A M-1 AA
2002-A M-2 A-
2002-A B-1 BBB-
2002-B A-3, A-IO AAA
2002-B M-1 AA
2002-B M-2 A
2002-B B-1 BBB
2002-B B-2 BB
2002-C AF-4, AF-IO AAA
2002-C MF-2 A
2002-C BF-1 BBB
2002-C AV-1, AV-IO AAA
Conseco Finance Home Improvement Loan Trust
Series Class Rating
------ ----- ------
2000-E A-5 AAA
2000-E M-1 AA
2000-E M-2 A
2000-E B-1 BBB
Conseco Finance Home Equity & Home Improvement Loan Trust
Series Class Rating
------ ----- ------
2001-B I-A-1A, I-A-5 AAA
2001-B I-M-1 AA
2001-B I-M-2 A-
2001-B I-B-1 BBB-
2001-B II-B-1 BBB
CONSOLIDATED COTTON: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Consolidated Cotton Gin Co., Inc.
8606 Highway 87
Lubbock, Texas 79423
Bankruptcy Case No.: 05-50630
Type of Business: The Debtor manufactures cotton ginning
equipment and machinery. See
http://www.consolidatedcottongin.com/
Chapter 11 Petition Date: May 20, 2005
Court: Northern District of Texas (Lubbock)
Judge: Robert L. Jones
Debtor's Counsel: David R. Langston, Esq.
Mullin, Hoard & Brown
P.O. Box 2585
Lubbock, Texas 79408-2585
Tel: (806) 765-7491
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.
CONSTITUTION STATE: Improvements Cue Fitch's Positive Outlook
-------------------------------------------------------------
Fitch Ratings has revised Constitution State Corporate Credit
Union's Rating Outlook to Positive from Stable. At the same time,
Fitch has affirmed all other ratings for Constitution and a
complete list of ratings follows at the end of this release.
The revision of the Rating Outlook is largely due to the
improvement in the company's capital position, particularly total
capital, as well as the prospect of further enhancement through a
planned supplemental capital offering. In July 2004, Constitution
revised its Membership Capital Share requirement cap to $2 million
from $1 million. The revised MCSD requirement increased its MCSD
balances by $8.6 million since June 30, 2004 and improved its
total capital ratio to 5.28% at March 31, 2005. Additionally,
Constitution plans to raise an additional $30 million in MCSDs
through a supplemental offering to be completed by the end of
June. A fully subscribed offering is expected to increase
Constitution's total capital ratio to the 7.00% range.
Following the completion of the supplemental offering, Fitch will
re-evaluate Constitution to determine if the new capital structure
is commensurate with its risk profile to warrant an upgrade of the
ratings.
Ratings affirmed by Fitch are as follows:
Constitution State Corporate Credit Union
--Long-term issuer 'A+';
--Short-term debt 'F1+';
--Individual 'B';
--Support '4'.
CYCLELOGIC INC: Wants Until Aug. 18 to Remove State Court Actions
-----------------------------------------------------------------
Ana Marie Lozano Stickley, the liquidation trustee for the
liquidation trust created under Cyclologic Inc.'s liquidation
plan, asks the Court to extend the time which she may file notices
of removal of state court actions under Rule 9027 of the Federal
Rules of Bankruptcy Procedure, to August 18, 2005.
Joseph A. Malfitano, Esq., at Young Conaway Stargatt & Taylor,
LLP, in Wilmington, Delaware, informs the Court that the Trustee
has been focused on:
(i) analyzing prepetition transfers and filing preference
complaints;
(ii) prosecuting certain claim objections; and
(iii) negotiating settlements of various preference actions and
claims objections.
As a result, the Trustee has not had the opportunity to fully
investigate and determine whether there are any pending matters
that should be removed. Mr. Malfitano insists that the Trustee
needs the additional time to make fully informed decision
concerning removal of any pending actions.
The Court will convene a hearing on June 10, 2005, to consider
the Trustee's request. By application of Rule 9006-2 of the Local
Rules of Bankruptcy Practice and Procedures of the United States
Bankruptcy Court for the District of Delaware, the removal period
is automatically extended through the conclusion of that hearing.
Headquartered in Miami, Florida, CycleLogic, Inc., has made the
transition from Internet media company to wireless software
provider. It offers Mobile Internet solutions that allow wireless
operators and their end users to take full advantage of the
Internet across multiple platforms. The Company filed for chapter
11 protection on December 23, 2003 (Bankr. Del. Case No.
03-13881). Joseph A. Malfitano, Esq., at Young, Conaway, Stargatt
& Taylor represent the Debtor in its restructuring efforts. When
the Company filed for protection from its creditors, it listed
assets of more than $100 million and debts of over $10 million.
D & K STORES: U.S. Trustee Appoints 3-Member Creditors Committee
----------------------------------------------------------------
The United States Trustee for Region 3 appointed three creditors
to serve on the Official Committee of Unsecured Creditors in
D & K Stores, Inc.'s chapter 11 case:
1. Branco Enterprises
Attn: Rusty Coleman, Chairperson
P.O. Box 280
1640 Highway 64 West
Asheboro, North Carolina 27205
Tel: 336-629-1090, Fax: 336-629-0396
2. J. Tepler & Company, Inc.
Attn: Michael Tepler
413 Park Avenue
Brooklyn, New York 11205
Tel: 718-694-9300, Fax: 718-694-0212
3. Briara Trading Corp.
Attn: Ned J. Kaplin
70 Portland Road
Conshohocken, Pennsylvania 19428
Tel: 610-834-0735, Fax: 866-268-4022
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 Eatontown, New Jersey, D & K Stores, Inc., filed
for chapter 11 protection on April 8, 2005 (Bankr. D.N.J. Case No.
05-21445). Timothy P. Neumann, Esq., at Broege, Neumann, Fischer
& Shaver, LLC, represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it
estimated assets and debts from $10 million to $50 million.
D & K STORES: Creditors Committee Taps Cozen O'Connor as Counsel
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey gave the
Official Committee of Unsecured Creditors of D & K Stores, Inc.,
permission to employ Cozen O'Connor as its counsel.
Cozen O'Connor will:
a) prepare applications, motions, pleadings, briefs memoranda
and other documents and reports for the Committee that are
required in the Debtor's chapter 11 cases;
b) represent the Committee in Bankruptcy Court hearings in its
dealings with the Debtor and other parties-in-interest, and
in negotiating, formulating and reviewing a plan of
reorganization;
c) represent the Committee in investigating potential causes of
action in the Debtor's chapter 11 case; and
d) perform all other legal services to the Committee that are
appropriate and necessary in the Debtor's chapter 11 case.
Arthur J. Abramowitz, Esq., a Member at Cozen O'Connor, is the
lead attorney for the Committee. Mr. Abramovitz charges $475 per
hour for his services.
Mr. Abramovitz reports Cozen O'Connor's professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Jerrold N. Poslusny, Jr. Junior Member $275
Debbie Reyes Paralegal $140
Cozen O'Connor assures the Court that it does not represent any
interest materially adverse to the Committee, the Debtor or its
estate.
Headquartered in Eatontown, New Jersey, D & K Stores, Inc., filed
for chapter 11 protection on April 8, 2005 (Bankr. D.N.J. Case No.
05-21445). Timothy P. Neumann, Esq., at Broege, Neumann, Fischer
& Shaver, LLC, represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it
estimated assets and debts from $10 million to $50 million.
DEEN PREFILLED: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Deen PreFilled Syringes, LLC
5 Homestead Road, Suite 1 & 2
Hillsborough, New Jersey 08844
Bankruptcy Case No.: 05-27101
Chapter 11 Petition Date: May 320, 2005
Court: District of New Jersey (Trenton)
Judge: Raymond T. Lyons Jr.
Debtor's Counsel: Barry W. Frost, Esq.
Teich Groh
691 State Highway 33
Trenton, New Jersey 08619-4407
Tel: (609) 890-1500
Estimated Assets: $1 to $50,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
DELPHI CORPORATION: Fitch Junks Trust Preferred Rating to CCC+
--------------------------------------------------------------
Fitch Ratings has taken the following actions regarding Delphi
Corporation's ratings:
--Indicative senior secured bank facility assigned 'BB-';
--Senior unsecured rating downgraded to 'B' from 'BB-';
--Trust preferred rating downgraded to 'CCC+' from 'B';
--Rating Watch Remains Negative.
Fitch's rating actions reflect:
(1) the pending $2.75 billion senior secured bank facility,
(2) the subordination of the unsecured and trust preferred
debtholders,
(3) declining General Motors' production volume, and the
resulting losses from Delphi's high fixed-cost structure,
(4) incremental raw material costs, and
(5) significant cash requirements arising from restructuring,
pension, and health care.
As a result, Fitch expects negative free cash flow to persist
through 2005 and 2006, resulting in significant balance sheet
deterioration. While Delphi management has stated that the
accounting investigation is largely completed and that the company
would be current with its SEC filings by June 30, Fitch maintains
a Negative Rating Watch until these issues have been officially
concluded. Offsetting these issues are Delphi's success at
garnering new business from customers other than GM and from non-
automotive markets and a two-tier wage and benefit labor
agreement, as well as the potential for the disposition of assets
from the Automotive Holdings Group.
Delphi is currently amending and upsize its existing $1.5 billion
five-year revolving credit facility, while providing collateral to
lenders. Security is expected to be provided in the form of all
of the domestic assets and 65% of the equity of the first tier of
the foreign subsidiaries. The company is also seeking to put in
place secured term loans to preserve its liquidity position and to
meet early 2007 debt maturities. The downgrades of the senior
unsecured and trust preferred securities reflect the subordination
to the new bank facilities and the size of the potential senior
secured debt load, indicating limited recovery prospects for
unsecured holders.
General Motors' market share has eroded nearly 200 basis points
year-to-date versus 27.3% market share in 2004. In addition,
sales of medium and large sport-utility-vehicles have declined in
excess of 20% year-to-date 2005 versus that of one year ago
period. While Delphi's average content per GM vehicle is
substantial, its content on GM's SUVs is modestly higher than the
GM average. Since GM has been aggressively attacking inventories
and since the new versions of these models are due to launch late
this year, Fitch believes that there may be additional downside
risk in GM's second-half SUV production volumes.
While the company's pension obligation represents a substantial
claim on cash flows over the near term, heavy mandated
contributions well in excess of benefits paid indicate that the
company should make progress in narrowing its underfunded
position. In addition, asset returns and/or interest rate
increases could help reduce the company's underfunded obligation
over the intermediate term. However, pension legislation
currently being considered could result in tighter funding
requirements, which would further impair the company's credit
position.
DIRECT INSITE: March 31 Balance Sheet Upside-Down by $2.7 Million
-----------------------------------------------------------------
Direct Insite Corp. (OTCBB:DIRI) reported its financial results
for the three months ended March 31, 2005. Revenue from
continuing operations was $2,080,000 compared to revenue from
continuing operations of $2,106,000 for the first three months of
2004. Recurring revenues from EIP&P services increased 16.1% to
$1,149,000 for the quarter ended March 31, 2005 compared to
$990,000 for the first quarter of 2004, while recurring revenues
from other non-EIP&P services decreased by $142,000. Revenues
from professional services declined slightly to $917,000 for the
first quarter 2005 compared to $960,000 for the same period in
2004.
Direct Insite reported a net loss of $285,000 for the three months
ended March 31, 2005, compared to net income of $142,000 in the
first quarter of 2004 including income from discontinued
operations of $204,000 in 2004.
Direct Insite CEO and Chairman of the Board James A. Cannavino
said, "During the quarter the Company's recurring revenues from
its Invoice-on-Line (IOL) family of EIP&P offerings that support
accounts receivable organizations continued to show strong growth.
Two additional corporations committed to become users of the IOL
service with deployments scheduled to cover both North America and
Europe. We now deliver on behalf of our customers our electronic
invoice presentment and payment service in twenty nine countries
around the world supporting fifteen local languages and
currencies."
The portfolio of the Company's offerings was significantly
expanded in the first quarter with the deployment of the Invoice
Approval and Payment service offering. IAP supports the accounts
payable organization within the large enterprise and complements
Invoices on Line service which supports the accounts receivable
organization. IAP accepts purchase orders from a Corporations
supply chain management system, proof of delivery or acceptance
data, and other such documentation and then provides the AP
department with a workflow that insures proper delivery, quantity
and price charged, and compliance with various contractual terms
and conditions. IAP also facilitates payment to the vendor and
provides monitoring and reporting that assists in assuring SOX
compliance. This new IAP service "went live" during the quarter
in support of a Global 1000 company.
About the Company
Headquartered in Bohemia, New York, Direct Insite Corp. employs a
staff of 55. The Company's IOL solution is deployed in North and
South America, Europe/Middle East/Africa and Asia/Pacific
geographic areas. For more information about Direct Insite Corp.
visit http://www.directinsite.com/
At Mar. 31, 2005, Direct Insite Corp.'s balance sheet showed a
$2,678,000 stockholders' deficit, compared to a $2,537,000 deficit
at Dec. 31, 2004.
FEDERAL-MOGUL: U.K. Admin. Wants Cross-Border Protocol Terminated
-----------------------------------------------------------------
Simon Freakley, James Gleave and the other partners at Kroll
Limited Corporate Advisory and Restructuring Group, as Joint
Administrators of Federal-Mogul Corporation's U.K. Debtors, advise
Judge Lyons of the U.S. Bankruptcy Court for the District of
Delaware that the High Court of Justice in London will hear their
application to terminate the Cross-Border Insolvency Protocol
dated October 1, 2001, entered among the Debtors and the
Administrators.
In a letter sent to the Bankruptcy Court, the Administrators tell
Judge Lyons that the application to terminate is necessary for
them to "begin an orderly realization of the U.K. Debtors'
businesses and assets." The termination, according to the
Administrators, will ensure that the U.K. Debtors' employees are
clear about who they are responsible to and prospective
purchasers are clear that the Administrators are -- under English
law -- in sole control of the process thereby facilitating smooth
and advantageous sales.
The Administrators are represented in the U.S. Debtors'
bankruptcy proceedings by James L. Garrity, Jr., Esq., at
Shearman & Sterling LLP, in New York.
According to Mr. Garrity, the Administrators and the Debtors
continue to explore the possibility of a consensual realization.
"After termination of the Protocol, the Administrators expect
that the U.K. Debtors' U.K. management will continue, for the
time being, to run the day-to-day operations as if the Protocol
had not been terminated subject, however, to the overall
supervision and control of the Administrators," Mr. Garrity says.
"We have been advised that the Debtors and the other Plan
Proponents have not agreed to a realization and have stated that
a realization is inconsistent with the laws of the United States
(absent approval of the U.S. Court by agreement or otherwise), on
the basis that Chapter 11 cases are pending for each of the U.K.
Debtors," Mr. Garrity adds.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's
largest automotive parts companies with worldwide revenue of
some $6 billion. The Company filed for chapter 11 protection on
October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J.
Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at
Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
US$10.15 billion in assets and $8.86 billion in liabilities. At
Dec. 31, 2004, Federal-Mogul's balance sheet showed a $1.925
billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's
balance sheet showed a $2.048 billion stockholders' deficit,
compared to a $1.926 billion deficit at Dec. 31, 2004.
(Federal-Mogul Bankruptcy News, Issue No. 79; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
FREEMAN FARMS: Case Summary & 30 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: Freeman Farms Trucking, LLC
106 Industrial Drive
Portland, Tennessee 37148
Bankruptcy Case No.: 05-06091
Debtor affiliate filing separate chapter 11 petition:
Entity Case No.
------ --------
Stephen Darrell Freeman 05-06089
Type of Business: The Debtor is a long-distance & general freight
trucking company.
Chapter 11 Petition Date: May 18, 2005
Court: Middle District of Tennessee (Nashville)
Judge: Marian F Harrison
Debtor's Counsel: Steven L. Lefkovitz, Esq.
Law Offices Lefkovitz & Lefkovitz
618 Church Street, Suite 410
Nashville, Tennessee 37219
Tel: (615) 256-8300
Fax: (615) 250-4926
Estimated Assets Estimated Debts
---------------- ---------------
Freeman Farms Trucking, LLC $100,000 to $1 Million to
$500,000 $10 Million
Stephen Darrell Freeman $1 to $50,000 $100,000 to
$500,000
A. Freeman Farms Trucking, LLC's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Paccar Financial Paccar Financial $557,915
P.O. Box 530491 -financed vehicles
Atlanta, GA 30353 2003 Kenworth
W900 Vin
#1XKWDB9X43J39
3286 MV
2003 Kenworth
W900 VIN
#1XKWDB9X03J70
7547 MV
2003 Kenworth
Financial Federal Financial Federal $493,981
P.O. Box 201490 -Financed Vehicles
Houston, TX 77216 2003 Kenworth W900 VIN
#1XKWDB9X63J39
3287 MV $
2003 Kenworth
W900 VIN
#1XKWDB9XXYJ85
5650 MV $
2003 KE
Farmers Bank Farmers Bank financed $455,000
P.O. Box 10 Vehicles:
Portland, TN 37148 2000 Utility
Rf3353 Trailer
VIN #Uyvs2531ym2932
03 MV $26,000
1987 Great Dane
RF 1861 VIN
#1GRAA9622HS17 7511 MV
Value of security:
$103,000
Wells Fargo Equip Fin. Wells Fargo $204,000
P.O. Box 1450 financed vehicles
Minneapolis, MN 55485 2004 Peterbilt
VIN #1x95db9x94d823
027 MV $ Owe: $
2004 Peterbilt
VIN #1xp5db9x54d822
974 MV $
Citi Capital Citi Capital financed $134,489
P.O. Box 6229 vehicle
Carol Stream, IL 60197 2005 Kenworth
W900 VIN
#1XKWDB9X55J09K91296
American Lease Plan $90,000
P.O. Box 506
Goodlettsville, TN 37070
IRS $89,513
801 Broadway MDP146
Nashville, TN 37203
Key Equipment $87,319
Navistar $84,346
First Ins Funding Group $17,086
P.O. Box 3306
Northbrook, IL 60065
Tennessee Titans Ticket $14,765
Office
One Titans Way
Nashville, TN 37239
USIS Commercial $11,543
P.O. Box 21228 Dept 130
Tulsa, OK 74121
Whayne Supply Co. $8,787
P.O. Box 35900
Louisville, KY 40232
Baydoun & Knight $8,094
424 Church Street #2650
Nashville, TN 37219
City Of Portland $7,560
100 South Russell
Portland, TN 37148
Sumner County Trustee $7,460
355 Belvedere Drive #107
Gallatin, TN 37066
Keystops $6,478
P.O. Box 402246
Atlanta, GA 30384
American Tire $5,365
P.O. Box 978
Murfreesboro, TN 37133
General Tire $5,039
P.O. Box 262
Gallatin, TN 37066
TN Dept Labor Workforce Env. $4,857
C/O TN Atty. Gen. Office
P.O. Box 20207
Nashville, TN 37202
B. Stephen Darrell Freeman's 10 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Farm Credit Services $81,000
(Address not provided)
Household Auto Finance $16,127
P.O. Box 4153k
Carol Stream, IL 60197
GE Money Bank $11,960
P.O. Box 105278
Atlanta, GA 30348
Ford Motor Credit Co. $7,000
P.O. Box 105697
Atlanta, GA 30348
Yamaha Credit $3,000
P.O. Box 703
Wood Dale, IL 60191
GMAC $2,757
Attn: Nat'l Bk. Dept.
P.O. Box 5500
Troy, MI 48007
Cherokee Resort $420
Stockhouse 3
450 Cherokee Dock Road
Lebanon, TN 37087
BP/AMOCO $162
P.O. Box 9014
Des Moines, IA 50368
Centennial Med Ctr. $25
C/O NCO Financial
P.O. Box 41421 Dept 51
Philadelphia, PA 19101
C&H Truck & Equipment $16
P.O. Box 369
Westmoreland, TN 37186
FUN-4-ALL: Gets Court Nod to Hire Gary R. Lampert as Accountant
---------------------------------------------------------------
Fun-4-All Corp.'s chapter 11 trustee, David R. Kittay, sought and
obtained U.S. Bankruptcy Court for the Southern District of New
York for authority to employ Gary R. Lampert and his associates as
accountant.
Gary R. Lampert and his associates will:
(a) reconcile all bank accounts;
(b) analyze transactions in cash receipts and cash
disbursements to determine estate income and deduction
items;
(c) determine tax attributes available to the estate including
net operating loss forward and other tax credits (where
available);
(d) calculate administration fees, commissions and allowances;
(e) prepare annual estate income tax returns, as required;
(f) communicate and correspond with taxing authorities, as
required;
(g) request expeditious audit of the Trustee's tax returns upon
closing of the estate, if necessary or desirable; and
(h) perform any other services as may be required by the
Trustee.
Mr. Lampert assures the Court that he and his associates:
(1) do not have any relationship with:
(i) the Debtor,
(ii) its creditors, or
(iii) other parties in interest, or
(iv) their respective attorneys, and
(2) represent no interests adverse to the estate within the
meaning of the Bankruptcy Code in the matters upon which
they are to be retained.
