/raid1/www/Hosts/bankrupt/TCR_Public/050526.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, May 26, 2005, Vol. 9, No. 123
Headlines
24 HOUR: Moody's Puts B2 Rating on New $700M Credit Facility
AAIPHARMA INC: Wants to Reject Useless Leases & Contracts
ACCIDENT & INJURY: Committee Taps Hance Scarborough as Counsel
ACCIDENT & INJURY: Gets Final Court Nod to Use Cash Collateral
ADELPHIA COMMS: Court Okays Tele-Media Settlement for $21.65MM
ALLIED HOLDINGS: March 31 Balance Sheet Upside-Down by $52 Million
AMERICA PENA: Sun Coast Will Auction Fairfield Shares on June 6
AMERICAN HEALTHCARE: Court OKs $125,000 DIP Loan on Interim Basis
AMERICAN HOMEPATIENT: Argument Before 6th Cir. Set for July 20
AMERICAN RESTAURANT: Solicitation Period Extended Until June 27
AQUAMARINE INC: List of 21 Largest Unsecured Creditors
ATA AIRLINES: Gets Court Nod to Ink AAR Aircraft Lease Pact
ATLAS AIR: Distributing 17.2M Shares After Citizenship Is Settled
BEAR STEARNS: Fitch Downgrades Classes BF & BB
BEATON HOLDING: Judge Kilburg Formally Closes Bankruptcy Case
BIG CITY: Paying Final Liquidating Cash Distribution on June 3
BUEHLER FOODS: Look for Bankruptcy Schedules on June 18
CARDIAC SERVICES: Hires Paul Jennings as Bankruptcy Counsel
CATHOLIC CHURCH: Creditors Vote to Accept St. George's Proposal
CEDU: Chapter 7 Trustee Hires Cozen O'Connor as Counsel
CHAS COAL: Judge Scott Formally Closes Ch. 11 Bankruptcy Case
CNA FINANCIAL: Moody's Withdraws Low-B Debt Ratings
CONGOLEUM CORP: Has Until Aug. 13 to Make Lease-Related Decisions
CREDIT SUISSE: S&P Junks Series 2001-26 Class D-B-5 Certificates
DELTA AIR: Names Hank Halter Finance VP & Controller
DORIAN GROUP: Wants to Auction & Sell Its Assets
DYNEGY INC: Shareholders Approve Election of 13 Directors
EAGLEPICHER INC: Court Extends Interim DIP Financing to June 24
ELITE FLIGHT: Losses & Deficit Trigger Going Concern Doubt
EMMIS COMMS: S&P Rates Proposed $300 Mil. Sr. Unsec. Notes at B-
EMPIRE FINANCIAL: Recurring Losses Trigger Going Concern Doubt
EPICUS COMMS: Remains Delinquent in its Tax Payment Obligations
EXCALIBUR IND.: Restructuring Stillwater National's Secured Debt
EXCO RESOURCES: Posts $9 Million Net Loss in First Quarter 2005
FIRST FRANKLIN: Good Credit Support Cues S&P to Hold Ratings
FORD MOTOR: Inks Deal to Take Back 24 Plants from Visteon Corp.
FREEDOM MEDICAL: Has Until Aug. 23 to Make Lease Decisions
GE COMMERCIAL: Fitch Puts Low-B Ratings on 3 Certificate Classes
GENEVA STEEL: Chapter 11 Trustee Hires Block Markus as Counsel
GREAT NORTHERN: Chapter 7 Trustee Hires DLA Piper as Tax Counsel
GXS CORPORATION: Moody's Junks $235M Senior Subordinated Debt
HEALTHSOUTH CORP: Launching $150M Sr. Unsecured Loan Syndication
HIGH VOLTAGE: Creditors Must File Proofs of Claims by May 31
HUFFY CORP: Wants Until Sept. 15 to Decide on Leases
INDYMAC ARM: Moody's Junks Class B-3 Subordinated Certificates
INTERSTATE BAKERIES: Amends JPMorgan DIP Financing Agreement
ISCO INTERNATIONAL: Losses & Deficit Trigger Going Concern Doubt
J.P. MORGAN: Fitch Affirms B Rating on $10.7 Million Certificates
JAFRA COSMETICS: Good Debt Leverage Cues S&P's Positive Outlook
JOHNSONDIVERSEY: Fitch Lowers Senior Secured Debt Rating to BB-
KAISER ALUMINUM: Wants Insurers' Confirmation Objections Overruled
KERR-MCGEE: S&P Rates $5.5 Billion Senior Secured Facility at BB+
LARRY BJURLIN: First Meeting of Creditors Scheduled for May 31
LBACK DEV'T: MLSBF Wants Case Dismissed or Converted to Chapter 7
LIBERTY GROUP: Fortress Investment Sale Cues S&P to Lift Ratings
MAYTAG CORP: Ripplewood Offers to Buy Company for $2.1 Billion
MERRILL LYNCH: Fitch Lowers Class J Seven Notches to C
METROMEDIA FIBER: Gets Court Nod to Delay Entry of Final Decree
MIRANT CORP: Court Approves Resolution of Two Contractor's Claims
MIRANT CORP: Amends Senior VP Lloyd Warnock's Employment Agreement
MIRANT CORP: Gets Consent Order on Use of Potomac River Plant
MIRANT CORP: Says T. Zerngast Can't Testify in Valuation Hearing
MITEK SYSTEMS: March 31 Balance Sheet Upside Down by $1.4 Million
MORGAN STANLEY: Fitch Affirms $20.8 Million Class H at B+
NORCROSS SAFETY: $495 Mil. Odyssey Sale Cues S&P to Watch Ratings
NORSTAN APPAREL: Wants to Employ Abacus Advisors as Advisor
NORTEL NETWORKS: Appoints Paul Karr as Controller
NORTHERN BERKSHIRE: Fitch Lowers 2004 Revenue Bonds to BB
OUTSOURCING SOLUTIONS: Ask Ct. to Enter Final Decree & Close Case
OWENS CORNING: 30 Creditors Transfer $2,966,158 in Claims
PROTEIN POLYMER: March 31 Balance Sheet Upside-Down by $1.4 Mil.
PERKINELMER INC: Moody's Raises Senior Implied Debt Rating to Ba1
SCHUFF INTERNATIONAL: Moody's Upgrades $81M Sr. Notes Junk Rating
SIRIUS SATELLITE: Moody's Withdraws Planned Notes Junk Rating
SOUNDVIEW HOME: Fitch Puts Low-B Ratings on 3 Certificate Classes
SPECTRX INC: March 31 Balance Sheet Upside-Down by $5 Million
SPIEGEL INC: Plan Solicitation and Tabulation Results
SPIEGEL INC: Judge Lifland Confirms Joint Plan of Reorganization
STATEN ISLAND: Ba3 Bond Rating Remains on Moody's Watchlist
SUNNY DELIGHT: $144 Mil. PepsiCo Sale Prompts S&P to Hold Ratings
THILMANY LLC: Moody's Assigns B2 Rating to $145 Million Term Loan
TRANSGENE S.A.: Ernst & Young Raises Going Concern Doubt
TRUMP HOTELS: Distribution Record Date is Still March 28
TRUMP HOTELS: Trump Indiana Will Pay $20.7MM to Settle Tax Claims
UAL CORP: Court Postpones Ruling on Machinists' Pact Until May 31
UAL CORPORATION: Details Tentative Agreement with Mechanics
US AIRWAYS: U.S. Bank's Move for Adequate Protection Draws Fire
US AIRWAYS: San Francisco Wants Notice Before Bond Cancellation
US AIRWAYS: Mediating Air Wisconsin Jet Service Pact with UAL
USG CORP: Gets Court OK to Employ Meckler as Environmental Counsel
V-ONE CORP: AEP Networks Inks Pact to Acquire V-ONE Corp.
VECTOR GROUP: Reselling $30 Million Senior Convertible Notes
VILLAS AT HACIENDA: Section 341 Meeting Slated for June 23
VISTEON CORP: Inks Deal to Give Back 24 Plants to Ford Motor Co.
VISTEON CORP: Ford Agreement Prompts S&P's Watch Positive
VIVA INT'L: Zero Revenue & Net Losses Trigger Going Concern Doubt
W.R. GRACE: Can't Hire Cahill Gordon to Appeal Solow's NY Action
WELLSFORD REAL: Joint Venture to Sell Office Building for $31.4MM
WINN-DIXIE: Has Until Sept. 19 to Make Lease Decisions
WORLDCOM INC: Board Re-Elected Despite Protest from 9 Shareholders
YUKOS OIL: Plans to Restructure & Wind Up Three Units
ZAKOTAMENTH INVESTMENTS: Case Summary & 4 Largest Creditors
* Dr. David Friend Joins Alvarez & Marsal as Managing Director
* FTI Consulting to Acquire Cambio Health for $43 Million
* J. Gordon Joins Navigant Consulting's Discov. Services Practice
*********
24 HOUR: Moody's Puts B2 Rating on New $700M Credit Facility
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Moody's Investors Service assigned ratings to 24 Hour Fitness
Worldwide, Inc. in connection with the pending acquisition of the
company by private equity firm Forstmann Little & Co. Moody's
assigned a B2 rating to the proposed $700 million senior secured
credit facility, a B2 senior implied rating and a stable outlook.
All previously assigned ratings of 24 Hour Fitness will be
withdrawn upon completion of the acquisition.
The ratings reflect:
* a significant increase in lease adjusted leverage pro forma
for the acquisition;
* large growth capital expenditures and increasing competition
in the fitness industry;
* solid operating performance;
* strong market position;
* growth opportunities in the fitness industry; and
* good liquidity.
Moody's assigned these ratings to 24 Hour Fitness:
* $100 million Revolving Credit Facility due 2011, rated B2;
* $600 million Tranche B Term Loan Facility due 2012, rated B2;
* Senior Implied, rated B2;
* The ratings outlook is stable.
Moody's will withdraw these ratings of 24 Hour Fitness (Old) upon
completion of the acquisition:
* $75 million Senior Secured Revolving Credit Facility,
due 2008, rated B1;
* $401 million Senior Secured Term Loan, due 2009, rated B1;
* Senior Implied, rated B1; and
* Senior Unsecured Issuer Rating, rated B3.
Proceeds from the proposed $600 million tranche B term loan
facility, $500 million of 5% subordinated debentures and a
$450 million cash equity contribution are expected to be used to:
* repay all existing debt of the company,
* purchase outstanding equity securities,
* pay fees an expenses and
* provide working capital.
The ratings reflect the significant increase in leverage and
weaker credit metrics of the company pro forma for the
acquisition. Total debt outstanding as of March 31, 2005 was
$401 million and would increase to $1.1 billion on a pro forma
basis. Lease adjusted debt to EBITDAR was about 5 times at
December 31, 2004 and would be about 7 times on a pro forma basis.
Free cash flow to debt was about 18% in 2004 and is expected to
decrease to about 5% in 2005.
Although the company's leverage will increase substantially, the
company's liquidity profile is solid. The company expects to have
over $30 million in cash at closing and no outstanding borrowings
under the $100 million revolving credit facility. The new term
loan has a 7 year term and amortization requirements are minimal.
The $500 million of subordinated notes are expected to be held by
co-investors in the equity of the company and have a final
maturity of 13 years, with amortization commencing in year 11.
The company has continued its strong operating performance.
Revenues have grown from $908 million in 2002 to about $1 billion
in 2004. EBITDA margins (excluding non-recurring charges)
improved from 14% to 17% over the same period. The company
substantially increased its capital spending in 2004 as part of a
strategy to increase the rate of new club openings. Total capital
expenditures were about $100 million in 2004 and are expected to
increase significantly in 2005. Rent expense was $166 million in
2004 and will continue to increase as the company expands its club
base.
The ratings benefit from improving free cash flow generation from
the company's base of 334 fitness clubs and positive industry
trends. 24 Hour Fitness is the second largest fitness operator
(based on number of locations) in the United States and has a
number one or two market share in most of its primary markets.
The company has improved cash flow generation by increasing member
retention rates and growing ancillary revenues such as personal
training and nutritional products. Cash flows should also
continue to benefit from the maturation of the significant number
of fitness clubs opened in the last few years. The fitness club
industry has grown solidly over the past five years and should
continue to benefit from demographic trends, including the aging
population, and the growing awareness of the importance of
physical fitness.
The ratings also reflect the challenges facing the fitness club
industry. The industry is highly fragmented and the number of
fitness club competitors continues to grow due to relatively low
barriers to entry. Customer attrition rates have been high and
operating costs continue to rise significantly.
The stable ratings outlook anticipates continued club expansion by
24 Hour Fitness and modest organic revenue growth. Free cash flow
is expected to decline substantially in 2005 relative to 2004 due
primarily to the increase in cash interest expense as a result of
the new capital structure and increased capital expenditures.
Free cash flows are expected to be used to build the company's
liquidity position or repay borrowings under the term loan.
The ratings would likely be upgraded if the company successfully
executes its expansion strategy and improves profitability levels
such that sustainable free cash flow from operations to debt
exceeds 8% and lease adjusted leverage is below 5.5 times.
The rating could be pressured if the company increases debt levels
to finance a significant acquisition or recapitalization or if the
company is unable to maintain expected free cash flow levels due
to declining profitability or higher that expected capital
expenditure needs.
The B2 rating assigned to the proposed senior secured credit
facility, notched at the senior implied level, reflects a first
priority pledge of the capital stock of material domestic
subsidiaries and 65% of the capital stock of material first tier
foreign subsidiaries. The senior secured credit facility is
expected to have financial covenants that set maximum levels of
senior leverage and capital expenditures plus minimum cash
interest coverage.
Headquartered in San Ramon, California, 24 Hour Fitness Worldwide,
Inc. is the second largest fitness club operator with 330 fitness
clubs in the Unites States and 13 in Asia. The company has
approximately 2.8 million members. Revenues for 2004 were
approximately $1 billion.
AAIPHARMA INC: Wants to Reject Useless Leases & Contracts
---------------------------------------------------------
aaiPharma Inc. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the District of Delaware, for permission to reject
unexpired leases of nonresidential real property; abandon personal
property, furniture, fixtures and equipment; and walk away from
other burdensome personal property leases and executory contracts.
aaiPharma has evaluated its nonresidential real property leases
for locations where the Debtors won't continue to operate and
concluded they don't contribute to the company's ongoing business
plan. By rejecting these useless leases at the outset of their
chapter 11 case, the Debtors will save $158,000 a month in
administrative costs associated with the continued occupancy of
the premises subject to the real property leases.
Additionally, the Debtors also ask the Court for permission to
walk away from some other executory contracts, including:
* aircraft leases,
* severance agreements,
* office equipment agreements, and
* a manufacturing agreement,
that are burdensome and no longer necessary for business
operations.
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.
ACCIDENT & INJURY: Committee Taps Hance Scarborough as Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of Accident & Injury
Pain Centers, Inc., sought and obtained permission from the U.S.
Bankruptcy Court for the Northern District of Texas to employ and
retain Hance Scarborough Wright Ginsberg & Brusilow, LLP, as its
counsel.
Hance Scarborough will:
(1) Consult with the Debtor concerning the administration of
the case;
(2) Investigate the acts, conduct, assets, liabilities, and
financial condition of the Debtor, the operation of the
Debtor's business, and any other matter relevant to the
case or to the formulation of a plan;
(3) Participate in the formulation of a plan and advise those
represented by the Committee of the Committee's
determinations as to any plan formulated;
(4) Prepare on behalf of the Committee all necessary
motions, applications, answers, orders, reports, and
papers in connection with the representation of the
Committee; and
(5) Perform such other services as are in the interest of the
Committee.
E.P. Keiffer, Esq., a partner at Hance Scarborough, discloses
rates of the professionals at his Firm:
Designation Hourly Rate
----------- -----------
Partner $325-$500
Associate $200
Paralegals $50-$110
Hance Scarborough 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 Dallas, Texas, Accident & Injury Pain Centers,
Inc. -- http://www.accinj.com/-- operates clinics that treat
patients with highly advanced therapy equipment and techniques.
The Company and its debtor-affiliates filed for chapter 11
protection on Feb. 10, 2005 (Bankr. N.D. Tex. Case No. 05-31688).
Glenn A. Portman, Esq., at Bennett, Weston & LaJone, P.C.,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they reported
estimated assets and debts of $10 million to $50 million.
ACCIDENT & INJURY: Gets Final Court Nod to Use Cash Collateral
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
authorizes Accident & Injury Pain Centers, Inc., and its debtor-
affiliates to use their lenders' cash collateral.
Comerica Bank asserts a first priority lien on Accident & Injury's
accounts receivable, pledged to secure repayment of a $2.2 million
line of credit. Comerica also asserts a first priority lien on
equipment securing repayment of $718,000 of equipment loans.
Additionally, Northeast Bank, General Electric Capital Corporation
and Ikon Financial Corporation assert various liens on specific
equipment.
Glenn A. Portman, Esq., at Bennett, Weston & LaJone, P.C., in
Dallas, Texas, reminded the Court that the cash collateral is the
Debtors' sole source of operating funds.
Headquartered in Dallas, Texas, Accident & Injury Pain Centers,
Inc. -- http://www.accinj.com/-- operates clinics that treat
patients with highly advanced therapy equipment and techniques.
The Company and its debtor-affiliates filed for chapter 11
protection on Feb. 10, 2005 (Bankr. N.D. Tex. Case No. 05-31688)
after the U.S. District Court for the Northern District of Texas
ruled against them in the civil suit commenced by Allstate
Insurance Company, et al. Glenn A. Portman, Esq., at Bennett,
Weston & LaJone, P.C., represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they reported estimated assets and debts of
$10 million to $50 million.
ADELPHIA COMMS: Court Okays Tele-Media Settlement for $21.65MM
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved Adelphia Communications Corporation and its debtor-
affiliates' global settlement agreement and release with these
Tele-Media parties:
-- Tele-Media Constructors Company,
-- Tele-Media Corporation of Delaware,
-- Robert E. Tudek, Trustee for The Robert E. Tudek Revocable
Trust dated January 12, 1998, as amended,
-- Robert E. Tudek, Jr.,
-- Constance A. Vicente,
-- Thomas E. Mundy,
-- James J. Mundy,
-- Peggy L. Tudek,
-- Robert D. Stemler,
-- Allen C. Jacobson,
-- Charles J. Hilderbrand,
-- Robert H. Stewart,
-- Steven E. Koval,
-- Tony S. Swain,
-- Gerald P. Corman,
-- Richard W. Shore,
-- Russell G. Bambarger,
-- Frank R. Vicente,
-- Thomas F. Kenly,
-- Robert R. Shepherd,
-- Ralph E. Steffan, and
-- John R. Previs.
Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New
York, related that the Tele-Media Parties own interests in a
number of Tele-Media partnerships, corporations and limited
liability companies, both Debtors and non-Debtors, that are
engaged in owning or operating cable television systems, radio
stations, and other related businesses.
Beginning in 1992, the Tele-Media Parties and certain ACOM
Debtors entered into a variety of transactions through which ACOM
financed, purchased or became an equity participant in several
groups of cable operations owned and managed by Tele-Media. By
December 31, 1999, ACOM indirectly held controlling interests in
each of these Joint Ventures, each of which is a Debtor:
* Tele-Media Company of Tri-States, L.P.:
-- ACOM 82%
-- Tele-Media 18%
* TMC Holdings Corporation:
-- ACOM 75%
-- Tele-Media 25%
* Tele-Media Investment Partnership, L.P.:
-- ACOM 75%
-- Tele-Media 25%.
The Joint Ventures' subsidiaries include these Debtors:
-- CMA Cablevision Associates VII, L.P.,
-- CMA Cablevision Associates XI, Limited Partnership,
-- Adelphia Company of Western Connecticut,
-- TMC Holdings, LLC,
-- Eastern Virginia Cablevision, L.P.,
-- Tele-Media Company of Hopewell-Prince George, and
-- Eastern Virginia Cablevision Holdings, LLC.
As reported in the Troubled Company Reporter on Apr. 25, 2005,
each of the JV Entities was operated previously by Tele-Media
Delaware pursuant to certain management agreements. In September
2003, certain ACOM Debtors entered into transition services
agreements with Tele-Media Delaware that provided the transition
of the management of the JV Entities to the Debtors. By
March 31, 2004, the Debtors replaced Tele-Media Delaware as
managers of the JV Entities and assumed full day-to-day
operations of the cable systems.
Disputes Between the Parties
Since the Debtors' bankruptcy petition date, the Tele-Media
Parties have raised numerous objections to the Debtors' handling
of the JV Entities' bankruptcy cases.
As previously reported, on August 5, 2004, the Tele-Media Parties
requested the appointment of an examiner for each of the JV
Entities' Chapter 11 cases. The Tele-Media Parties alleged that
the ACOM Debtors' management and board of directors breached
their fiduciary obligations to the creditors and equity holders
of the JV Entities. The Examiner Motion raised numerous complex
factual issues.
In June 2004, the Debtors initiated a preference action against
each of Tele-Media Delaware and Tele-Media Constructors. Through
the Preference Actions, the Debtors sought to recover around
$93.6 million in allegedly preferential payments. The Court
later stayed the actions.
On May 14, 2004, the Court allowed the Tele-Media Parties to
intervene in the adversary proceeding entitled, Adelphia
Communications Corp., et al., v. Bank of America, et al. The
Tele-Media Parties asserted that there are additional claims that
they could assert in connection with the Co-Borrowing Facilities
against the agents and lenders.