Gary R. Lampert charges $300 per hour for his services. His
associates and staff bill:
Staff Hourly Rate
----- -----------
Senior $185
Semi-Senior $165
Junior $ 95
Paraprofessional $ 65
Headquartered in New York, New York, Fun-4-All Corp.,
manufactures, sells and distributes toys under various licenses.
The Company filed for chapter 11 protection on June 8, 2004
(Bankr. S.D.N.Y. Case No. 04-13943). Steven H. Newman, Esq., at
Esanu Katsky Korins & Siger, LLP represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $4,554,659 in total assets and $9,856,993
in total debts.
GEORGIA-PACIFIC: Strong Finances Prompt S&P's Positive Outlook
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Georgia-
Pacific Corp. to positive from stable and affirmed all its ratings
on the company and its subsidiaries, including its 'BB+' corporate
credit rating.
"These rating actions reflect our expectation that GP's financial
profile will continue to gradually strengthen, primarily through
reduction of still relatively aggressive debt leverage," said
Standard & Poor's credit analyst Cynthia Werneth. "As a result,
the ratings could be raised to investment grade within the next
few years."
Atlanta, Georgia-based GP has large-scale manufacturing, broad
product diversity, and good cost and market positions in several
paper and wood products categories.
Having completed a number of significant divestures during the
past few years, GP has reshaped its business mix to concentrate on
its better-performing and more strategic segments, particularly
consumer products (principally paper towels, bathroom tissue, and
disposable tableware), packaging, and building products
manufacturing. GP's product diversity is a key strength.
GOLESH INC.: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Golesh, Inc.
dba Golesh Door & Trim, Inc.
2345 South Delaware Street
Denver, Colorado 80223
Bankruptcy Case No.: 05-22529
Type of Business: The Debtor is a family owned and operated
distributor of commercial and residential
doors, frames, hardware and trim. See
http://www.goleshdoor.com/
Chapter 11 Petition Date: May 23,2 005
Court: District of Colorado (Denver)
Judge: Michael E. Romero
Debtor's Counsel: Lee M. Kutner, Esq.
Kutner Miller, PC
303 East 17th Avenue, Suite 500
Denver, Colorado 80203
Tel: (303) 832-2400
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Amweld Building Products, Inc. $180,923
P.O. Box 73876-N
Cleveland, OH 44193
Boddington Lumber $95,393
P.O. Box 7590
Colorado Springs, Co 80933-7590
Lynden Door, Inc. $84,342
P.O. Box 528
Lynden, WA 98264
VT Industries $57,206
Precision Hardware, Inc. $51,957
Cal-Royal Products, Inc. $49,608
Woodtech Trading Co. $48,279
Galeana Wood Products $41,332
Sean Hackett Construction $38,349
Hugh Fleming $35,567
Yale Security Inc. $35,043
Medeco Security Locks $33,602
Karona, Inc. $31,762
American Express $30,000
Colorado Commercial Installations $25,701
Fleming $24,296
Hager Hinge Company $23,630
Allied Lumber Co. $21,860
Best Access Systems $21,038
Taylor Building Products $20,495
HARRAHS OPERATING: Offers $750 Million of 5-5/8% Senior Notes
-------------------------------------------------------------
Harrah's Operating Company, Inc. reported the pricing of a private
placement of $750 million of 5 5/8% senior notes due 2015.
The senior notes will be guaranteed by Harrah's Entertainment,
Inc. Net proceeds from the offering will be used to refinance and
extend maturity of outstanding indebtedness.
The securities to be offered have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any
other jurisdiction and may not be offered or sold in the United
States absent registration or an applicable exemption from the
registration requirements. This announcement shall not constitute
an offer to sell or the solicitation of an offer to buy any
security.
About the Company
Harrah's Operating Company, Inc., is a wholly owned subsidiary of
Harrah's Entertainment, Inc. Founded 67 years ago, Harrah's
Entertainment, Inc. (NYSE:HET), owns or manages through various
subsidiaries 25 casinos in the United States, primarily under the
Harrah's and Horseshoe brand names. Harrah's Entertainment is
focused on building loyalty and value with its target customers
through a unique combination of great service, excellent products,
unsurpassed distribution, operational excellence and technology
leadership. More information about Harrah's Entertainment is
available on the company's Web site, http://www.harrahs.com/
Standards & Poor's rated Harrah's Operating Company, Inc.'s 7-7/8%
Notes due December 15, 2005 at B+.
HECLA MINING: S&P Withdraws B- Rating at Company's Request
----------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'B-' corporate
credit rating on Hecla Mining Co. at the company's request.
INSURANCE AUTO: Shareholder Demands $50 per Share from Kelso
------------------------------------------------------------
Geoffrey J. Bailey of San Diego, Calif., owns 3,000 shares of
common stock in Insurance Auto Auctions, Inc. He opposes the
company's merger proposal with Kelso and Company, L.P. He says
Kelso's offer delivers less than 60% of the intrinsic value of his
(and other shareholders') securities.
"I am a happy shareholder, but I could be happier," Mr. Bailey
tells the company in a written demand for payment asserting his
right to dissent from the merger transaction in accordance with
section 11.70 of the Illinois Business Corporation Act. His
written demand to the company is the first step in an appraisal
process that may need to be resolved by the courts.
Kelso has offered $28.25 in cash for each common share in IAAI
under the terms of an Agreement and Plan of Merger dated as of
Feb. 22, 2005. IAAI shareholders will meet tomorrow, May 25,
2005, at 10.30 a.m., at the company's headquarters in Westchester,
Illinois, to vote on the merger proposal.
Mr. Bailey won't be voting in favor of the merger transaction.
Rather, he'll be challenging the assumptions underlying a fairness
opinion rendered by William Blair & Company, L.L.C., for which
IAAI will pay $7.4 million.
"After thorough consideration, the proposed merger does not
provide fair value to IAAI shareholders," Mr. Bailey says,
claiming that the $28.25 per share offer underestimates the
intrinsic value of IAAI. "IAAI shares have an intrinsic value of
at least $50 per share," Mr. Bailey contends.
Mr. Bailey focuses on IAAI's actual and projected earnings before
interest and taxes:
Year EBIT
---- ----
2004 (Actual) $20,909,000
2005 (Projected) $39,600,000
2006 (Projected) $50,200,000
Multiplying the $50.2 million of projected 2006 EBIT by what he
believes is a conservative 13 EBIT multiple puts a $652.6 million
market capitalization on IAAI. Dividing that market cap by his
estimate of 13 million outstanding shares, results in Mr. Bailey's
expected price of $50.20 per share.
Mr. Bailey says that William Blair's comparable company analysis
is "substantially meaningless" because five of the six firms
operate in different industries. ADESA is also a vehicle
auctioneer, but it operates in the wholesale market and has a
floor plan financing unit. Pep Boys and CSK Auto are auto parts
retailers. LKQ Corporation is an auto parts recycler. Keystone
Automotive Industries is an auto replacement parts distributor.
Mr. Bailey contends that IAAI has only one publicly traded, direct
competitor: Copart. "Except for Copart, the five firms used in
William Blair's valuation comparison are not competitors to IAAI,"
Mr. Bailey says. "These firms have different returns on capital,
cash generating abilities and future growth opportunities.
Therefore, comparisons for valuation purposes are meaningless."
Mr. Bailey can be reached by telephone at (858) 361-4252. Mr.
Bailey has not disclosed the names of the lawyers and financial
advisors, if any, he's hired to help him fight for the additional
$65,850 he thinks he should receive on account of his IAAI shares.
* * *
As previously reported in the Troubled Company Reporter on March
29, 2005, Standard & Poor's Rating Services assigned its 'CCC+'
rating to $150 million of privately placed 11% senior notes due
2013 issued by IAAI Finance Corp. to fund the Kelso merger
transaction. In connection with the merger deal, Kelso also
received commitment letters from Bear, Stearns & Co. Inc. and
Deutsche Bank Securities, Inc., for $165 million of new senior
secured financing comprised of a $50 million Revolving Credit
facility and a $115 million Term Loan B facility. Kelso will
provide up to $148.7 million in equity financing for the merger.
Kelso & Company is represented by Lou R. Kling, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, in this merger transaction.
Herbert S. Wander, Esq., at Katten Muchin Zavis Rosenman, provides
legal counsel to IAAI.
Insurance Auto Auctions, Inc., founded in 1982, is the No. 2
automotive total loss and specialty salvage services in the United
States, providing insurance companies with cost-effective, turnkey
solutions to process and sell total-loss and recovered-theft
vehicles. The Company currently has 79 salvage auction facilities
in 32 states, serving 60 of the top 75 metropolitan markets.
JACUZZI BRANDS: Sells Eljer Plumbingware Division to Sun Capital
----------------------------------------------------------------
Jacuzzi Brands, Inc. (NYSE: JJZ) reported that it has entered into
an agreement to sell its Eljer Plumbingware business to an
affiliate of Sun Capital Partners, Inc. The transaction is
expected to close by the end of Jacuzzi Brand's fiscal 2005 third
quarter ending July 2, 2005. Terms of the sale were not
disclosed.
Eljer Plumbingware, part of the Company's consumer Bath division,
offers a line of ceramic, composite and iron sanitary ware
including bathtubs, toilets, bidets, sinks and faucets under the
Eljer(R) brand name. For the fiscal year ended October 2, 2004,
Eljer recorded an operating loss of $30.7 million on sales of
$150.5 million. For the first six months of fiscal 2005 ended
April 2, Eljer recorded an operating loss of $2.9 million on sales
of $69.2 million. Operating results for the year ended October 2,
2004 and the six months ended April 2, 2005 included restructuring
charges of $19.4 million and $1.9 million, respectively.
An affiliate of Sun Capital Partners, Inc. will assume
substantially all current assets and liabilities of Eljer, the
long term retiree medical liability and certain other liabilities,
and also take the Ford City, Pennsylvania and Tupelo, Mississippi
operations. Jacuzzi Brands will retain the Salem, Ohio
manufacturing facility property which was closed in fiscal 2004.
Jacuzzi Brands anticipates that it will incur pre-tax charges in
the second half of fiscal 2005 of approximately $65.0 million in
connection with this sale. The charges are primarily related to
non-cash asset write-offs, transition services and termination
expenses to be incurred.
David H. Clarke, Chairman and Chief Executive Officer of Jacuzzi
Brands, said, "We are pleased with this sale which has significant
benefits. Despite ongoing product rationalization efforts and
other initiatives, Eljer has continued to incur losses and consume
a significant amount of management's time. This sale, together
with the sale of Rexair announced earlier this month, will enable
us to devote all our energies on maximizing the value of our
Jacuzzi and Zurn operations."
Bud Terry, Managing Director of Sun Capital, said, "We are excited
about the investment in Eljer as it has significant brand
recognition, franchise value, dedicated employees and very strong
and loyal customer base. We continue to invest in branded
consumer products companies that have a strong market presence.
We intend to operate Eljer as a stand-alone portfolio company and
maintain the corporate presence in Dallas, Texas."
About Sun Capital Partners, Inc.
Sun Capital Partners, Inc. is a leading private investment firm
focused on leveraged buyouts and investments in market leading
companies that can benefit from its in-house operating
professionals and experience. Sun Capital affiliates invest in
companies with long-term competitive advantages and significant
barriers to entry. Sun Capital affiliates have invested in more
than 80 companies since Sun Capital's inception in 1995 with
combined sales in excess of $20.0 billion. Sun Capital has
offices in Boca Raton, Florida, Los Angeles, New York and London,
but has acquired and manages companies worldwide. Recent
acquisitions have included consumer product companies such as St.
Louis Music, Bachrach, Crane Plumbing, and Creekstone Farms. For
more information about Sun Capital, please visit
http://www.suncappart.com/
About Jacuzzi Brands, Inc.
Jacuzzi Brands, Inc., through its subsidiaries, is a global
manufacturer and distributor of branded bath and plumbing products
for the residential, commercial and institutional markets. These
include whirlpool baths, spas, showers, sanitary ware and
bathtubs, as well as professional grade drainage, water control,
commercial faucets and other plumbing products. The Company also
manufactures premium vacuum cleaner systems. The Company's
products are marketed under our portfolio of brand names,
including JACUZZI(R), SUNDANCE(R), ELJER(R), ZURN(R), ASTRACAST(R)
and RAINBOW(R). Learn more at http://www.jacuzzibrands.com/
* * *
As reported in the Troubled Company Reporter on May 18, 2005,
Fitch Ratings placed Jacuzzi Brands, Inc. on Rating Watch
Evolving after its announced sale of Rexair and the hiring of
Lazard Freres & Co. to assist it in a strategic review of
operations to potentially create greater value for shareholders.
Fitch currently rates Jacuzzi's $380 million 9.625% senior secured
notes 'B', the $200 million asset-based bank credit facility 'BB',
and the $65 million term loan 'BB-'.
On May 9, 2005, Jacuzzi announced that it entered into an
agreement to sell Rexair, Inc., to Rhone Capital LLC in a
transaction valued at $170 million. The transaction, which is
subject to certain closing conditions, is expected to be completed
by the end of JJZ's fiscal 2005 third quarter ending July 2, 2005.
An after tax gain of approximately $24 million, net of debt
retirement costs, will be recorded. Capital loss carryforwards
will be used to offset the gain on the sale for tax purposes.
The company expects net cash proceeds of approximately $145
million after investing $15 million back into Rexair, which will
represent 30% of the equity of the new company, and paying roughly
$10 million in fees, expenses, and escrow requirements. Part of
the proceeds will be used to pay off the outstanding balances
under the revolving credit facility and to repay the term loan,
which will result in the withdrawal of the term loan rating.
These borrowings totaled approximately $86 million at March 31,
2005.
While debt balances will be reduced, sales, earnings, and cash
flow from Rexair will be lost. Over the past three years, EBITDA
at roughly $30 million for Rexair has been steady with minimal
change expected in the foreseeable future. Excluding Rexair's
EBITDA contribution from fiscal 2004 consolidated results and
repaying the asset-based credit facility ($2.5 million), term loan
($61.8 million), and current maturities ($3.9 million) that
existed at fiscal year-end 2004 would have produced a total debt
to EBITDA ratio of 3.5 times. This compares to the actual total
debt/EBITDA of 3.2x. The capitalization of the new Rexair is
expected to contain a significant amount of debt, the servicing of
which will limit any income derived from Jacuzzi's equity position
in the near term.
On its second-quarter earnings call on May 10, 2005, Jacuzzi's
management indicated that its size, competitive position, cost
structure, negative arbitrage resulting from cash to be received
from the sale of Rexair that cannot be applied to reduce debt, and
cash utilization will all be part of the strategic review.
Implications from this announcement are varied and include the
potential for further asset sales, acquisitions that could broaden
the operations of the remaining bath and plumbing segments, stock
repurchases, reinstitution of the dividend, and debt repurchases.
These actions could have rating implications.
Currently, Jacuzzi is focused on reducing leverage and
strengthening its operating segments, bath products, and plumbing
products through brand investment, elimination of high cost
manufacturing and unprofitable product lines, and other cost-
cutting efforts. Revenues have benefited from increased
distribution of bath products, market share gains in plumbing
products, and price increases. For the six months ended March 31,
2005, sales grew 2.2% and operating income improved 6.9%, driven
by gains in the Plumbing Products segment. Both Bath Products and
Rexair experienced modest declines in revenues and operating
income. Operating income was negatively affected by increased
marketing and advertising expenses associated with the global
branding program, new product development costs, increased raw
material and freight costs, and higher corporate expenses.
For the 12 months ended March 31, 2005, leverage, measured by
total debt to EBITDA was 3.3x, and EBITDA coverage of interest was
3.0x. Cash used in operating activities was $28.6 million in the
first half of 2005, largely reflecting a $34 million rise in
inventory levels. This reflects weakness in U.K. sales of bath
products and reduced orders from retailers, as well as softness in
the domestic spa business and remodeling segment of the U.S. bath
business. Inventory is expected to decline as JJZ enters its peak
selling season and orders return to more normal levels.
Barring any material transaction resulting from the strategic
review, debt levels are anticipated to be around $400 million at
fiscal year-end 2005 as proceeds from Rexair will have been used
to repay bank borrowings. Cash balances may be high compared to
historical levels if excess cash proceeds remain from the sale of
Rexair and inventory levels are worked down.
JOSE ALBERTO: Case Summary & 6 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Jose Alberto Arce Lopez
dba JA Truck & Service
dba Cantera Arce
dba Agregados & Contractors
Box Cantero 190
Manati, Puerto Rico 00674
Bankruptcy Case No.: 05-04668
Chapter 11 Petition Date: May 20, 2005
Court: District of Puerto Rico (Old San Juan)
Debtor's Counsel: Jaime Rodriguez Rodriguez, Esq.
Rodriguez & Asociados
P.O. Box 2477
Vega Baja, Puerto Rico 00694
Tel: (787) 858-5324
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 6 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
G.E. Capital Corporation Various equipment $1,931,969
P.O. Box 70256
San Juan, PR 00936
Banco Popular De PR Personal loan $55,103
P.O. Box 366818
San Juan, PR 00936
Dept. De Hacienda Income tax retention $1
Negociado De Recaudaciones
P.O. Box 9022501
San Juan, PR 00902
Dept. De Hacienda Income tax retention $1
Negociado De Recaudaciones
P.O. Box 9022501
San Juan, PR 00902
Internal Revenue Service Social security $1
(personal)
Internal Revenue Service Social security $1
retention
KINSTON HOUSING: Declining Debt Coverage Cues S&P to Cut Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on Kinston
Housing Authority (Kinston Towers Project), N.C.'s $3.1 million
series 1994A bonds to 'BB' from 'BBB' due to declining debt
service coverage over the past several years. The outlook is
stable.
The latest audited financial results for the year ended Dec. 31,
2004, indicate a marginal improvement in the performance of the
property reflected in debt service coverage of 0.95x, up from
0.84x in 2003. The owner has been able to lower certain expenses,
however, revenues have also declined. On the revenue side net
rent declined marginally. The property has not received any
rental increase recently because contract rents are above fair
market rents, with the last rental increase received in fiscal
2002. Expenses decreased to $3,837 per unit per year in 2004,
down from $4,213 in fiscal 2003 primarily due to a 19% decline in
maintenance and repair expenses and a 14% decline in utility
expenses. Debt per unit was $21,318 as of April 22, 2005. Current
occupancy is 95% according to the project manager report dated
Jan. 31, 2005.
LACLEDE STEEL: Judge Schermer Confirms Chap. 11 Liquidating Plan
----------------------------------------------------------------
The Honorable Barry S. Schermer of the U.S. Bankruptcy Court for
the Eastern District of Missouri approved the First Amended
Liquidating Plan of Reorganization filed by Laclede Steel Company
and its Official Committee of Unsecured Creditors on Jan. 31,
2005.
Judge Schermer determined that the Plan satisfies the 13 standards
for confirmation stated in 11 U.S.C. Section 1129(a).
Terms of the Plan
The Plan proposes that after confirmation, the Debtor's assets
which have not previously been liquidated will be transferred to
and administered by the Plan Committee consisting of the members
of the Official Committee of Unsecured Creditors. The Plan
Committee will complete the liquidation and will administer all
Distributions to be made under the Plan. The Plan Committee will
also file objections to Claims.
The Official Unsecured Creditors Committee is currently comprised
of:
* Terry L. Freeman of Metals USA, Inc.;
* Mike Horn of Ameren UE;
* David R. Jury of the United Steelworkers of America;
* Daniel Brennen of PSC Metals, Inc.;
* David J. Krozier of Sharon Tube Company; and
* Joseph Kerola of P.I.I. Motor Express, Inc.
Mr. Freeman chairs the Committee. Under Section 5.1 of the Plan,
the Plan Committee may add members or remove members in its
reasonable discretion.
Unless the Plan Committee otherwise elects, it will continue to be
represented by Steven Goldstein, Esq., and the law firm of
Goldstein & Pressman, P.C., which currently serves as counsel to
the Official Committee of Unsecured Creditors.
From and after the Effective Date of the Plan, the Debtor will
remain in existence only to the extent necessary to allow the Plan
Committee to liquidate the Debtor's remaining estate, make
Distributions under the Plan, and wind up the Debtor's affairs.
Upon confirmation of the Plan, all of the Debtor's outstanding
stock will be cancelled. The Debtor will be dissolved.
Creditor Recoveries & Treatment of Claims
Holders of general unsecured claims will receive a pro rata share
of what's left of the Debtor's estate after:
* administrative claims,
* secured claims, and
* unsecured priority claims
are paid in full.
Holders of equity interests will not receive anything.
One of only three full-line producers of continuous-weld pipe in
the United States at the time, Laclede Steel Company sought
chapter 11 protection for a second time on July 27, 2001 (Bankr.
E.D. Mo. Case No. 01-48321). The company disclosed more and
$100 million in assets and liabilities at the time of the filing.
Over the past three and half years, the Company has closed its
facilities, conducted going concern sales and liquidated most of
its real property and other assets for the benefit of its
creditors.
LOEWEN GROUP: Liquidating Trust Files First Quarter Status Report
-----------------------------------------------------------------
Wells Fargo Bank Minnesota, N.A., Trustee of the Loewen Creditor
Liquidating Trust, successor-in-interest to The Loewen Group
International, Inc., delivered its Quarterly Status Report to the
Court covering the period from January 1, 2005, through March 31,
2005. Wells Fargo also serves as Transfer Agent and Registrar of
the Trust under a Trust Agreement.
NAFTA Litigation
On February 26, 2005, Raymond Loewen filed a Motion to Vacate and
Remand the Arbitration Award of the NAFTA Tribunal. On March 25,
2005, the United States Government opposed the Motion to Vacate.
Mr. Loewen filed his Reply on April 8, 2005.
As of April 30, 2005, the District Court Action is pending and a
final decision has not been rendered.
Distributions by the Trust
A summary of Trust Units distribution for the period from January
through March 2005 reflects:
Division Allowed Amount Holdings
-------- -------------- --------
02 $2,000.00 $2,000.00
08 0.00 0.00
11A 23,259,844.46 23,251,525.00
11B 90,439,594.03 89,324,919.00
11F 6,654,815.28 6,737,015.00
11G 7,582,779.21 7,582,769.00
11H 14,662,488.96 14,662,469.00
Totals Total Class 11: $141,560,697.00
Total Class 8: 0.00%
Cash Receipts and Disbursements
Cash receipts and disbursements for the period from January
through March 2005 are:
Principle Cash Income Cash
-------------- -----------
Balance carried forward 12/31 $4,896.24- $4,896.24
10/03 Interest on WF Govt MM Fund 77.23
SVC Class from 12/1/04-12/31/04
10/03 Purchased $77.23 of WF Govt MM 77.23-
Fund SVC Class 1/3/05
01/24 Sold $3,239.61 of WF Govt MM 3,239.61
Fund SVC Class 1/24/05
01/24 Cash Disbursement Paid To
Wells Fargo Fees Trustee Fee 850.00-
01/24 Cash Disbursement Paid To
Wells Fargo Fees Trustee Fee 2,389.61-
02/01 Interest on WF Govt MM Fund 83.57
SVC Class from 1/1/05-1/31/05
02/01 Purchased $83.57 of WF Govt MM 83.57-
Fund SVC Class 2/1/05
02/16 Paid to Bingham McCutchen LLP 6,308.61-
02/16 Sold $1,613.57 of WF Govt MM 1,613.57
Fund SVC Class 2/16/05
02/16 Sold $6,308.61 of WF Govt MM 6,308.61
Fund SVC Class 2/16/05
02/16 Cash Disbursement Paid To
Wells Fargo Fees Trustee Fee 1,613.57-
02/28 Sold $0.01 of WF Govt MM 0.01
Fund SVC Class 2/28/05
03/01 Interest on WF Govt MM Fund 73.69
SVC Class from 2/1/05-2/28/05
03/01 Purchased $73.7 of WF Govt MM 73.70-
Fund SVC Class 3/1/05
03/11 Sold $804.01 of WF Govt MM 804.01
Fund SVC Class 3/11/05
03/11 Cash Disbursement Paid To
Wells Fargo Fees Trustee Fee 804.01-
04/01 Interest on WF Govt MM Fund 79.39
SVC Class from 3/1/05-3/31/05
04/01 Purchased $79.39 of WF Govt MM 79.39-
Fund SVC Class 4/1/05
----------- -----------
04/06 Ending Balance -
Principal Portfolio $5,210.12-
04/06 Ending Balance -
Income Portfolio $5,210.12
04/06 Ending Balance -
Invested Income Portfolio $0.00
Last Month Last Statemt Last Tax
Current 03/31 03/31 Year
------- ---------- ------------ ----------
Prin Cash -5,210.12 -5,130.73 -5,130.73 -4,896.24
Income Cash 5,210.12 5,130.73 5,130.73 4,896.24
Inv Inc Cash 0.00 0.00 0.00 0.00
Total Cash 0.00 0.00 0.00 0.00
Prin Inv 43,036.19 42,956.80 42,956.80 54,688.11
Inv Inc Inv 0.00 0.00 0.00 0.00
Total Inv 43,036.19 42,956.80 42,956.80 54,688.11
Trustee's Fees and Expenses
The Trustee's fees and disbursements as Trustee, Transfer Agent
and Registrar for the period from January to March 2005 are:
Administration Fee $37.50 (0.75 hrs @ $250 & 1 hr @ $75)
1,521.66 1/31/05 Denison Invoice
702.00 (McGladrey & Pullen Invoice)
---------
$2,261.16
Registrar/Transfer 789.04 (640 holders x $5/365 x 90 days)
Fees 30.00 (Per Cert sent - 6 x $5)
0.00 (Transfers - 0 x $20)
---------
Total Expenses $819.04
Total to Trustee $3,080.20
Professional Fees and Expenses
From January through March 2005, Bingham McCutchen LLP's fees
reached $5,929, with $44 reimbursement for expenses, for a total
of $5,973. Young, Conaway, Stargatt & Taylor LLP's fees aggregate
$340.
Formerly The Loewen Group International Inc., Alderwoods Group is
North America's #2 funeral services company. Alderwoods Group
owns or operates about 750 funeral homes and some 170 cemeteries
in the US and Canada. The firm's funeral services include casket
sales, remains collection, death registration, embalming,
transportation, and the use of funeral home facilities. The
Debtors filed for chapter 11 protection in the United States and
CCAA protection in Canada on June 1, 1999 after the Debtors failed
to make debt payments after its aggressive acquisition phase.
Loewen became Alderwoods Group when it emerged from bankruptcy on
January 2, 2002. (Loewen Bankruptcy News, Issue No. 98;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
MAYTAG CORP: Ripplewood Holdings Sale Cues Fitch to Watch Ratings
-----------------------------------------------------------------
Fitch Ratings has placed Maytag Corporation's (MYG) senior
unsecured debt on Rating Watch Negative following the company's
announcement that it has entered into a definitive agreement to be
acquired by a private investor group led by Ripplewood Holdings
LLC. Fitch's current rating on the senior unsecured notes is
'BB'.
The aggregate transaction value, including assumption of roughly
$975 million of debt, is approximately $2.1 billion. The board of
directors of Maytag has approved the merger agreement and intends
to recommend to Maytag's shareholders that they adopt the
agreement. The transaction is expected to close prior to year's
end and is subject to Maytag shareholder approval, as well as
closing conditions, including the receipt of financing and
regulatory approval.
The Rating Watch primarily reflects the expectation that MYG's
leverage will increase considerably, uncertainty related to the
steps new owners will take to improve manufacturing efficiencies,
ongoing weakness from operations, and relentless competition. In
addition, the potential for a new credit agreement securing its
receivables and inventories is high, which would subordinate
existing bondholders.
MAYTAG CORP: Ripplewood Holdings Sale Prompts S&P to Watch Ratings
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB+' corporate
credit and senior unsecured debt ratings on home and commercial
appliance manufacturer Maytag Corp. on CreditWatch with negative
implications.
Newton, Iowa-based Maytag had about $970 million of debt
outstanding at April 2, 2005.
The CreditWatch placement follows Maytag's announcement that its
Board of Directors approved a definitive agreement to sell the
company to an investor group led by private equity firm Ripplewood
Holdings LLC, and is based on the likelihood that Maytag's
leverage will increase significantly after consummating the
transaction. The agreement calls for Maytag to be acquired for
$14 per share, plus the assumption of debt, which represents a
transaction value of $2.1 billion. The transaction, expected to
close prior to year-end, is subject to shareholder and regulatory
approval, as well as other closing conditions, including obtaining
requisite financing.
Maytag's operating and financial performance has significantly
weakened as a result of its:
(1) high-cost structure and burden absorption issues,
(2) soaring raw material and distribution costs, and
(3) limited pricing flexibility.
In addition, highly competitive industry conditions have pressured
the company's market share in its floor care and home appliance
businesses.
Standard & Poor's will monitor further development of the
transaction and evaluate the company's financing plans and
business prospects, including its ability to aggressively address
its still uncompetitive supply chain costs, in order to determine
where its future ratings will be in the speculative-grade
category.
MERRILL LYNCH: Fitch Holds Low-B Ratings on 2 Certificate Classes
-----------------------------------------------------------------
Fitch Ratings has taken the following rating actions on the
Merrill Lynch Mortgage Loans, Inc. mortgage pass-through
certificates listed below:
MLMI mortgage pass-through certificates, series 2002-A3
-- Classes I-A, II-A and III-A affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 upgraded to 'AAA' from 'AA';
-- Class B-1 upgraded to 'AA' from 'A';
-- Class B-2 upgraded to 'A' from 'BBB'.
MLMI mortgage pass-through certificates, series 2003-H
-- Classes A-1, A-2 and A-3 affirmed at 'AAA';
-- Class B-1 affirmed at 'AA+';
-- Class B-2 affirmed at 'A+' ;
-- Class B-3 affirmed at 'BBB+';
-- Class B-4 affirmed at 'BB+';
-- Class B-5 affirmed at 'B+'.
The upgrades reflect an increase in credit enhancement relative to
future loss expectations and represent approximately $6.6 million
of outstanding principal, while the affirmations affect around
$627 million.
The pools factors (current principal balance as a percentage of
original) range from approximately 10% to 79% outstanding.
The underlying collateral for series 2002-A3 consists of fully
amortizing 15 to 30-year adjustable-rate mortgage loans secured by
first liens on one- to four-family residential properties. Credit
enhancement for the upgraded classes has increased by more than 10
times original levels. The pool has not incurred any losses to
date.
The underlying collateral for series 2003-H consists of fully
amortizing 15- to 30-year adjustable-rate mortgage loans secured
by first liens on one to four-family residential properties. On
average the affirmed classes have experienced a rise in credit
enhancement of 35 basis points above the original levels. To date
no realized losses have occurred in the mortgage pool.
MIRANT CORP: $500M California Parties Settlement is Approved
------------------------------------------------------------
The Federal Energy Regulatory Commission accepted a settlement,
valued at nearly $500 million, in which Mirant Corp. settles with
California parties and Commission staff a wide range of issues
stemming from the 2000-2001 energy crisis in California and other
Western states. The global settlement resolves claims to refunds
for power sales Mirant made during the energy crisis, as well as
claims for damages. It also addresses pending proceedings
involving gaming and disgorgement of unjust profits, revocation
of market-based rate authority, generation withholding and long-
term contract disputes.
"This settlement will benefit customers and end the lingering
uncertainty in Western energy markets. Unfortunately, our work in
this regard is not yet finished, but we've accomplished a
respectable amount thus far, and both the markets and customers
will further benefit if other market participants opt in as
parties to this agreement," said Chairman Pat Wood, III.
The settlement marks the latest in a long history of actions the
Commission has taken both during and in response to the Western
energy crisis, including creation of the Office of Market
Oversight and Investigations, behavioral rules and adoption of
clear and unambiguous market rules.
Including in the action, the Commission has now accepted or helped
bring about more than $4.3 billion in monetary settlements
in the wake of the Western energy crisis. In the ongoing Enron
gaming proceeding, Commission trial staff have recommended that
the company be required to forfeit more than $1.6 billion. The
pending refund proceeding is expected to produce final refunds of
about $3 billion.
A timeline and summary of Commission actions in response to the
2000-2001 energy crisis and Enron is available at
http://tinyurl.com/7hcme
The settlement addresses Mirant's obligation in the refund
proceeding. The agreement requires Mirant to assign to the
California parties - the state of California, the State Attorney
General, the California Department of Water Resources, the State
Water Resources Department, the California Energy Oversight Board,
California Public Utilities Commission, Pacific Gas & Electric
Co., Southern California Edison Co., and San Diego Gas & Electric
Co. - approximately $283 million in receivables claimed by Mirant,
plus another $37 million associated with Mirant's sales in the
day-ahead market administered by the now-defunct Power Exchange.
The agreement also addresses any interest due on the assigned
funds.
The agreement further calls for Mirant to support the California
parties' unsecured claim of $175 million in the bankruptcy
proceeding involving Mirant Americas Energy Marketing Inc. A
bankruptcy judge will determine the ultimate value of that claim.
The agreement also provides an opportunity for other market
participants to join the settlement agreement as "Additional
Settling Participants." By opting into the settlement, a
participant will receive any refunds or offsets against amounts
owed in accordance with an allocation matrix specified in the
agreement. If participants do not opt into the agreement, they
may still pursue claims in the refund proceeding without benefit
of the agreement. By the same token, Mirant would be free to
litigate all issues with respect to non-settling parties.
A full-text copy of the FERC Order is available at no charge at:
http://www.ferc.gov/whats-new/comm-meet/041305/E-9.pdf
Court Also Approves Settlement
The Bankruptcy Court approves the California Settlement in its
entirety. Judge Lynn finds that the California Settlement
comprehensively resolves substantial claims that the Settling
Participants have asserted against the Mirant Parties and their
related parties on terms and conditions that are fair and
equitable to the Debtors, their creditors, and their estates.
Litigating the various disputes to conclusion would likely be
extraordinarily costly and would take a considerable amount of
time to resolve. Moreover, any resolution is uncertain, could
result in significantly higher liability than the consideration
provided by the Mirant Parties under the Settlement, and could
obstruct the Debtors' ability to reorganize.
The California Settlement, Judge Lynn notes, will allow the
Mirant parties to continue their present operations in California
free from the litigation costs related to the California energy
crises currently impacting their California operations. The
Settlement guarantees, through the Wraparound Agreements, that
the Mirant Parties will have predictable rates in connection with
those units of their California Plants that are elected annually
by the CAISO for RMR status for the near term.
The Court also rules that the $175 million Aggregate Allowed
Claim against MAEM is reasonable, especially considering the
recent Ninth Circuit Court of Appeals' ruling regarding the
FERC's ability to order refunds for periods other than the Refund
Period and other developments. Judge Lynn explains that if the
Refund Period is expanded, then the California Parties have
asserted that the Debtors could be liable for in excess of
$369 million of additional refund liability for sales made in the
PX and CAISO markets before the Refund Period, and more than
$1.2 billion in refunds for short-term electric energy sales to
CERS.
Judge Lynn holds that the California Settlement is not a sub rosa
plan. The Settlement does not dictate the structure or terms of
the Debtors' Plan of Reorganization. To the contrary, Judge Lynn
notes, the Settlement expressly provides that the Mirant Parties
retain all of their rights to negotiate and propose a
reorganization plan, so long as that plan incorporates the
Settlement. The Settlement also does not require the Settling
Participants' claims against MAEM and certain other Mirant
Parties to be paid in any specific manner or in any specific
"plan currency," Judge Lynn adds.
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)
MIRANT CORP: Court Allows RBS to Trade $31.9M of Americas' Debt
---------------------------------------------------------------
Judge Lynn of the U.S. Bankruptcy Court for the Northern District
of Texas lifts the trading restrictions pursuant to the Court's
August 2003 Screening Wall Order, and authorizes Royal Bank of
Scotland plc, New York Branch, to proceed to sell or trade the
Debtors' securities and bank debt.
As reported in the Troubled Company Reporter on May 19, 2005,
the Royal Bank of Scotland plc, New York Branch, holds over
$31.9 million in principal of Mirant Americas Generation, LLC,
unsecured debt. In January 2005, RBS withdrew as a member of the
Official Committee of Unsecured Creditors of MAGi. In February,
the Office of the U.S. Trustee reconstituted the MAGi Committee,
deleting RBS.
Unlike other MAGi Committee members, RBS is not routinely engaged
in the buying, selling or trading of bank debt of large
companies. Accordingly, RBS did not execute a screening wall
declaration pursuant to the Court's August 2003 Screening Wall
Order, which allows Committee members to trade in the Debtors'
securities or bank debt without violating their fiduciary duties
as Committee members.
In view of its resignation from the MAGi Committee, RBS asserted
that the Screening Wall Order should no longer be applicable to
its future trading activities. Out of abundance of caution, RBS
asked Judge Lynn to relax the trading restrictions provided under
the Screening Wall Order so it may proceed to sell or trade,
within its discretion, the Debtors' securities or bank debt,
without concern that it could arguably be in violation of the
Order.
Stephen A. Goodwin, Esq., at Carrington, Coleman, Sloman &
Blumenthal, LLP, in Dallas, Texas, assures U.S. Bankruptcy Court
for the Northern District of Texas that RBS, during its tenure as
MAGi Committee member, took no actions in contravention of the
Screening Wall Order.
Moreover, the Court directs RBS to:
(i) return any "Subject Material" physically in its
possession to the Chairperson of the Official Committee
of Unsecured Creditors for Mirant Americas Generation,
LLC; or
(ii) destroy any of the Subject Material within its control --
via electronic transmission or otherwise -- that cannot
be physically returned.
RBS is expected to maintain as confidential any material subject
to confidentiality under the Screening Wall Order it received
during its tenure on the MAGi Committee.
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. 62; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MIRANT CORP: Equity Comm. & Phoenix Wants Expert Reports Excluded
-----------------------------------------------------------------
The Official Committee of Equity Security Holders appointed in the
chapter 11 cases of Mirant Corporation and its debtor-affiliates,
Phoenix Partners, LP, Phoenix Partners II, LP, and Phaeton
International {BVI} Ltd. ask the U.S. Bankruptcy Court for the
Northern District of Texas to preclude the Debtors and the
Official Committee of Unsecured Creditors of Mirant Corporation
from introducing into evidence or otherwise or making any
reference to or testifying about, these supplemental expert
reports received by the Equity Committee and Phoenix on April 16,
2005:
(a) "Valuation Hearing Exhibits" of Timothy R. Coleman at
Blackstone Group, L.P.;
(b) Supplemental Report from Miller Buckfire Ying; and
(c) Supplemental Report from Richard D. Tabors at Charles
River Associates.
The Equity Committee and the Phoenix Entities argue that the
Supplement Expert Reports contain new and previously undisclosed
opinions and purported analyses:
A. Blackstone
(a) it appears, for the first time changed its forward
multiple valuation from 2005 to 2005 and 2006 without
explanation, without explaining the effects, and without
relevant backup data;
(b) "updated" claims estimates;
(c) decimated its NOL valuation based on a mysterious foreign
restructuring or Section 382(l)(6) election of which
the Equity Committee and the Phoenix Entities have no
knowledge -- without providing even the slightest
information necessary to test the "calculation";
(d) changed the most critical aspect of each comparable
company analysis, the EBITDA, without providing the backup
work papers and calculations and leaving the Equity
Committee and the Phoenix Entities to guess as to its
"methodology";
(e) revised its excess cash estimates as of the projected
effective date; and
(f) one month after the deadline for submission of Rebuttal
Reports, issued eight pages of what is titled "Rebuttal
Points."
B. Tabors/Charles River
(a) for the first time, provides testimony on his views
regarding the Debtors' capital structure and working
capital issues;
(b) presents brand-new analysis/criticism of Kenneth J. Slater
regarding the NE-ISO LICAP Proposal based on material
existing at a time that it could have been timely included
in a rebuttal report;
(c) presents a brand-new analysis of electricity price growth
based on historical information which has always been
available; and
(d) presents a brand-new analysis criticizing Mr. Slater's
market adder calculations using a long available
2003 NY-ISO report.
C. Miller Buckfire
(a) announces changes to fundamental components of its
valuation; and
(b) performs a brand new working capital analysis of
comparable companies, based on new calculations delivered
to the Equity Committee by the Debtors' William Holden on
April 7, 2005, which was less than 24 hours prior to his
deposition, and based on unsourced information relating to
NRG.
According to Mark C. Taylor, Esq., at Hohmann, Taube & Summers,
L.L.P., in Austin, Texas, the Supplemental Expert Reports reflect
new opinions or analyses that could have been provided in earlier
expert reports.
The Equity Committee and the Phoenix Entities received the
Supplemental Expert Reports on April 16, 2005, a month after the
deadline for submission of rebuttal expert reports on March 16,
2005. Mr. Taylor points out that the Supplemental Expert Reports
were clearly untimely rebuttal expert reports prepared by
financial and industry advisors for the Debtors and the Mirant
Corp. Committee.
Mr. Taylor argues that the April 16 delivery is the epitome of
unfair surprise -- the Debtors and the Mirant Corp. Committee are
attempting to submit further rebuttal reports that contain new
valuation methodologies, assumptions, and financial data, which
are brand-new attacks on the Equity Committee's and the Phoenix
Entities' positions at literally the last possible minute and
after having foreclosed any chance to take necessary discovery.
Without the benefit of having the Supplemental Expert Reports or
the analyses and information on which they are based before the
close of discovery, the Equity Committee and the Phoenix Entities
could not depose the authors about their new methodologies,
numbers, findings, and conclusions.