After the Debtors took over the day-to-day management of the JV
Entities in September 2003, the parties have had extensive
business, operational and other related disputes. The Debtors
have been engaged in extensive settlement negotiations with the
Tele-Media Parties since the filing of the Examiner Motion.
Tele-Media Claims
The Tele-Media Parties filed 691 separate proofs of claim against
the ACOM Debtors, of which 210 claims allege breaches of
fiduciary obligation and fraudulent inducement by the Debtors to
pledge specific JV Entities' interests in support of the Co-
Borrowing Facilities. The Fiduciary Duty Claims total $638.7
million.
Tele-Media Delaware and Tele-Media Constructors also filed an
additional 481 claims related to construction work and management
fees. The claims, many of which the ACOM Debtors believe are
duplicative, total over $1.25 billion.
Settlement Agreement
Subject to the Judge Gerber's approval, the Settlement Agreement
resolves the Tele-Media Claims, the Examiner Motion and other
existing issues between the Debtors and the Tele-Media Parties.
The principal provisions of the Settlement are:
a. ACOM will pay the Tele-Media Parties $21.65 million as
settlement;
b. The Tele-Media Parties will sell, assign and transfer all
of their Tele-Media Tri-States Interests, Tele-Media TMC
Holdings Shares and Tele-Media Investment Partnership
Interests to ACOM;
c. Tele-Media Delaware will pay ACOM $912,500 at closing and
assume responsibility for administering and paying any
outstanding and unpaid invoices with respect to claims made
under workers' compensation policies and attributable to
the JV Entities;
d. Of the 691 Tele-Media Claims, the Debtors will allow
22 reduced and allowed claims aggregating around $5.5
million. The remaining Tele-Media Claims will be
disallowed and expunged;
e. The parties will exchange mutual general releases of all
claims;
f. ACOM will dismiss the Preference Actions with prejudice;
g. The Tele-Media Parties will transfer any rights they have
asserted or could assert in connection with the Bank of
America Adversary Proceeding to the Debtors; and
h. The Tele-Media Parties will withdraw the Examiner Motion.
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)
ALLIED HOLDINGS: March 31 Balance Sheet Upside-Down by $52 Million
------------------------------------------------------------------
Allied Holdings, Inc. (Amex: AHI) reported results for first
quarter ended March 31, 2005. The Company reported revenues of
$221.0 million in the first quarter of 2005 compared to revenues
of $212.2 million in the first quarter of 2004, an increase of
4.1%, or $8.8 million. The Company also reported a net loss of
$10.1 million, for the three months ended March 31, 2005 compared
to a net loss of $9.0 million, for the three months ended March
31, 2004.
The increase in revenues was due primarily to an increase in
revenue per vehicle delivered, partially offset by a 2.7% decrease
in the volume of vehicles that the Company delivered during the
three months ended March 31, 2005 compared to the three months
ended March 31, 2004. The reduction in our volume was less than
the reported 4.6% decline in OEM production for the comparable
periods. During the first quarter of 2005, revenue per vehicle
delivered increased by $6.88, or 7.3%, over the first quarter of
2004. The increase in revenue per unit is primarily the result of
an increase per unit of $2.56 due to the increase in fuel
surcharges, an increase of $1.32 per unit due to the strengthening
of the Canadian dollar and an increase of $1.30 per unit due to
certain rate increases.
The increase in the net loss for the three months ended March 31,
2005 compared to the three months ended March 31, 2004 was the
result of higher pension expense for our employees subject to
collective bargaining agreements and workers' compensation
expenses in the first quarter of 2005, an adjustment that reduced
operating taxes and licenses in the first quarter of 2004 related
to a 2001 licensing fee, an increase in interest expense in the
first quarter of 2005 compared to 2004 and a gain on disposal of
operating assets in the first quarter of 2004. The effect of
these items was partially offset by the favorable impacts of the
revenue increases and lower depreciation expense in the first
quarter of 2005 compared to the same period in 2004.
Benefits related to our employees subject to collective bargaining
agreements were higher for the first quarter of 2005 compared to
the first quarter of 2004 due to provisions of the master
agreement with the International Brotherhood of Teamsters that
went into effect during the second quarter of 2004. The Company
estimates that this increased our expenses by approximately
$1.5 million in the first quarter of 2005 compared to the first
quarter of 2004. Workers' compensation expense was also
approximately $700,000 higher during the first quarter of 2005
compared to the first quarter of 2004 due primarily to a change in
accounting estimate related to retrospective adjustments to the
workers' compensation claims liability in Canada. In the first
quarter of 2004 a change in estimate related to licensing fees in
2001 resulted in an expense reversal of approximately $1.1 million
in operating taxes and licenses.
Interest expense was $800,000 higher in the first quarter of 2005
compared to the first quarter of 2004 due to additional
borrowings, higher interest rates and certain financing fees. In
the first quarter of 2004, the Company recorded a gain of $1.1
million related to the sale of excess land in Canada. The
increases in revenues had only a slight positive offsetting effect
on operating income since most of the revenue increase had
corresponding cost increases, including fuel costs and the costs
in Canada due to the strengthening of the Canadian dollar. The
decrease in depreciation and amortization expense of $2.2 million
in the first quarter of 2005 compared to the first quarter of 2004
was due primarily to a decrease in the depreciable asset base,
which has been reduced due to certain aged equipment becoming
fully depreciated and our decision to upgrade and extend our fleet
through our remanufacturing program.
Earnings before interest, taxes, depreciation, amortization, gains
and losses on disposal of assets, other non-operating income and
expense items and special charges for the first quarter of 2005
were $6.4 million compared to $7.8 million for the first quarter
of 2004, a decline of $1.4 million. The decline in Adjusted
EBITDA in the first quarter of 2005 compared to the first quarter
of 2004 was a result of higher union pension and workers'
compensation expenses and higher license fees that were partially
offset by the impact of the increase in revenues.
About the Company
Allied Holdings, Inc. is the parent company of several
subsidiaries engaged in providing distribution and transportation
services of new and used vehicles to the automotive industry. The
services of Allied's subsidiaries span the finished vehicle
distribution continuum and include car-hauling, intramodal
transport, inspection, accessorization and dealer prep. Allied,
through its subsidiaries, is the leading company in North America
specializing in the delivery of new and used vehicles.
At Mar. 31, 2005, Allied Holdings, Inc.'s balance sheet showed a
$51,869,000 stockholders' deficit, compared to a $41,549,000
deficit at Dec. 31, 2004.
AMERICA PENA: Sun Coast Will Auction Fairfield Shares on June 6
---------------------------------------------------------------
The Estate of America E. Pena aka America Pena defaulted on a Loan
and Security Agreement, dated June 22, 1998, with Citimortgage,
Inc., aka Citibank N.A.
Citimortgage assigned the security to Sun Coast Management
Corporation.
The security consists of 450 shares of capital stock in Fairfield
Views Inc., and all right, title, and interest in and to a
Proprietary Lease for Apartment 6E in the building known as 3103
Fairfield Avenue, located in Riverdale, New York.
Sun Coast will conduct a public sale of the collateral on June 6,
2005, at 9:00 a.m. on the steps of the Queens County General
Courthouse located at 88-11 Supthin Boulevard, in Jamaica, New
York.
The entire amount of the purchase price must be paid by certified
check, payable directly to Thomas E. Wynne. He is the attorney
for Sun Coast. Mr. Wynne can be contacted at:
Thomas E. Wynne
1325 Franklin Avenue
Garden City, NY 11530
Tel: (516) 248-2600
The transfer to the purchaser of the stock and the proprietary
lease will be made by stock power and assignment of lease
previously executed by the Estate of America E. Pena only upon the
approval of cooperative board of the successful bidder.
AMERICAN HEALTHCARE: Court OKs $125,000 DIP Loan on Interim Basis
-----------------------------------------------------------------
American Healthcare Services, Inc., and its debtor-affiliates
asked the U.S. Bankruptcy Court for the Northern District of
Georgia for authority to borrow money from Allied Capital
Corporation, the company's prepetition secured lender, under these
terms:
(a) Allied Capital will provide post-petition DIP loans to the
Debtors in the form of a line of credit up to a total
maximum amount of $125,000;
(b) Each loan request to Allied Capital must be in writing and
must state the Debtor liable for the repayment for that
particular loan;
(c) The obligations of each Debtor are be limited to the
advances received by or made for the benefit of such
Debtor;
(d) The advances will be limited for the purposes of and in
the amounts (subject to a 15% variance) in the proposed
budget or any subsequent budgets agreed on by the Debtors
and Allied Capital;
(e) The total outstanding principal balance of the DIP loans
will bear interest at a rate of 10% per annum. The
Debtors agree to make monthly payments to Allied
Capital in the amount of one-half of the accrued interest
(which would total 5%) for a period no greater than six
months from the date the Court approves the DIP Financing;
(f) The DIP Loan from Allied Capital will be secured by:
(i) a first priority priming lien on and security interst
in all of the Debtors' assets pursuant to Sec. 364(d)
of the Bankruptcy Code;
(ii) a first priority lien on and in and security interest
in any of the Debtors' assets pursuant to Sec.
364(c)(2) of the Bankruptcy Code; and
(g) The DIP Loan from Allied Capital will be evidenced by one
or more promissory notes and agreements.
J. Ashley Reynolds, Esq., at Scroggins & Williamson, in Atlanta,
Georgia, told the Court that except for the currently available
cash collateral, the Debtors have no cash or other funds available
to operate. The currently available cash collateral is
insufficient to enable the Debtors to meet their ongoing expenses.
Consequently, Mr. Reynolds says, without this new postpetition
financing, they will be unable to pay their postpetition expenses
and the value of the Debtors' remaining property will be
diminished to the detriment of all creditors.
The Honorable C. Ray Mullins authorized the Debtors, on an interim
basis, to draw on the DIP facility. The Court will hold a final
hearing to approve the DIP Loan and the financing documents on
June 6, 2005, at 9:30 a.m.
Headquartered in Roswell, Georgia, American Healthcare Services,
Inc. -- http://www.american-healthcare-services.com/-- provides
practice management to physicians and other health care providers
who work in the fields of ear, nose, throat and head and neck
medicine, including financial and administrative management
services. The Company and its debtor-affiliate filed for chapter
11 protection on March 11, 2005 (Bankr. N.D. Ga. Case No.
05-64660). When the Debtors filed for protection from their
creditors, they listed estimated assets of $1 million to $10
million and estimated debts of $10 million to $100 million.
AMERICAN HOMEPATIENT: Argument Before 6th Cir. Set for July 20
--------------------------------------------------------------
American HomePatient, Inc. (OTCBB: AHOM) reported that oral
argument before the United States Court of Appeals for the Sixth
Circuit has been set for July 20, 2005 on the previously-announced
appeal (Case No. 03-6500) by the Company's senior debt holders
related to the confirmation order originally issued by the United
States Bankruptcy Court for the Middle District of Tennessee and
subsequently confirmed by the United States District Court.
As previously reported in the Troubled Company Reporter, American
HomePatient sought and obtained confirmation of a chapter 11 plan
in May 2003 that forced a restructuring its long term debt
obligations to its secured lenders, promised to full payment to
unsecured creditors with interest, and left shareholders
unimpaired. The plan took effect in July 2003.
American HomePatient and its debtor-affiliates filed for chapter
11 protection on August 5, 2002 (Bankr. M.D. Tenn. Case No. 02-
08915). Glenn B. Rose, Esq., at Harwell Howard Hyne Gabbert &
Manner, PC, represents the Debtors. Houlihan Lokey Howard & Zukin
Capital served as the Company's Financial Advisors.
About the Company
American HomePatient, Inc. is one of the United States' largest
home health care providers with 274 centers in 35 states. Its
product and service offerings include respiratory services,
infusion therapy, parenteral and enteral nutrition, and medical
equipment for patients in their home. American HomePatient,
Inc.'s common stock is currently traded in the over-the-counter
market or, on application by broker-dealers, in the NASD's
Electronic Bulletin Board under the symbol AHOM or AHOM.OB.
At Mar. 31, 2005, American HomePatient, Inc.'s balance sheet
showed a $19,330,000 stockholders' deficit, compared to a
$20,729,000 deficit at Dec. 31, 2004.
AMERICAN RESTAURANT: Solicitation Period Extended Until June 27
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Los Angeles Division, extended the time during which American
Restaurant Group, Inc., and its debtor-affiliates have the
exclusive right to solicit acceptances of their Plan of
Reorganization through and including June 27, 2005.
As previously reported in the Troubled Company Reporter on
April 5, 2005, the Ad Hoc Committee of Senior Secured Noteholders
appointed in the Debtors' chapter 11 cases asked the Court not to
extend the Debtors' exclusive plan filing and solicitation
periods. The Debtors' exclusive plan filing period ended on
March 28.
Headquartered in Los Altos, California, American Restaurant Group,
Inc., through its subsidiaries operating as Stuart Anderson's,
specializes in U.S.D.A. Choice fresh-cut steak; seasoned, seared,
and slow-roasted prime rib; and a variety of seafood entrees
complete with 'all the fixin's'. The company and its debtor-
affiliates filed for chapter 11 protection on Sept. 28, 2004
(Bankr. C.D. Calif. Case No. 04-30732). Thomas R. Kreller, Esq.,
at Milbank, Tweed, Hadley & Mccloy represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $77,873,000 in total assets and
$273,395,000 in total debts.
AQUAMARINE INC: List of 21 Largest Unsecured Creditors
------------------------------------------------------
Aquamarine Inc., released a list of its Largest Unsecured
Creditors:
A. Aquamarine (Kona), Inc.'s Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
GE Capital Plyglass Trimaran/ $1,468,155
[44 Old Ridgebury Road Coastwise Passenger
Danbury, CT 06877] Vessel "Kona Dream"
Official No. 522814
Value of security:
$100,000
B. Aquamarine (Hawaii), Inc.'s 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
GE Capital Triple-screw diesel $1,468,155
[44 Old Ridgebury Road excursion vessel/
Danbury, CT 06877] commercial passenger
identified as
"American Dream"
Official No. 1021672
Value of security:
$750,000
Internal Revenue Service $581,904
300 Ala Moana Blvd, MS H240
Honolulu, HI 96850-4992
Hawaii Dept. of Taxation $213,403
Bankruptcy Collection Unit
PO Box 259
Honolulu, HI 96809-0259
Hawaii DLIR- Unemployment $132,023
Ins
Aquamarine, Inc. $92,764
Bank of Hawaii $92,400
State of Hawaii - DOT $61,900
Frank Alexich $32,700
Maui Molokai Sea Cruises $29,500
Arthur Van Diggelen $19,650
HMAA $9,782
Hawaii Business Equipment $8,250
B&E Petroleum $6,877
Chu & Waters $6,173
Atlantis Adventure LLC $5,944
Pacific Lightnet Communications $5,944
Victoria Ward Ltd. $5,790
Bankcard Center $5,186
Diagnostic Laboratory $5,185
Hilton Hawaiian Village $4,431
Headquartered in Honolulu, Hawaii, Aquamarine Inc., is the
operator of Dream Cruises. The Company and its debtor-affiliate
filed for chapter 11 protection on March 22, 2005 (Bankr. D.
Hawaii Case Nos. 05-00631). Steven Guttman, Esq., at Kessner Duca
Umebayashi Bain & Matsunaga represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed an estimated $1 Million to $10
Million in assets and debts.
ATA AIRLINES: Gets Court Nod to Ink AAR Aircraft Lease Pact
-----------------------------------------------------------
As a part of its ongoing restructuring efforts, ATA Airlines,
Inc., rejected leases of a number of aircraft. Although the
airline is still in the process of developing a fleet plan,
Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis,
Indiana, says it is essential for ATA's continued operations to
replace a portion of the rejected aircraft.
In this regard, the Debtors sought and obtained the U.S.
Bankruptcy Court for the Southern District of Indiana's permission
to enter into an aircraft lease with AAR-GS 737
Classics Leasing LLC.
Pursuant to a Joint Statement of Intent and Agreement dated
April 29, 2005, ATA Airlines and AAR agree to enter into
negotiations for ATA's lease of a Boeing Model B737-322 aircraft
and two CFM56-3C1 engines.
The terms and conditions for the execution of the letters of
intent and the definitive agreements are highly confidential and
proprietary. ATA Airlines will disclose information to the
United States Trustee, counsel for Southwest Airlines, the DIP
lender, the Official Committee of Unsecured Creditors and the Air
Transportation and Stabilization Board, and to other parties,
subject to confidentiality agreements.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.
(ATA Airlines Bankruptcy News, Issue No. 23; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ATLAS AIR: Distributing 17.2M Shares After Citizenship Is Settled
-----------------------------------------------------------------
Atlas Air Worlwide Holdings Inc. reports that it is getting closer
to distributing the 17.2 million shares of new common stock
promised to general unsecured creditors under the terms of its
confirmed chapter 11 plan.
Atlas said in a regulatory filing this week that it has made
substantial progress in the claims reconciliation process over the
last several months. In addition, the Company indicated that it
has been working closely with the U.S. Department of
Transportation as the DOT completes its fitness and citizenship
review (required of all companies emerging from bankruptcy) to
ensure that the Company retains its "U.S. citizen" status and
meets the U.S. ownership and control rules upon the distribution.
The Company says it will not be issuing the Common Stock until the
DOT's review is complete. While the Company is not currently
anticipating any problems with the DOT's review, it cannot predict
with specificity when the review will be complete. It is the
Company's current expectation, subject to the DOT's completion of
its review, that the timing of the stock distribution will be
completed over the next several weeks.
"I anticipate the stock issuance to be measured in days, perhaps
weeks, but not months," Mr. Erickson said in a conference call
with analysts, Allan Drury at The Journal News reports.
As previously reported, Atlas exited chapter 11 in July 2004. For
the year ending Dec. 31, 2004, Atlas reported a $22.7 million
profit. Atlas expects to report $3 million to $8 in pre-tax
profits during the first quarter.
Mr. Drury relates that Company officials are optimistic for
freight transport demand to increase later this year. Planes are
being upgraded in anticipation of that increase. Atlas recently
struck a deal with Israel Aircraft Industries. Atlas will buy
four Boeing passenger planes which Israel Aircraft will convert to
freight planes.
About Atlas Air Worldwide Holdings, Inc.
AAWW is the parent company of Atlas Air, Inc. (Atlas) and Polar
Air Cargo, Inc. (Polar), which together operate the world's
largest fleet of Boeing 747 freighter aircraft.
Atlas is the world's leading provider of ACMI (aircraft, crew,
maintenance and insurance) freighter aircraft to major airlines
around the globe. Polar is among the world's leading providers
of airport-to-airport freight carriage. Polar operates a
global, scheduled-service network and serves substantially all
major trade lanes of the world.
Through both of its principal subsidiaries, AAWW also provides
commercial and military charter services.
Atlas Air Worldwide Holdings, Inc. -- http://www.atlasair.com/
-- is a worldwide all-cargo carriers that operate fleets of
Boeing 747 freighters. The Company filed for chapter 11
protection (Bankr. S.D. Fla. Case No. 04-10794) on January 30,
2004. The Honorable Robert A. Mark presided over Atlas'
restructuring proceeding. Jordi Guso, Esq., at Berger Singerman,
represents the debtor. Atlas Air emerged from bankruptcy on
July 27, 2004. When the Company filed for bankruptcy, it listed
$1,451,919,000 in assets and $1,425,156,000 in debts.
BEAR STEARNS: Fitch Downgrades Classes BF & BB
----------------------------------------------
Fitch Rating downgrades two and affirms six from Bear Stearns
Asset Backed Security issue, series 1999-1:
Series 1999-1 group 1:
-- Class AF-5 affirmed at 'AAA';
-- Class AF-6 affirmed at 'AAA';
-- Class MF-1 affirmed at 'AA+';
-- Class MF-2 affirmed at 'A+';
-- Class BF downgraded to 'BB-' from 'BBB-'.
Series 1999-1 group 2:
-- Class MV-1 affirmed at 'AA+';
-- Class MV-2 affirmed at 'A';
-- Class BV downgraded to 'BB' from 'BBB-'.
The affirmations, affecting $24,260,426 of outstanding
certificates, reflect credit enhancement levels consistent with
future loss expectations.
The negative rating actions on classes BF from group 1 and BV from
group 2 are the result of poor collateral performance, losses
incurred to date, and future loss expectations in relation to
credit support levels. The downgrades affect $2,541,971
outstanding certificates.
Series 1999-1 is backed by two collateral loan groups:
* group 1 (fixed-rate mortgages) and
* group 2 (adjustable-rate mortgages) originated by
Amresco Residential Mortgage Corporation (92.45%)
and Provident Funding Associates (7.55%).
The group 1 and group 2 mortgage pools are not cross-
collateralized. However, there is limited cross-collateralization
-- OC -- in the form of excess spread.
In group 1, the three-month average loss is approximately $97,000,
and excess spread has been insufficient to cover these high
losses. This has resulted in the decline of OC to $661, 617,
approximately $163,000 off target. In addition, as of the April
2005 distribution date, 90-plus delinquencies (including
bankruptcies, foreclosures, and real estate owned) stand at
21.44%. The pool factor (outstanding loan principal as a
percentage of the initial loan pool) is currently 13%.
In group 2, high losses in the month of April 2005 resulted in a
decrease in the OC to $851, 015, which is below its target of
$857,950. In addition, the 90-plus delinquency (including
bankruptcies, foreclosures, and real estate owned) stand at
34.88%. The pool factor is currently 6.66%.
Further information regarding current delinquency, loss, and
credit enhancement statistics is available on the Fitch Ratings
web site at http://www.fitchratings.com/
BEATON HOLDING: Judge Kilburg Formally Closes Bankruptcy Case
--------------------------------------------------------------
The Honorable Paul J. Kilburg of the U.S. Bankruptcy Court for the
Northern District of Iowa formally closed Beaton Holding Company,
L.C.'s bankruptcy proceeding on May 17, 2005.
Beaton Holding is a debtor-affiliate of Gilbertson Restaurants,
L.L.C. Beaton's case is jointly administered under Case No.
04-00385.
Judge Kilburg confirmed Gilbertson Restaurants and its debtor-
affiliates' Third Amended Plan of Reorganization on April 4, 2005.
Judge Kilburg's decision to formally close Beaton Holding's
bankruptcy case is based on the Debtor's request, which was filed
on April 26, 2005.
Beaton Holding convinced Judge Kilburg that its bankruptcy case
should be formally closed because it has been fully reorganized
under the Debtors' confirmed Plan, and it has paid all of its
attorney fees and expenses and other fess and expenses for all
other professionals it employed for its bankruptcy case.
Beaton Holding relates that is has also completed payments to all
of its unsecured creditors and paid all administrative expenses,
including U.S. Trustee fees and expenses.
Headquartered in Cedar Rapids, Iowa, Beaton Holding Company, L.C.,
and its affiliates operate some twenty-six Burger King restaurants
in Missouri, Iowa, and Illinois. The Debtors filed for chapter 11
protection on February 10, 2004 (Bankr. N.D. Iowa Case No.
04-00387). The case is jointly administered under (Bankr. N.D.
Iowa Case No. 04-00385). Douglas S. Draper, Esq., at Heller,
Draper, Hayden, Patrick & Horn, L.L.C., represents the Debtor.
When the Debtor filed for chapter 11 protection, it estimated
assets and debts of $10 million to $50 million. The Court
formally closed Beaton Holding's chapter 11 case on May 17, 2005.
BIG CITY: Paying Final Liquidating Cash Distribution on June 3
--------------------------------------------------------------
Big City Radio, Inc.'s board of directors approved a liquidating
cash distribution which will be made in accordance with Big City
Radio's previously announced plan of complete liquidation and
dissolution. The liquidating cash distribution of $2,750,682.25
in the aggregate will be made to holders of record of Big City
Radio's common stock on May 24, 2005, on a pro rata basis, with
holders of Big City Radios' Class A and Class B common stock being
treated in the same manner. Each holder of record of Big City
Radio common stock will receive nineteen cents for every share of
Big City Radio common stock that they hold as of the record date.
The liquidating cash distribution will be paid on June 3, 2005.
It is expected that the liquidating distribution will be the final
distribution made to Big City Radio's stockholders. For a
discussion of tax consequences related to this liquidating
distribution, please refer to the Big City Radio, Inc. Information
Statement, dated December 1, 2003, filed in connection with the
Plan of Complete Liquidation and Dissolution of Big City Radio,
Inc.
Big City Radio filed a certificate of dissolution with the office
of the Secretary of State of the State of Delaware on Dec. 23,
2003, and has been engaged solely in winding up its affairs since
that time.
BUEHLER FOODS: Look for Bankruptcy Schedules on June 18
-------------------------------------------------------
Buehler Foods, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of Indiana for more
time to file their Schedules of Assets and Liabilities, Statements
of Financial Affairs and Schedules of Executory Contracts and
Unexpired Leases. The Debtors want until June 18, 2005, to file
those documents.
The Debtors operate approximately 67 low-cost grocery stores
primarily located in Indiana, Kentucky, Illinois and North
Carolina.
The Debtors explain that due to the size and complexity of their
operations, an extension of time to file their Schedules and
Statements is necessary in order to collect the necessary
accounting and financial information from their 67 stores that
will be included in their Schedules and Statements.
The Debtors relate that the U.S. Trustee has not opposed their
request to extend the filing of their Schedules and Statements.
Headquartered in Jasper, Indiana, Buehler Foods, Inc., owns and
operates grocery stores under the BUY LOW and Save-A-Lot banners
in Illinois, Indiana, and Kentucky, North Carolina, and Virginia.
The Company also sells gas at about a dozen locations. The
Company and its debtor-affiliates filed for chapter 11 protection
on May 4, 2005 (Bankr. S.D. Ind. Case No. 05-70961). Jerald I.
Ancel, Esq., at Sommer Banard Attorneys, P.C., represents the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they estimated between $10
million to $50 million in assets and $50 million to $100 million
in debts.
CARDIAC SERVICES: Hires Paul Jennings as Bankruptcy Counsel
-----------------------------------------------------------
Cardiac Services, Inc. sought and obtained permission from the
U.S. Bankruptcy Court for the Middle District of Tennessee to
employ Paul E. Jennings Law Offices, P.C., as their bankruptcy
counsel.
The Debtor selected Paul Jennings because of the Firm's extensive
experience in bankruptcy litigation. In this engagement, Paul
Jennings will render services relating to the bankruptcy filing in
connection with the Debtor's discharge of its duties.
Paul Jennings received a $30,000 retainer to cover services
provided during the:
a) initial conferences with the Debtor's Representatives;
b) collection of the information necessary for the Chapter
11 filing;
c) preparation of the documents for filing; and
d) preparation of initial motions; and
e) general representation in the case after the filing, and
through plan confirmation.
Mr. Jennings intends to charge the Debtor $235 per hour for his
services. Paraprofessionals employed by the Firm will bill $65
per hour. Mr. Jennings' travel time will also be billed at $125
per hour.
To the best of the Debtor's knowledge, Paul Jennings has no
connection with the Debtor's creditors or any other party in
interest and represents no interest adverse to the Debtor or the
Debtor's estate.
Headquartered in Nashville, Tennessee, Cardiac Services, Inc.,
provides surgical services, mobile catherization and peripheral
vascular labs, and associated equipment. The Company filed for
chapter 11 protection on March 8, 2005 (Bankr. M.D. Tenn. Case No.
05-02813). Paul E. Jennings, Esq., at Paul E. Jennings Law
Offices, P.C., represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it
estimated assets and debts of $10 million to $50 million.
CATHOLIC CHURCH: Creditors Vote to Accept St. George's Proposal
---------------------------------------------------------------
Ernst & Young Inc., in its capacity as Trustee in the Proposal of
the Roman Catholic Episcopal Corporation of St. George's,
disclosed that the creditors of the Corporation voted
overwhelmingly in favor of the Corporation's Proposal.
The Most Rev. Douglas Crosby, OMI, Bishop of St. George's Diocese,
expressed his gratitude that the victims of sexual abuse along
with other creditors of the Corporation, the civil arm of the
diocese, voted to accept the Corporation's proposal.
"[Yester]day's vote confirms our hope that the victims would see
our proposal as fair and just," said Bishop Crosby. "I've
acknowledged from the outset that while no amount of money can
compensate these young men for the harm that was done to them and
their families, it was our moral and legal obligation to offer
them everything we could possibly manage."
In 1990 Kevin Bennett, then a priest of the Diocese of St.
George's, was sentenced for the sexual abuse of 36 young men over
a period of almost 20 years and served four years in prison.
Since that time a number of victims launched civil suits at a
total claimed value in excess of $50 million. In March 2004 the
Supreme Court of Canada found the Corporation directly and
vicariously liable.
On March 8, 2005 the Corporation filed a Notice of Intention to
file a proposal pursuant to the Bankruptcy and Insolvency Act,
which effected a "stay of proceedings" in civil actions against
the Corporation. The intent of the filing was to provide the
Corporation with adequate time to develop a proposal to its
creditors offering a better compensation plan than would be
available if the Corporation were forced to declare bankruptcy.
The proposal presented to the creditors on May 6th included a
financial settlement of over $13 million to the victims of sexual
abuse.
The agreement reached yesterday between the Corporation and its
creditors is subject to final approval by the Supreme Court of
Newfoundland and Labrador. If the Court approves the agreement,
then the Corporation will be bound by the parameters of its
proposal to discharge its financial commitment to its creditors.
The Diocese of St. George's -- http://www.rcchurch.com/--
established in 1904, is located in Western Newfoundland. It
serves a Catholic population of 32,060 found in 20 parishes under
the pastoral care of 18 priests. St. George's is one of four
Catholic dioceses in the province. The Diocesan Centre is located
in Corner Brook.
CEDU: Chapter 7 Trustee Hires Cozen O'Connor as Counsel
-------------------------------------------------------
George L. Miller, the chapter 7 Trustee overseeing the liquidation
of CEDU Education Inc. and its debtor-affiliates' estates, sought
and obtained permission from the U.S. Bankruptcy Court for the
District of Delaware to employ Cozen O'Connor as his counsel, nunc
pro tunc to Mar. 25, 2005.
Cozen O'Connor will:
a) advise and consult with the Trustee concerning questions
arising in the conduct of the administration of the estates
and concerning the Trustee's rights and remedies with
regard to the estate's assets and the claims of secured,
preferred and unsecured creditors and other parties in
interest;
b) appear for, prosecute, defend and represent the Trustee's
interest in suits arising in or related to this case;
c) investigate and prosecute preference and other actions
arising under the Trustee's avoiding powers; and
d) assist in the preparation of such pleadings, motions,
notices and orders as are required for the orderly
administration of the estate.
John T. Carroll, III, Esq., a senior member at Cozen O'Connor,
discloses his Firm's professionals' hourly billing rates:
Designation Rate
----------- ----
Senior Members $335-$450
Junior Members/Associates $240-$275
Paralegals $160
To the best of the Trustee's knowledge, Cozen O'Connor is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Sandpoint, Idaho, CEDU Education Inc. --
http://www.cedu.com/-- operates schools offering programs for
troubled teenagers. The Debtor along with its affiliates filed
for chapter 7 petitions on March 25, 2005 (Bankr. D. Del. Case
Nos. 05-10841 through 05-10865). When the Debtor filed for
protection from its creditors, it estimated $10 million in assets
and $50 million in debts.
CHAS COAL: Judge Scott Formally Closes Ch. 11 Bankruptcy Case
-------------------------------------------------------------
The Honorable Joseph M. Scott Jr. of the U.S. Bankruptcy Court for
the Eastern District of Kentucky formally closed the bankruptcy
case filed by Chas Coal, LLC, on April 25, 2005.
Judge Scott confirmed the Debtor's Amended Plan of Reorganization
on Dec. 21, 2004.
The Debtor asked the Court to enter a final decree and formally
close its chapter 11 case on March 19, 2005.
The Debtor said in its request that its bankruptcy case should be
formally closed because its confirmed Plan has been substantially
consummated and no creditors or other parties-in-interest have
objected to its request to close its case.
Furthermore, the Debtor has substantially completed (or in the
process of completing) all payments to creditors, paid all
administrative expenses, and paid U.S. Trustee fees.
Judge Scott concludes that these facts constitute cause to
formally close the Debtor's bankruptcy case.
Headquartered in London, Kentucky, Chas Coal, LLC --
http://www.chascoal.com/-- mines, processes and sells high
quality, low sulfur Eastern Kentucky coal. The Company filed for
chapter 11 protection on June 17, 2004 (Bankr. E.D. Ky. Case No.
04-60972). Robert Gregory Lathram, Esq., at Law Offices of R.
Gregory Lathram, P.S.C., represents the Debtor. When the Debtor
filed for chapter 11 protections, it listed $28,080,624 in total
assets and $8,601,895 in total debts. The Court formally closed
the Debtor's bankruptcy case on April 25, 2005.
CNA FINANCIAL: Moody's Withdraws Low-B Debt Ratings
---------------------------------------------------
Moody's Investors Service has withdrawn the prospective ratings on
the multi-issuer multi-seniority shelf registration of CNA
Financial Corporation and affiliated issuers. The registration
has been fully drawn and is therefore not available for further
issuance.
Ratings withdrawn include:
CNA Financial Corporation:
* prospective senior unsecured debt at (P)Baa3
* prospective subordinated debt at (P)Ba1
* prospective preferred stock at (P)Ba2
CNA Financial Capital I, II, III:
* prospective capital securities at (P)Ba1.
CONGOLEUM CORP: Has Until Aug. 13 to Make Lease-Related Decisions
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey extended,
until Aug. 13, 2005, the period within which Congoleum Corporation
and its debtor-affiliates can elect to assume, assume and assign,
or reject their unexpired nonresidential real property leases.
The Debtors explains that they are parties to two unexpired
nonresidential real property leases located in Hamilton, New
Jersey and Highland Park, New Jersey. Those two leases are used
for the Debtors' corporate headquarters, warehouse facility and
general business operations.
The Debtors relate that under their proposed Chapter 11 Plan, they
intend to assume the unexpired nonresidential leases as part of
their strategy of maintaining their business operations unaltered.
The Debtors remind the Court that it approved their First Modified
Disclosure Statement explaining the Fourth Modified Plan of
Reorganization on Dec. 9, 2004. But the scheduled hearing to
confirm that Plan has been withdrawn by the Court and another
hearing is yet to be scheduled.
The Debtors give the Court three reasons why the extension is
warranted:
a) the unexpired leases are significant part of the Debtors'
assets and are integral component of the Debtors' business
operations;
b) the Debtors recently obtained from the Court an extension of
their exclusive period to file a chapter 11 plan until
Aug. 1, 2005, and the Debtors believe that it would be
imprudent on their part to assume the unexpired leases if
ever they will file an amended chapter 11 Plan; and
c) the extension will not prejudice the landlords under the
unexpired leases because the Debtors are current on all pre-
petition and post-petition rent obligations to those
landlords.
Headquartered in Mercerville, New Jersey, Congoleum Corporation --
http://www.congoleum.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The Company filed for
chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No.
03-51524) as a means to resolve claims asserted against it related
to the use of asbestos in its products decades ago. Domenic
Pacitti, Esq., at Saul Ewing, LLP, represents the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $187,126,000 in total assets and
$205,940,000 in total debts.
CREDIT SUISSE: S&P Junks Series 2001-26 Class D-B-5 Certificates
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the class
D-B-5 fixed-rate prime/Alt-A collateral backed certificates issued
by Credit Suisse First Boston Mortgage Securities Corp.'s series
2001-26 to 'CCC' from 'B'. Concurrently, ratings on eight other
classes from the same transaction are affirmed.
The lowered rating on class D-B-5 of loan group III reflects a
decrease in credit support resulting from the continued erosion of
the unrated subordinate class D-B-6, the only means of credit
support. Class D-B-6 has experienced periodic principal write-
downs with minor recoveries since the November 2002 distribution.
As of the April 2005 remittance period, monthly net losses for the
most recent 12 months averaged approximately $65,620, while the
six-month net loss average has increased to $101,906. As of the
April 2005 remittance period, the current principal balance of the
unrated subordinate D-B-6 class is $264,409. If this class
continues to incur steady net losses, its balance will be reduced
to zero and the D-B-5 class will eventually experience a realized
loss.
As of the April 2005 distribution period, cumulative losses for
loan group III were 0.35% of the original pool balance, while
total delinquencies were 22.13%. Serious delinquencies (90-plus
days, foreclosure, and REO) were 15.14%. While the mortgage pool
has paid down to approximately 6.48% of its original balance,
substantial losses have contributed to the continued erosion of
credit support for class D-B-5. Standard & Poor's will continue
to monitor the performance closely. The rating may be adjusted
accordingly to reflect the available credit support.
The affirmed ratings on the eight remaining classes in the fixed-
rate prime/Alt-A loan group III reflect adequate credit support
provided by subordination.
The collateral consists of 30-year, fixed-rate, prime/Alt-A
mortgage loans secured by one- to four-family residential
properties.
Rating Lowered
Credit Suisse First Boston Mortgage Securities Corp.
Series 2001-26
Rating
------
Class To From
----- -- ----
D-B-5 CCC B
Ratings Affirmed
Credit Suisse First Boston Mortgage Securities Corp.
Series 2001-26
Class Rating
----- ------
II-A-3 AAA
III-X AAA
V-A-1 AAA
V-A-2 AAA
D-B-1 AAA
D-B-2 AAA
D-B-3 A
D-B-4 BB
DELTA AIR: Names Hank Halter Finance VP & Controller
----------------------------------------------------
Delta Air Lines, Inc. (NYSE: DAL) reported that Hank Halter has
been named senior vice president - Finance and controller.
Mr. Halter, 40, will continue to report directly to Michael J.
Palumbo, Delta's executive vice president and CFO. Halter is
responsible for Delta's financial planning and analysis function,
and he also oversees Delta's division finance for operations,
customer service, marketing, Delta Technology and Delta
Connection, Inc. organizations. Additionally, he will be
responsible for all corporate accounting activities including SEC
and regulatory financial reporting, Sarbanes-Oxley financial
compliance, benefits and revenue accounting, procurement and
receivable services and ERP systems.
Halter has nearly seven years of experience at Delta in the
Finance organization. Prior to joining Delta, he spent five years
with American Airlines. He began his career in the Philadelphia
office of Ernst & Young LLP and is a certified public accountant.
Halter earned a Bachelor of Science degree in accountancy from
Villanova University and an MBA from Duke University.
"Hank has made significant contributions to our cost restructuring
efforts since September 11 and was instrumental in creating
Delta's economic viability model and Transformation Plan," said
Palumbo. "Hank's finance and accounting background, combined with
his strong leadership and analytical skills, position him well in
this new role."
About the Company
Delta Air Lines -- http://delta.com/-- is the world's second-
largest airline in terms of passengers carried and the leading
U.S. carrier across the Atlantic, offering daily flights to 490
destinations in 85 countries on Delta, Song, Delta Shuttle, the
Delta Connection carriers and its worldwide partners. Delta's
marketing alliances allow customers to earn and redeem frequent
flier miles on more than 14,000 flights offered by SkyTeam and
other partners. Delta is a founding member of SkyTeam, a global
airline alliance that provides customers with extensive worldwide
destinations, flights and services.
At March 31, 2005, Delta Air's balance sheet showed a $6.6 billion
stockholders' deficit, compared to a $5.8 billion deficit at
Dec. 31, 2004.
DORIAN GROUP: Wants to Auction & Sell Its Assets
------------------------------------------------
The Dorian Group, Ltd., asks the U.S. Bankruptcy Court for the
Northern District of New York, for permission to sell
substantially all of its assets to the highest and best bidder in
a formal auction process. The Debtor proposes to sell the entire
company as an integrated, going concern. The Debtor will also
consider bids for groups of assets and "artist packages."
The Debtor has not proposed a timetable for the auction and sale.
Based in Troy, N.Y., Dorian Group Ltd. -- http://www.dorian.com/
-- produces and releases audiophile-quality recordings of fine
classical and acoustic traditional music. The Company filed for
chapter 11 protection on Jan. 5, 2005 (Bankr. S.D.N.Y. Case No.
05-10056). Robert J. Rock, Esq., in Albany, New York, represents
the Debtor in its restructuring efforts. When the Company filed
for protection from its creditors, it listed $10 million to $50
million in assets and $1 million to $10 million in debts.
DYNEGY INC: Shareholders Approve Election of 13 Directors
---------------------------------------------------------
At the annual meeting of shareholders, Bruce A. Williamson,
Chairman, President and Chief Executive Officer of Dynegy Inc.
(NYSE:DYN), reported the progress Dynegy has made in the past year
-- including the completion of the company's multi-year self-
restructuring initiative -- and its current focus on developing
growth opportunities for its Midstream natural gas and Power
Generation businesses.
"During the past year, Dynegy completed its self-restructuring
initiative by resolving key litigation issues, restructuring
burdensome power tolling arrangements and completing the
divestiture of non-core assets, while operating our energy assets
in a safe, efficient manner that provided reliable service to our
markets and our customers," said Mr. Williamson. "Going forward,
our focus is on evaluating strategic opportunities for our
businesses to accelerate their growth and unlock shareholder
value."
On May 9, Dynegy said it is evaluating strategic alternatives for
its Midstream business to competitively position the business as
part of a growth platform. By utilizing the company's
advantageous tax asset positions to maximize proceeds from a
potential sale, Dynegy's Power Generation business would be
positioned for consolidation and growth opportunities to deliver
greater value to investors.
During the annual meeting, shareholders approved the election of
Dynegy's 13 directors -- including 11 Class A common stock
directors and two Class B common stock directors -- to serve until
the 2006 annual meeting of shareholders. Shareholders also
approved a management proposal concerning the ratification of
PricewaterhouseCoopers LLP as Dynegy's independent auditors for
2005.
Management's proposal concerning the change of Dynegy's state of
incorporation from Illinois to Delaware failed to pass. Although
more than 90 percent of the votes cast were in favor of the
proposal, it failed to receive a sufficient number of total votes
by the holders of Class A common stock to satisfy the two-thirds
super-majority required under Illinois law.
Additionally, a shareholder proposal concerning the recoupment of
performance-based compensation for executives following financial
restatements did not pass. As noted in Dynegy's Corporate
Governance Guidelines available in the Corporate Governance
section of http://www.dynegy.com/the company's Board of Directors
previously adopted a policy of reviewing compensation in the event
of a material restatement of the company's financial results and
taking appropriate action.
About the Company
Dynegy provides electricity, natural gas and natural gas liquids
to markets and customers throughout the United States. Through
its energy businesses, Power Generation and Midstream, the company
owns and operates a diverse portfolio of assets, including power
plants totaling more than 13,000 megawatts of net generating
capacity and gas processing plants that process approximately 1.6
billion cubic feet of natural gas per day.
* * *
As reported in the Troubled Company Reporter on May 11, 2005,
Moody's Investors Service placed the debt ratings of Dynegy Inc.
and its rated subsidiaries (Dynegy Holdings Inc., B3 Senior
Implied) under review for possible upgrade.