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. 61; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
OWENS CORNING: U.S. Trustee Amends Creditors' Comm. Membership
--------------------------------------------------------------
Kelly Beaudin Stapleton, the United States Trustee for Region 3,
informs the U.S. Bankruptcy Court for the District of Delaware
that six members of the Official Committee of Unsecured Creditors
in Owens Corning's Chapter 11 cases have resigned:
1. Barclays Bank PLC,
2. Fleet National Bank,
3. Metropolitan Life Insurance Co.,
4. Jackson National Life Insurance Co,
5. 3M Corp., and
6. Enron Energy Services Operations, Inc.
The U.S. Trustee has appointed a new member to the Committee,
Wilmington Trust Company, as Indenture Trustee.
Pursuant to Section 1102(a)(1) of the Bankruptcy Code, the
U.S. Trustee amends the composition of the Unsecured Creditors
Committee. The four current committee members are:
1. Credit Suisse First Boston
Attn: Jan Kofol, Director
Eleven Madison Avenue
New York, NY 10010-3629
Phone: 212-325-9057
Fax: 212-325-0304
2. The Chase Manhattan Bank
Attn: Elizabeth Kelley
380 Madison Avenue
New York, NY 10017-2513
Phone: 212-622-4868
Fax: 212-622-4834
3. John Hancock Life Insurance Company
Attn: Valeda Britton, Esquire
200 Clarendon Street
Boston, MA 02117
Phone: 617-572-9214
Fax: 617-572-9268
4. Wilmington Trust Company
Indenture Trustee
Attn: Steven M. Cimalore, Vice President
Corporate Trust Department
1100 North Market Street
Wilmington, DE 19890
Phone: 302-636-6058
Fax: 302-651-8882
Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com/-- manufactures fiberglass
insulation, roofing materials, vinyl windows and siding, patio
doors, rain gutters and downspouts. The Company filed for chapter
11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom,
represents the Debtors in their restructuring efforts. At Sept.
30, 2004, the Company's balance sheet shows $7.5 billion in assets
and a $4.2 billion stockholders' deficit. The company reported
$132 million of net income in the nine-month period ending
Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 108;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
PLATINUM WARRANTY: Case Summary & 22 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Platinum Warranty Corporation
dba Warranty Wizard
200 Public Square, Suite 2900
Cleveland, Ohio 44114
Bankruptcy Case No.: 05-17227
Type of Business: The Debtor sells automobile warranties.
See http://www.warrantywizard.com/
Chapter 11 Petition Date: May 20, 2005
Court: Northern District of Ohio (Cleveland)
Judge: Arthur I. Harris
Debtor's Counsel: Joan Allyn Kodish, Esq.
Joan Allyn Kodish Co., LPA
1620 Superior Building
815 Superior Avenue, Northeast
Cleveland, Ohio 44114
Tel: (216) 566-0580
Total Assets: $948,576
Total Debts: $8,819,754
Debtor's 22 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
State of Ohio Alleged violations $750,000
615 West Superior Avenue, of OCSPA and MM
11th Floor
Cleveland, Ohio
Signet Financial Group Alleged breach of $250,000
4050 Allison Parkway, contract action
Suite A
Vacaville, CA
Smith, Bobby $200,000
[Address not provided]
Williams, Cristy $126,000
American Express $71,250
Noveshen, Eric $30,000
Auto Auction Shopper/ $20,000
Used Car News
State of Minnesota Potential registration $18,000
Violation
Perry, Roxanne $14,297
Williams, Homer $13,111
Moon, David $12,377
Villeneuve, Steve $12,319
Ayyad, Mustafa $12,165
Cardenas, Corine $11,365
Ponco, Bernaliza $11,131
Blankenship, Dee $10,888
Kessler, Todd $10,864
Sims Buick $10,449
Bailey, John K. $10,416
Wilson, Laqueta $10,339
Dover, Kenneth $10,000
State of Ohio Collections Sales and/or Unknown
Enforcement Section franchise taxes
QUIGLEY COMPANY: Has Until Aug. 8 to File Notices of Removal
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave Quigley Company Inc. an extension, through and including,
Aug. 8, 2005, to file notices of removal with respect to pre-
petition Civil Actions pursuant to 28 U.S.C. Section 1452 and
Rules 9006(b) and 9027 of the Federal Rules of Bankruptcy
Procedure.
The Debtor gave the Court four reasons in support of the
extension:
a) since the Petition Date, the Debtor has been focused on
important matters related to its bankruptcy proceedings,
including preparing the schedules of assets and liabilities
and statements of financial affairs, litigating contested
matters, and preparing for hearings before the Court;
b) since a plan of reorganization and related disclosure
statement was filed on March 4, 2005, the Debtor has been
involved in negotiations with the parties-in-interest,
including the Creditors Committee and the Future Demand
Holders' Representative in order to reach a consensus on the
terms of the Plan, the establishment of a trust under
Sections 105(a) and 524(g) of the Bankruptcy Code and the
procedures to govern distributions by the proposed trust;
c) the extension will assure that the Debtor does not forfeit
its valuable rights under Section 1452 of the Bankruptcy
Code; and
d) the rights of the Debtor's adversaries in the pre-petition
Civil Actions will not be prejudiced by the extension
because any party to a removed pre-petition Civil Action may
seek to have it remanded to the pertinent state court
pursuant to 28 U.S.C. Section 1452(b).
Headquartered in Manhattan, Quigley Company is a subsidiary of
Pfizer, Inc., which used to produce and market a broad range of
refractories and related products to customers in the iron, steel,
glass and other industries. The Company filed for chapter 11
protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to
resolve legacy asbestos-related liability. When the Debtor filed
for protection from its creditors, it listed $155,187,000 in total
assets and $141,933,000 in total debts. Michael L. Cook, Esq., at
Schulte Roth & Zabel LLP, represents the Company in its
restructuring efforts. Albert Togut, Esq., at Togut Segal & Segal
serves as the Futures Representative.
REGIONAL DIAGNOSTICS: Wants Howard Wershbale as Accountants
-----------------------------------------------------------
Regional Diagnostics, L.L.C., and its debtor-affiliates ask the
U.S. Bankruptcy Court for the Northern District of Ohio for
permission to employ Howard, Wershbale & Company, as their
accountants.
Howard Wershbale will provide:
a. consultative services relative to revenue recognition
project for radiology billing throughout the Debtors'
imaging centers in Ohio, Pennsylvania, Illinois and
Florida; and
b. general advice on business, accounting and tax matters,
at Debtors' request.
Grant M. Weimer, a senior principal at Howard Wershbale, discloses
rates of the professionals at his Firm:
Designation Hourly Rate
----------- -----------
Principals $200-$290
Managers $120-$190
Seniors $95-$115
Staff $80-$95
Howard Wershbale assures the Court that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Warrensville Heights, Ohio, Regional Diagnostics,
L.L.C. -- http://www.regionaldiagnostic.com/-- owns and operates
27 medical clinics located in Florida, Illinois, Indiana, Ohio and
Pennsylvania. The Company and its debtor-affiliates filed for
chapter 11 protection on April 20, 2005 (Bankr. N.D. Ohio Case No.
05-15262). Jeffrey Baddeley, Esq., at Baker & Hostetler LLP
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they estimated
assets of $10 million to $50 million and debts of $50 million to
$100 million.
SKILLED HEALTHCARE: S&P Junks Proposed $145 Million Sr. Sec. Loan
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' bank loan
rating and a recovery rating of '3' (indicating the expectation
for a meaningful recovery of principal [50%-80%] in the event of a
payment default) to Skilled Healthcare Group Inc.'s proposed
$225 million senior secured first-lien credit facility due in 2012
and $50 million revolving credit facility due in 2010.
In addition, a 'CCC+' debt rating and recovery rating of '5'
(indicating the expectation for a negligible recovery of principal
[0%-25%] in the event of a payment default) were assigned to the
company's proposed $145 million senior secured second-lien term
loan due in 2012. (These ratings are based on preliminary
documentation.)
The company will use the proceeds from the senior secured loans to
refinance existing debt and pay a $107 million dividend to its
owners.
At the same time, Standard & Poor's revised its outlook on Skilled
Healthcare to stable from positive. The 'B' corporate credit
rating on the company was affirmed. Pro forma for the bank loan
transaction, outstanding debt will be $376 million.
"The low speculative-grade ratings on nursing home operator
Skilled Healthcare Group Inc. reflect the risks associated with
the company's concentration in California and Texas, its exposure
to uncertain third-party reimbursement, and an aggressive
financial policy," said Standard & Poor's credit analyst David
Peknay. The company, previously known as Fountain View Inc.,
emerged from bankruptcy in August 2003.
Foothill Ranch, California-based Skilled Healthcare faces many
risks, even though its operating margins and payor mix are
superior to many of its peers' and it enjoys economies of scale
and strong local market positions in California and Texas.
Medicaid is the source of about 32% of the company's revenues;
consequently, the company is vulnerable to changes in the program
in its two major states.
Despite currently favorable prospects for reimbursement rates in
the near term, both Texas and California have a history of
financial difficulties that could resurface and adversely affect
the longer-term prognosis for the programs. While it appears that
reimbursement cuts by Medicare, which accounts for 46% of
revenues, may not occur in 2006, potential reductions in its rates
remain an ongoing concern over a longer-term horizon. As a
relatively small company in a limited number of markets, Skilled
Healthcare could also be hurt by weak trends in managed care in
its key areas. In addition, the company is more subject to
adverse shifts in local economic and political trends than a
larger, more diversified company would be.
SKIN NUVO INT'L: Wants Greg Murray as Chief Restructuring Officer
-----------------------------------------------------------------
Skin Nuvo International, LLC, and its debtor-affiliates ask the
U.S. Bankruptcy Court for the District of Nevada for permission to
employ Greg Murray of Camino Real Advisors, LLC, as their Chief
Restructuring Officer. The Debtors want to retain Mr. Murray
because of his certification as a fraud examiner and because of
his knowledge of the Debtors' operations and significant
experience managing businesses in financial distress.
As Chief Restructuring Officer, Mr. Murray is expected to:
a) perform the duties of Chief Restructuring Officer;
b) oversee and assist in maintaining the Debtors' books and
records, preparation of the monthly financial statements,
and compliance with the U.S. Trustee's reporting
requirements;
c) manage the Debtors' restructuring efforts, including, but
not limited to, acting as signatory on the Debtor's entire
accounts, directing other signatories with respect to
signing check and other expenditures of the Debtor's
monies, and providing oversight of the Debtor's Chief
Financial Officer;
d) provide reporting and testimony to the Court as may be
required;
e) oversee the Debtor's day-to-day business operations and
communications with potential lenders, suppliers,
employees and other parties in interest;
f) interface with regulatory authorities, community leaders,
and other organizations as necessary; and
e) represent the Debtors in their dealings with statutory
committees, their constituents and their professionals.
Mr. Murray will be paid $275 per hour for his services. This
compensation is separate from the fees tendered to Camino Real,
which functions as the Debtors' restructuring advisor.
To the best of the Debtor's knowledge, Mr. Murray is a
"disinterested person" as that phrase is defined in Section
101(14) of the U.S. bankruptcy code. His employment is necessary
and in the best interests of the Debtors and their estates.
Headquartered in Henderson, Nevada, Skin Nuvo International, LLC,
dba Nuvo International, LLC, and dba A&E Aesthetics, LLC --
http://www.nuvointernational.com/-- specializes in offering
progressive anti-aging treatments and top quality products and the
first medical cosmetic company to launch a chain of retail skin
care clinics in shopping malls throughout the United States.
Keith M. Aurzada, Esq., and Sarah Link Schultz, Esq., at Akin Gump
Strauss Hauer & Fled LLP represent the Debtors in their
restructuring efforts. The Company and its debtor-affiliates
filed for chapter 11 protection on March 7, 2005 (Bankr. D. Nev.
Case No. 05-50463). When the Debtors filed for protection from
their creditors, they estimated assets and debts of $10 million to
$50 million.
SOLECTRON CORP.: Completes Redemption of $500 Million Senior Notes
------------------------------------------------------------------
Solectron Corporation (NYSE:SLR) reported that it has completed
its previously announced redemption of all of its outstanding
9.625 percent senior notes due 2009. In accordance with the terms
of the indenture governing the notes, the outstanding aggregate
principal amount of $500 million was redeemed for a total of
approximately $557.4 million in cash, which includes the early
redemption premium and accrued interest.
"With our strong balance sheet, we're able to retire the most
expensive component of our debt," said Kiran Patel, executive vice
president and chief financial officer. "The benefits for
Solectron are many, including measurably reducing our interest
expense and eliminating capital restrictions, while maintaining
strong liquidity and business flexibility."
About the Company
Solectron Corporation -- http://www.solectron.com/-- provides a
full range of worldwide manufacturing and integrated supply chain
services to the world's premier high-tech electronics companies.
Solectron's offerings include new-product design and introduction
services, materials management, product manufacturing, and product
warranty and end-of-life support. The company is based in
Milpitas, California, and had sales from continuing operations of
$11.64 billion in fiscal 2004.
* * *
As reported in the Troubled Company Reporter on Jan. 13, 2005,
Fitch Ratings affirmed Solectron Corporation's debt ratings:
-- 'BB-' senior unsecured debt;
-- 'BB+' senior secured bank credit facility;
-- 'B' subordinated debt.
Fitch says the Rating Outlook is Stable. Approximately
$1.2 billion of debt is affected by Fitch's action.
SOLUTIA INC: Wants JP Morgan's Complaint Filed Under Seal
---------------------------------------------------------
As reported in the Troubled Company Reporter on May 23, 2005, JP
Morgan Chase Bank, National Association, as Indenture Trustee,
asked the U.S. Bankruptcy Court for the Southern District of New
York to allow it to file under seal its adversary complaint
against Solutia, Inc., pursuant to the terms of a confidentiality
stipulation. In the alternative, JP Morgan seeks the Court's
permission to publicly file its adversary complaint against the
Debtor.
Debtors Respond
The Debtors do not oppose the filing of JP Morgan Chase Bank,
N.A.'s adversary complaint without seal because the draft
adversary complaint provided to them does not disclose any
confidential information.
On April 12, 2004, Solutia, Inc., and JP Morgan entered into a
stipulation to protect the confidentiality of information that
the Debtors provided to JP Morgan. Subsequently, the Debtors'
financial advisor, Rothschild, Inc., and JP Morgan entered into a
separate stipulation in which they agreed that Rothschild will be
deemed a party to the Confidentiality Stipulation.
The Confidentiality Stipulation requires JP Morgan to obtain
written consent from the Debtors or a Court order before it seeks
to make public confidential information provided by the Debtors
or Rothschild. Richard M. Cieri, Esq., at Kirkland & Ellis, LLP,
in New York, points out that although JP Morgan's draft adversary
complaint alludes vaguely to some confidential information, the
Debtors believe that it does not disclose the substance of any
confidential information, nor does it attach any confidential
documents as exhibits.
The issues raised by JP Morgan's draft adversary complaint may
well require the disclosure of confidential information through
discovery should the complaint survive a motion to dismiss, Mr.
Cieir says. Given the Confidentiality Stipulation already in
place and the importance of the confidential information to the
Debtors, the Debtors expressly reserve their right to object to
JP Morgan's filing of any future pleadings or documents that
contain confidential information without a seal in the absence of
a Court order or prior written consent from Solutia.
The Debtors believe that, should the Trustee file the adversary
complaint and the complaint survives to the discovery stage, the
appropriate course will be for the parties to agree on an
appropriate protective order to address the use and disclosure of
information. Section 107 of the Bankruptcy Code and Rule 9018 of
the Federal Rules of Bankruptcy Procedure expressly authorize the
Court to issue a protective order to maintain the confidentiality
of certain types of information.
However, given the meritless nature of JP Morgan's draft
complaint, Mr. Cieri states that entry of a protective order at
this time is premature.
According to Mr. Cieri, JP Morgan's allegations are legally and
factually baseless. In October 1997, Solutia and JP Morgan's
predecessor entered into an indenture under which the Debtors
issued two series of unsecured public debentures:
(1) $150 million in 6.72% notes due October 15, 2037; and
(2) $300 million in 7.375% notes due October 15, 2027.
"The complaint is simply an attempt by JP Morgan, on behalf of
the purchasers of the Debentures, to achieve secured status
despite the express terms of the indentures. The complaint fails
to state any case of action or to allege any conduct that would
entitle [JP Morgan] to the extraordinary relief it seeks or to
justify its efforts to disadvantage all other creditors," Mr.
Cieri asserts.
The Debtors clarify that they do not oppose JP Morgan's filing of
the adversary complaint without a seal, provided that:
(a) future filings with respect to the adversary proceeding
will not disclose confidential information;
(b) JP Morgan agrees to continue to be bound, both in the
context of the adversary proceeding and otherwise, by the
terms of the Confidentiality Stipulation;
(c) the Debtors reserve all of their rights to address and
respond to the allegations in the adversary complaint.
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. Solutia is represented by
Richard M. Cieri, Esq., at Kirkland & Ellis. (Solutia Bankruptcy
News, Issue No. 39; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SOLUTIA INC: Gets Court Nod to Implement 2005 Incentive Program
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorizes Solutia, Inc., and its debtor-affiliates to implement
their 2005 Incentive Program.
Historically, Solutia Inc. implemented annual incentive plans
designed to retain, motivate and reward employees. The annual
incentive plans are "pay-for-performance" programs as employees
are only paid a bonus if they meet certain performance metrics.
The performance metrics for any given year are determined in
connection with Solutia's business goals for that year. At the
outset of the Debtors' Chapter 11 cases, two of Solutia's primary
business goals were to stabilize its business operations and
implement significant cost cutting measures. As a result, the
performance metrics utilized in the Debtors' employee incentive
program for 2004 were designed to encourage employees to achieve
cost reductions and increase liquidity. During 2004, Solutia was
able to achieve those goals.
For 2005, one of Solutia's primary goals is to grow its
businesses. Accordingly, Solutia seeks the Court's authority to
implement a 2005 annual incentive plan designed to motivate
employees to engage in initiatives and activities that will
achieve its goals. The Official Committee of Unsecured Creditors
and Monsanto Company support the 2005 Incentive Program.
Need for the 2005 Incentive Program
Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York,
relates that in developing the 2005 Incentive Program, the
Debtors engaged in an extensive and thoughtful process to insure
that their employees were motivated to achieve their business
goals:
* At the beginning of 2005, Solutia's senior management team
established financial metric thresholds based on the 2005
budget for its nylon business, performance products
business, and business support services;
* The financial metric thresholds were submitted for review,
comment and approval to Solutia's Executive Compensation
and Development Committee of its Board of Directors;
* After the terms of the 2005 Incentive Program were approved
by the Executive Committee, Solutia presented the Program to
the Creditors Committee and Monsanto for their review,
comment and support;
* At the review conclusion, the Creditors Committee and
Monsanto requested certain modifications to the Program.
After careful consideration and arm's-length negotiations,
Solutia modified the Program to address the concerns.
The key terms of the 2005 Incentive Program include:
(a) The amount of the incentive pools for Nylon and
Performance Products will be determined based on the
achievement of specific business objectives for their
business units.
(b) Consistent with the 2004 Incentive Program, there will not
be a threshold level of corporate performance that must be
met for the incentive program to pay out bonuses to
employees in the Performance Product and Nylon units.
(c) The amount of the incentive pool for Core will be
determined by Solutia's overall enterprise performance.
(d) The financial metric thresholds that will determine the
amount of the incentive pools for Core, Performance
Products and Nylon are:
Unit Measure Weight
---- ------- ------
Core EBITDAR 75%
Performance EBITDA 60%
Products
Nylon EBITDA 55%
Unit Measure Weight
---- ------- ------
Core Free Cash Flow 25%
Performance Free Cash Flow 5%
Products
Nylon Free Cash Flow 22.5%
Unit Measure Weight
---- ------- ------
Performance New Revenue 35%
Products
Nylon Cost Reduction 22.5%
(e) At the end of 2005, Solutia will renew the financial
metric thresholds and determine the amount of the
incentive pools that need to be established.
Solutia will follow this process in making awards to eligible
employees:
(a) Solutia will determine the amount of the incentive pools
and, thereafter, Solutia will fund the incentive pools;
(b) The funds in the incentive pools will be allocated to
individuals based on the performance of their business
units and recommendations by their managers based on their
individual performance:
Performance
Organizational Level Unit Individual
-------------------- ---- ----------
Executive Leadership and 75% 25%
their Direct Reports
Other participants 50% 50%
(c) The recommendations of managers based on individual
performance will be reviewed and approved by senior
management; and
(d) The Executive Committee will give final approval for all
recommendations.
Solutia projects that the total cost of the 2005 Incentive
Program will be $25 million if the entire program is paid at
target levels. Solutia will award its employees as soon as
practicable after it closes its accounts for fiscal year 2005.
In no event will the amounts be paid later than 2-1/2 months
after the end of the 2005 calendar year.
Employment Modifications
The Debtors also seek the Court's permission to enter into
modifications to their employment agreements with Rosemary L.
Klein, Robert T. DeBolt, Jeffry N. Quinn and James M. Sullivan.