This action reflects the company's announcement that it is
planning to sell its natural gas liquids business segment, which
should provide the opportunity for material debt repayment. The
review also reflects the continuing improvement Dynegy has made in
its post-Enron restructuring, including selling Illinois Power,
sales of non-core assets, mitigation of its tolling obligations,
including the Sithe acquisition, and the recent settlement of
shareholder lawsuits related to "Project Alpha."
Dynegy recently announced that it had settled class action
lawsuits related to a 2001 structured transaction known as
"Project Alpha" that resolves the last material litigation facing
the company. The settlement requires Dynegy to make a $250
million cash payment, which will reduce its liquidity; however, we
would expect Dynegy to maintain total liquidity, including cash on
hand and availability under its revolving credit facility, of at
least $700 million even after the settlement payment. More
importantly, this settlement removes a significant source of
uncertainty regarding the company's future direction. As a result
of the settlement, Dynegy will be able to sell its midstream
natural gas liquids business and evaluate other possible strategic
transactions.
Dynegy's natural gas liquids segment is currently generating about
$300 million per year of cash flow, and at current asset sale
multiples in the 8 to 10x range, Dynegy could realize $2.5 to $3
billion in total proceeds. In addition, Dynegy has a large income
tax net operating loss position that could shelter virtually all
of the gain from the sale of this business. Consequently, Dynegy
will be able to sell its midstream business in a tax efficient
manner and monetize the value of its NOL. Dynegy currently has
adjusted debt of about $5.5 billion, which ignores the non-
recourse Sithe debt but includes lease obligations and its
convertible preferred securities. Moody's expects that Dynegy
should be able to prepay at least $2.5 billion of this debt from
its sales proceeds, or about 45% of its outstanding debt.
Following the midstream sale, Dynegy will be a pure-play electric
power generator with greater focus and a lower cost structure.
Moody's expects continued consolidation in the merchant power
sector and Dynegy will be positioned to participate in this
consolidation.
The ratings review will include an analysis of Dynegy's expected
operating and free cash flow from its power generation business
following the midstream disposition, the value of its generation
assets relative to its outstanding debt, its capital structure
post debt repayment and the company's ongoing working capital
requirements of its customer risk management segment.
Ratings placed under review include those of Dynegy Inc. and its
rated subsidiaries, except Sithe/Independence.
EAGLEPICHER INC: Court Extends Interim DIP Financing to June 24
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Ohio
extended EaglePicher Holdings, Inc., and EaglePicher
Incorporated's use of its interim $50 million debtor-in-possession
financing from a bank group led by Harris Trust and Savings Bank
through June 24, 2005. The final DIP hearing has been rescheduled
for June 20, 2005. The Company required additional time to update
its 2005 forecasts and in turn, give its financial advisors, banks
and the unsecured creditors' committee adequate time to analyze
the updates. At the same time, the Company continues to negotiate
a final DIP loan agreement and intends to present the financing
package at its June 20 hearing.
"The DIP financing agreement and time extension provides adequate
financial resources to fund our post-petition vendor and employee
obligations and other operating requirements while allowing
adequate time for the company to finalize the final DIP
agreement," said Bert Iedema, President and Chief Executive
Officer of EaglePicher.
Headquartered in Phoenix, Arizona, EaglePicher Incorporated
-- http://www.eaglepicher.com/-- is a diversified manufacturer
and marketer of innovative advanced technology and industrial
products for space, defense, automotive, filtration,
pharmaceutical, environmental and commercial applications
worldwide. The company along with its affiliates and parent
company, EaglePicher Holdings, Inc., filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Ohio Case No. 05-12601).
When the Debtors filed for protection from their creditors, they
listed $535 million in consolidated assets and $730 in
consolidated debts.
ELITE FLIGHT: Losses & Deficit Trigger Going Concern Doubt
----------------------------------------------------------
Elite Flight Solutions Inc.'s management plans to seek out other
business operations after losses and deficit triggered substantial
doubt about its ability to continue as a going concern. The
Company incurred a net loss of approximately $841,000 for the
period ended Dec. 31, 2004, a $2,133,000 working capital deficit
and a $1,924,903 stockholders' deficit at Dec. 31, 2004. The
Company's net cash used from operating activities approximated
$142,508 during the year ended June 30, 2004.
The Company intends to seek additional sources of capital through
the issuance of debt and equity financing, but there can be no
assurance that the Company will be successful in accomplishing its
objectives. The Company currently estimates sufficient ability to
fund operating shortfalls and potential acquisitions as part of
the remaining terms of the Equity Line of Credit with Cornell
Capital Partners.
The Company received approximately 93% of its revenue from a
single contract with Yukon-Kuskokwim Health Corporation. YHKC is
a tribal consortium of 58 federally recognized tribes that
contracts with the federal government pursuant to the Indian Self-
Determination and Education Assistance Act, 25 U.S.C.450, et seq.,
to provide health care and related services to Alaska Natives.
Through its wholly owned subsidiary, the Company provides air
ambulance service to YKHC.
The largest of Elite's liabilities is a promissory note (totaling
$1,891,710) from a financial institution, secured by the Company's
aircraft, bearing an interest rate of prime plus 1.00%, currently
6.250%, with monthly payments currently at $18,827 per month
through July 2008 with the unpaid balance to be paid in August
2008.
The Company is bound by a covenant in relation to a $1,891,710
note whereby the Company's subsidiary Delta Romeo, Inc., is
required to maintain a minimum tangible net worth of $15,000,000
at fiscal year end. The Company is currently negotiating with the
financial institution to amend the related note agreement to
remove that specific covenant as management of the Company
anticipates it will not be met. Management believes that it will
be successful and that an event of default will not occur as a
result of the covenant.
Elite Flight had an accumulated deficit of $7,763,963 from
inception through December 31, 2004 and an accumulated deficit of
$6,922,582 from inception through June 30, 2004. As mentioned,
for the six months ended December 31, 2004, the Company had a net
loss of $841,381. As of December 31, 2004, there was cash on hand
of $455,954 and current liabilities of $2,675,120. Management
admits there is not sufficient cash or other assets to meet the
Company's current liabilities. In order to meet those
obligations, it will need to raise cash from the sale of
securities or from borrowings. Elite Flight must successfully
expand its business operations and become profitable to achieve a
sound financial condition. Currently, there is substantial risk
that it will be unable to continue operations.
EMMIS COMMS: S&P Rates Proposed $300 Mil. Sr. Unsec. Notes at B-
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
Emmis Communications Corp.'s proposed $300 million senior
unsecured floating-rate notes due 2012. The rating was also
placed on CreditWatch with negative implications. Proceeds from
the proposed transaction are expected to be used to fund share
repurchases. The radio and television broadcasting company had
approximately $1.2 billion in debt outstanding at Feb. 28, 2005.
"The notes are rated two notches below the current 'B+' corporate
credit rating, recognizing that this holding company obligation is
judged to be junior and to have relatively worse recovery
prospects than operating company debt," said Standard & Poor's
credit analyst Alyse Michaelson Kelly.
All ratings on Emmis, including the 'B+' long-term corporate
credit rating, remain on CreditWatch with negative implications.
The CreditWatch listing reflects concerns related to the company's
plans to buy back its shares at a cost of up to $400 million,
which, if entirely debt-financed, could increase the company's
total debt to EBITDA ratio to more than 8x, from around 6x at Feb.
28, 2005. Additional uncertainty relates to the size of proceeds
of a potential sale of all or a portion of Emmis' TV business.
Growth in radio advertising is expected to be in the very low
single digits in 2005. Industry-related concerns persist as to
when convincing growth in general radio ad demand will resume.
In resolving the CreditWatch listing, Standard & Poor's will
monitor the company's progress in restoring debt to EBITDA to a
range appropriate for a 'B+' rating, which would likely be
accomplished by using proceeds from TV station sales to pay down
debt. The anticipated asset sales are expected to be completed in
the next 12 months. Management's long-term commitment to credit
quality and broader strategic mission from a business perspective,
given radio advertising's anemic growth and pressure on the
company's stock price, will also be considered. Standard & Poor's
currently believes that downside risk is limited to one notch.
EMPIRE FINANCIAL: Recurring Losses Trigger Going Concern Doubt
--------------------------------------------------------------
Empire Financial Holding Company (Amex: EFH) reported financial
results for the first quarter ended March 31, 2005. First quarter
2005 financial results included a year-over-year revenue increase
of 11.6% and a return to profitability with earnings of $0.06 per
basic and diluted share.
"We are pleased with our return to profitability along with the
balance sheet improvements made during the quarter," President
Donald A. Wojnowski Jr. said. "Our first quarter results indicate
that our business plan is on track. Consistent with our plan for
2005 and beyond, we are continuing to focus on growing our
revenues while managing expenses in today's highly competitive
environment."
"Additionally we are pleased to announce Rodger E. Rees will
succeed Patrick E. Rodgers as our Chief Financial Officer, in
addition to continuing in his current position as Chief Operating
Officer of our broker dealer subsidiary," Mr. Wojnowski continued.
"Rodger has been a valuable member of our team since 2001 and has
over 20 years of financial services and accounting experience. I
want to personally thank Patrick Rodgers for his efforts during
the past 14 months and his contributions to our company are
greatly appreciated. Pat will remain with the Company during a
transition period."
Financial Results
Total revenues for the three months ended March 31, 2005 were
$5,936,760, an increase of $616,680, or 11.6%, compared to
revenues of $5,320,080 for the same period in 2004. The revenue
growth was primarily the result of a 159.9% increase in net
revenues from the Company's order execution and trading
operations. Total operating expenses for the three months ended
March 31, 2005 were $5,699,176 compared to total operating
expenses of $5,385,509 for the same period in 2004. The increase
was primarily due to higher employee compensation and benefits
expenses, partially offset by a waiver of compensation by certain
of our employees.
For the three months ended March 31, 2005, the Company had a net
income of $230,834, compared to a restated net loss of $72,180,
for the same period in 2004.
Financial Condition
At March 31, 2005, the Company had total assets of $3.8 million,
the majority of which consisted of cash and cash equivalents,
trading account securities purchased not yet sold and receivables
from brokers, dealers and clearing organizations arising from
customer-related securities transactions.
Going Concern Doubt
The audit report contained in its Annual Report on Form 10-KSB for
the year ended December 31, 2004, contains an explanatory
paragraph that raises doubt about the Company's ability to
continue as going concern because the Company has had net losses
from continuing operations in 2004, 2003 and 2002, a stockholders'
deficit and has uncertainties relating to regulatory
investigations.
About the Company
Empire Financial Holding Company, through its wholly owned
subsidiary, Empire Financial Group, Inc., provides full-service
retail brokerage services through its network of independently
owned and operated offices and discount retail securities
brokerage via both the telephone and the Internet. Through its
market-making and trading division, the Company offers securities
order execution services for unaffiliated broker dealers and makes
markets in domestic and international securities. Empire
Financial also provides turn-key fee based investment advisory and
registered investment advisor custodial services through its
wholly owned subsidiary, Empire Investment Advisors, Inc.
At Mar. 31, 2005, Empire Financial Holding Company's balance sheet
showed a $1,308,937 stockholders' deficit, compared to a
$1,897,607 deficit at Dec. 31, 2004.
EPICUS COMMS: Remains Delinquent in its Tax Payment Obligations
---------------------------------------------------------------
Epicus Communications Group remains delinquent in the payment of
various Federal and State payroll and service taxes accrued in
prior years. The Company has been the subject of various levies
and collection actions by the Internal Revenue Service and various
State tax authorities. The withdrawal of the Company's ability to
operate in any jurisdiction as a result of the non-payment of
these taxes could be detrimental to the Company's ongoing
operations and financial condition.
On Oct. 25, 2004, the Company and it's operating subsidiary,
Epicus, Inc., filed voluntary petitions in the United States
Bankruptcy Court for the Southern District of Florida seeking
reorganization relief under the provisions of Chapter 11 of
the United States Bankruptcy Code (Case Nos. 04-34915 and
04-34916, respectively).
The Company's liquidity, in periods prior to the bankruptcy
filing, was sustained through the sale of equity securities,
restricted and unrestricted, domestically and in international
markets and significant working capital advances have been made by
members of management or by entities owned or controlled by
members of management during the current and prior periods. Due
to the bankruptcy filing, the availability of further liquidity
from these sources is uncertain.
Since the filing of the respective bankruptcy petitions and prior
thereto, management undertook and continues to perform a detailed
review of all customer accounts, the credit ratings and payment
history of the respective customers. In accordance with the
Company's various operating tariffs in the States in which the
Company conducts business operations, management is raising
service rates and/or discontinuing service to unprofitable
customers and service areas. However, due to the Company's
customer base, the Company continues to experience significant
charges for bad debts which impair the related cash flows and the
Company's continued existence is principally dependent upon its
ability to generate sufficient cash flows from operations to
support its daily operations on a timely basis as well as provide
sufficient resources to satisfy the components of its proposed
reorganization plan to retire pre-petition liabilities and
obligations.
There is no assurance that the Company's reorganization plan will
be approved, or if approved, will be successful. Further the
ability to obtain additional funding through the sales of
additional securities or, that such funding, if available, will be
obtained on terms favorable to or affordable by the Company is
uncertain.
In general, the Company's business plan is to enter into strategic
relationships or, possibly, business combination transactions with
unaffiliated companies that have developed, or are developing,
innovative technologies, methodologies or products for the
communication industry. The Company also has also entered into
marketing relationships with strategic partners that are designed
to increase the customer base, and therefore the revenue streams
of its subsidiaries.
The Company currently has only one operating subsidiary, EPICUS,
Inc. which is a "competitive local exchange carrier" telephone
company and a reseller of other telecommunications services.
Due to the nature of Epicus' customer base and other general
economic conditions, Epicus recognized a charges to operations of
approximately $250,000, $959,000 and $2,873,000 for quantified bad
debt exposures within it's trade accounts receivable portfolio for
the respective quarters ended February 28, 2005, November 30, 2004
and August 31, 2004, respectively. In reaching the estimate for
bad debts in the trade accounts receivable portfolio, management
evaluated the response to both it's in-house and outsourced
collection efforts on delinquent and disconnected customers. Due
to the Company's status of debtor-in-possession, management has
adopted the position of marking the net trade accounts receivable
portfolio at the end of each reporting cycle to be equal to the
actual cash collected during the next 30 day cycle with a
corresponding charge to bad debt expense.
As of February 28, 2005, Epicus Group had approximately $146,000
in available cash on hand as compared to approximately $922,000 at
May 31, 2004. To assist it in its cash flow requirements, the
Company may determine, depending upon the prevailing stock price
of its shares, to seek subscriptions from the sale of securities
to private investors, although there can be no assurance that it
will be successful in securing any investment from private
investors at terms and conditions satisfactory to Epicus, if at
all. If the Company is unable to obtain new capital, the Company
will be unable to carry out its strategy of growth through
acquisitions and the long-term ability of the Company to
continue its operations may be in doubt.
Going Concern Doubt
The Company's auditors raised substantial doubt about the
Company's ability to continue as a going concern after it audited
its financial statements as of May 31, 2004. The auditors cited
the Company's bankruptcy filing along with these conditions for
the opinion:
-- the Company has experienced cumulative operating losses for
the previous four-year period of approximately $18,600,000
and has used cash in operating activities for the same
period of approximately $5,996,000;
-- the Company has sufficient working capital and will continue
to incur selling, general and administrative expenses; and
-- realization of certain assets is dependent upon the
Company's ability to meet its future financing requirements,
And the success of future operations and its continued
funding by its CEO and the sale of common stock.
Epicus Communications Group, Inc., and it's operating subsidiary,
Epicus, Inc., filed voluntary petitions in the U.S. Bankruptcy
Court for the Southern District of Florida seeking reorganization
relief under the provisions of Chapter 11 of the United States
Bankruptcy Code (Case Nos. 04-34915 and 04-34916) on Oct. 25,
2004. Epicus' balance sheet dated Feb. 28, 2005, shows
$3.2 million in assets and $19.1 million in liabilities. Alvin S.
Goldstein, Esq., at Furr and Cohen, P.A., in Boca Raton, Florida,
represents Epicus in its chapter 11 restructuring.
EXCALIBUR IND.: Restructuring Stillwater National's Secured Debt
----------------------------------------------------------------
Excalibur Industries Inc. (OTCBB:EXCB) signed a loan commitment
with its senior lender, Stillwater National Bank and Trust
Company, for a restructuring of its secured debt. On June 13,
2005, pursuant to its proxy solicitation, the company will hold a
special stockholders meeting at Spectrum Law Group, the company's
counsel's offices, to approve the restructuring plan and other
matters.
The proxy statement is being furnished to Excalibur's stockholders
in connection with the proposed restructuring of the company. The
proposed restructuring will result in a significant reduction of
our outstanding debt and provide us with a strengthened balance
sheet and reduced debt servicing requirement.
The proposed restructuring will be effected through an out-of-
court restructuring, or "reorganization plan," which consists of
the following:
(a) an agreement to amend and restate a series of notes issued
to Stillwater National Bank, or Stillwater, into one term
note;
(b) an agreement to issue a new note to Stillwater for
settlement of a lien;
(c) the extension of the company's current revolving line of
credit with Stillwater;
(d) the issuance of a convertible note to Stillwater;
(e) the issuance of a note to the company's Chief Financial
Officer to advance funds to purchase shares of our common
stock for $250,000 for 250,000 shares (post-split);
(f) the conversion of a portion of the company's debt to
Stillwater into 20% of the company's then-outstanding
common stock after giving effect to the restructuring,
resulting in $2.368 million purchasing 2.368 million
shares of the company's common stock post-split;
(g) a release from Stillwater for any indebtedness not covered
above;
(h) the exchange of the company's outstanding unsecured notes,
including principal and accrued interest, for the
company's common stock at $1.00 per share post-split;
(i) the grant of restricted stock awards to the company's
executive officers, in return for their personal
guarantees on new bank debt, and to the company's non-
employee director;
(j) A one for seven reverse stock split anticipated to reduce
the current stockholders of the company to approximately
21% of the reorganized company with about 11.6 million
shares issued and outstanding post-split; and
(k) Renaming the public company Shumate Industries, Inc. to
evidence its focus in the energy field services market.
Matthew Flemming, Excalibur's chief financial officer, stated,
"After more than a year of working on the formal plan or
reorganization and its debt restructuring, we are pleased to have
a signed loan commitment with our lender to submit for stockholder
approval. Additionally, we are pleased with our improvements at
our Shumate Machine Works operating subsidiary. As reported in
our 2004 annual report on Form 10-KSB, revenues were up 41% in
fiscal 2004 over 2003 as the energy field services market
benefited from higher activity levels and higher commodity prices.
Management believes this trend will continue during 2005."
Larry Shumate, Excalibur's chief executive officer, stated, "As a
fellow stockholder, your vote is very important. Please review
the proxy materials being mailed to each stockholder or under our
company's Edgar filings at the SEC's web site at
http://www.sec.gov/
"Pursuant to the proxy statement, we are soliciting your proxy to
be voted in favor of the recapitalization plan. We urge you to
carefully review the proxy statement and the other documents we
refer you to in the proxy statement for a detailed description of
the proposed restructuring and its effect on our existing
stockholders. To our fellow stockholders, please take the time to
complete the proxy and sign and return it in the enclosed postage-
paid envelope as soon as possible. We will not be able to
complete the recapitalization plan unless we obtain the approval
of our stockholders.
"We look forward to getting the company restructured and
reorganized. It is an excellent time to pursue new growth
opportunities and technologies in energy field services and
leverage our reputation in the marketplace."
The special meeting of stockholders will be held on Monday, June
13, 2005, at 10:00 a.m. at the law firm of Spectrum Law Group,
LLP, 1900 Main Street, Suite 125, Irvine, California.
Pre-Petition Liabilities of Bankrupt Subsidiary
On March 9, 2005, Excalibur Holdings, Inc., a wholly owned
subsidiary of Excalibur and the parent corporation of Shumate
Machine Works, Inc., filed a voluntary petition for protection
under Chapter 7 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court, Southern District of Texas. As a result of this
bankruptcy filing, 100% of the capital stock of Shumate became the
sole asset of the bankruptcy estate. The capital stock of Shumate
has been pledged to secure the obligations of Excalibur Holdings
to its senior lender, Stillwater National Bank.
On March 11, 2005, Stillwater filed a motion for abandonment with
the Bankruptcy Court, requesting the Court to order the Bankruptcy
Trustee to abandon the capital stock of Shumate. Stillwater filed
a motion for relief of the automatic stay resulting from the
bankruptcy filing so that Stillwater can pursue all available
remedies in connection with Excalibur Holdings' stock in Shumate.
On April 20, 2005, the Court granted Stillwater's motion for
relief from stay so as to permit Stillwater to exercise any and
all rights and remedies it may have with respect to the capital
stock of Shumate held by Excalibur Holdings, including, but not
limited to, exercising any rights of foreclosure of said stock.
On April 28, 2005, Stillwater gave notice of its intention to
dispose of the capital stock of Shumate in a private sale after
May 9, 2005 pursuant to the Oklahoma Uniform Commercial Code.
Excalibur intends to bid on the capital stock of Shumate at this
private sale.
Stock Incentive Plan
On April 29, 2005, Excalibur adopted its 2005 Stock Incentive
Plan. Excalibur is permitted to issue up to 33,000,000 shares of
common stock under the Plan in the form of stock options,
restricted stock awards, and stock awards to employees, non-
employee directors, and outside consultants.