(1) Rosemary Klien
In November 2004, Solutia promoted Rosemary L. Klien from the
Vice-President and Co-General Counsel position to Senior
Vice-President and General Counsel based on her expertise and
leadership abilities. As a result, Ms. Klein's management
and oversight responsibilities are increasing dramatically.
Solutia proposes to modify the terms of Ms. Klein's
employment to provide for:
-- an increase in base salary from $190,000 to $250,000;
-- an increase in annual target bonus from 40% to 75%;
-- an emergence bonus of $500,000; and
-- a severance payment in the event she is terminated other
than for cause or resigns for good reason, equal to one
times her base salary.
(2) Robert DeBolt
In November 2004, Solutia promoted Robert T. DeBolt to the
position of President of Strategy based on his expertise and
excellent performance as Nylon's Director of Finance and
Supply Chain. The promotion increased Mr. DeBolt's
responsibilities within Solutia. Solutia offered Mr. DeBolt
an enhanced severance package, increasing the potential
severance pay from 33 weeks to 52 weeks. Mr. DeBolt will be
entitled to the severance pay only in the event that he is
terminated other than for cause or resigns for good reason.
(3) Jeffry Quinn
At this juncture in the Debtors' reorganization cases,
leadership is critical to grow Solutia's businesses and
develop the parameters for a plan of reorganization. The
Debtors decided to ensure the retention of their senior
leadership by modifying the employment agreements of
Jeffry N. Quinn, Solutia's President and CEO.
Mr. Quinn's employment agreement will be modified to increase
his severance payment from 1.25 times his base salary to two
times his base salary. Mr. Quinn will be entitled to receive
his severance payment if he is terminated prior to or after
Solutia emerges from bankruptcy, provided that the payment
will be reduced by any amounts paid to him on account of his
"emergence bonus."
(4) James Sullivan
The Debtors also want to ensure the retention of James M.
Sullivan, Solutia's Senior Vice President and Chief Financial
Officer. Mr. Sullivan's employment agreement will be
modified to increase his base salary from $275,000 to
$325,000 and his severance payment from 1.25 times his base
salary to 2 times his base salary. Mr. Sullivan will be
entitled to receive his severance payment if he is terminated
prior to or after Solutia emerges from bankruptcy, provided
that the payment will be reduced by any amounts paid to him
on account of his "emergence bonus."
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. Solutia is represented by
Richard M. Cieri, Esq., at Kirkland & Ellis. (Solutia Bankruptcy
News, Issue No. 38; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SOLUTIA INC: Triage Capital Discloses 5.8% Equity Stake
-------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission, Triage Capital LF Group LLC disclosed that it
indirectly beneficially owns 6,067,635 shares of Solutia, Inc.,
common stock, which is 5.8% of the total shares outstanding.
Triage Capital is a Delaware limited liability company that acts
as:
(i) a general partner of different funds and an investment
manager of a managed account; and
(ii) an investment manager of a Cayman Islands company.
In addition, Leonid Frenkel, as managing member of Triage
Capital, disclosed that he may be deemed to indirectly
beneficially own the 6,067,635 shares. Mr. Frenkel also
disclosed that he directly beneficially owns 55,000 shares of
Solutia common stock. Thus, Mr. Frenkel may be deemed to
beneficially own 6,122,635 shares of Solutia's common stock,
which represents 5.9% of the total shares outstanding.
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. Solutia is represented by
Richard M. Cieri, Esq., at Kirkland & Ellis. (Solutia Bankruptcy
News, Issue No. 37; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SOUTHAVEN POWER: Case Summary & 14 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Southaven Power, LLC
9405 Arrowpoint Boulevard
Charlotte, North Carolina 28273
Bankruptcy Case No.: 05-32141
Type of Business: The Debtor operates a power plant.
Chapter 11 Petition Date: May 20, 2005
Court: Western District of North Carolina (Charlotte)
Judge: George R. Hodges
Debtor's Counsel: Hillary Bridgers Crabtree, Esq.
Lou M. Agosto, Esq.
Moore & Van Allen, PLLC
100 North Tryon Street, Floor 47
Charlotte, North Carolina 28202-4003
Tel: (704) 331-3571
Fax: (704) 335-5968
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
Debtor's 14 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Erie Power Technologies, Inc. Trade debt $2,107,418
5300 Knowledge Parkway
Erie, PA 16510
Covington & Burling Professional fees $257,836
1330 Avenue of the Americas
New York, NY 10019
Energy Mississippi Inc. Trade debt $70,197
425 West Capitol Avenue
Little Rock, AR 72203
Energy and Environmental Trade debt $22,487
Engineering
McGuire Woods LLP Professional fees $19,443
General Electric $15,822
International, Inc.
Brunini, Grantham, Grower & Professional fees $5,848
Hewes, PLLC
Centro, Inc. Trade debt $1,632
Hughes Supply Trade debt $691
MSC Industrial Direct Trade debt $678
BFI Waste Trade debt $201
North MS Pest Control Trade debt $200
Federal Express Trade debt $143
Unifirst Corp. $138
STANDARD MOTOR: Weak Credit Measures Cue S&P to Junk Ratings
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Long Island City, New York-based Standard Motor Products
Inc. to 'B-' from 'B+'. At the same time, the subordinated debt
rating was lowered to 'CCC' from 'B-'. The ratings were taken off
CreditWatch, where they were placed with negative implications on
April 7, 2005. Standard Motor, an automotive aftermarket parts
manufacturer and distributor, had $261 million of total debt
outstanding at March 31, 2005. The outlook is negative.
"The downgrade reflects Standard Motor's weaker-than-expected
credit protection measures as of March 31, 2005," said Standard &
Poor's credit analyst Nancy C. Messer. "Lease-adjusted total debt
to EBITDA was about 10x and EBITDA interest coverage was about
1.7x. Material improvement in the ratios depends on synergies from
a 2003 acquisition that are taking longer to achieve than
expected."
Standard Motor remains very aggressively leveraged and is expected
to produce negative free cash flow in 2005, a result of its
acquisition of Dana Engine Management group for $130 million in
July 2003. Leverage increased because the transaction was
financed with a combination of equity and debt. The costs
incurred to restructure the unprofitable DEM have consumed cash
that could have been used for debt reduction. In addition,
Standard Motor's plan to extract significant savings from the
integration of DEM has fallen behind schedule.
The ratings also reflect Standard Motor's weak business position,
given the highly competitive character of the markets it serves,
its customer concentration, and the narrow focus of its product
lines. Sale of the company's products--which include ignition and
emission parts, onboard computers, battery cables, fuel system
parts, air conditioning compressors, and heater parts--depends on
the number of vehicles on the road rather than original equipment
manufacturers' production volumes.
Mitigating these factors is Standard Motor's leading market
positions in its two core business segments, which provide some
revenue diversity: The engine management products business (which
contributes about 66% of sales) typically offers more stable
revenues and higher profits than the temperature control business
(which contributes 34%).
SUITLAND EAST: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Suitland East 2002 Tenants Association, Inc.
3101 Nayloor Road, Southeast
Washington, DC 20020
Bankruptcy Case No.: 05-00808
Chapter 11 Petition Date: May 23, 2005
Court: District of Columbia (Washington, D.C.)
Debtor's Counsel: John J Brennan, III, Esq.
Jackson & Campbell, P.C.
1120 20th St., Northwest
Suite 300 South
Washington, DC 20036-3437
Tel: (202) 457-1600
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.
SUNSET VISTAS: Case Summary & 15 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Sunset Vistas, LLC
3027 East Sunset Road
Las Vegas, Nevada 89120
Bankruptcy Case No.: 05-14706
Chapter 11 Petition Date: May 19, 2005
Court: District of Nevada (Las Vegas)
Judge: Bruce A. Markell
Debtor's Counsel: Nancy L. Allf, Esq.
Parsons Behle & Latimer
415 South Sixth Street, Suite 200-A
Las Vegas, Nevada 89101
Tel: (702) 307-5001
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 15 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Stephen Gregory Payment of second $900,000
3027 East Sunset Road deed of trust to
Las Vegas, NV 89120 consolidated mortgage.
First Street Properties Loan $22,000
3027 East Sunset Road, #106
Las Vegas, NV 89120
777 Properties Appraisal costs, $16,500
3027 East Sunset Road, #106 insurance costs, &
Las Vegas, NV 89120 survey costs
ARS Management Loan $10,000
3027 East Sunset Road,
Suite 106
Las Vegas, NV 89120
Clark County Treasurer Property taxes $8,441
P.O. Box 551220
Las Vegas, NV 891551220
First Street Properties Loan (Alexander) $5,000
3027 East Sunset Road,
Suite 106
Las Vegas, NV 89120
Glenda Shaw Unpaid for landscape $600
1609 Bear Claw Terrace
Henderson, NV 89014
Nevada Power Company Power to property $132
P.O. Box 30086
Reno, NV 895203086
ARS Management Inc. Unknown
1609 Bearclaw Terrace
Jean, NV 89019
ARS Mangement, Inc. Unknown
C/O Glenda Shaw
3035 East Sunset Road
Las Vegas, NV 89120
Don Polednak, Esq. Unknown
7371 Prairie Falcon, #120
Las Vegas, NV 89128
Kent Larson Unknown
1935 Village Center Circle
Las Vegas, NV 89134
Laura Muccini and Unknown
Anthony Ross
C/O Michael Cristalli, Esq.
3960 Howard Hughes
Parkway #850
Las Vegas, NV 89109
Lawrence Semenza, Esq. Unknown
3027 East Sunset Road,
Suite 106
Las Vegas, NV 89120
Steve Gregory Unknown
C/O Mike Singer, Esq.
520 South Fourth, Second Floor
Las Vegas, NV 89101
TARCO PRINTING: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Tarco Printing, Inc.
1270 Ardmore
Itasca, Illinois 60143
Bankruptcy Case No.: 05-20358
Type of Business: The Debtor provides commercial offset printing
and book binding services.
Chapter 11 Petition Date: May 20, 2005
Court: Northern District of Illinois (Chicago)
Judge: Jacqueline P. Cox
Debtor's Counsel: Beverly A. Berneman, Esq.
Robert R. Benjamin, Esq.
Benjamin Berneman & Brom Ltd.
216 West Jackson Boulevard, Suite 330
Chicago, Illinois 60606
Tel: (312) 444-1996
Total Assets: $2,360,252
Total Debts: $5,263,461
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
American Express Finance, leasing, $13,283
c/o Becket & Lee medical, insurance
16 General Warren Blvd. and taxes
Malvern, PA 19355
Andrews Converting Utility maintenance, $58,171
707 East 47th Street repair & equipment
La Grange, IL 60525
Bloomindale Bank & Trust Promissory note $3,326,296
150 South Bloomindale Road and line of credit
Bloomingdale, IL 60108 Value of security:
$2,325,576
Bruce Paradise CPA Support services $20,200
1019 West Wise Road,
Suite 101
Schaumburg, IL 60193
Case Paper Materials suppliers $12,138
72458 Eagle Way
Chicago, IL 60678
Chicago Laminating, Inc. Support services $39,362
125 Weiler Road
Arlington Heights, IL 60005
FNT Transportation Services, Support services $19,316
Inc.
10 East Progress Road
Lombard, IL 60148
Gene Goodwille Co. Materials suppliers $17,474
1820 North 30th Avenue
Melrose Park, IL 60160
Gradei's Express Support services $16,004
2035 North 15th Avenue
Melrose Park, IL 60160
IRS 941's May, 2005 $48,478
Cincinnati, OH 45999
Metrostaff Support services $111,681
94 Mitchell Circle
Wheaton, IL 60187
Midland Paper Unlimited Materials suppliers $37,908
135 South LaSalle Street
Dept. 1140
Chicago, IL 60674
Murnane Paper Company Materials suppliers $136,873
135 South LaSalle Street
Dept. 2933
Chicago, IL 60674
Platnium Converting Support services $14,782
263 Richert Road
Wood Dale, IL 60191
Primesource an Enovation Co. Materials suppliers $82,084
850 Central Avenue
Hanover Park, IL 60133
Superior Printing Inc. Co. Support services $84,103
70 Bethune Street
New York, NY 10014
Unisource Paper Co. Materials suppliers $30,780
7472 Collection Center Drive
Chicago, IL 60693
WWF Paper Corp. Payments pursuant $227,056
c/o Abrams & Abrams, P.C. to stipulation for
75 East Wacker Drive, payment 03L4061
Suite 320
Chicago, IL 60601
WWF Paper Corp. Materials suppliers $212,056
c/o Abrams & Abrams, P.C.
75 E. Wacker Drive,
Suite 320
Chicago, IL 60601
XPEDX Materials suppliers $532,640
P.O. Box 0978
Dallas, TX 753120978
TECTONIC NETWORK: Recurring Losses Trigger Going Concern Doubt
--------------------------------------------------------------
Tectonic Network, Inc., (OTCBB: TNWK) formerly Return On
Investment Corporation, reported financial results for the third
fiscal quarter ended March 31, 2005.
Tectonic Network's revenues for the quarter ended March 31, 2005,
decreased by $401,048 or 67.6% to $192,227 compared to $593,275
for the quarter ended March 31, 2004. Net loss from continuing
operations for the quarter ended March 31, 2005 was $3,180,934
compared to $1,542,291 for the quarter ended March 31, 2004. Net
income for the quarter ended March 31, 2005, which included
proceeds from the sale of substantially all of the assets of the
Company's subsidiary, GO Software, Inc., amounted to $6,779,855
compared to a net loss for the quarter ended March 31, 2004 of
$1,649,433. The decrease in revenue for the three-month period is
primarily due to management and sales staff having concentrated
their attention on working with existing customers to address the
Company's change in strategy. This strategy is to no longer focus
on regional print directories but in response to a market demand
to move towards national directories and publications which cater
to particular segments of the building industry e.g., roofing,
building interiors and building openings. The net income for the
quarter is the result of gain on the sale of the assets of GO
Software on February 28, 2005 in the amount of $9,933,865.
Tectonic Network's revenues for the nine months ended March 31,
2005 increased by $265,264 or 39.9% to $929,726 compared to
$664,462 for the nine months ended March 31, 2004. Net loss from
continuing operations for the nine months ended March 31, 2005 was
$9,107,888 compared to $3,206,618 for the nine months ended March
31, 2004. The net income for the nine months ended March 31, 2005
amounted to $1,810,646 compared to a net loss for the nine months
ended March 31, 2004 of $3,077,671. The increase in revenues for
the nine month period is primarily due to an increase in
consulting fee revenue as a result of the work performed under new
consulting contracts signed by the Company. Net income for the
nine months primarily resulted from gain on the sale of the assets
of GO Software on February 28, 2005 in the amount of $9,933,865,
as well as income from the discontinued operations of GO Software
through the date of the sale in the amount of $984,669.
Tectonic's President and CEO, Arol Wolford, stated, "In the
current quarter, the Company completed a refinancing in the form
of a convertible $4 million Term Note and a $1.5 million
convertible revolver with a lender, completed the sale of the
assets of our GO Software subsidiary and also changed the name of
the Company to Tectonic Network, Inc. While revenues were much
lower than anticipated, due to a longer than expected sales cycle
and certain changes in our business, we have refocused our sales
efforts and product lines and have also begun taking actions to
reduce the expense base until greater revenues are generated".
Going Concern Doubt
On December 6, 2004, the Company and GO entered into an Asset
Purchase Agreement with VeriFone pursuant to which VeriFone
purchased substantially all of GO's assets on February 28, 2005.
This divestiture is part of the Company's new business strategy to
focus on its construction information product offerings.
Following the sale of GO, the Company also changed its name to
Tectonic Network, Inc. to more appropriately reflect its new
market focus.
The Company has incurred losses since its inception in August 2000
and has financed its operations principally through equity
investments and borrowings, as well as revenue from the GO
business, and more recently the proceeds from the sale of GO's
assets. As of March 31, 2005, the Company's accumulated deficit
was $15,262,825. Net losses and negative cash flow are likely to
continue for the foreseeable future and profitability is dependent
upon the Company significantly increasing its revenues from new
and existing customers, as well as reducing our expense base. If
we cannot achieve sufficient revenue and reduce our expense base,
we will incur additional losses. These circumstances raise
substantial doubt about the Company's ability to continue as a
going concern; however the Company has implemented a program to
increase revenues and is currently taking actions to reduce its
expense base.
About the Company
Tectonic Network, Inc., (OTCBB:TNWK) provides end-to-end marketing
and sales support solutions that connect buyers and sellers of
building products and construction services. The products and
services of Tectonic Network make it easier for designers,
architects, contractors, and owners to find, select and buy
commercial building products. The Company combines seasoned
professionals from the design, construction, building products,
and AEC information industry with the latest information,
technology, and tools. "With our significant combined user base,
we are also able to deliver higher market awareness, and more
efficient sales channels for our clients," the Company says.
Tectonic hosts a Web site at http://www.tectonicnetwork.com/
TELESYSTEM INT'L: Gets Court Approval for Plan of Arrangement
-------------------------------------------------------------
Telesystem International Wireless Inc. (TSX:TIW) (NASDAQ:TIWI)
reported that the Superior Court, District of Montreal, Province
of Quebec has issued a final order approving a Plan of Arrangement
under the Canada Business Corporations Act. As previously
reported, TIW shareholders approved the arrangement at a meeting
held on May 19, 2005.
TIW will operate under a court supervised Plan of Arrangement to
complete the transaction with Vodafone announced on March 15,
2005, proceed with its liquidation, including the implementation
of a claims process and the distribution of net cash to
shareholders, cancel its common shares and proceed with its final
distribution and be dissolved.
As part of the Plan of Arrangement, TIW will seek, under the
supervision of the Court, the expeditious identification and
resolution of claims as of May 20, 2005 against the Company in
order to accelerate distributions to shareholders. A claims bar
date has been set at July 8, 2005.
The Court has appointed KPMG Inc. as monitor to perform the duties
provided in the claims identification process approved by the
Court, including the identification and valuation of claims, and
the reporting to the Court and the Company on the claims received
and as to any further steps required for dealing with such claims.
About the Company
Telesystem International Wireless Inc. -- http://www.tiw.ca/-- is
a leading provider of wireless voice, data and short messaging
services in Central and Eastern Europe with over 6.9 million. TIW
operates in Romania through MobiFon S.A. under the brand name
Connex and in the Czech Republic through Oskar Mobil a.s. under
the brand name Oskar. TIW's shares are listed on NASDAQ ("TIWI")
and on the Toronto Stock Exchange ("TIW").
* * *
As reported in the Troubled Company Reporter on Mar. 18, 2005,
Standard & Poor's Ratings Services placed its ratings on MobiFon
Holdings B.V. and parent Telesystem International Wireless, Inc.
(Corp. Credit B+) on CreditWatch with positive implications
following the announced definitive agreement between TIW and
U.K.'s Vodafone Group PLC (A/Stable/A-1), whereby Vodafone will
purchase TIW's 79% ownership interest in MobiFon a.s. (79%-owned
subsidiary of MobiFon Holdings) through interim holding company
Clearwave N.V.
The CreditWatch placement also reflects the improving standalone
credit profile of MobiFon.
TENET HEALTHCARE: Reaches Agreement to Sell Brotman Medical
-----------------------------------------------------------
Tenet Healthcare Corporation (NYSE:THC) reported that a company
subsidiary has entered into a definitive agreement to sell 420-bed
Brotman Medical Center in Culver City, California, to a group led
by Prospect Medical Holdings, Inc. that will include physicians on
the staff of the hospital and private investors from the
community.
Net after-tax proceeds, including the liquidation of working
capital, are estimated to be approximately $27 million. The
company expects to use the proceeds of the sale for general
corporate purposes.
Prospect Medical Holdings, Inc., based in Culver City, is a health
care management services organization that provides management
services primarily to affiliated independent physician
associations. Prospect's chairman and chief executive officer is
Jacob Y. Terner, M.D., who was a member of Brotman's medical staff
for almost 30 years and also served as chairman of the pathology
department for many years. For the past four years, Dr. Terner
has served as a member of the Brotman Medical Center governing
board. Dr. Terner held the position of clinical professor of
obstetrics and gynecology at the University of Southern California
School of Medicine from 1972 to 2001. He is currently emeritus
professor of obstetrics and gynecology. Dr. Terner also served as
Chairman and CEO of Century MediCorp, Inc., a publicly traded,
integrated health management organization from 1988 until its
merger in 1992 with Foundation Health Corp. During that time
Century MediCorp owned two hospitals. The buyers intend to
continue to operate Brotman Medical Center as an acute care
facility and maintain its emergency department. As part of the
agreement, the buyers have committed to offer employment to
substantially all employees of the hospital. The transaction is
expected to conclude by July 31 following completion of normal
regulatory requirements.
Brotman Medical Center is one of 27 hospitals Tenet announced it
was divesting on Jan. 28, 2004. The company has completed the
divestiture of 22 of the 27 facilities. Discussions and
negotiations with potential buyers for the remaining four
hospitals slated for divestiture are ongoing.
About the Company
Tenet Healthcare Corporation -- http://www.tenethealth.com/--
through its subsidiaries, owns and operates acute care hospitals
and related health care services. Tenet's hospitals aim to
provide the best possible care to every patient who comes through
their doors, with a clear focus on quality and service.
* * *
As reported in the Troubled Company Reporter on Jan. 27, 2005,
Fitch has rated Tenet Healthcare Corp.'s new $500 million senior
unsecured notes issue due 2015 a 'B-' rating, consistent with the
company's existing senior unsecured ratings that have also been
affirmed by Fitch. The Rating Outlook remains Negative.
Moody's Investors Service assigned a B3 rating to Tenet
Healthcare's new $500 million senior unsecured note offering
pursuant to Rule 144A. At the same time, Moody's affirmed the
Company's B2 senior implied rating and other long-term ratings and
its SGL-4 speculative grade liquidity rating. The ratings outlook
remains negative.
Standard & Poor's Ratings Services assigned its 'B' rating to
Tenet Healthcare Corp.'s proposed $500 million senior unsecured
notes due 2015.
At the same time, Standard & Poor's affirmed Tenet's 'B' corporate
credit rating, raised its ratings on Tenet's senior unsecured
notes to 'B' from 'B-', and withdrew its bank loan and recovery
ratings.
THOPY FARMS: Voluntary Chapter 11 Case Summary
----------------------------------------------
Lead Debtor: Thopy Farms, Inc.
6485 West 100 South
Shelbyville, Indiana 46176
Bankruptcy Case No.: 05-09856
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Harold W. & Elinor S. Thopy 05-09860
Chapter 11 Petition Date: May 23, 2005
Court: Southern District of Indiana (Indianapolis)
Debtors' Counsel: David R. Krebs, Esq.
Hostetler & Kowalik P.C.
101 West Ohio Street, Suite 2100
Indianapolis, Indiana 46204
Tel: (317) 262-1001
Fax: (317) 262-1010
Estimated Assets Estimated Debts
---------------- ---------------
Thopy Farms, Inc. $1 Million to $1 Million to
$10 Million $10 Million
Harold W. & $1 Million to $1 Million to
Elinor S. Thopy $10 Million $10 Million
The Debtors' did not file a list of its 20 Largest Unsecured
Creditors.
TRANSMETA CORPORATION: Form 10-Q Filing Delay Cues Nasdaq Notice
----------------------------------------------------------------
Transmeta Corporation (Nasdaq:TMTAE) reported that it has received
and is addressing two notices from the staff of the Nasdaq Stock
Market.
On May 18, 2005, the Company received a notice from the Nasdaq
Listing Qualifications staff indicating that because the Nasdaq
Stock Market had not received Transmeta's Form 10-Q for the period
ended March 31, 2005, the Company's securities are subject to
potential delisting from the Nasdaq Stock Market at the opening of
business on May 27, 2005, unless Transmeta requests a hearing in
accordance with Nasdaq's Marketplace Rule 4800 Series. As a
result of the Company's filing delinquency, a fifth character,
"E," is appended to its trading symbol, changing it from TMTA to
TMTAE, effective today.
"Transmeta is committed to achieving compliance with all Nasdaq
requirements, and we are working diligently to complete and file
our Form 10-Q report for the first quarter of 2005 as soon as
practicable," said Mark R. Kent, chief financial officer,
Transmeta Corporation.
On May 10, 2005, Transmeta filed a Notification of Late Filing on
Form 12b-25 stating that its Form 10-Q for its fiscal quarter
ended March 31, 2005 could not be filed timely, because the
Company's management had not had sufficient time to finish
compiling certain financial and narrative information needed to
complete its Form 10-Q, due to management having only recently
completed its assessment of their internal controls over financial
reporting as of December 31, 2004 in accordance with Section 404
of the Sarbanes-Oxley Act and the rules of the Public Company
Accounting Oversight Board, which assessment Transmeta reported in
its Form 10-K/A filed on April 29, 2005.
On May 18, 2005, Transmeta filed a Form 8-K disclosing that the
Company is working to complete and file its Form 10-Q as soon as
practicable in order to remain in compliance with Nasdaq National
Market rules.
On May 19, 2005, Transmeta also received a notice from the Nasdaq
Stock Market indicating the Company is not in compliance with the
Nasdaq Stock Market's requirements for continued listing because,
for the previous 30 consecutive business days, the bid price of
the Company's common stock had closed below the minimum $1.00 per
share requirement for continued inclusion under Nasdaq Marketplace
Rule 4450(a)(5). Nasdaq stated in its notice that in accordance
with the Nasdaq Marketplace Rules, Transmeta will be provided 180
calendar days, or until November 15, 2005, to regain compliance
with the Minimum Bid Price Rule. This notification has no effect
on the listing of the Company's common stock at this time.
The May 19 notice also states that if, at any time before November
15, 2005, the bid price of the Company's common stock closes at
$1.00 per share or more for a minimum of 10 consecutive business
days, the Nasdaq staff will provide the Company written
notification that it has achieved compliance with the Minimum Bid
Price Rule. However, the notice states that if the Company does
not regain compliance with the Minimum Bid Price Rule by November
15, 2005, the Nasdaq staff will provide the Company with written
notification that its common stock will be delisted from the
Nasdaq Stock Market.
In the event that the Company receives notice that its common
stock is delisted from the Nasdaq Stock Market, Nasdaq rules
permit Transmeta to appeal any delisting determination by the
Nasdaq staff to a Nasdaq Listings Qualifications Panel. In
addition, in the event that such a delisting determination was
based solely on non-compliance with the Minimum Bid Price Rule,
Nasdaq Marketplace Rule 4450(i) may permit the Company to transfer
its common stock to the Nasdaq's Small Cap Market if the Company's
common stock satisfies all criteria for initial inclusion on such
market other than compliance with the Minimum Bid Price Rule. In
the event of such a transfer, the Nasdaq Marketplace Rules provide
that the Company would be provided an additional 180 calendar days
to comply with the Minimum Bid Price Rule.
About the Company
Transmeta Corporation develops and licenses innovative computing,
microprocessor and semiconductor technologies and related
intellectual property. Founded in 1995, Transmeta first became
known for designing, developing and selling its highly efficient
x86-compatible software-based microprocessors, which deliver a
balance of low power consumption, high performance, low cost and
small size suited for diverse computing platforms. We also
develop advanced power management technologies for controlling
leakage and increasing power efficiency in semiconductor and
computing devices. To learn more about Transmeta, visit
http://www.transmeta.com/
* * *
Going Concern Doubt
"[T]he Company's recurring losses from operations raise
substantial doubt about its ability to continue as a going
concern," ERNST & YOUNG LLP says in its audit report dated
March 25, 2005, addressed to the company's Board of Directors and
Stockholders.
At Dec. 31, 2004, the Company had $53.7 million in cash, cash
equivalents and short-term investments compared to $120.8 million
and $129.5 million at December 31, 2003 and December 31, 2002,
respectively.
The Company believes that its existing cash and cash equivalents
and short-term investment balances and cash from operations would
not be sufficient to fund its operations.
TRIAD HOSPITALS: S&P Rates Proposed $1.1 Bil. Sr. Sec. Loan at BB
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' bank loan
rating and a recovery rating of '1' to Triad Hospital, Inc.'s
proposed $1.1 billion senior secured credit facility due in 2011.
These ratings are based on preliminary bank loan documentation,
and indicate a high expectation for full recovery of principal in
the event of a payment default. Proceeds from the proposed $500
million term loan A under the facility will repay the outstanding
balances on existing bank term loans, as well as provide
additional cash to help finance near-term capital needs.
At the same time, Standard & Poor's affirmed its existing ratings
on Triad (BB-/Positive/B-2). The outlook is positive. As of
March 31, 2005, company's debt outstanding totaled $1.6 billion.
"The speculative-grade ratings on Plano, Texas-based Triad reflect
the company's aggressive growth plan, the competitive nature of
many of its key hospital markets, and the industry challenges it
faces, such as bad debt and exposure to third-party
reimbursement," said Standard & Poor's credit analyst David
Peknay.
The company's aggressive growth strategy incorporates joint-
venture partnerships with not-for-profit hospitals, potentially
large acquisitions, and new construction projects. This strategy
is risky, however, because the company may not achieve a good
return on such investments, which require substantial capital.
Although Triad has a growing record of success, a larger pipeline
of projects may be more difficult to manage, and replicating
earlier results could prove challenging.
Triad's 53 hospitals and nine ambulatory surgery centers typically
have solid, but not dominant, positions in their respective
markets. The key to success in meeting its competitive
challenges, as well as increasing the profitability of its
hospitals, involves expanding the number of services it offers and
strengthening relationships with existing physicians and
communities. The company's recent results from 2003 to early 2005
provide some evidence of the success of Triad's strategy. Lease-
adjusted debt to EBITDA has declined to 2.9x from 3.6x; funds from
operations to lease-adjusted debt improved to about 21% from 19%;
and return on capital improved to 11% from 9%.
Although the company's accelerating growth initiatives will
continue to consume all its operating cash flow, Triad is not
expected to significantly increase debt leverage, if it does at
all. The level of growth activity, along with the company's
ability to manage both its growth and core operating performance,
will be key to avoiding any weakening in credit protection
measures.
TRIM TRENDS: Case Summary & 22 Largest Unsecured Creditors
----------------------------------------------------------
Lead Debtor: Trim Trends Company, LLC
30665 Northwest Highway
Farmington Hills, Michigan 48334
Bankruptcy Case No.: 05-56108
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Trim Trends OH Co., Inc. 05-56110
Trim Trends Canada, Inc. 05-56112
Type of Business: The Debtor provides automobile and light truck
component parts. See
http://www.trimtrendsco.com/
Chapter 11 Petition Date: May 17, 2005
Court: Eastern District of Michigan (Detroit)
Judge: Marci B. McIvor
Debtors' Counsel: Joseph M. Fischer, Esq.
Carson Fischer, PLC
300 East Maple Road, 3rd Floor
Birmingham, Michigan 48009
Tel: (248) 644-4840
Consolidated Financial Condition as of
Estimated Assets Estimated Debts
---------------- ---------------
Trim Trends Company, $50 Million to $50 Million to
LLC $100 Million $100 Million
Trim Trends OH Co., $50 Million to $50 Million to
Inc. $100 Million $100 Million
Trim Trends Canada, $50 Million to $50 Million to
Inc. $100 Million $100 Million
Debtors' Consolidated List of 22 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Harvard Industries Trade Debt $4,992,222
3 Werner Way, Suite 300
Lebanon, NJ 08833
DaimlerChrysler Trade Debt $4,224,751
PO Box 456, Stn. A
Asst-OL-9107801
Windsor, ON N9A 6L7
Chryler Corp. Trade Debt $2,744,554
PO Box 98298
Chicago, IL 60693
Ispat Inland Admin. Service Trade Debt $1,362,063
2347 Reliable parkway
Chicago, IL 60686-0023
General Motors Corporation Trade Debt $1,347,093
Corporate material Brokering
Dept.# 78095
PO Box 78000
Detroit, Mi 48278
Tower Automotive Trade Debt $697,634
Prototype Center
43955 Plymouth Oaks Blvd.
Plymouth, MI 48170
National Materials Company Trade Debt $525,842
PO Box 96895
Chicago, IL 60693
Tenneco Automotive Trade Debt $483,931
PO Box 96919
Chicago, IL 60693
Thiel Tool & Engineering Co. Trade Debt $390,278
PO Box 470397
St. Louis, MO 63147
BWC State Insurance Fund Trade Debt $327,221
Corporate Processing Dept.
Columbus, OH 43271-0977
Tower Automotive Trade Debt $293,311
Granite City
3101 Highway 3
Granite City, IL 62040
Product Action International Trade Debt $291,351
2506 Reliable Parkway
Chicago, IL 60686-0025
Welded Tube of Canada Trade Debt $270,682
5401 Rogers St., Suite A
Delta, OH 43515
Perfect Cut-Off Inc. Trade Debt $260,756
PO Box 94781
Cleveland, OH 44101
Kenwal Steel Corporation Trade Debt $256,894
PO Box 67-758
Detroit, MI 48267-7758
General Motors of Canada Trade Debt $199,516
Ltd.
Rygate Industrial Inc. Trade Debt $180,000
STM Manufacturing, Inc. Trade Debt $147,574
Polynorm Automotive Trade Debt $146,151
Regal Steel Trade Debt $145,036
Beta Tech Inc. Trade Debt $137,600
Preferred Tool & Die Trade Debt $135,768
UAL CORP: Inks New Tentative Labor Pact with Mechanics
------------------------------------------------------
United Airlines reached a tentative agreement with International
Association of Machinists (IAM) on May 16, which consensually
achieves the $96 million in annual wage and benefit cuts United
needs, while addressing IAM's concerns over pay, job security,
benefits and work rules.
"We hope that the IAM membership will ratify this proposal so we
can move forward and successfully complete our restructuring,"
United said in a press statement.
Union leaders asked their 7,000 members to vote -- beginning
May 17, through May 31 --whether to accept or reject the new
tentative deal with United. The union, the Associated Press
reports, has threatened a strike if Judge Wedoff orders the
contract broken without its consent, which could come as soon as
Friday -- the day the judge has now scheduled to hear closing
arguments.
A 5 percent defined-contribution pension plan is part of the
mechanics' tentative contract, replacing the defined-benefits plan
that United eliminated last week, the Associated Press said.
Impending Strikes
In January 2005, IAM members working for United overwhelmingly
voted to authorize a strike if additional pay cuts and other
concessions were imposed outside of the normal negotiating
process. Bankruptcy Judge Eugene Wedoff then imposed a temporary
9.8 percent pay cut and reduced sick leave benefits for IAM
members, for the period February 1 through May 31, 2005, to give
AMFA and United additional time to try to reach a consensual
contract agreement.
Pension Plan Termination
As reported in the Troubled Company Reporter on May 12, 2005, the
Honorable Eugene Wedoff of the U.S. Bankruptcy Court for the
Northern District of Illinois put his stamp of approval on United
Airlines' plan to terminate its employees' pension plans -- the
largest pension plan default in U.S. history. About 120,000
current and retired United employees are affected by the Court's
decision.
Under the terms of the agreement, the PBGC would terminate and
become trustee of the company's four pension plans and the
agency's multi-billion dollar claims against the carrier will be
settled. The PBGC and its financial advisers believe the
settlement is superior to the recovery the agency would have
received as an unsecured creditor in bankruptcy.
Collectively, United's pension plans are underfunded by
$9.8 billion on a termination basis, $6.6 billion of which is
guaranteed, according to the PBGC. The four plans are:
-- the UA Pilot Defined Benefit Plan, which covers
14,100 participants and has $2.8 billion in assets
to pay $5.7 billion in promised benefits;
-- the United Airlines Ground Employees Retirement Plan,
which covers 36,100 participants and has $1.3 billion
in assets to pay $4.0 billion in promised benefits;
-- the UA Flight Attendant Defined Benefit Pension Plan,
which covers 28,600 participants and has $1.4 billion
in assets to pay $3.3 billion in promised benefits; and
-- the Management, Administrative and Public Contact Defined
Benefit Pension Plan, which covers 42,700 participants
and has $1.5 billion in assets to pay $3.8 billion in
promised benefits.
The Pension Benefit Guaranty Corporation will assume
responsibility for United's pension obligations. The PBGC
originally opposed United's plan, but agreed to the distressed
termination in exchange for $1.5 billion of new preferred
securities that must be issued under any plan of reorganization
confirmed in United's chapter 11 cases.
The Associated Press reports that the PBGC will only guarantee
$5 billion of United's $9.8 billion pension fund.
Judge Wedoff approved the carrier's deal with the PBGC because, he
found, there's nothing illegal about it and it doesn't violate the
terms of any of United's collective bargaining agreements.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts.
US AIRWAYS: Inks Merger Agreement with $1.5 Billion in Capital
--------------------------------------------------------------
America West Holdings Corporation [NYSE: AWA] and US Airways
Group, Inc. [UAIRQ.OB] inks an agreement to merge and create the
first full-service nationwide airline, with the consumer-friendly
pricing structure of a low-fare carrier. Operating as the first
national low-cost (LCC) hub-and-spoke network carrier, customers
can look forward to simplified pricing, international scope,
access to low-fare service to over 200 cities across the U.S.,
Canada, Mexico, the Caribbean and Europe, and amenities that
include a robust frequent flyer program, airport clubs, assigned
seating and First Class cabin service.
America West Holdings Corporation Chairman, President and CEO Doug
Parker said: "Building upon two complementary networks with
similar fleets, closely-aligned labor contracts and two
outstanding teams of people, this merger creates the first
nationwide full service low-cost airline. Through this
combination, we are seizing the opportunity to strengthen our
business rather than waiting for the industry environment to
improve. A combined US Airways/America West places the new
airline in a position of strength and future growth that neither
of us could have achieved on our own."
US Airways President and CEO Bruce Lakefield said: "US Airways has
a strong franchise and great employees that will be enhanced by
America West's strengths and success in the low-fare, low-cost
marketplace. That we have secured such an impressive slate of
equity investors and partner support in a period of such industry
uncertainty is a strong indication of the prospects and enthusiasm
for this transaction. It has been my objective to ensure the
long-term viability of US Airways and the security of our
outstanding employees; this merger with America West will
accomplish that objective."
Subject to approval by the U.S. Bankruptcy Court overseeing US
Airways' pending Chapter 11 case and transaction closing, which is
anticipated to occur this fall, the merged airlines will operate
under the US Airways brand under the leadership of CEO Doug
Parker. The merged airline's 13-member board will be comprised of
one member from each of three new equity investment companies, six
members from the current America West board, including Parker as
chairman, and four members from the current US Airways board,
including Lakefield as vice-chairman. The combined airline's
headquarters will be consolidated into America West's headquarters
in Tempe, Ariz. For regulatory purposes, both airlines will
operate under separate operating certificates for a transition
period of two to three years, keeping flight crew, maintenance and
safety procedures for each airline separate. To ensure that the
substantial consumer benefits are realized quickly, however, the
airlines will work together to coordinate schedules, frequent
flyer programs and other marketing programs as soon as practical.
Mr. Lakefield continued: "We believe that the airline created
from the merger of US Airways and America West will bring more
choices for customers, as we expand the low-fare pricing
structure of America West to dozens of new cities, while also
offering passenger-service amenities, such as an attractive
frequent flyer program, assigned seating and a First Class
cabin."
Customers
With the creation of the first full-service nationwide airline,
customers will enjoy simplified pricing across an expanded
east/west network along with access to international destinations.
Both airlines' frequent flyer programs will ultimately be combined
once the merger is complete. Members of both programs will retain
all of their miles and elite status designation and will receive
similar benefits in the merged airline's frequent flyer program.
Other customer amenities will include access to airport clubs,
assigned seating and First Class upgrades.
Financing
The merger is expected to create one of the industry's most
financially stable players, with over $10 billion in annual
revenues and a strong balance sheet that includes approximately
$2 billion in total cash at closing with which to weather the
current industry environment and fund further growth strategies.
The airline's strong cash balance is expected to be created
through a combination of:
(a) current cash on hand at US Airways/America West;
(b) $350 million of new equity commitments (which may be
supplemented with additional commitments; and
(c) proceeds from a contemplated $150 million rights
offering.
In addition, the merged airline will receive cash infusions of
over $1.1 billion, principally from:
-- partners and suppliers (approximately $675 million);
-- asset-based financings or sales of surplus aircraft
(approximately $250 million); and
-- release of certain cash reserves (approximately
$200-300 million).
The $350 million of new equity is expected to be provided by four
separate investor groups:
Commitment Investor
---------- --------
$75,000,000 ACE Aviation Holdings Inc., a Canadian
holding company that owns Air Canada,
Canada's largest airline with over
$7.5 billion in annual revenues;
$100,000,000 PAR Investment Partners, L.P., a Boston-
based investment firm;
$50,000,000 Peninsula Investment Partners, L.P.,
a Virginia-based investment firm; and
$125,000,000 Eastshore Holdings LLC, which is owned
and agreement by Air Wisconsin Airlines Corporation and
to provide its shareholders.
regional
airline
services
The merged company also plans to conduct a rights offering that
could provide an additional $150 million of equity financing.
Approximately $675 million of additional cash financing is being
secured through a combination of refunding of certain deposits,
debt refinancing (which reduces collateralization) and signing
bonuses from companies interested in long-term business
relationships with the merged airline. The companies have signed
commitments or firm proposals for more than $425 million in
additional cash liquidity from strategic partners and vendors,
including over $300 million in a signing bonus and a loan from
prospective affinity credit card providers for the merged
company. Negotiations with credit card companies are still in
progress. Another $250 million will come from Airbus in the form
of a loan. The companies have also agreed that the merged
company will be the launch customer for the Airbus A350, with
deliveries scheduled from 2011 to 2013.
Synergies
"We are exceptionally pleased with the financial support this
transaction has received, but it would not be available if we did
not have a business model that worked in today's difficult
industry environment," said Parker. "We have created a
competitive business that is profitable even with oil prices at
$50 per barrel, achieved primarily because of the $600 million of
annual net operating synergies. These synergies are higher than
generally experienced in airline mergers for two reasons. First,
US Airways and America West now have very similar labor costs so
there are no large negative synergies related to contract
integration, and second, US Airways' bankruptcy allows us to
right-size capacity, thus increasing the network synergies."