On May 11, 2005, Excalibur granted restricted stock awards for
29,958,000 shares of common stock under the Plan, including
restricted stock awards of 27,650,000 shares to its officers and
directors. Under the terms of the restricted stock awards, the
shares do not vest unless and until Excalibur closes a plan of
reorganization between Excalibur, its subsidiaries, certain
affiliated parties, and Stillwater, with respect to the
restructuring of various notes issued to Stillwater.
About the Company
Excalibur Industries, Inc. (to be known as Shumate Industries,
Inc.), serves the energy field services market through its Shumate
Machine Works operating subsidiary. With its roots going back
more than 25 years, Shumate is a contract machining and
manufacturing company that makes products, parts, components,
assemblies and sub-assemblies for its customers designed to their
specifications. The Company's state-of-the-art 3-D modeling
software, computer numeric controlled ("CNC") machinery and
manufacturing expertise are contracted by its customers' research
and development ("R&D"), engineering and manufacturing departments
to ensure optimization and timely desired results for their
products. The diverse line of products Shumate manufactures
includes expandable tubular launchers and liner hangers for oil &
gas field service applications, blow-out preventers, top drive
assemblies, directional drilling products, natural gas measurement
equipment, control & check valves and sub-sea control equipment
used in energy field service. The Company employs about 35 people
at its 23,000 square foot plant in Conroe, Texas, north of
Houston.
At Mar. 31, 2005, Excalibur Industries, Inc.'s balance sheet
showed a $12,797,145 stockholders' deficit, compared to an
$11,989,065 deficit at Dec. 31, 2004.
EXCO RESOURCES: Posts $9 Million Net Loss in First Quarter 2005
---------------------------------------------------------------
EXCO Resources, Inc. (EXCO) reported revenues, earnings and cash
flow for the quarter ended March 31, 2005. For the quarter, EXCO
reported net income of $92.2 million, including after-tax income
from discontinued operations of $120.9 million, on oil and natural
gas revenues of $38.9 million. Discontinued operations consisted
of the after-tax gain on the sale of its wholly owned Canadian
subsidiary, Addison Energy Inc., on February 10, 2005, and the
after-tax net loss from operations of Addison for the period from
January 1 to February 10, 2005.
For the quarter, cash settlement expenses on derivative financial
instruments were $56.3 million including payments totaling $52.6
million to terminate and reset commodity price risk management
arrangements for the years 2005-2007. Net cash used in operating
activities for the quarter ended March 31, 2005 was $115.3 million
after changes in working capital. This amount includes one-time
cash payments of $52.6 million on U.S. and $15.0 million on
Canadian commodity price risk management arrangements which were
terminated during the quarter, and approximately $49.6 million in
U.S. and Canadian taxes paid on the sale of Addison. For the
quarter ended March 31, 2004, EXCO had a net loss of $9.1 million,
including after-tax income from discontinued operations of $2.2
million, on oil and natural gas revenues of $28.7 million, and net
cash provided by operating activities of $29.1 million after
changes in working capital.
Production for the three months ended March 31, 2005, was
approximately 126,000 barrels of oil, 6,000 barrels of natural gas
liquids, and 5.1 Bcf of natural gas as compared to first quarter
2004 production of approximately 189,000 barrels of oil, 15,000
barrels of natural gas liquids, and 4.1 Bcf of natural gas.
Overall, for the three months ended March 31, 2005, total
production was approximately 5.9 Bcfe versus first quarter 2004
total production of approximately 5.3 Bcfe, a .6 Bcfe or 11%
increase.
The average oil price per Bbl, before cash settlements of
derivative financial instruments, received during the three months
ended March 31, 2005, was $47.09 versus $33.16 for the three
months ended March 31, 2004, a $13.93 per barrel or 42% increase.
The average natural gas price per Mcf, before cash settlements of
derivative financial instruments, received during the current
three months was $6.41 versus $5.37 for the corresponding three
months of the prior year, a $1.04 per Mcf or 19% increase. The
average natural gas liquids price per Bbl received during the
three months ended March 31, 2005, was $30.17 versus $26.53 during
the three months ended March 31, 2004, a $3.64 per barrel or 14%
increase.
About the Company
EXCO Resources, Inc. is a privately-held oil and natural gas
acquisition, exploration, exploitation, development and production
company headquartered in Dallas, Texas with principal operations
in Texas, Colorado, Ohio, Pennsylvania and West Virginia.
* * *
As reported in the Troubled Company Reporter on January 24, 2005,
Standard & Poor's Ratings Services placed Dallas, Texas-based
exploration and production -- E&P -- company EXCO Resources Inc.'s
'B+' corporate credit rating on CreditWatch with negative
implications. The CreditWatch listing follows EXCO's announcement
that its board approved an agreement to sell the company's
Canadian subsidiary (Addison Energy Inc. (unrated)), which
represents about 43% of the company's current production (as of
Sept. 30, 2004) and about 34% of the company's total proved
reserves (as of year-end 2003 pro forma for the acquisition of
North Coast Energy Inc. (unrated)), to NAL Oil and Gas Trust
(unrated) for U.S. $452 million (Cdn $550 million).
"Although EXCO's liquidity will be significantly bolstered in the
near term as proceeds are realized from the transaction, the
negative CreditWatch listing reflects uncertainty regarding the
direction of proceeds, the low likelihood that funds will be used
for debt reduction, and the potential execution risks facing the
company, if it seeks to reinvest proceeds into additional domestic
U.S. oil and gas properties (particularly given elevated commodity
prices)," noted Standard & Poor's credit analyst Jeffrey B.
Morrison.
The CreditWatch listing will be resolved in the near term, pending
Standard & Poor's meeting with management to assess the company's
business profile going forward, discuss the expected timing and
deployment of proceeds, and evaluate the transaction's effect on
the company's reserve base and credit measures in the near-to-
intermediate term.
FIRST FRANKLIN: Good Credit Support Cues S&P to Hold Ratings
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 334
classes of certificates from 34 series issued by First Franklin
Mortgage Loan Trust.
The rating affirmations are based on credit support percentages
that are sufficient to maintain the current ratings. Cumulative
losses in these transactions range from 0.00% (five of the pools)
to 1.03% (series 2000-FF1) of the original pool balance. Ninety-
plus day delinquencies range from 0.00% (five of the pools) to
23.79% (series 2000-FF1) of the current pool balance. These
transactions are protected from losses by a combination of
overcollateralization, excess spread, and subordination.
The underlying collateral in all of these transactions are pools
of fixed-rate, fully amortizing and balloon payment mortgage loans
secured by first and second liens on one- to four-family
residential properties. These mortgages were originated or
purchased by First Franklin Financial Corp. in accordance with
guidelines that target borrowers with less-than-perfect credit
histories. The guidelines are intended to assess both the
borrowers' ability to repay the loan, and the adequacy of the
value of the property securing the mortgage.
Ratings Affirmed
First Franklin Mortgage Loan Trust
Series Class Rating
------ ----- ------
2000-FF1 A AAA
2000-FF1 M-1 AA
2001-FF1 A-1, M-1 AAA
2001-FF2 A-1, A-2, M-1 AAA
2001-FF2 M-2 A+
2001-FF2 M-3 BBB
2002-FF1 I-A-2, II-A-1 AAA
2002-FF1 M-1 AA+
2002-FF1 M-2 AA
2002-FF1 M-3 BBB
2002-FF2 A-1, A-2 AAA
2002-FF2 M-1 AA
2002-FF2 M-2 A
2002-FF2 M-3 BBB+
2002-FF3 A1, A2 AAA
2002-FF3 M1 AA
2002-FF3 M2 A
2002-FF3 M3 A-
2002-FF3 B BBB+
2002-FF4 I-A2, II-A2 AAA
2002-FF4 M-1 AA
2002-FF4 M-2 A
2002-FF4 M-3 A-
2002-FFA M-1 AA
2002-FFA M-2 A
2002-FFA M-3 BBB
2003-FF1 A-1, A-2 AAA
2003-FF1 M-1 AA
2003-FF1 M-2 A
2003-FF1 M-3F, M-3V BBB+
2003-FF1 M-4 BBB
2003-FF2 A-1, A-2 AAA
2003-FF2 M-1 AA
2003-FF2 M-2 A
2003-FF2 M-3F, M-3A A-
2003-FF2 M-4A, M-4F BBB+
2003-FF2 M-5A, M-5F BBB
2003-FF3 1-A, 2-A1, 2-A2, A-IO AAA
2003-FF3 M1 AA
2003-FF3 M2 A
2003-FF3 M3 A-
2003-FF3 M4 BBB+
2003-FF3 B BBB
2003-FF4 A-1, A-2, A-3, A-4 AAA
2003-FF4 M-1 AA
2003-FF4 M-2 A
2003-FF4 M-3 A-
2003-FF4 M-4 BBB+
2003-FF4 M-5 BBB
2003-FF4 M-6 BBB-
2003-FFA II-A-3, II-A-IO, A-R, P AAA
2003-FFA I-B-1, II-M-1 AA
2003-FFA I-B-2, II-M-2 A
2003-FFA I-B-3, II-B BBB-
2003-FFA I-B-4 BB
2003-FFA I-B-5 B
2003-FFB A, A-IO AAA
2003-FFB M1 AA
2003-FFB M2 A
2003-FFB B1 BBB
2003-FFB B2 BBB-
2003-FFC A-1, S AAA
2003-FFC M-1 AA
2003-FFC M-2 A
2003-FFC M-3 BBB+
2003-FFC M-4 BBB
2003-FF5 A-1, A-2, A-3 AAA
2003-FF5 M-1 AA
2003-FF5 M-2 A
2003-FF5 M-3 A-
2003-FF5 M-4 BBB+
2003-FF5 M-5 BBB
2003-FF5 M-6 BBB-
2003-FF5 B BB+
2003-FFH1 I-A-1, II-A2 AAA
2003-FFH1 M-1 AA
2003-FFH1 M-2 A
2003-FFH1 M-3 A-
2003-FFH1 M-4 BBB+
2003-FFH1 M-5 BBB
2003-FFH1 M-6 BBB-
2003-FFH1 B-1 BB+
2003-FFH2 A-1A, A-1B, A-2, A-3, A-4 AAA
2003-FFH2 M-1A, M-1B AA
2003-FFH2 M-2 A
2003-FFH2 M-3 A-
2003-FFH2 M-4 BBB+
2003-FFH2 M-5 BBB
2003-FFH2 M-6 BBB-
2003-FFH2 B BB+
2004-FF1 A-1, A-2, S, R AAA
2004-FF1 M-1 AA
2004-FF1 M-2 A
2004-FF1 B-1 BBB+
2004-FF1 B-2 BBB
2004-FF1 B-3 BBB-
2004-FF10 A-1, A-2, A-3 AAA
2004-FF10 M-1 AA
2004-FF10 M-2 A
2004-FF10 M-3 A-
2004-FF10 M-4 BBB+
2004-FF10 M-5 BBB
2004-FF10 M-6, M-7A, M-7F BBB-
2004-FF11 I-A1, I-A2, II-A1, II-A2, II-A3 AAA
2004-FF11 M-1, M-2 AA+
2004-FF11 M-3 AA
2004-FF11 M-4 AA-
2004-FF11 M-5 A+
2004-FF11 M-6 A
2004-FF11 M-7 A-
2004-FF11 M-8 BBB+
2004-FF11 M-9 BBB
2004-FF11 M-10 BBB-
2004-FF11 B-1 BB+
2004-FF11 B-2 BB
2004-FF2 A-1, A-2, A-3, A-4, A-5, A-6 AAA
2004-FF2 M-1 AA+
2004-FF2 M-2 AA
2004-FF2 M-3 AA-
2004-FF2 M-4 A+
2004-FF2 M-5 A
2004-FF2 M-6 A-
2004-FF2 M-7 BBB+
2004-FF2 M-8 BBB
2004-FF2 M-9 BBB-
2004-FF2 B BB+
2004-FF4 A-1, A-2 AAA
2004-FF4 M-1 AA
2004-FF4 M-2 A
2004-FF4 M-3 A-
2004-FF4 B-1 BBB+
2004-FF4 B-2 BBB
2004-FF4 B-3 BBB-
2004-FF5 A-1, A-2, A-3A, A-3B, A-3C AAA
2004-FF5 M-1 AA+
2004-FF5 M-2 AA
2004-FF5 M-3 AA-
2004-FF5 M-4 A+
2004-FF5 M-5 A
2004-FF5 M-6 A-
2004-FF5 M-7 BBB+
2004-FF5 M-8 BBB
2004-FF5 M-9 BBB-
2004-FF5 B BB+
2004-FF6 A-1, A-2A, A-2B AAA
2004-FF6 M-1 AA
2004-FF6 M-2 A
2004-FF6 M-3 A-
2004-FF6 B-1 BBB+
2004-FF6 B-2 BBB
2004-FF6 B-3 BBB-
2004-FF6 B-4 BB+
2004-FF7 A1, A2, A3, A4, A5 AAA
2004-FF7 M1 AA+
2004-FF7 M2 AA
2004-FF7 M3 AA-
2004-FF7 M4 A+
2004-FF7 M5 A
2004-FF7 M6, M7 A-
2004-FF7 M8 BBB+
2004-FF7 M9 BBB
2004-FF7 B BBB-
2004-FF8 A-1, A-2A, A-2B, A-2C AAA
2004-FF8 M-1 AA+
2004-FF8 M-2 AA
2004-FF8 M-3 A
2004-FF8 M-4 A-
2004-FF8 B-1 BBB+
2004-FF8 B-2 BBB
2004-FF8 B-3 BBB-
2004-FF8 B-4 BB+
2004-FFA A1, A2, A-SIO AAA
2004-FFA M1-A, M1-F AA
2004-FFA M2-A, M2-F A
2004-FFA M3-A, M3-F A-
2004-FFA M4 BBB+
2004-FFA M5 BBB
2004-FFA M6 BBB-
2004-FFB A-1, A-2, A-3, A-4, A-IO-1, A-IO-2 AAA
2004-FFB A-IO-3, A-IO-4, A-R, A-RL, P AAA
2004-FFB M-1 AA+
2004-FFB M-2 AA
2004-FFB M-3 A-
2004-FFB M-4 A
2004-FFB M-5 A-
2004-FFB B BBB
2004-FFC A, R AAA
2004-FFC M-1 AA
2004-FFC M-2 AA-
2004-FFC M-3 A
2004-FFC M-4 A-
2004-FFC B-1 BBB+
2004-FFC B-2 BBB
2004-FFC B-3 BBB-
2004-FFC B-4 BB
2004-FFH1 A-1, A-2, A-3, A-4 AAA
2004-FFH1 M-1 AA+
2004-FFH1 M-2 AA
2004-FFH1 M-3 AA-
2004-FFH1 M-4 A+
2004-FFH1 M-5 A
2004-FFH1 M-6 A-
2004-FFH1 M-7 BBB+
2004-FFH1 M-8 BBB
2004-FFH1 M-9 BBB-
2004-FFH1 B BB+
2004-FFH2 A-1, A-2, A-3, A-4 AAA
2004-FFH2 M-1 AA+
2004-FFH2 M-2 AA
2004-FFH2 M-3 AA-
2004-FFH2 M-4 A+
2004-FFH2 M-5 A
2004-FFH2 M-6 A-
2004-FFH2 M-7 BBB+
2004-FFH2 M-8 BBB
2004-FFH2 M-9 BBB-
2004-FFH2 B-1 BB+
2004-FFH2 B-2 BB
2004-FFH3 I-A1, I-A2, II-A1, II-A2, II-A3 AAA
2004-FFH3 II-A4 AAA
2004-FFH3 M-1 AA+
2004-FFH3 M-2 AA
2004-FFH3 M-3 AA-
2004-FFH3 M-4 A+
2004-FFH3 M-5 A
2004-FFH3 M-6 A-
2004-FFH3 M-7 BBB+
2004-FFH3 M-8 BBB
2004-FFH3 M-9 BBB-
2004-FFH3 B-1 BB+
2004-FFH3 B-2 BB
2004-FFH4 I-A-1, II-A2, II-A-3 AAA
2004-FFH4 M-1 AA+
2004-FFH4 M-2 AA
2004-FFH4 M-3 AA-
2004-FFH4 M-4 A+
2004-FFH4 M-5 A
2004-FFH4 M-6 A-
2004-FFH4 M-7 BBB+
2004-FFH4 M-8 BBB
2004-FFH4 M-9 BBB-
FORD MOTOR: Inks Deal to Take Back 24 Plants from Visteon Corp.
---------------------------------------------------------------
Ford Motor Company signed a Memorandum of Understanding with its
largest supplier, Visteon Corp., on May 24, 2005, that, Ford says,
"protects the Company's supply of critical parts and components,
creates opportunities for production material cost savings, and
improves its ability to benefit from competitively-priced and
high-quality parts, systems and technologies."
The MOU proposes the transfer of 24 Visteon plants and facilities
in the U.S. and Mexico and associated assets to a new, temporary
business entity to be managed by Ford. Over time, Ford would
prepare most of these transferred Visteon operations for sale to
companies with the expertise and capital to supply Ford with
parts, systems and technologies that are competitive in price
and quality. In addition, once the transaction is closed, the
agreement provides Ford with warrants to purchase up to 25 million
shares of Visteon Corp. common stock at $6.90 per share, and
continued annual price reductions from Visteon through 2008.
"This agreement brings us closer to a true 'arms length'
relationship with our largest supplier," said Don Leclair, Ford's
chief financial officer and executive vice president. "We've
accomplished this while also creating opportunities to accelerate
the improvement of our business results. Over time, this
agreement will allow us to diversify our supply base and enhance
our access to parts, systems and technologies that are competitive
in price and quality. With the United Auto Workers' continued
support, many of these Visteon operations will have the
opportunity to prosper under new ownership."
The MOU with Visteon is subject to customary approvals and
conditions, ratification by Ford-UAW hourly employees that would
be affected by the proposed agreement, and negotiation by Ford and
Visteon of a definitive agreement, which the parties are working
to complete in the third quarter. The transaction is expected to
be closed by September 30.
Business Entity Details
At the transaction's closing, 24 Visteon plants and facilities in
the U.S. and Mexico will transfer to a Ford-managed business
entity. The entity's operations, assets and liabilities will be
reflected in Ford's consolidated financial results and balance
sheet.
In keeping with its temporary status, the new business entity will
not have its own employees. It will lease salaried employees from
Visteon, and all hourly UAW-Ford employees currently working in
Visteon facilities. In addition, Ford is expected to implement
over time buy-outs for about 5,000 Ford-UAW hourly employees.
Leading the new business entity as chief executive officer will be
Frank E. Macher, a 35-year veteran of the automotive industry who
most recently served as CEO and chairman of Federal-Mogul Corp.,
and previously as president and CEO of the former ITT Automotive,
an $8 billion global automotive supplier. He will report to Greg
Smith, Ford's executive vice president and president, The
Americas. Macher's career experience includes 30 years with
Ford, including as vice president and general manager of the
Company's Automotive Components Division, the predecessor to the
current Visteon Corp. Also, Al Ver, Ford's current vice president
of Advanced and Manufacturing Engineering, has been appointed the
new business entity's president and chief operating officer. He
will report to Macher. Ver has 37 years of industry experience,
including 33 years with Ford that includes significant experience
with Manufacturing operations, as well as engineering expertise in
automotive components, powertrain and vehicle assembly.
"Frank's unique leadership experience in our industry from both
the manufacturer and supplier perspectives makes him the right
person to lead this operation," said Smith. "Al will be focused
on driving change in the areas of quality, cost and delivery.
Together, Frank and Al will make a formidable team."
Other MOU Details
Other significant terms of the MOU that would be part of the
definitive agreement include:
* Forgiveness by Ford of Visteon's remaining Ford-UAW OPEB
obligation and a portion of Visteon's salaried OPEB
obligation for former Ford employees and retirees, totaling
about $800 million (of which $600 million was reserved in
2004).
* Payment by Ford to Visteon of up to $550 million to assist
Visteon's restructuring expenses.
* Extension by Ford to Visteon of a $250 million secured
loan, the proceeds of which would be used by Visteon to
repay debt maturing on August 1, 2005. The loan from Ford
would be repaid by Visteon upon closing of the transaction.
* Provision by Visteon of certain services (e.g., information
technology, accounting, etc.) to facilitate the operation
of the new business entity.
* Payment by Ford of $300 million for the inventory included
in the transferred operations.
* Assumption by Ford or the Ford-managed business entity of
certain liabilities associated with the business including
environmental and employee-related accrued liabilities for
the Ford-UAW hourly employees assigned to work at Visteon.
Other than these liabilities and the OPEB obligation
mentioned above, the MOU does not contemplate that Ford or
the new entity will take on other liabilities of the
transferred businesses. However, it is expected that the
Ford-managed business entity would take over the future
performance under purchase and supply contracts associated
with the transferred businesses.
* Acceleration of payment terms through 2006 for payments due
from Ford to Visteon for components purchased by Ford for
its U.S. facilities, with a gradual increase over time to
normal payment terms by 2009.
* Funding by Ford of certain capital expenditures associated
with Visteon's Saline, Sheldon Road, Sandusky and Utica
Plants effective with capital expenditures incurred or
committed by Visteon beginning May 1, 2005. This funding
is on the same terms as the funding previously agreed and
announced by Ford and Visteon in March for other Visteon
plants and will continue until closing of the transactions
contemplated by the MOU.
A 26-slide PowerPoint presentation Mike Johnston, Visteon's
chairman-elect and chief executive officer, and Jim Palmer,
executive vice president and chief financial officer, used to
describe the transaction in a conference call yesterday with
Visteon investors and other analysts is available at no charge at
http://tinyurl.com/bns9h
Financial Impact on Ford
The agreement is expected to result in special charges ranging
from $450 million to $650 million in 2005. In addition, there
will be an estimated $300 million to $500 million in special
charges in 2005-to-2009 related to the buy-outs for hourly
workers. The new business arrangement also is expected to result
in significant material cost savings in the range of $600 million
to $700 million per year by the end of the decade; however,
operating losses of about $125 million in the fourth quarter of
2005, and annual operating losses of $200 million to $300 million
in 2006 are expected in addition to the special charges.
Plants and Facilities Transferring
to Ford-Managed Business Entity
THe Visteon operations and assets to be transferred to the new
Ford-managed business entity (in alphabetical order by location)
are:
Plant/Facility Location Operation
-------------- -------- ---------
Bellevue Bellevue, OH Service Parts
Chesterfield Chesterfield, MI Interior
Autovidrio Chihuahua, Mexico Glass
El Jarudo Chihuahua, Mexico Powertrain
Commerce Park South Dearborn, MI Admin./Support
Glass Labs Dearborn, MI Glass
Product Assurance Center Dearborn, MI Engineering
Visteon Technical Center Dearborn, MI Engineering/Support
Indianapolis Indianapolis, IN Chassis
Kansas City VRAP* Kansas City, MO Interior
Carlite Automotive Lebanon, TN Glass
Milan Milan, MI Powertrain
Monroe Monroe, MI Chassis
Nashville Nashville, TN Glass
Lamosa Nuevo Laredo, Mexico Chassis/Powertrain
VitroFlex Nuevo Leon, Mexico Glass
Sheldon Road Plymouth, MI Climate Control
Saline Saline, MI Interior
Sandusky Sandusky, OH Powertrain/Lighting
Sterling Sterling Heights, MI Chassis
Tulsa Tulsa, OK Glass
Utica Utica, MI Interior/Exterior
Rawsonville Ypsilanti, MI Powertrain
Ypsilanti Ypsilanti, MI Powertrain
* VRAP -- Visteon Regional Assembly Plant
Ford Motor Company, a global automotive industry leader based in
Dearborn, Michigan, manufactures and distributes automobiles in
200 markets across six continents. With more than 324,000
employees worldwide, the Company's core and affiliated automotive
brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln,
Mazda, Mercury and Volvo. Its automotive-related services include
Ford Motor Credit Company and The Hertz Corporation.
* * *
Earlier this month, Standard & Poor's Ratings Services lowered its
long- and short-term corporate credit ratings on Ford Motor Co.,
Ford Motor Credit Co., and all related entities -- except those of
Hertz Corp. -- to 'BB+/B-1' from 'BBB-/A-3', and said the rating
outlook is negative. S&P's ratings on Hertz (BBB-/Watch Dev/A-3)
remain on CreditWatch, where they were placed on April 21, 2005,
following Ford's disclosure that it was evaluating strategic
options for Hertz, including its potential sale.
S&P said the downgrade to non-investment-grade reflects the rating
agency's skepticism about whether management's strategies will be
sufficient to counteract mounting competitive challenges.
Moody's Investors Service lowered its ratings on Ford and Ford
Credit earlier this month, but maintained their investment grade
ratings.
Fitch Ratings weighed in this week by downgrading the senior
unsecured debt ratings of Ford Motor Corporation and Ford Motor
Credit Corporation to 'BBB' from 'BBB+'.
As reported in the Troubled Company Reporter on April 11, 2005,
Ford Motor Co. delivered it's 2004 annual report on Form 10-K to
the Securities and Exchange Commission on March 10, 2005. A full-
text copy of Ford's 2004 annual report is available at
http://tinyurl.com/d556rat no charge.
While 2004 financial results show some improvements from 2003, the
company's performance has steadily declined over the past five
years:
Total Assets Total Liabilities
------------ -----------------
1998 $237.5 +++ 1998 $213.5 +
1999 $270.2 +++++ 1999 $241.9 ++++
2000 $284.4 +++++++ 2000 $265.1 ++++++
2001 $276.5 ++++++ 2001 $268.1 ++++++
2002 $295.2 +++++++ 2002 $283.9 ++++++++
2003 $310.7 +++++++++ 2003 $298.4 +++++++++
2004 $305.3 ++++++++ 2004 $288.4 ++++++++
Shareholder Equity Current Assets
------------------ --------------
1998 $24.0 +++++++ 1998 $41.7 ++
1999 $28.3 +++++++++ 1999 $44.9 +++
2000 $19.3 ++++ 2000 $40.1 ++
2001 $8.4 . 2001 $36.9 +
2002 $11.3 . 2002 $48.6 ++++
2003 $12.3 + 2003 $61.2 +++++++
2004 $16.9 +++ 2004 $59.2 +++++++
Current Liabilities Working Capital
------------------- ---------------
1998 $106.9 ++++++ 1998 ($65.2)
1999 $115.5 +++++++ 1999 ($70.6)
2000 $114.9 +++++++ 2000 ($74.8)
2001 $93.9 ++++ 2001 ($57.0)
2002 $61.5 . 2002 ($12.9)
2003 $112.7 +++++++ 2003 ($51.5)
2004 $122.8 ++++++++ 2004 ($63.6)
Leverage Ratio Liquidity Ratio
-------------- ---------------
1998 8.9 . 1998 0.4 +++
1999 8.5 . 1999 0.4 +++
2000 13.7 + 2000 0.3 +++
2001 31.9 +++++++ 2001 0.4 +++
2002 25.1 +++++ 2002 0.8 +++++++
2003 24.3 +++++ 2003 0.5 +++++
2004 17.1 +++ 2004 0.5 ++++
Net Sales Interest Expense
--------- ----------------
1998 $144.4 +++++ 1998 $0.8 +++++
1999 $160.6 +++++++ 1999 $1.3 +++++++++
2000 $170.1 ++++++++ 2000 $1.4 +++++++++
2001 $162.4 +++++++ 2001 $1.4 +++++++++
2002 $162.5 +++++++ 2002 $1.4 +++++++++
2003 $164.3 ++++++++ 2003 $1.3 +++++++++
2004 $171.6 ++++++++ 2004 $1.2 ++++++++
EBITDA Net Income
------ ----------
1998 $23.3 +++++++ 1998 $22.0 +++++++
1999 $24.9 ++++++++ 1999 $7.2 ++
2000 $24.1 ++++++++ 2000 $3.4 +
2001 $10.7 +++ 2001 ($5.4)
2002 $16.1 +++++ 2002 ($1.0)
2003 $15.9 +++++ 2003 ($0.5)
2004 $11.4 +++ 2004 $3.5 +
EBITDA Margin Profit Margin
------------- -------------
1998 16.1%++++++++ 1998 15.2%+++++++
1999 15.5%+++++++ 1999 4.5%++
2000 14.2%+++++++ 2000 2.0%.
2001 6.6%+++ 2001 -3.3%
2002 9.9%++++ 2002 -0.6%
2003 9.7%++++ 2003 -0.3%
2004 6.6%+++ 2004 2.0%+
Ford estimates that it manufactures and sells 21% of all cars and
trucks in the United States. General Motors' market share is
about 28%; DaimlerChrysler captures 14%; Toyota's market share is
about 11%; and Honda accounts for another 8%. U.S. automakers'
share of the U.S. market has declined steadily for the past five
years while Toyota, Honda, and other companies based in Europe,
Korea and Japan have steadily increased.
Ford employs approximately 327,500 workers. Ford's $162 billion
in annual sales account for nearly 1-1/2% of the United States'
gross domestic product. If Ford were a sovereign nation, it would
rank as the 28th-largest country according to 2003 data from the
World Bank -- larger than Finland, South Africa or Hong Kong, and
smaller than Poland, Indonesia or Greece.
Ford faces asbestos-related liability. Plaintiffs allege various
health problems as a result of asbestos exposure, either from (i)
component parts found in older vehicles (ii) insulation or other
asbestos products in Ford's facilities or (iii) asbestos aboard
Ford's former maritime fleet.
Claims against the automaker have been rising:
Date Active Claims
---- -------------
12/31/01 18,000 ++++++++++++
12/31/02 23,000 +++++++++++++++++
02/28/03 25,000 ++++++++++++++++++
02/03/04 41,500 ++++++++++++++++++++++++++++++
Ford does not disclose the number of claims filed against it after
Feb. 3, 2004. Ford says that while annual payout and related
defense costs in asbestos cases increased between 1999 and 2003,
those amounts were not significantly higher in 2004.
FREEDOM MEDICAL: Has Until Aug. 23 to Make Lease Decisions
----------------------------------------------------------
The Honorable Bruce I. Fox of the U.S. Bankruptcy Court for the
Eastern District of Pennsylvania gave Freedom Medical, Inc., more
time to decide whether to assume, assume and assign, or reject its
unexpired nonresidential real property leases pursuant to Section
365(d)(4) of the Bankruptcy Code.
The Debtor has until August 23, 2005 to make its decision on the
unexpired leasehold contracts, in line with its intention to
extend the lease decision period through confirmation of a chapter
11 plan of reorganization.
The Court initially granted an extension in February after the
Debtor submitted that premature assumption or rejection of the
leases might prove cumbersome or important in the ultimate
reorganization. That extension expired Tuesday.
Headquartered in Exton, Pennsylvania, Freedom Medical, Inc.,
-- http://www.freedommedical.com/-- sells electronic medical
equipment and related services to hospitals, alternate site
healthcare providers, and EMS transport organizations. The
Company filed for chapter 11 protection on December 29, 2004
(Bankr. E.D. Pa. Case No. 04-37092). Barry D. Kleban, Esq., at
Adelman Lavin Gold and Levin represents the Debtor. When Freedom
Medical filed for protection from its creditors, it listed
estimated assets and debts of more than $50 million.
GE COMMERCIAL: Fitch Puts Low-B Ratings on 3 Certificate Classes
----------------------------------------------------------------
GE Commercial Mortgage Corporation, series 2005-C2, commercial
mortgage pass-through certificates are rated by Fitch Ratings:
-- $55,000,000 class A-1 'AAA';
-- $334,900,000 class A-2 'AAA';
-- $132,400,000 class A-3 'AAA';
-- $72,362,000 class A-AB 'AAA';
-- $445,399,000 class A-4 'AAA';
-- $451,249,000 class A-1A 'AAA';
-- $149,131,000 class A-J 'AAA';
-- $1,822,837,000 class X-P* 'AAA';
-- $1,864,137,976 class X-C* 'AAA';
-- $13,981,000 class B 'AA+';
-- $30,292,000 class C 'AA';
-- $16,311,000 class D 'AA-';
-- $25,632,000 class E 'A';
-- $16,312,000 class F 'A-';
-- $20,971,000 class G 'BBB+';
-- $16,311,000 class H 'BBB';
-- $20,972,000 class J 'BBB-';
-- $9,321,000 class K 'BB+';
-- $6,990,000 class L 'BB';
-- $9,321,000 class M 'BB-';
-- $2,330,000 class N 'NR';
-- $6,990,000 class O 'NR';
-- $4,661,000 class P 'NR';
-- $23,301,976 class Q 'NR'.
* Notional Amount and Interest Only
Classes N, O, P, and Q are not rated by Fitch. Classes A-1, A-2,
A-3, A-AB, A-4, A-1A, A-J, X-P, B, C, D and E are offered
publicly, while classes X-C, F, G, H, J, K, L, M, N, O, P, and Q
are privately placed pursuant to rule 144A of the Securities Act
of 1933. The certificates represent beneficial ownership interest
in the trust, primary assets of which are 142 fixed-rate loans
having an aggregate principal balance of approximately
$1,864,137,976, as of the cutoff date.
For a detailed description of Fitch's rating analysis, please see
the report titled 'GE Commercial Mortgage Corporation, Series
2005-C2' dated May 3, 2005, available on the Fitch Ratings web
site at http://www.fitchratings.com/
GENEVA STEEL: Chapter 11 Trustee Hires Block Markus as Counsel
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Utah, Central
Division, authorized James T. Markus, the chapter 11 Trustee
appointed in Geneva Steel LLC's bankruptcy case, to retain Block
Markus & Williams LLC as his counsel, nunc pro tunc to April 18,
2005.
The chapter 11 Trustee selected Block Markus as counsel based on
the Firm's extensive experience in bankruptcy proceedings and
related litigation. John F. Young, Esq., will serve as lead
attorney in the Debtor's chapter 11 proceedings. Mr. Young is
certified as a business bankruptcy specialist by the American
Board of Certification and is a past Chairman of the Bankruptcy
Subsection for the Colorado Bar Association.
As bankruptcy counsel, Block Markus will:
a) prepare on behalf of the Trustee any necessary motions,
applications, answers, orders, reports and papers as
required by applicable bankruptcy or non-bankruptcy law,
dictated by the demands of the case, or required by the
Court, and to represent the Trustee in proceedings and
hearings.
b) assist the Trustee in analyzing and pursuing any
proposals to acquire the assets of the Debtor's estate;
c) review, analyze and advise the Trustee regarding claims
or causes of action to be pursued on behalf of the
estate;
d) review, analyze, and advise the Trustee regarding any
fee applications or other issues involving professional
compensation in the Debtor's case;
e) prepare and advise the Trustee regarding any chapter 11
plan filed by the Trustee and advise the Trustee
regarding chapter 11 plans filed by other constituents
in the Debtor's case;
f) assist the Trustee in negotiations with various creditor
constituencies regarding an exit, resolution and payment
of the creditor's claims.
g) review and analyze the validity of the claims filed and
advise the Trustee as to the filing of the objections to
claims, if necessary;
h) provide continuing legal advice with respect to the
bankruptcy, estate, litigation, avoidance actions and
miscellaneous other legal matters; and
i) perform all other legal services as may be prompted by
the needs of the trustee on this case.
Mr. Young intends to charge $245 per hour for his services. The
hourly rates for other Block Markus attorneys currently range from
$150 to $275. The Firm's paralegals charge $75 per hour.
To the best of the Debtor's knowledge, Block Markus is a
"disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Provo, Utah, Geneva Steel LLC owns and operates
an integrated steel mill. The Company filed for chapter 11
protection on January 25, 2002 (Bankr. Utah Case No. 02-21455).
Andrew A. Kress, Esq., Keith R. Murphy, Esq., and Stephen E.
Garcia, Esq., at Kaye Scholer LLP represent the Debtor in its
chapter 11 proceedings. When the Company filed for protection
from its creditors, it listed $262 million in total assets and
$192 million in total debts.
GREAT NORTHERN: Chapter 7 Trustee Hires DLA Piper as Tax Counsel
----------------------------------------------------------------
Gary M. Growe, the Chapter 7 Trustee overseeing the liquidation of
Great Northern Paper, Inc.'s estate, asks the U.S. Bankruptcy
Court for the District of Maine for authority to employ Evan
Migdail, Esq., and the firm of DLA Piper Rudnick Gray Cary US LLP
as special Washington Tax Counsel.
As tax counsel, Mr. Migdail and DLA Piper Rudnick will assist the
Trustee in prosecuting tax refund claims in Washington. Subject
to Court approval, Mr. Migdail will charge the estate $565 per
hour for his services. DLA Piper Rudnick's professionals will
charge their usual hourly rates ranging from $150 to $750 per
hour.
The Trustee does not indicate in his application whether Mr.
Migdail and DLA Piper Rudnick's are "disinterestedness", as the
term is defined in Section 101(14) of the Bankruptcy Code.
Great Northern Paper, Inc., one of the largest producers of
groundwood specialty papers in North America, filed for
chapter 11 protection on January 9, 2003 (Bankr. Maine Case No.
03-10048). The court converted the Debtor's case to a Chapter 7
liquidation proceeding on May 22, 2003. Alex M. Rodolakis, Esq.,
and Harold B. Murphy, Esq., at Hanify & King, P.C., represents the
Debtor. When the Company filed for protection from its creditors,
it listed debts and assets of more than $100 million each.
GXS CORPORATION: Moody's Junks $235M Senior Subordinated Debt
-------------------------------------------------------------
Moody's Investors Service affirmed the B2 senior implied rating of
GXS Corporation. At the same time, Moody's downgraded the senior
subordinated notes rating to Caa2 from Caa1 and assigned new
ratings to the proposed financing package. The rating outlook
remains negative.
These rating was affirmed:
* Senior implied rating of B2;
These rating was downgraded:
* $235 million (with $155 million outstanding following the
current proposed transaction) senior subordinated debt due
2012 downgraded to Caa2 from Caa1;
These new ratings were assigned:
* $50 million senior secured first lien revolving credit
facility maturing 2010 rated B2;
* $300 million senior secured first lien term loan maturing
2011 rated B2; and
* $100 million senior secured second lien term loan due 2011
rated Caa1.
These ratings will be withdrawn once it is refinanced:
* $100 million senior secured credit facilities rated B2;
* $105 million FRNs due 2008 rated B3.
Proceeds of the new debt will be used to refinance existing
indebtedness as well as provide long term financing to complete
the purchase of IBM's EDI assets, purchased by Francisco Partners,
also currently majority shareholder in heritage GXS, for $135
million. The combined company, which will be named GXS
Corporation, will be the world's largest provider of EDI
transaction services.
The senior implied rating affirmation reflects:
(1) the high degree of leverage, with pro forma debt to EBITDA
for the debt-financed acquisition of G Intl of 3.8x;
(2) top line which Moody's expects will continue to decline for
the near term due to erosion in EDI revenues, the threat of
forward integration by large retailers who could substitute
alternative products for GXS' EDI offerings;
(3) the potential for future acquisitions; and
(4) the near term distraction of a series of corporate
transactions on the management team.
The ratings are supported by:
(1) GXS' leadership position in EDI, which management estimates
at greater than 40% of the market;
(2) the company's success in transitioning monthly contract
into multi-year contracts, which lowers unit pricing but
increases revenue stability;
(3) new products such as synchronization and collaboration
solutions that expand the breadth of the company's
offerings; and
(4) the company's increasing focus on small to medium business
customers which GXS considers to have higher value added
versus traditional EDI customers.
The downgrade of the senior subordinated rating to Caa2 reflects
the changes in the company's capital structure which increases the
proportion of secured debt and as a result further subordinates
the subordinated note holders.
The negative outlook reflects ongoing medium-term challenges
regarding profitability and cash flow resulting from weak pricing
and volume trends. GXS' top line, margin and cash flow trends
have deteriorated due to eroding transaction volume and pricing
pressures. The company initiated some price reductions in return
for longer contract terms, which Moody's believes will help
stabilize revenues over the next few years. Higher profitability
during the second half of 2004 indicates that GXS' efforts to
"right size" costs are showing some signs of success.
The outlook could stabilize if GXS achieves top line growth and
maintains EBITDA margins in excess of 25% (after adjusting for one
time integration costs). This profit margin is consistent with
the 30% levels demonstrated in the second half of 2004. Ratings
could fall if top line, margin or cash flow trends continue to
weaken. An erosion in liquidity, which Moody's believes will be
satisfactory following the transaction, could also pressure
ratings.
EDI suppliers depend on a hub-and-spoke customer strategy where
large retailers or manufacturers form the hub of the buying
relationship, and their trading partners make up the spokes. This
customer structure incentives 'spokes' to also use EDI offerings
that are consistent with that of the hub. This allows market-
dominating players such as GXS to be relatively price-inelastic to
spokes customers, but makes GXS highly dependent on the retention
of key hub customers. In the short-term, the erosion of pricing
power is somewhat offset by the increased per-transaction fee that
results from the large file size generated by alternative formats
because GXS is compensated by the amount of data moved per
transaction.
In fiscal 2004, GXS stand-alone EBITDA to interest expense was
1.2x. Moody's anticipates that cash generation will remain weak
in the near future as the company ramps up its next generation
product offerings, integrates G Intl, and completes its
restructuring actions initiated June 2004. However, the G Intl
acquisition does improve GXS' leverage to about 3.8x debt to
EBITDA, in line with the company's metrics in 2003. Moody's
expects fixed charge coverage to be greater than 1.5x in fiscal
2005, but notes that debt reduction will be difficult to achieve
without a meaningful improvement in both top line and
profitability.
GXS Corporation will be the borrower of all debt issuances (first
lien, second lien, and senior subordinated) being rated herein.
Borrowings under the first and second lien credit facilities will
be guaranteed by each of the borrower's direct and indirect
domestic subsidiaries, and will be secured by first priority
security interests and second priority interests, respectively,
in:
(1) all capital stock and intercompany notes of the borrower
and each direct and indirect existing and future
subsidiary, but limited to 65% of material first tier
foreign subsidiaries; and
(2) substantially all of the tangible and intangible assets of
each domestic borrower and guarantor.
The two-notch differential between the first and second lien debt
reflects relatively low coverage on both asset and enterprise
value bases for the second lien term loan. Further, the increase
in first lien borrowings overrides the benefit expected from
EBITDA accretion from the G International acquisition, and thus
reduces protection for second lien holders.
Headquartered in Gaithersburg, Maryland, GXS Corporation provides
software and services which allow companies to exchange data,
principally EDI services. Revenues were $329 million in 2004.
HEALTHSOUTH CORP: Launching $150M Sr. Unsecured Loan Syndication
----------------------------------------------------------------
HealthSouth Corporation (OTC Pink Sheets: HLSH) is launching a
$150 million senior unsecured credit facility. The company stated
that it intends to use the net proceeds of the credit facility to
partially refinance the company's $245 million 6.875% senior notes
due June 15, 2005. This allows the company to reduce their
overall level of debt. J.P. Morgan Securities Inc. and Citigroup
Global Markets Inc. are acting as joint-lead arrangers and joint-
bookrunners for the syndication of the new credit facility.