The $600 million in anticipated annual synergies are the result of
route restructuring, revenue synergies and cost savings. Route
restructuring synergies of approximately $150-200 million are
created by reducing aircraft and unprofitable flying, better
matching aircraft size to consumer demand by route and
incorporating Hawaii service into the network. Revenue synergies
of $150-200 million are achieved by taking two largely regional
airlines and creating one nationwide, low-cost carrier that can
provide more choice for consumers when combined with improving
connectivity across both airlines' networks and by increasing
aircraft and other asset utilization. Lastly, the combined
airline expects to realize cost synergies of $250-300 million
annually by reducing administrative overhead, consolidating both
airlines' information technology systems and combining
facilities.
In addition to the operating synergies created by the merger, the
new relationship with Air Canada provides for even greater
operating improvements. The merged airline and Air Canada plan to
work together to create value for each other through maintenance
contracts, airport handling agreements and the eventual expansion
of the Star Alliance agreement, which could include codesharing
with Air Canada, consistent with the U.S.-Canada bilateral
aviation agreement.
Fleet/Route System
US Airways/US Airways Express currently serves 179 cities and
America West/America West Express serves 96 cities. When merged,
the combined airline will become the nation's fifth largest
airline, as measured by domestic Available Seat Miles -- ASMs.
The combined airline is expected to operate a mainline fleet of
361 planes (supported by 239 regional jets and 57 turboprops for
feed into the mainline system), down from a total of 419 mainline
aircraft operated by both airlines at the beginning of 2005.
US Airways projects returning 25 additional aircraft by the end of
2006, in addition to the 46 aircraft that US Airways already has
announced it plans to return. Nearly all of the aircraft are
being returned to General Electric Capital Aviation Services
(GECAS). The combined airline also will take delivery of
13 Airbus A320 family aircraft previously ordered by America West
Airlines. Airbus has also agreed to reschedule and reconfirm
30 narrow body A320-family aircraft deliveries from 2006 - 2008 to
2009 - 2010. To rationalize international flying, the merged
company will work with Airbus to transition to an all-Airbus
international fleet of A330 aircraft and, beginning in 2011, A350
aircraft.
Once fully integrated, the airline plans to have primary hubs in
Charlotte, Phoenix and Philadelphia, and secondary hubs in Las
Vegas and Pittsburgh. The merged airline plans to have focus
cities in Boston, New York/LaGuardia, Washington, D.C., and Fort
Lauderdale.
People/Culture
US Airways currently employs 30,100 people and America West
employs 14,000 people. Contract integration of represented
employees is expected to occur after integrated seniority lists
have been negotiated between each respective airline's labor
groups.
America West's Parker continued: "Although US Airways and America
West are clearly two different airlines with two different
cultures, our common traits far outnumber our differences. We are
all aviation professionals proud of our heritage, eager to serve
the traveling public and hopeful for the future. While seniority
integration will be a challenge for us and our employees, we will
ensure that those issues are discussed and resolved in a fair and
equitable manner. Throughout this process, as has always been the
case, we will continue our commitment of open and honest
communication with our employees. We are building a new future
that will present far greater job security and growth
opportunities than either airline would have achieved on its own,
and we are doing so with the ability for all to share in the
collective upside."
Equity Allocation
The $350 million of private equity commitments are based upon a
total implied private full equity value of $850 million for the
merged corporation. Of that $850 million valuation, 45 percent
will be allocated to America West, 41 percent to the new equity
and 14 percent to US Airways. This valuation results in an
implied value of $6.12 per share for the publicly traded America
West stock, taking into effect dilution from outstanding warrants
and options and the anticipated treatment of convertible
securities. The partners have agreed that up to $650 million of
total equity can be raised including any proceeds from planned a
rights offering. Any additional equity would dilute all
participants pro rata. However, any additional equity raised
above $350 million will not reduce the $6.12 per share of implied
value for the publicly traded America West stock. The right to
participate in a rights offering for up to $150 million in common
shares of the merged companies is to be allocated 61.5 percent to
the stakeholders of US Airways and 38.5 percent to the common
stockholders of America West.
Approvals
Under the terms of the agreement, the merger is expected to occur
subsequent to confirmation of US Airways' plan of reorganization
and emergence from Chapter 11. Because the merger and related
equity investments are subject to US Airways' pending Chapter 11
proceedings in the U.S. Bankruptcy Court for the Eastern District
of Virginia in Alexandria, the transaction will also have to be
approved by the U.S. Bankruptcy Court and will be subject to a
competitive bidding process that will be proposed to the Court.
The transaction, which has been approved by both company's boards
of directors, is also subject to the approval of America West's
shareholders.
Both airlines will file the necessary documents for review with
the U.S. Department of Justice, the U.S. Department of
Transportation and the Securities and Exchange Commission as well
as secure other necessary regulatory approvals. In addition,
both airlines hold loans with a federal guarantee from the Air
Transportation Stabilization Board (ATSB), and the carriers are
in joint negotiations with the ATSB on the treatment of those
loans under the proposed merger.
US Airways Group, Inc. is being advised by Seabury Group LLC as
restructuring advisor and financial advisor and the law firm of
Arnold & Porter LLP; advisors for America West Holdings Corp.
include Greenhill & Co., LLC as its principal financial advisor,
Merrill Lynch & Co. as structuring advisor to certain financings,
and the law firms of Skadden, Arps, Slate Meagher and Flom, LLP
and Cooley, Godward LLP.
Unions Issue Statements
(1) ALPA
US Airways MEC Chairman Captain Bill Pollock of the Air Line
Pilots Association, Int'l (ALPA) released the following statement:
"US Airways Group, Inc. and America West Holdings
Corporation have announced their intention to enter into a merger
that would create both the nation's sixth-largest airline and the
largest low-cost carrier network.
"The US Airways Master Executive Council (MEC), the pilots'
governing body, will be analyzing the terms of this proposed
transaction at the earliest opportunity.
"US Airways management believes that this proposed merger
will enable US Airways to emerge from bankruptcy and then create
a partnership that will be viable and competitive. I want
management, our investors, and our flying public to know that the
US Airways pilots are largely responsible for the progress that
US Airways has made in its restructuring. US Airways enjoys this
opportunity today because of the tremendous sacrifices made by
our pilots. Our MEC and our pilots have been called upon again
and again to make the most difficult decisions in this volatile
and still-transforming industry. Our pilots have provided the
Company with $7 billion in cost savings through four
restructurings -- an investment far greater than any other group.
We expect that our sacrifices will be respected as we welcome the
opportunity to become a partner in the creation of this country's
premier low-cost airline.
"We also look forward to working with the pilots of America
West as we begin the process of combining pilot groups through
the seniority integration procedures outlined in our ALPA
Administrative Manual."
(2) America West Pilots
Captain JR Baker, chairman of the America West Airlines unit of
the Air Line Pilots Association, made this statement following
America West's (NYSE: AWA) announcement that it will merge with
US Airways.
"Protecting and defending the careers of America West pilots
are our top priorities. In 1997, we saw the potential for a
transaction in our future and were determined not to be caught
behind the power curve if our company was involved in an
agreement. The AWA pilots started a separate merger fund to
cover all outside expenses, and it has grown substantially
during the past eight years.
When news of discussions between America West and US Airways
first came to light, we set in motion measures enabling us to
more efficiently realize our goals. Our teams are in place, and
we are fully prepared to safeguard the careers of America West
pilots who put their trust in this union.
In our profession, seniority is everything. To be clear our
union's Merger Policy provides for a process and timeframe for
events to occur, but does not dictate how two ALPA pilot groups
will integrate their seniority lists. Specifics on how the two
merge their seniority lists are left up to negotiations between
the pilot groups involved; however, if no agreement is reached, a
merged list would emerge from a mediation-arbitration process.
Clearly, in such discussions with the US Airways pilots, we
would view a date-of-hire type of integration as a completely
unworkable solution for the America West pilots. While details
of the transaction continue to evolve, we remain focused on our
priorities: protecting and defending the career expectations of
America West pilots. As such, we will not allow America West
management to lose focus on running an efficient airline or
forget their commitment of operating in the best interests of the
employees.
We are a vital part of America West, and we will not allow
our pilots' career expectations to be sacrificed as a result of
our airline's success."
(3) Teamsters
Teamsters Airline Division Director Don Treichler said that the
Teamsters Union is actively monitoring the merger between America
West Holdings Corp. and US Airways Group Inc. to ensure that
workers' rights are not adversely impacted.
"Our primary concern is to protect the jobs and rights of
the workers at America West," Treichler said. "We are working
with America West management to secure the rights of Teamster
members employed by the company. Management has been cooperative
and we are optimistic an agreement can be reached."
The Teamsters Union represents more than 4,100 highly
skilled workers employed by the Phoenix, Arizona-based America
West Airlines. The workers include approximately 3,300 customer
service representatives across the country and approximately 850
airline maintenance technicians, primarily stationed at the
airline's Phoenix and Las Vegas facilities.
"If this merger helps both airlines to compete in the
marketplace, we expect that it will also increase our members'
job security," said Andy Marshall, Secretary-Treasurer of
Teamsters Local 104 in Phoenix. "We are going to fight for our
members' rights and negotiate protections on their behalf."
About America West
America West -- http://www.americawest.com/-- operates more than
900 flights daily to 95 destinations in the U.S., Canada, Mexico
and Costa Rica. The airline's 13,500 employees are proud to offer
a range of services including more destinations than any other
low-cost carrier, first-class cabins, assigned seating, airport
clubs and an award-winning frequent flyer program.
About US Airways
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts.
* * *
As reported in the Troubled Company Reporter on Apr. 25, 2005,
Standard & Poor's Ratings Services placed selected ratings on
America West Holdings Corp. and subsidiary America West Airlines
Inc., including the 'B-' corporate credit rating on both, on
CreditWatch with negative implications. Ratings on selected
enhanced equipment trust certificates (EETCs) of America West
Airlines Inc., which were placed on CreditWatch on Feb. 24, 2005,
as part of an industry wide review of aircraft-backed debt, remain
on CreditWatch.
"The CreditWatch placement is based on the potential combination
of America West with US Airways Inc. (rated 'D'), the major
operating subsidiary of US Airways Group Inc. (rated 'D'), both
currently operating under Chapter 11 bankruptcy protection," said
Standard & Poor's credit analyst Betsy Snyder. "The combination
could present significant labor integration and financial
challenges, depending on how any such combination is structured."
US AIRWAYS: Outlines Merger Agreement with America West
-------------------------------------------------------
After flirting on the edge of financial disaster for many months,
Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado,
tells Judge Mitchell of the U.S. Bankruptcy Court for the Eastern
District of Virginia that US Airways, Inc., and its debtor-
affiliates are proud to bring a Merger Agreement to the Court.
The Merger Agreement will preserve jobs that the Debtors' loyal
employees richly deserve, while maximizing value to all
stakeholders.
The Merger Agreement among US Airways Group, Inc., America West
Holdings Corporation and Barbell Acquisition Corp., Mr. Leitch
says, will produce a "best in class" cost structure, with a
nationwide route structure, an international presence, a strong
balance sheet, and a strong management team. The combined entity
will compete effectively with:
-- low-cost carriers on price and convenience;
-- network carriers on scope, service and amenities; and
-- international carriers for international service.
The combination will create over $600,000,000 in provable annual
synergies. At closing, there will be in excess of $2,100,000,000
in cash on the balance sheet. The cost per available seat mile
of the combined business is projected to be 7.3 cents in 2007, a
22% improvement over the Debtors' 9.3-cent CASM in 2004.
W. Douglas Parker, Chief Executive Officer of America West, will
serve as Chairman of the Board for an initial three-year term.
The combined entity will be headquartered at America West's
offices in Tempe, Arizona.
Upon emergence, the Reorganized Debtors will issue 200,000,000
shares, with 47,475,730 shares of outstanding capital stock
consisting of:
-- 7,666,667 shares issued to unsecured creditors;
-- 14,809,063 shares issued to the shareholders of
America West; and
-- 25,000,000 shares issued to ACE Aviation Holdings,
Inc., Par Investment Partners, L.P., Peninsula
Investment Partners, L.P., Eastshore Aviation LLC and
the Other Investors -- assuming an investment of
$375,000,000.
Mr. Leitch emphasizes that the Merger Agreement, combined with
investments from the Plan Investors and synergy agreements with
ACE, is the best strategic opportunity the Debtors have seen in
over five years. It is unlikely that the Debtors will find an
alternative transaction that confers a greater benefit to all
stakeholders than this one.
According to Mr. Leitch, the combined entity will realize cost
savings by shrinking unprofitable routes, redistributing excess
capacity from the West to the East Coast, streamlining aircraft
fleets through a net reduction of 58 aircraft, downgrading
mainline aircraft to regional jets on certain routes and better
utilization of aircraft. The combined entity will save money by
reducing management overhead, eliminating overlap in airport
facilities, airport labor, office space and real estate and
utilizing America West's in-house information technology
department. The cost savings are achievable because the Debtors
and America West have similar labor costs and overlap of aircraft
fleets.
The combined entity will have major hubs in Charlotte,
Philadelphia and Phoenix, and focus cities of Boston, New York-
LaGuardia, Las Vegas, Pittsburgh and Washington-Reagan National.
This heightened presence will increase revenue through the
addition of new routes, including service to Hawaii, and through
improved connectivity between cities. The Merger will increase
liquidity by combining the balance sheets of the Debtors and
America West, improving the merged company's ability to obtain
credit. The cash infusion from the Merger will allow the
combined entity to access currently restricted cash.
A full-text copy of the Merger Agreement is available at no extra
cost at:
http://bankrupt.com/misc/usairmerger.pdf
The ACE Agreements
The Reorganized Debtors and ACE will enter into "synergy
agreements" that create benefits for one another from services,
goods or traffic. The synergy agreements include:
(a) certain maintenance agreements that are anticipated to
bring ACE at least $280,000,000 per year in
maintenance, repair and overhaul services work;
(b) certain airport facilities and ground handling
agreements;
(c) a future code share relationship consistent with the
U.S.-Canada bilateral agreement; and
(d) a regional jet services agreement for incremental
transborder flying.
When fully implemented, Mr. Leitch says the code share
arrangement will result in net incremental revenue to the
Reorganized Debtors of $25,000,000 to $40,000,000 per year or
more. Applying standard industry valuation multiples, this
annual benefit translates into the equivalent of an additional
$125,000,000 to $240,000,000 equity investment by ACE. This will
bring the effective value of the ACE investment, plus synergies,
to well over $200,000,000.
ACE will invest at least $75,000,000 in exchange for 5,000,000
new common shares in the Reorganized Debtors. This equates to a
post-Merger, but pre-money equity value of $500,000,000. The
Debtors and America West may undertake a rights offering of new
common stock to their existing stakeholders for the difference
between $650,000,000 and the investment received from Par,
Peninsula, Eastshore, ACE, and other equity investors. The
Debtors may issue additional shares of new common stock for more
than $650,000,000, provided that:
(a) the proceeds are used to redeem or repurchase equity
securities from existing Debtor and America West
stakeholders at a price per share no less than the
price per share paid by ACE;
(b) the aggregate value of the new common stock will not
exceed $200,000,000; and
(c) ACE has the right to purchase up to $15,000,000 of the
new common stock at a price per share equal to that
paid by ACE under the ACE Investment Agreement.
The Debtors will reimburse ACE for reasonable out-of-pocket
related expenses, not to exceed $350,000, plus filing fees under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
If the ACE Investment Agreement is not consummated and ACE is not
in breach, but an alternative transaction is consummated, ACE
will be entitled to a $2,250,000 Break-Up Fee.
ACE may terminate the ACE Investment Agreement if:
(1) the Merger Agreement and the Investment Agreements do
not close by December 31, 2005;
(2) the Merger Agreement is terminated before December 31,
2005;
(3) the Bankruptcy Court does not approve the ACE Break-Up
Fee and expense reimbursement by June 30, 2005;
(4) the Merger and the Investment Agreements are not
chosen as a Plan within 65 days after the Court
approves the Debtors' request to approve procedures
for the consideration of competing plan funding
proposals;
(5) the Debtors or America West breaches the ACE
Investment Agreement;
(6) the conditions to ACE's obligations are not capable
of being satisfied;
(7) the Debtors enter into an Alternative Proposal; or
(8) the Court orders the Debtors to terminate the ACE
Investment Agreement to accept an Alternative
Proposal.
The Eastshore Transaction
The Debtors will borrow $125,000,000 from Eastshore in three
tranches of $75,000,000, $25,000,000 and $25,000,000. The first
two tranches have been drawn, making the outstanding balance on
the loan $100,000,000. The Debtors will draw the third tranche
as soon as possible under the terms of the loan.
The Eastshore Loan will be repaid with an expected 8,333,333
shares of new common stock, under the Shares Repayment
Alternative. The Debtors will calculate the value of the shares
based upon the lowest price paid by Par or Peninsula or another
equity investor. Eastshore may designate one member of the
Debtors' Board of Directors. The Debtors will reimburse
Eastshore for its related reasonable out-of-pocket expenses, not
to exceed $350,000, plus filing fees under the HSR Act.
The Par Transaction
Under the Par Transaction, on the effective date of a plan of
reorganization, Par will invest at least $100,000,000 in the
Debtors. The Debtors will issue 6,666,667 shares of new common
stock to Par that equate to a post-Merger, but pre-money equity
value of $500,000,000. Par may designate one member of the
Debtors' Board of Directors. The Debtors have to find another
$375,000,000 to $650,000,000 in equity investment.
The Debtors and America West may undertake a rights offering of
new common stock to their existing stakeholders for the
difference between $650,000,000 and the investment received from
Par, Peninsula, Eastshore, ACE, and any other equity investors.
The Debtors may issue additional shares of new common stock for
more than $650,000,000 provided that:
(a) the proceeds are used to redeem or repurchase equity
securities from existing Debtor and America West
stakeholders at a price per share no less than the
price per share paid by Par;
(b) the aggregate value of the new common stock will not
exceed $200,000,000, and
(c) Par has the right to purchase up to $20,000,000 of the
new common stock at a price per share equal to that
paid by Par under the Par Investment Agreement.
The Debtors will reimburse Par for related reasonable out-of-
pocket expenses not to exceed $350,000 plus filing fees under the
HSR Act.
If the Par Investment Agreement is not consummated and Par is not
in breach, but an alternative transaction is consummated, Par
will be entitled to a $3,000,000 Break-Up Fee.
Par may terminate the Par Investment Agreement if:
(1) the Merger Agreement and the Investment Agreements do
not close by December 31, 2005;
(2) the Merger Agreement is terminated before December 31,
2005;
(3) the Bankruptcy Court does not approve the Par Break-Up
Fee and expense reimbursement by June 30, 2005;
(4) the Merger and the Investment Agreements are not
chosen as a Plan within 65 days after the Court
approves the Plan Proposal Procedures;
(5) the Debtors or America West breaches the Par
Investment Agreement;
(6) the conditions to Par's obligations are not capable
of being satisfied;
(7) the Debtors enter into an Alternative Proposal; or
(8) the Court orders the Debtors to terminate the Par
Investment Agreement to accept an Alternative
Proposal.
The Peninsula Transaction
Under the Peninsula Transaction, on the Plan Effective Date,
Peninsula will invest at least $50,000,000 in the Debtors. The
Debtors will issue 3,333,333 shares of new common stock to
Peninsula that equate to a post-Merger, but pre-money equity
value of $500,000,000. The Debtors have to find another
$375,000,000 to $650,000,000 in equity investment.
The Debtors and America West may undertake a rights offering of
new common stock to their existing stakeholders for the
difference between $650,000,000 and the investment received from
Par, Peninsula, Eastshore, ACE, and any other equity investors.
The Debtors may issue additional shares of new common stock for
more than $650,000,000 provided that:
(a) the proceeds are used to redeem or repurchase equity
securities from existing Debtor and America West
stakeholders at a price per share no less than the
price per share paid by Peninsula;
(b) the aggregate value of the new common stock will not
exceed $200,000,000, and
(c) Peninsula has the right to purchase up to $10,000,000
of new common stock at a price per share equal to that
paid by Peninsula under the Peninsula Investment
Agreement.
The Debtors will reimburse Peninsula for reasonable out-of-pocket
expenses for the enforcement of Peninsula's rights under the Term
Sheet, the Peninsula Investment Agreement, or the Stockholders'
Agreement, plus filing fees under the HSR Act.
If the Peninsula Investment Agreement is not consummated and
Peninsula is not in breach, but an alternative transaction is
consummated, Peninsula will be entitled to a $1,500,000 Break-Up
Fee.