About the Company
HealthSouth is one of the nation's largest providers of outpatient
surgery, diagnostic imaging and rehabilitative healthcare
services, operating facilities nationwide. HealthSouth can be
found on the Web at http://www.healthsouth.com/
* * *
Notice of Late Filing
HealthSouth filed a Form 12b-25 with the Securities and Exchange
Commission saying that it will not be filing its 2004 Form 10-K on
time due to the company's ongoing accounting reconstruction and
restatement efforts. The company is currently targeting the
filing of its 2004 Form 10-K in the fourth quarter of 2005. The
company says it plans to file a comprehensive Form 10-K for the
years ended Dec. 31, 2000, through Dec. 31, 2003, by the middle of
the second quarter 2005. This comprehensive Form 10-K will
contain restated financial statements for periods which previously
had been reported and initial financial statements for the other
periods covered by the report.
"Our external auditor is now auditing these documents and is
taking steps to ensure a thorough review," said HealthSouth CFO
John Workman. "We have been working extensively with external
resources to ensure that our accounting records are reconstructed
thoroughly and our financial statements and other disclosures are
prepared properly. This process has consumed more than 500 man-
years of external labor resources and required millions of lines
of adjusting journal entries. It is our intention to not rush a
process of this importance to reach an earlier, self-imposed
deadline."
HIGH VOLTAGE: Creditors Must File Proofs of Claims by May 31
------------------------------------------------------------
The United States Bankruptcy Court for the District of
Massachusetts, Eastern Division, set May 31, 2005 at 5:00 p.m., as
the deadline for all creditors owed money on account of claims
arising prior to February 8, 2005, against High Voltage
Engineering Corp. and its debtor-affiliates to file proofs of
claim.
Creditors must file written proofs of claim that comply with
Official Form No. 10 available at http://www.uscourts.gov/bkforms/
All proofs of claim must be delivered by mail to:
High Voltage Engineering Corporation
c/o The Trumbull Group LLC
P.O. Box 721
Windsor, CT 06095-0721
or hand-delivered to:
High Voltage Engineering Corporation
c/o The Trumbull Group LLC
4 Griffin Road
Windsor, CT 06095
Governmental units will have until 5:00 p.m. on August 18, 2005,
to file their proofs of claims against the Debtors.
Headquartered in Wakefield, Massachusetts, High Voltage
Engineering Corporation -- http://www.asirobicon.com/-- owns and
operates a group of three industrial and technology based
manufacturing and services businesses. HVE's businesses focus on
designing and manufacturing high quality applications and
engineered products which are designed to address specific
customer needs. The Debtor filed its first chapter 11 petition on
March 1, 2004 (Bankr. Mass. Case No. 04-11586). Its Third Amended
Joint Chapter 11 Plan of Reorganization was confirmed on July 21,
2004, allowing the Company to emerge on Aug. 10, 2004.
High Voltage filed its second chapter 11 petition on Feb. 8, 2004
(Bankr. Mass. Case No. 05-10787). S. Margie Venus, Esq., at Akin,
Gump, Strauss, Hauer & Feld LLP, and Douglas B. Rosner, Esq., at
Goulston & Storrs, represent the Debtors in their restructuring
efforts. In the Company's second bankruptcy filing, it listed
$457,970,00 in total assets and $360,124,000 in total debts.
Stephen Gray was appointed chapter 11 Trustee in February 2005.
HUFFY CORP: Wants Until Sept. 15 to Decide on Leases
----------------------------------------------------
Huffy Corporation and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of Ohio to extend the
period within which they may assume, assume and assign, or reject
unexpired non-residential real estate leases until Sept. 15, 2005.
The Debtors need more time to determine if the assumption or
rejection of particular leases is called for by the reorganization
plan that they are developing. The Debtors say the extension will
avoid an unintentional rejection of any remaining unexpired
property lease when the current deadline to make lease-related
decisions expires on June 17, 2005.
Headquartered in Miamisburg, Ohio, Huffy Corporation --
http://www.huffy.com/-- designs and supplies wheeled and related
products, including bicycles, scooters and tricycles. The Company
and its debtor-affiliates filed for chapter 11 protection on Oct.
20, 2004 (Bankr. S.D. Ohio Case No. 04-39148). Kim Martin Lewis,
Esq., and Donald W. Mallory, Esq., at Dinsmore & Shohl LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$138,700,000 in total assets and $161,200,000 in total debts.
INDYMAC ARM: Moody's Junks Class B-3 Subordinated Certificates
--------------------------------------------------------------
Moody's Investors Service has downgraded two subordinate
certificates issued by IndyMac ARM Trust, Series 2001-H1.
The underlying loans consist primarily of first-lien hybrid
adjustable-rate mortgage loans originated by IndyMacBank, F.S.B.
The two subordinate certificates from the Series 2001-H1
transaction are being downgraded because existing credit
enhancement levels are low given the current projected losses on
the underlying pools. To date, higher than anticipated losses
have resulted in the two most subordinate classes (class B-5 and
class B-6) to be completely written-down, leaving the class B-3
certificates only protected by $11,282 balance from class B-4 as
of April 2005.
Moody's complete rating actions are:
Issuer: IndyMac ARM Trust, Series 2001-H1
* Class B-2, downgraded to Baa1 from A2
* Class B-3, downgraded to Ca from Ba2
INTERSTATE BAKERIES: Amends JPMorgan DIP Financing Agreement
------------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission, Interstate Bakeries Corporation and its debtor-
affiliates disclose that they entered into a Third Amendment to
the DIP Agreement with JPMorgan Chase Bank, N.A., as Agent, on
May 23, 2005.
The Third Amendment redefines "Consolidated EBITDA" in its
entirety as the consolidated net income or net loss of the
Debtors for the period:
(a) plus the sum of:
(i) depreciation expense;
(ii) amortization expense;
(iii) other non-cash charges;
(iv) net total Federal, state and local income tax
expense;
(v) gross interest expense for the period less gross
interest income for the period;
(vi) extraordinary losses;
(vii) any restructuring charge; and
(viii) "Chapter 11 expenses" or "administrative costs
reflecting Chapter 11 expenses", inclusive of
professional fees, as shown on the Debtors'
consolidated statement of income for the period;
(b) less extraordinary gains.
The Third Amendment provides for the reduction of the Commitments
on a pro rata basis by an amount equal to the sum of (i) the Net
Proceeds of the subject Asset Sale required to be applied to
repay the outstanding Loans, plus (ii) the Net Proceeds of the
subject Asset Sale retained by the Debtors.
The Third Amendment prohibits the Debtors or their Subsidiaries
from making Capital Expenditures during the Debtors' fiscal
periods, in an aggregate amount in excess of the amount specified
for the fiscal periods:
Maximum Capital
Fiscal Period Expenditures
------------- ---------------
05/29/2005 - 08/20/2005 $20,000,000
08/21/2005 - 11/12/2005 21,500,000
11/13/2005 - 03/04/2006 19,000,000
03/05/2006 - 06/03/2006 10,000,000
06/04/2006 - 08/26/2006 14,000,000
08/27/2006 - 10/21/2006 9,000,000
If the amount of Capital Expenditures that are made during any of
fiscal period is less than the amount that is permitted to be
made during that fiscal period, the unused portion may be carried
forward to and made during the subsequent fiscal periods.
As of the end of each of the Debtors' fiscal period commencing
with the fiscal period beginning May 29, 2005, the Debtors
covenant with the Lenders not to permit cumulative Consolidated
EBITDA for each fiscal period beginning May 29, 2005, and ending
in each case on the last day of these fiscal periods to be less
than the amounts specified for each fiscal period:
Cumulative
Fiscal Period Ending Consolidated EBITDA
-------------------- -------------------
06/25/2005 $3,500,000
07/23/2005 4,000,000
08/20/2005 8,000,000
09/17/2005 12,500,000
10/15/2005 18,000,000
11/12/2005 21,000,000
12/10/2005 25,000,000
01/07/2006 23,500,000
02/04/2006 31,500,000
03/04/2006 42,500,000
04/01/2006 48,500,000
04/29/2006 58,500,000
06/03/2006 74,000,000
07/01/2006 83,000,000
07/29/2006 88,500,000
08/26/2006 99,500,000
09/23/2006 111,500,000
Cash Restructuring Charges
The Debtors and their Subsidiaries covenant with the Lenders not
permit cash restructuring charges for each fiscal period
beginning May 29, 2005, and ending in each case on the last day
of the fiscal period to be incurred in an amount in excess of the
amounts specified for each fiscal period:
Maximum Cash
Fiscal Period Ending Restructuring Charges
-------------------- ---------------------
11/12/2005 $44,000,000
06/03/2006 21,000,000
11/21/2006 7,700,000
If the amount of Cash Restructuring Charges that are incurred
during any fiscal period is less than the amount that is
permitted to be incurred during that fiscal period, the unused
portion may be carried forward to and incurred during the
subsequent fiscal periods.
The amount of Cash Restructuring Charges accrued since the
Petition Date but unpaid as of May 28, 2005, will not exceed
$21,000,000.
Waiver
JPMorgan and each of the other commercial banks, finance
companies, insurance companies or other financial institutions or
funds that are parties to the DIP Credit Agreement waive the
Events of Default arising as a result of the Debtors' payment of
up to $1,170,000 prior to May 23, 2005, to General Electric
Capital Business Asset Funding Corporation on account of the
Debtors' prepetition Indebtedness under:
(i) the Master Lease Purchase Agreement between General
Electric and Interstate Brands Corporation, dated
April 9, 2001;
(ii) the Lease Purchase Addendum No. One between General
Electric and Interstate Brands, dated April 9, 2001; and
(iii) Lease Purchase Closing Schedule between General Electric
and Interstate Brands, dated June 29, 2001.
The DIP Lenders also waive any default arising out of the
Debtors' bring down or restatement of the representations and
warranties of the DIP Credit Agreement after May 23 to the
extent, but solely to the extent, that the default pertains to
Interstate Bakeries Corporation's failure to timely file its
Form 10-Qs for the second and third quarters of fiscal year 2005,
its Form 10-K for fiscal year 2005, or its Form 10-Qs for the
first and second quarters of fiscal year 2006, with the United
States Securities and Exchange Commission.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014,
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ISCO INTERNATIONAL: Losses & Deficit Trigger Going Concern Doubt
----------------------------------------------------------------
Grant Thornton LLP raised substantial doubt about ISCO
International Inc.'s ability to continue as a going concern after
it audited the Company's financial statements for the fiscal year
ended Dec. 31, 2004. The auditors cited the Company's $7 million
net loss in 2004, and a $157 million accumulated deficit at Dec.
31. Also, the Company has consistently used, rather than
provided, cash in its operations.
The Company has been engaged in developing new solutions, and
toward that end development spending has preceded sales revenues.
Management's plans in regard to these matters include:
-- the focusing of development efforts on products with a
greater probably of commercial sales;
-- reducing professional fees and discretionary expenditures;
and
-- increased efficiencies and reduced overhead costs
associated with its outsourced production model.
Significant uses of cash during 2004 include personnel costs, the
cost to produce inventory, legal costs primarily related to a
patent appeal, facility related costs, and other uses.
Significant sources of cash during 2004 include sales and the
resulting realization of customer receivables, the draw of
$2.5 million on the credit line, and the exercise of $2 million in
warrants.
Recoverability of a major portion of the recorded asset amounts
shown in the Company's balance sheet is dependent upon continued
operations of the Company, which in turn is dependent upon the
Company's ability to meet its financing requirements on a
continuing basis, to maintain present financing, and to succeed in
its future operations. At December 31, 2004, the Company's cash
and cash equivalents, excluding restricted certificates of
deposit, were $402,000, an increase of $56,000 from the December
31, 2003 balance of $346,000.
The continuing development of, and expansion in, sales of the
Company's RF product lines, as well as the continued defense of
its intellectual property, may require a commitment of funds to
undertake product line development and to market and sell its RF
front-end products. The actual amount of the Company's future
funding requirements will depend on many factors, including: the
amount and timing of future revenues, the level of product
marketing and sales efforts to support the Company's
commercialization plans, the magnitude of its research and product
development programs, the ability of the Company to improve or
maintain product margins, and the costs involved in protecting the
Company's patents or other intellectual property.
As of May 4, 2005, the Company believes that it has sufficient
funds to operate its business without the need for substantial
future capital sources into the third quarter 2005, and very
possibly longer, subject to working capital and other
requirements. The Company intends to look into augmenting its
existing capital position potentially through other sources of
capital. For example, the Company regularly reviews the
capital markets for appropriate debt, equity and hybrid
instruments in search of both adequate operating capital and the
best available capital structure.
About the Company
ISCO International Inc. develops and sells solutions designed to
optimize the RF (Radio Frequency) link within wireless networks,
particularly, but not exclusively, on the reverse link. RF link,
or Radio link, is the signal between the mobile device (e.g.,
mobile phone) and the base station. Reverse link is the signal
from the mobile device to the base station. Forward link is the
signal from the base station to the mobile device. The Company's
array of solutions includes its ANF product line, the RF2; product
family, services and other solutions, all focused on optimizing RF
handling. The benefits of using the Company's solutions include:
allowing carriers (channels) to carry traffic in certain
circumstances where they otherwise could not, increased cell
site capacity and utilization, reduced mobile transmit power and
thus improved battery life, improved voice quality and substantial
reduction in dropped calls and failed attempts, culminating in
more satisfied customers and increased revenues for wireless
operators. These benefits have been documented in field trials
and commercial deployments with wireless operators involving
existing wireless systems.
J.P. MORGAN: Fitch Affirms B Rating on $10.7 Million Certificates
-----------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp.'s commercial
mortgage pass-through certificates, series 1996-C2 are upgraded by
Fitch Ratings:
-- $25.1 million class E to 'AAA' from 'AA-';
-- $2.3 million class F to 'AA-' from 'A'.
These classes are affirmed by Fitch:
-- Interest-only class DX at 'AAA';
-- $7.6 million class D at 'AAA';
-- $10.7 million class G at 'B'.
Fitch does not rate the $2.2 million class NR certificates.
Classes A, AX, B, and C have paid in full.
The upgrades are a result of increased subordination levels due to
amortization and prepayments.
As of the May 2005 distribution date, the pool's aggregate
principal balance has decreased 84.3% to $47.8 million from $304.6
million at issuance. Since issuance, the deal has become more
concentrated with only 18 loans remaining. Of the remaining
loans, 80% are expected to mature in 2005. All of the loans'
prepayment lockout periods have expired; however, there are yield
maintenance provisions in place through maturity.
One loan (8.5%) is currently in special servicing. The loan is
secured by a 120 bed nursing home located in North Huntingdon,
Pennsylvania. The loan transferred to the special servicer in
August 2004 due to a non-monetary default and declining
performance. The loan is current and expected to return to the
master servicer.
JAFRA COSMETICS: Good Debt Leverage Cues S&P's Positive Outlook
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
cosmetics products seller Jafra Cosmetics International Inc. to
positive from stable.
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit and 'B-' senior subordinated debt ratings on the Westlake
Village, California-based company. Approximately $164 million of
debt is affected by this action.
The revised outlook reflects Jafra's improved debt leverage as a
result of a $79 million equity contribution from its parent,
Vorwerk & Co. KG, in early 2005, and stronger operating trends
during the past two years. "The ratings could be raised over the
intermediate term if the company continues to maintain moderate
debt leverage levels and stable operating performance," said
Standard & Poor's credit analyst Patrick Jeffrey.
Though less likely, the outlook could be revised back to stable
over this period if Jafra faces significant operating challenges
in its key Mexican market or demonstrates a more aggressive
financial policy.
JOHNSONDIVERSEY: Fitch Lowers Senior Secured Debt Rating to BB-
---------------------------------------------------------------
Fitch Ratings has downgraded JohnsonDiversey, Inc.'s senior
secured debt rating to 'BB-' from 'BB' and senior subordinated
debt rating to 'B-' from 'B+'. The ratings have been removed from
Rating Watch Negative. The Rating Outlook is Negative.
JohnsonDiversey's ratings were placed on Rating Watch Negative on
March 24, 2005 following weaker-than-expected operating results
for the fourth quarter and full-year 2004 compared with Fitch's
expectations. Additionally, Fitch was concerned with the
company's weaker-than-expected margins, weakened cash flow
generation from operations, liquidity deterioration, and higher-
than-expected debt level.
Since then, JohnsonDiversey's liquidity has been enhanced to
support seasonal working capital needs with the completion of its
third amendment to the credit facility.
The recent amendment gives JohnsonDiversey greater financial
flexibility, providing covenant relief during periods when
seasonal working capital needs are high. The amendment also
includes favorable changes to limitations on annual capital
expenditures and less restrictive constraints for certain growth
initiatives such as investments in joint ventures. In addition,
borrowings under the Euro tranche B loan were refinanced with
additional U.S. dollar borrowings. As a result of the
refinancing, the borrowings outstanding under term loan B are
entirely denominated in U.S. dollars. The amendment also included
lower interest rates for term loan B as well.
The ratings downgrade reflects JohnsonDiversey's margin
deterioration, weakening cash flow, and higher-than-expected debt
levels. The Negative Outlook relates to continued unfavorable
trends in operating results and weak cash flow. Prices for key
raw materials for the company's polymer and floor care products
are likely to remain unstable throughout 2005 and 2006. The
pressure on margins could be alleviated with successful price
initiatives, currently under way by JohnsonDiversey, or price
relief for key raw materials such as benzene, styrene monomer,
acrylic acid, and caustic soda. Fitch expects key raw material
prices to be volatile, and there may be short periods of softening
in prices, but overall prices are likely to be maintained at
recent levels as the chemical industry proceeds to the next
cyclical peak in 2006 or 2007.
The negative margin trend year-over-year has been due to a
combination of factors including, but not limited to, escalating
raw material prices, as well as higher freight and transportation
costs. On a sequential basis, JohnsonDiversey's polymer segment
operating margin improved to 10% for the three months ending April
1, 2005, compared with 3% for the three months ending Dec. 31,
2004, due to price increases taking hold. Fitch is concerned that
JohnsonDiversey's largest segment, the Professional segment,
realized only modest improvement in the first quarter of 2005 and
remains weak with an operating margin of 2%. Fitch realizes that
the company's operating profit is generally the strongest in the
second and third quarters; however, it is uncertain if margins
will return to the 7% and 12% levels obtained by the Professional
and Polymer segments, respectively, last year in the second
quarter.
Ratings concerns also center on the company's need to rely on
available revolving lines of credit and uncommitted lines of
credit for cash. If price increases or cost reductions efforts
are unsuccessful this year, then Fitch expects that the need for
further covenant relief in late 2005 is a strong possibility.
Financial covenants under the company's senior secured credit
facility become more restrictive beginning in the third quarter of
2005.
Positive credit attributes include the company's strong market
positions worldwide and diversified product portfolio serving the
institutional and industrial cleaning and sanitation market.
Additionally, JohnsonDiversey benefits from its production of
water-based acrylic polymer resins for printing, packaging,
coatings, and plastics markets, as well as providing key materials
for its floor care business. Other credit strengths include
JohnsonDiversey's manageable debt maturity schedule with the next
significant debt maturity not until 2008. Key for the remainder
of 2005 will be JohnsonDiversey's ability to restore margins with
price increases, cost reductions, and revenue growth.
JohnsonDiversey's credit statistics declined slightly during the
12 months ended April 1, 2005, compared with that of year-end Dec.
31, 2004, due to a decrease in EBITDA partially offset by modest
debt reduction, with EBITDA-to-interest incurred of 3.0 times, and
debt-to-EBITDA of 3.6x. For the fiscal year ended Dec. 31, 2004,
EBITDA-to-interest incurred was 3.1x, and debt-to-EBITDA was 3.4x.
The company's total adjusted debt-to-EBITDAR incorporating gross
rent was slightly weaker at 5.2x for the 12 months ending April 1,
2005, compared with 5.0x at 2004 year-end due to lower EBITDA and
a higher accretive value for JohnsonDiversey Holdings' senior
discount note. Balance sheet debt was approximately $1.3 billion
at April 1, 2005. Additionally, the company has a $150 million
accounts receivable securitization program with approximately
$108 million utilized as of April 1, 2005, compared with $130
million at Dec. 31, 2004. The total adjusted debt amount includes
operating leases, A/R program balance, and JohnsonDiversey
Holdings' senior discount note.
JohnsonDiversey, Inc., is a global player in the I&I cleaning
market and sells its products into the following market segments:
* floor care;
* food service;
* restroom/housekeeping;
* laundry; and
* food processing.
In addition, JohnsonDiversey is a global supplier of water-based
acrylic polymer resins for printing, packaging, coatings, and
plastics markets. The company is owned by JohnsonDiversey
Holdings, Inc., which is owned by Commercial Markets Holdco (67%)
and Unilever (33%). For the 12-months ending April 1, 2005, the
company had $3.2 billion in net sales and $376 million in EBITDA
before one-time charges. Free cash flow defined as net from
operating activities minus capital expenditures and dividends was
$32 million for the same period.
KAISER ALUMINUM: Wants Insurers' Confirmation Objections Overruled
------------------------------------------------------------------
As previously reported, the Liquidating Debtors asked the U.S.
Bankruptcy Court for the District of Delaware to overrule the
Insurers' Objections. A group of insurers led by Century
Indemnity Company complain that the Third Amended Joint Plans of
Liquidation for Kaiser Alumina Australia Corporation and Kaiser
Finance Corporation and for Alpart Jamaica, Inc., and Kaiser
Jamaica Corporation are inherently and structurally unfair to
insurers and, accordingly, are not "insurance neutral."