Peninsula may terminate the Peninsula Investment Agreement if:
(1) the Merger Agreement and the Investment Agreements do
not close by December 31, 2005;
(2) the Merger Agreement is terminated before December 31,
2005;
(3) the Bankruptcy Court does not approve the Peninsula
Break-Up Fee and expense reimbursement by June 30,
2005;
(4) the Merger and the Investment Agreements are not
chosen as a Plan within 65 days after the Court
approves the Plan Proposal Procedures;
(5) the Debtors or America West breaches the Peninsula
Investment Agreement;
(6) the conditions to Peninsula's obligations are not
capable of being satisfied;
(7) the Debtors enter into an Alternative Proposal; or
(8) the Court orders the Debtors to terminate the
Peninsula Investment Agreement to accept an
Alternative Proposal.
The Stockholders' Agreement
The Plan Investors and the Debtors will enter into a
Stockholders' Agreement, whereby the Debtors will:
(a) file a resale registration statement for new common
stock within 45 days after the Plan Effective Date;
(b) cause the registration statement to become effective
within six months; and
(c) maintain the effectiveness of the registration
statement until the Plan Investors do not hold new
common stock that cannot be sold either:
(x) pursuant to Rule 144(k) promulgated under the
Securities Act of 1933; or
(y) in a single transaction pursuant to
Rule 144.12.
The Debtors will have the new common stock listed and quoted on a
securities exchange or automated quotation system, namely the New
York Stock Exchange or the NASDAQ. Pursuant to the Stockholders'
Agreement, the Plan Investors will not sell any new common stock
purchased pursuant to the Plan Investment Agreements and the
Stockholders' Agreement for six months after the Plan Effective
Date.
Related Transactions
(1) GECAS/GE Engines Transaction
The Debtors, America West and GE Commercial Aviation Services LLC
have entered into the GECAS Restructuring Outline, which reduces
the combined fleet of the Debtors and America West. To
facilitate a smooth return of the GE Aircraft, the parties have
amended certain redelivery conditions for the GE Aircraft that
are being removed and returned early to GECAS.
Pursuant to the GECAS Restructuring Outline, the parties have
amended the terms of the Master Memorandum of Understanding,
dated November 24, 2004, between the Debtors and GECAS. The
amendments include:
(1) elimination of GECAS's obligation to provide direct
financing to the Debtors for regional jets; and
(2) $2,800,000 reduction to the Debtors' purchase price
for the sale/leaseback transaction.
The Debtors and America West have entered into a term sheet with
GE Engine Services, Inc. and GE Engine Services -- Dallas, LP,
that modifies engine maintenance agreements to provide the
Debtors with additional liquidity.
(2) The Airbus Transaction
The Debtors, America West and AVSA S.A.R.L. have entered into the
Airbus Memorandum of Understanding for the purchase and delivery
of certain Airbus-manufactured aircraft when the plan of
reorganization becomes effective.
Under the Airbus MOU, the Debtors will assume their existing
Airbus Purchase Agreements, the A319/A320/A321 Purchase Agreement
and A330/A340 Purchase Agreements upon emergence from Chapter 11.
The Agreements will be amended to delay the aircraft delivery
schedule. The Airbus MOU also delays the aircraft delivery
schedule for the A319 and A320 Purchase Agreement between Airbus
and America West and the application of pre-delivery deposits.
Pursuant to the Airbus MOU, upon emergence, the Debtors and
America West will purchase 20 A350-800 aircraft. In exchange for
their A350 aircraft purchase commitment, Airbus will provide the
Debtors and America West with a $250,000,000 senior secured line
of credit. The line of credit may be utilized to pay the
Debtors' designated obligations and for general corporate
purposes. Upon the satisfaction of certain conditions precedent,
Airbus will provide the Debtors with backstop financing related
to the purchase of the A350 aircraft.
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue
No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000)
US AIRWAYS: Asks Court to Okay Plan Funding Solicitation Protocol
-----------------------------------------------------------------
US Airways, Inc., and its debtor-affiliates ask the United States
Bankruptcy Court for the Eastern District of Virginia to approve:
a) the procedures to consider plan funding proposals;
b) the procedures for providing notice of competing offers; and
c) approve the break-up fees.
"It would be an understatement to say that the Debtors are
pleased to bring this motion to the Court," Brian P. Leitch,
Esq., at Arnold & Porter, in Denver, Colorado, states. Mr.
Leitch says the Debtors have found a partner airline, a third
airline seeking synergies, financial investors, and existing
creditors who support the Debtors' vision.
The Debtors intend to emerge from Chapter 11 with America West
Holdings Corporation as a well-capitalized, low cost airline.
The new entity will create the first national, low-cost hub and
spoke network carrier in the United States with an international
presence, international alliance partners and a nationwide
domestic network with service to over 200 cities.
The merger with America West will be implemented through a plan
of reorganization that includes:
(1) an equity investment and synergy relationship with ACE
Aviation Holdings, Inc., the corporate parent of Air Canada
and its affiliates;
(2) equity investments by Eastshore Aviation LLC, Par
Investment Partners, L.P., and Peninsula Investment
Partners, L.P.;
(3) restructured credit relationships with aircraft financiers
General Electric Credit Corporation, General Electric
Aircraft Engines and affiliates, Airbus and others; and
(4) a restructured relationship with the Air Transportation
Stabilization Board and other key creditor constituencies.
However, in accordance with the Debtors' fiduciary duties and to
ensure that the Merger Agreement represents the best transaction
for all stakeholders, the Debtors will give potential partners
one last opportunity to submit a competing proposal.
Plan Proposal Procedures
Any person or entity who wants to submit a competing proposal
must satisfy these requirements:
(A) Eligibility
1) Confidentiality: Any Competing Plan Sponsor must execute
a confidentiality agreement.
2) Disclosure: Any Competing Plan Sponsor must disclose to
the Debtors:
(a) all participants providing funding;
(b) the amount, source, and type of funding;
(c) the identity of any entity who will participate
without providing funding; and
(d) the principals of each entity that will
participate in the Competing Plan Sponsor's
proposal.
3) Deposit: Any Competing Plan Sponsor must either:
(a) make a $25,000,000 cash deposit at submission,
which will be held in an escrow account; or
(b) provide a $25,000,000 irrevocable letter of
credit for the benefit of the Debtors issued by
an acceptable financial institution.
4) Capacity to Consummate Transaction: Any Competing Plan
Sponsor must demonstrate the financial, legal, and
managerial capacity to consummate a transaction.
(B) Requirements
1) Proponent: The proposal must be submitted by a Qualified
Competing Plan Sponsor.
2) How and When: The proposal must:
(a) be in writing;
(b) include a cover letter summarizing the material
provisions;
(c) include the proposed form of the primary
documents, like the investment agreements, asset
purchase agreements a merger agreement; and
(d) be submitted by 5:00 p.m. eastern time, 30 days
after approval of the Plan Proposal Procedures,
to the Debtors:
Bruce Lakefield
Chief Executive Officer
US Airways Group, Inc.
2345 Crystal Drive
Arlington, Virginia 22227
John E. Luth
President and CEO
Seabury Securities LLC
540 Madison Avenue, 17th Floor
New York, New York 10022
Brian P. Leitch
Arnold & Porter LLP
370 Seventeenth Street, Suite 4500
Denver, Colorado 80202
to America West:
Douglas Parker
Chief Executive Officer
America West Holding Corporation
111 West Rio Salado Parkway
Tempe, AZ 85281
Timothy R. Pohl
Skadden, Arps, Slate, Meagher & Flom LLP
333 West Wacker Drive
Chicago, Illinois 60606
to the Official Committee of Unsecured
Creditors:
Scott L. Hazan
Otterbourg, Steindler, Houston & Rosen P.C.
230 Park Avenue
New York, New York 10169
3) Comprehensive Plan: The proposal must have funding and a
mechanism to facilitate confirmation and implementation
of a plan with treatment for each creditor class,
including general unsecured creditors, the Pension
Benefit Guaranty Corporation, the Air Transportation
Stabilization Board, General Electric Company and General
Electric Capital Corporation, and aircraft financiers.
Asset sale proposals under Section 363 of the Bankruptcy
Code must:
(a) identify the assets to be sold;
(b) state the purchaser and the terms of sale;
(c) demonstrate that the purchaser can close the
transaction;
(d) disclose the impacts that the asset sales will
have on the Debtors' principal stakeholders,
including employees and creditors; and
(e) disclose the impacts on the amount and status of
the claims.
4) Fees and Expenses: The proposal cannot require a break-up
fee, termination fee, other fee or expense reimbursement.
5) Treatment of Plan Investors: The proposal must identify
the treatment for the agreements between the Debtors and
the Plan Investors.
6) Cash Investment: The proposal must specify the amount and
the sources of cash to be invested in the Debtors.
7) Feasibility: The proposal must include evidence of
feasibility, including financial capacity of the
proponent, and likelihood that the proposal will obtain
antitrust or other regulatory approvals.
(C) Selection
1) No Qualified Competing Plan Proposals: If there are no
Qualified Competing Plan Proposals, the Debtors will
seek confirmation of a Plan implementing the Merger
Agreement and Investment Agreements.
2) Best and Final Proposals/Auction: If Qualified Competing
Plan Proposals are received by the deadline, the Plan
Sponsor will submit its Best and Final Qualified Bids.
In the alternative, the Debtors may hold an auction,
after giving notice to America West and the Plan
Investors.
3) Determination of Winner: The winner will be selected by
the Debtors' Board of Directors, after consultation with
the Committee's Professionals.
4) Approval Hearing: The Debtors will ask the Court to
schedule a hearing on approval of the Debtors' selection
of the best proposal. Each of the Investment Agreements,
which comprise part of the Approved Proposal, will be
separately approved. If no Qualified Competing Plan
Proposal is received by the Qualified Competing Plan
Proposal Deadline, or if no proposal is approved by the
Court by the Approval Deadline, the America West Merger
Agreement and related Investment Agreements will
automatically be deemed approved without any further
action by the Court or any other party.
Access to Information
The Debtors will provide America West, the Plan Investors and any
potential Competing Plan Sponsor with access to the Debtors'
books, records, facilities, key personnel, officers, independent
accountants and legal counsel to complete due diligence.
Information provided to potential Competing Plan Sponsors will
also be provided to America West and the Plan Investors.
Termination Fees
Mr. Leitch explains that unlike many transactions where a break-
up or termination fee is negotiated for the non-debtor "stalking
horse" bidder, here the termination fee for America West is equal
and bilateral. Both parties have invested time and resources in
the Merger Agreement. Both parties forewent the opportunity to
explore other transactions. Both parties have economic interests
in the Merger Agreement. Accordingly, the Merger Agreement
provides for a $15,000,000 termination fee under a variety of
circumstances.
America West will pay the Debtors the Termination Fee if the
Merger Agreement is terminated:
(a) by the Debtors because:
(1) the Shareholders Meeting was not held by 120 days
after the Merger Agreement or 60 days after the
Form S-4 Registration Statement, or the vote of
America West's shareholders was not taken;
(2) America West's Board of Directors has adversely
withdrawn, modified or qualified its adoption of
the Merger Agreement or the Directors'
Recommendation;
(3) America West entered into a transaction that
constitutes a superior proposal;
(4) America West knowingly and materially breached
its obligations under the Merger Agreement;
(5) America West made a knowing and material breach
of any representation, warranty, covenant or
agreement in the Merger Agreement; or
(6) America West's shareholders voted against the
Merger Agreement when there is a competing
proposal to acquire America West and that
transaction is consummated within 18 months; or
(b) by America West because its Board authorizes a
transaction that constitutes a superior proposal.
The Debtors will pay America West the Termination Fee if the
Merger Agreement is terminated:
(a) by America West because:
(1) the Debtors entered into another Qualified
Competing Plan Proposal;
(2) the Debtors breached obligations under the Merger
Agreement;
(3) the Debtors withdrew the Plan, abandoned the Plan
or do not contest efforts by another entity to
derail confirmation;
(4) the Merger is not approved by the Bankruptcy
Court within 45 days after approval of the Plan
Proposal Procedures; or
(5) the Debtors committed a breach.
The Break-Up Fees equal 1.8% of the value of the transaction.
Mr. Leitch assures Judge Mitchell that the Break-Up Fees are
reasonable given the size and complexity of the transactions.
The Break-Up Fees are similar to the protections offered to
"stalking horse" bidders in large and complex transactions. The
Break-Up Fees will compensate America West, ACE, Par and
Peninsula for the risk that an alternative transaction may become
the basis for a plan of reorganization, which will cause other
interested persons to submit competitive offers.
Form of Notice
The Debtors will:
(a) mail a copy of the Procedures Notice and a copy of the
Order approving the Plan Proposal Procedures to
potential plan sponsors; and
(b) cause the Procedures Notice to be published in The Wall
Street Journal (National Edition) and other
publications as the Debtors determine.
According to Mr. Leitch, the Notice Procedures constitute "good
and sufficient notice" of the Plan Proposal Procedures and the
Order. No additional notice is required.
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue
No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000)
USG CORP: Gets Open-Ended Extension of Rule 9027 Remove Period
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extends the
deadline within which USG Corporation and its debtor-affiliates
may file certain notices of removal through and including the date
that is 30 days after the effective date of a plan of
reorganization. The extension applies to:
(a) any prepetition asbestos-related actions brought against
U.S. Gypsum Company or any of the Debtors;
(b) prepetition non-asbestos actions brought against any of
the Debtors; and
(c) any asbestos-related or non-asbestos-related actions
brought postpetition against any of the Debtors.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A.,
in Wilmington, Delaware, told Judge Fitzgerald that the Debtors
need more time to determine which among their pending asbestos
products liability actions and other actions should be removed
from state court and subsequently transferred to the Bankruptcy
Court and the District Court. Mr. DeFranceschi explained that the
Debtors do not wish to take those steps unless and until those
steps are proven necessary or useful in the administration of
their Chapter 11 cases. The Debtors need to retain flexibility to
remove cases to federal court as their bankruptcy cases progress.
In addition, the Debtors may wish to remove certain non-asbestos-
related cases and, thus, need to preserve flexibility with respect
to those cases as well.
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. 85; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
VILLAS AT HACIENDA: Hires Matthew Waterman as Bankruptcy Counsel
----------------------------------------------------------------
Villas At Hacienda Del Sol asks the U.S. Bankruptcy Court for the
District of Arizona, for authority to employ Matthew R.K.
Waterman, Esq., and the law Firm of Waterman & Waterman, P.C. as
lead bankruptcy counsel in its chapter 11 restructuring.
As bankruptcy counsel, Matthew Waterman will render general
representation services and perform other legal services as may be
required by the Debtor.
To the best of the Debtor's knowledge, Matthew Waterman has no
interest adverse to the Debtor or its estate in any matter upon
which W&W is to be engaged, and its employment would be in the
best interest of this estate.
Matthew Waterman will bill the Debtor for services rendered
according to its normal hourly rates for attorneys, law clerks,
and paralegals performing work of a similar nature, subject to
application to the Court according to the terms and requirements
of the bankruptcy code and rules.
Headquartered in Tucson, Arizona, Villas At Hacienda Del Sol,
Inc., filed for chapter 11 protection on March 28, 2005. (Bankr.
D. Ariz. Case No. 05-01482). When the Company filed for
protection from its creditors, it reported estimated assets and
liabilities ranging from $10 million to $50 million
W.R. GRACE: Settles Three Claim Disputes from Jan. to March 2005
----------------------------------------------------------------
W.R. Grace & Co. and its debtor-affiliates filed with the U.S.
Bankruptcy Court for the District of Delaware a list of
settlements made with regard to certain claims and causes of
action brought by or against them in a judicial, administrative,
arbitral or other proceeding, for the period January 1, 2005, to
March 31, 2005:
Debtor Counter-party Claim Settlement
------ ------------- ----------------
W.R. Grace & Timothy Kane On January 25, 2005, the
Co.-Conn. case of Timothy Kane v.
Walt Disney World Co. and
W.R. Grace & Co.-Conn., et
al., was settled at
mediation. Mr. Kane
slipped on Vycor Ice &
Water Shield and fell from
the roof of the Walt
Disney World Grand
Floridian Resort Hotel
while erecting
scaffolding. As a result,
Mr. Kane was paralyzed.
Collectively, all
defendants will pay
$1,000,000. Settlement
amount: $430,000 paid by
Grace's insurance carrier.
W.R. Grace & Miller Brewing During the period from
Co.-Conn. Company May 1, 2002, through
July 12, 2002, Miller used
Grace crown closure
materials in the
manufacture of
approximately 1,740,000
cases of Miller beer.
Miller then began
receiving complaints that
foreign matter was
floating in the beer,
including in approximately
103,000 cases shipped to
the Dominican Republic.
Following a settlement
agreement on January 5,
2005, the beer was
recalled and destroyed.
Miller released Grace from
claims for all suspect
products. Settlement
amount: $550,000.
W.R. Grace & Town of Pembroke Grace supplied certain
Co.-Conn. waterproofing materials,
including Procor(R) for
use at the Bryantville
Elementary School in
Pembroke. Certain odor
problems arose which
required remediation and
repair. Settlement
occurred on March 21,
2005, and Grace's
financial contribution to
the settlement amount was
$61,339.
Headquartered in Columbia, Maryland, W.R. Grace & Co. --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally. The Company and its debtor-
affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts. (W.R. Grace Bankruptcy
News, Issue No. 85; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
WAYNE HARTKE: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Wayne Hartke
7637 Leesburg Pike
Falls Church, Virginia 22043
Bankruptcy Case No.: 05-11961
Chapter 11 Petition Date: May 19, 2005
Court: Eastern District of Virginia (Alexandria)
Judge: Robert G. Mayer
Debtor's Counsel: Lawrence J. Anderson, Esq.
Pels, Anderson & Lee, LLC
4833 Rugby Avenue, 4th Floor
Bethesda, Maryland 20814
Tel: (301) 986-5570
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Airgate PCS Inc. PCSA (94) 299 86
Akamai Tech. AKAM (111) 202 75
Alaska Comm. Sys. ALSK (33) 637 71
Alliance Imaging AIQ (63) 622 21
Amazon.com AMZN (162) 2,472 720
AMR Corp. AMR (697) 29,167 (2,311)
Atherogenics Inc. AGIX (36) 74 60
Blount International BLT (256) 425 98
Biomarin Pharmac BMRN (68) 233 15
CableVision System CVC (2,035) 11,141 410
CCC Information CCCG (113) 93 21
Cell Therapeutic CTIC (71) 185 94
Centennial Comm CYCL (486) 1,467 124
Choice Hotels CHH (204) 276 (23)
Cincinnati Bell CBB (593) 1,919 (8)
Clorox Co. CLX (346) 3,756 (158)
Compass Minerals CMP (69) 707 139
Delta Airlines DAL (6,352) 21,737 (2,968)
Deluxe Corp DLX (150) 1,556 (331)
Denny's Corporation DENN (265) 500 (93)
Dollar Financial DLLR (51) 319 81
Domino's Pizza DPZ (526) 450 26
Eagle Hospitality EHP (26) 177 N.A.
Echostar Comm-A DISH (1,830) 6,579 148
Fairpoint Comm. FRP (173) 819 (9)
Flow Intl. Corp. FLOW (7) 135 (9)
Foster Wheeler FWHLF (441) 2,268 (212)
Graftech International GTI (23) 1,068 256
ICOS Corp ICOS (38) 285 170
IMAX Corp IMAX (40) 235 24
Investools Inc. IED (7) 50 (19)
Knoll Inc. KNL (3) 570 67
Life Sciences LSRI (5) 173 1
Lodgenet Entertainment LNET (68) 301 20
Maytag Corp. MYG (78) 2,954 380
McDermott Int'l MDR (232) 1,450 34
McMoran Exploration MMR (85) 156 29
Neff Corp. NFFCA (43) 270 6
Northwest Airline NWAC (3,273) 13,821 (1,204)
Northwestern Corp. NWEC (603) 2,445 (692)
NPS Pharm Inc. NPSP (13) 397 306
ON Semiconductor ONNN (363) 1,112 237
Owens Corning OWENQ (4,132) 7,567 1,118
Pinnacle Airline PNCL (8) 166 31
Primedia Inc. PRM (777) 1,883 163
Protection One PONN (178) 461 (372)
Quality Distribution QLTY (26) 377 9
Qwest Communication Q (2,564) 24,129 469
RH Donnelley RHD (127) 3,972 (57)
Riviera Holdings RIV (27) 223 5
SBA Comm. Corp. A SBAC (104) 854 9
Sepracor Inc. SEPR (351) 974 605
St. John Knits Inc. SJKI (52) 213 80
Syntroleum Corp. SYNM (8) 48 11
Tivo Inc. TIVO (3) 160 (50)
U-Store-It Trust YSI (34) 536 N.A.
US Unwired Inc. UNWR (84) 413 45
Valence Tech. VLNC (43) 16 1
Vector Group Ltd. VGR (31) 505 152
Vertrue Inc. VTRU (32) 486 31
WR Grace & Co. GRA (118) 3,086 774
Worldgate Comm. WGAT (2) 14 4
*********
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 Junior M.
Pinili, and Peter A. Chapman, Editors.
Copyright 2005. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
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