Kaiser Alumina Australia Corporation, Kaiser Finance Corporation,
Alpart Jamaica, Inc., and Kaiser Jamaica Corporation state that
the Insurers do not have standing to object to the Liquidation
Plans because they are not "parties-in-interest" as required by
Section 1128(b) of the Bankruptcy Code.
The Liquidating Debtors note that the entirety of the Insurers'
objections is based on the contention that the Liquidation Plans
are not "insurance neutral" and do not preserve the Insurers'
rights under the applicable insurance policies.
According to the Liquidating Debtors, the Insurers' suggestion
that Section 12.1 of the Liquidation Plans is somehow inadequate
is absurd, not only because Section 12.1 itself makes clear that
it applies notwithstanding any other provisions in the Liquidation
Plans, including Section 4.2, but also because counsel for the
Insurers, representing the "ACE Group of Insurers" -- which
includes at least some if not all of the Insurers -- represented
to the Court at the hearing on the Disclosure Statements that the
insurance neutrality language of Section 12.1 "is acceptable to
the ACE Insurers."
Responses
A. Asbestos Committee and Representatives
The Official Committee of Asbestos Claimants, Martin J. Murphy,
the Future Asbestos Claimants Representative, and Anne M. Ferazzi,
the Future Silica Claimants' Representative, support the arguments
and contentions presented by Kaiser Alumina Australia Corporation,
Kaiser Finance Corporation, Alpart Jamaica, Inc., and Kaiser
Jamaica Corporation.
B. Creditors Committee
On behalf of the Official Committee of Unsecured Creditors,
William P. Bowden, Esq., at Ashby & Geddes, in Wilmington,
Delaware, argues that the Insurers' concerns are misplaced, as the
Third Circuit has recently concluded in In re Combustion
Engineering, Inc., 391 F.3d 190 (3d Cir.2004) -- over the
objection of certain insurers in that case -- that the language
contained in the plan of reorganization for Combustion
Engineering was sufficient to protect the insurers' rights.
Specifically, in examining the neutrality provision added by the
District Court, the Third Circuit held that the language in the
plans protected the prepetition rights and obligations of both the
debtor and the insurers by preserving for "any Entity . . . any
and all claims, defenses, rights or causes of action" under
subject insurance policies and settlement agreements. Unlike the
modifications to the super-preemptory provision, which provide
limited protection to "claims," the neutrality provision applies
broadly to all "claims, defenses, rights or causes of action, and
that "[a]ffirming the pre-petition contractual obligations of the
[insurers] does not impair their rights or increase their burdens
under the subject insurance policies."
Hence, as noted clearly and unequivocally by the Third Circuit,
Mr. Bowden points out that the Insurers' rights are fully
protected by the insurance neutrality language contained in the
Third Amended Joint Plans of Liquidation for Kaiser Alumina
Australia Corporation and Kaiser Finance Corporation and for
Alpart Jamaica, Inc., and Kaiser Jamaica Corporation.
Notwithstanding the Creditors Committee's belief that the
Insurers are not harmed by, and are in fact protected by, the
language in the Liquidation Plans, Mr. Bowden says the Creditors
Committee is willing to negotiate with the Insurers for the
inclusion of acceptable "insurance neutrality" language that would
resolve the Objections.
The Creditors Committee asserts that the Liquidation Plans must be
confirmed.
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company filed for chapter 11 protection on
February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold
off a number of its commodity businesses during course of its
cases. Corinne Ball, Esq., at Jones Day, represents the Debtors
in their restructuring efforts. On June 30, 2004, the Debtors
listed $1.619 billion in assets and $3.396 billion in debts.
(Kaiser Bankruptcy News, Issue No. 68; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
KERR-MCGEE: S&P Rates $5.5 Billion Senior Secured Facility at BB+
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' rating and
'2' recovery rating to Kerr-McGee Corp.'s $5.5 billion senior
secured credit facilities and placed the rating on CreditWatch
with negative implications.
The ratings indicates the expectation of substantial (80% to 100%)
recovery of principal in the event of default.
The ratings on Kerr-McGee remain on CreditWatch with negative
implications where they were placed on March 4, 2005 due to
external pressure to enhance shareholder value from large
shareholders, such as the Icahn group.
The CreditWatch will be resolved when the $4 billion share
repurchase is completed and fully satisfies those shareholder
concerns. At that time, the ratings are likely to be affirmed at
the current 'BB+' rating and the outlook will be negative.
Oklahoma City, Oklahoma-based Kerr-McGee has about $7.0 billion in
debt outstanding, pro forma for about $4.3 billion outstanding
under the credit facilities.
The $5.5 billion senior secured credit facilities consist of the
following a $2 billion term loan X maturing in 2007, a $2.25
billion term loan B maturing in 2011, and a $1.25 billion
revolving credit facility maturing in 2010.
The credit facilities are being used to repurchase up to $4
billion of shares in a modified Dutch-auction tender offer.
"All three tranches are rated the same as they share the same
security package, similar covenants, and have been assigned the
same recovery rating," said Standard & Poor's credit analyst
Andrew Watt.
In addition, the senior secured credit facilities share the
collateral package with $2.7 billion of existing senior notes that
are also secured.
Although the credit and recovery ratings are the same, term loan X
benefits from priority in mandatory prepayment provisions with
proceeds of asset sales in the loan agreement.
LARRY BJURLIN: First Meeting of Creditors Scheduled for May 31
--------------------------------------------------------------
The U.S. Trustee for Region 14 will convene a meeting of Larry
Bjurlin's creditors on May 31, 2005, at 2:30 p.m., at the U.S.
Trustee Meeting Room located at 230 North First Avenue, Suite 102,
Phoenix, Arizona. This is the first meeting of creditors required
under U.S.C. Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but are not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Larry A. Bjurlin filed for chapter 11 protection on April 20, 2005
(Bankr. D. Ariz. Case No. 05-06793). D. Lamar Hawkins, Esq., at
Hebert Schenk P.C., represents Mr. Bjurlin. Mr. Bjurlin estimated
assets between $1 Million and $10 Million and liabilities between
$10 million and $50 million in his bankruptcy petition.
LBACK DEV'T: MLSBF Wants Case Dismissed or Converted to Chapter 7
-----------------------------------------------------------------
MLSBF, L.P. -- a secured creditor of LBack Development, L.P. --
asks the U.S. Bankruptcy Court for the Eastern District of Texas,
Plano Division, to dismiss the Debtor's chapter 11 proceeding or
convert it to a chapter 7 liquidation proceeding.
The Debtor owns one real estate asset whose only principal is
Matthew Lineback. Mr. Lineback operated the Lineback/Advantage on
the Debtor's property. The Lineback/Advantage ceased to operate
in January 2005.
The Debtor's sole business was to collect rental payments under
a lease with Lineback/Advantage.
MLSBF tells the Court that the Debtor has no cash flow and no
realistic hope of reorganizing.
Also, MLSBF contends, the case was filed in bad faith. MLSBF says
bad faith filing can be applied in the Debtor's case since it only
owns one piece of real property that's encumbered by $9 million of
indebtedness.
The Debtor, MLSBF continues, has no employees, no cash flow, and
no available sources of income to fund a plan of reorganization or
to make adequate protection payments.
An alternative to liquidation would be the appointment of a
chapter 11 trustee, MLSBF asserts. That's appropriate too, MLSBF
says, because Mr. Lineback has mismanaged the company. Mr.
Lineback is unwilling to pursue collection of delinquent rent from
Lineback/Advantage since he also controls it, MLSBF says.
MLSBF argues that Mr. Lineback's clearly conflicting interests
make it impossible for him to remain in control of the Debtor.
Headquartered in Plano, Texas, LBack Development, L.P., filed for
chapter 11 protection on March 31, 2005 (Bankr. E.D. Tex. Case No.
05-41537). Charles R. Chesnutt, Esq., of Dallas, Texas,
represents the Debtor. When the Debtor filed for protection from
its creditors, it estimated $50,000 in assets and more than
$10 million in debts.
LIBERTY GROUP: Fortress Investment Sale Cues S&P to Lift Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit and
senior secured debt ratings on newspaper publisher Liberty Group
Publishing Inc. and its operating subsidiary, Liberty Group
Operating Inc., to 'B+' from 'B'.
At the same time, Standard & Poor's affirmed its '3' recovery
ratings on Liberty Group Operating's senior secured debt,
indicating a meaningful recovery (50%-80%) of principal in the
event of a payment default. These ratings were removed from
CreditWatch with developing implications where they were listed
May 12, 2005. The outlook is stable.
"The higher ratings reflect a stronger capital structure following
the planned acquisition of Liberty Group Publishing by an
affiliate of Fortress Investment Group LLC. Terms of the
transaction were not disclosed," said Standard & Poor's credit
analyst Donald Wong. However, the pro forma balance sheet is
expected to consist of Liberty Group Operating's existing $280
million term loan and $50 million revolving credit facilities and
new common equity contributed by Fortress Investment Group. All
of the outstanding debt and preferred stock at the Liberty Group
Publishing level, which are held by affiliates of the current
financial sponsor, Leonard Green & Partners L.P., will be
eliminated.
Standard & Poor's has historically based its ratings on Liberty
Group Publishing and Liberty Group Operating on the consolidated
financial profile of Liberty Group Publishing. However, upon
closing of the transaction, Standard & Poor's will withdraw its
corporate credit rating on Liberty Group Publishing because there
will be no obligations at that level.
MAYTAG CORP: Ripplewood Offers to Buy Company for $2.1 Billion
--------------------------------------------------------------
Maytag Corporation (NYSE: MYG) entered into a definitive agreement
by which an investor group led by private equity firm Ripplewood
Holdings LLC will acquire all outstanding shares of Maytag in a
cash merger for $14 per share.
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 aggregate transaction value, including assumption of
approximately $975 million of debt, is approximately $2.1 billion.
The transaction is expected to close prior to year end, and is
subject to Maytag shareholder approval, as well as other closing
conditions, including the receipt of financing and regulatory
approval.
In addition to Ripplewood, other members of the investor group are
RHJ International (EURONEXT: RHJI), GS Capital Partners and the J.
Rothschild Group of Companies.
Lester Crown, Maytag board member since 1989, said, "After careful
consideration in conjunction with our independent advisors and an
independent committee of Maytag's board consisting of all non-
management directors, we have concluded that this transaction is
in the best interest of our shareholders.
"This transaction will also provide Maytag with greater
flexibility as a private company to accomplish long-term goals set
out for the Company."
Ralph Hake, Maytag CEO, said, "Ripplewood has an excellent track
record of building value at its portfolio companies by providing
strong financial and strategic support. Ripplewood is active in
the global markets and brings extensive operating expertise in
Asia and Europe, as well as North America, to Maytag."
Ripplewood CEO and founder Timothy C. Collins said, "Maytag is a
legendary company, with a portfolio of world-class brands and a
long history of producing high-quality, innovative products. We
see an opportunity to leverage these strengths and build Maytag
into a global leader as the fragmented home and commercial
appliances industry consolidates. Our objectives for Maytag are
to continue to take action to become a global low-cost producer
and to accelerate growth by introducing innovative new products,
expanding its presence in international markets and pursuing
selective acquisitions. We very much look forward to working with
Ralph Hake and his management team, employees, customers and
retail partners to restore the luster that this well- known
consumer and home appliance company enjoyed for so many decades."
Mr. Lazard served as financial advisor and Wachtell, Lipton, Rosen
& Katz served as legal advisor to Maytag. Citigroup and Goldman
Sachs acted as lead M&A advisors to Ripplewood. In addition, JP
Morgan and Deutsche Bank acted as M&A advisors to Ripplewood.
Cravath, Swaine & Moore LLP served as legal advisor to Ripplewood.
Citigroup, JP Morgan and Deutsche Bank have provided commitments
for the debt portion of the financing for the transaction, which
are subject to customary conditions.
About Ripplewood Holdings LLC
Ripplewood Holdings is a leading private equity firm established
by Timothy C. Collins in 1995. To date, Ripplewood has invested in
transactions with aggregate enterprise value in excess of
$12 billion.
About Maytag Corp.
Maytag Corporation is a $4.8 billion home and commercial appliance
company focused in North America and in targeted international
markets. The corporation's primary brands are Maytag(R),
Hoover(R), Jenn-Air(R), Amana(R), Dixie-Narco(R) and Jade(R).
At Jan. 1, 2005, Maytag's balance sheet reflected a $75,024,000
stockholders' deficit, compared to $65,811,000 of positive equity
at Jan. 3, 2004.
* * *
As reported in the Troubled Company Reporter on Apr. 29, 2005,
Moody's Investors Service downgraded Maytag Corporation's senior
unsecured ratings to Ba2 from Baa3 and the short-term rating to
Not Prime from Prime-3. At the same time the Ba2 senior unsecured
note rating was placed on review for possible further downgrade.
Moody's also assigned a new senior implied rating of Ba2. Moody's
says the outlook for the ratings remains negative.
The ratings downgraded are:
* Senior unsecured rating to Ba2 from Baa3; the rating is
placed on review for possible further downgrade
* Issuer rating to Ba2 from Baa3,
* Short term rating to Not Prime from P-3.
The rating assigned:
* Senior implied rating of Ba2.
As reported in the Troubled Company Reporter on Apr. 28, 2005,
Fitch Ratings has downgraded the senior unsecured rating on Maytag
Corporation to 'BB' from 'BB+' and has withdrawn the commercial
paper rating. Fitch says the Rating Outlook is Negative. On Jan.
1, 2005, Maytag had approximately $979 million of senior unsecured
debt and no commercial paper outstanding.
As reported in the Troubled Company Reporter on Apr. 26, 2005,
Standard & Poor's lowered its long-term corporate credit and
senior unsecured debt ratings on home and commercial appliance
manufacturer Maytag Corp. to 'BB+' from 'BBB-'.
At the same time, the 'A-3' short-term corporate credit and
commercial paper ratings on the Newton, Iowa-based company were
withdrawn. The ratings were removed from CreditWatch, where they
were placed Jan. 28, 2005, following weaker-than-expected fourth
quarter results and Standard & Poor's ongoing concerns about
Maytag's ability to improve its operation performance.
S&P says the outlook is stable. Total debt outstanding at
April 2, 2005, was about $970 million.
MERRILL LYNCH: Fitch Lowers Class J Seven Notches to C
------------------------------------------------------
Fitch Ratings downgrades Merrill Lynch Mortgage Investors, Inc.'s
series 1997-C2 certificates:
-- $6.9 million class G to 'B+' from 'BB-';
-- $12 million class H to 'B-' from 'B';
-- $6.9 million class J to 'C' from 'CCC'.
In addition, Fitch affirms these classes:
-- $273.1 million class A-2 at 'AAA';
-- Interest-only class X at 'AAA';
-- $27.5 million class B at 'AAA';
-- $41.2 million class C at 'AAA';
-- $34.3 million class D at 'AA-';
-- $37.7 million class F at 'BB'.
The $12 million class E and $5.1 million class K certificates are
not rated by Fitch.
The downgrades are attributable to the expected losses on several
of the specially serviced loans. Currently, 14 loans (10.7%) are
in special servicing, with losses expected on 10 of these loans.
As of the May 2005 distribution date, the pool's aggregate
principal balance has decreased 33.3% to $456.6 million from
$686.3 million at issuance. The pool currently consists of 115
loans, down from 147 loans at issuance. The pool is still diverse
with the top five loans representing just 15.5% of the pool and
the largest state concentration (Texas) only 15.4% of the pool.
Multifamily properties represent 46.8% of the pool.
The largest specially serviced loan (1.6%) is secured by a retail
property in New Bern, North Carolina, and is 60 days delinquent.
The performance at the property has declined as a result of the
anchor tenant, K-Mart, vacating. Although the K-Mart space is not
part of the loan's collateral, the property's performance suggests
that the center has had difficulty in attracting customers since
K-Mart has vacated. Foreclosure is expected within the next few
months. Losses are expected upon liquidation of the asset.
The second largest specially serviced asset (1.3%) is a 100,000
square foot office property in Dublin, Ohio, and is in
foreclosure. The property is currently listed for sale after
defaulting due to a decline in occupancy. Based on the most
recent appraisal value, a loss is expected to occur at the time of
disposition.
The next largest specially serviced loan (1%) is a 288 unit
multifamily property, located in Charlotte, North Carolina. The
property was transferred to the special servicer in February of
2004 following the borrower's request for a modification. As a
result of increased vacancy as well as delinquent tenants, the
property was no longer able to support its debt service. The
property is currently in foreclosure, and losses are expected.
METROMEDIA FIBER: Gets Court Nod to Delay Entry of Final Decree
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved AboveNet, Inc., fka Metromedia Fiber Network, Inc., and
its reorganized subsidiaries' request to delay entry of a final
decree in their chapter 11 cases until July 18, 2005.
The Debtors need more time to prosecute claim objections and other
estate litigation, including various preference actions, and
distribute assets of the estates for the benefit of their
creditors.
Metromedia Fiber Network, Inc., and most of its domestic
subsidiaries commenced voluntary Chapter 11 cases (Bankr. S.D.N.Y.
Case No. 02-22736) on May 20, 2002. When Metrodmedia filed for
protection form its creditors, it listed $7,024,208,000 in total
assets and $4,262,000,000 in total debts. Metromedia Fiber
emerged from chapter 11 on Sept. 8, 2003, and changed its name to
AboveNet Inc.
MIRANT CORP: Court Approves Resolution of Two Contractor's Claims
-----------------------------------------------------------------
At Mirant Corporation and its debtor-affiliates' request, Judge
Lynn of the U.S. Bankruptcy Court for the Northern District of
Texas approved a joint stipulation entered into by the Debtors
with D&M General Contracting, Inc., and MSE Power Systems, Inc.
The Stipulation resolves:
(i) two proofs of claim asserted by the Contractors against
the Debtors; and
(ii) the Contractors' objections, which allege that the
Debtors' Disclosure Statement explaining the Plan of
Reorganization fail to provide adequate information
regarding the unsecured debt and obligations of the
"Consolidated MAG Debtors."
D&M General filed Claim No. 5824 for 286,615 arising from
performed general contractor services. D&M General also asserted
$7,165 in accrued interest relating to Claim No. 5824 covering
the period from the Petition Date through December 14, 2003.
MSE Power filed Claim No. 5212 for $613,112 arising from services
performed under a certain subcontract agreement dated July 15,
2002, with Mirant Bowline, LLC. MSE Power subsequently amended
Claim No. 5212 to assert a mechanic's and materialmen's lien
against the Debtors.
Pursuant to the Joint Stipulation, the parties agree that:
(a) a $286,615 valid unsecured claim is allowed in favor of
D&M General and against Mirant Mid-Atlantic, LLC.
Claim No. 5824 will be treated and satisfied as a
"Consolidated MAG Class 6 -- Unsecured Claim" pursuant to
the terms of the Debtors' Plan;
(b) D&M General waives its Accrued Interest Claim; and
(c) MSE Power's Claim No. 5212, as amended, will be allowed as
a $613,112 valid secured claim against:
-- Mirant Bowline, LLC; and
-- the Debtors' Bowline Point Power Plant located in
Haverstraw, New York.
The Court lifts the automatic stay to allow MSE Power to file a
court action in the State of New York against the Debtors and
other parties-in-interest for the limited purpose of perfecting
its Mechanic's Lien. Any other action on or relief from the Lien
Suit will be stayed pending further Court's order.
The Contractors' Disclosure Objections are withdrawn without
prejudice and the Contractors will not assert or file additional
Disclosure Objections except if the Debtors' Plan materially
affects the treatment their Claims.
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)
MIRANT CORP: Amends Senior VP Lloyd Warnock's Employment Agreement
------------------------------------------------------------------
On May 9, 2005, Mirant Corporation signed an agreement with Lloyd
Alderman Warnock, Senior Vice President, amending the previously
agreed terms of his employment. The amendment modifies the
provisions related to Mr. Warnock's severance in the event that
Mirant terminates him other than for cause.
A full-text copy of Mr. Warnock's Amended Employment Agreement is
available at the Securities and Exchange Commission, at:
http://www.sec.gov/Archives/edgar/data/1010775/000110465905022621/a05-9255_1ex10d1.htm
In the event that Mr. Warnock's employment is terminated, not for
cause, up to one year after Mirant's emergence from Chapter 11,
Mr. Warnock will receive severance of 24 months base salary plus
target short-term incentive at the time of the termination and 24
months of medical benefits. According to Dan Streek, Vice
President and Controller of Mirant Corp., to receive the
severance benefit, Mr. Warnock must waive any right to an
administrative claim on any individual agreement like retention
agreements, employment agreements or employee benefit and pension
plans.
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. 64; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MIRANT CORP: Gets Consent Order on Use of Potomac River Plant
-------------------------------------------------------------
In 2004, the City Council for the City of Alexandria, Virginia,
adopted certain zoning ordinance amendments recommended by the
City Planning Commission that resulted in the zoning status of
Mirant Potomac River, LLC's generating plant being changed from
"non-complying use" to "non-conforming use subject to abatement."
Under the Non-conforming Use status, unless Mirant Potomac River
applies for and is granted a special use permit for the Plant
during the seven-year abatement period:
(i) the operation of the Plant must be terminated within a
seven-year period; and
(ii) no alterations that directly prolong the life of the
Plant will be permitted during the seven-year period.
Typically, the City Council grants special use permits with
various conditions and stipulations as to the permitted use.
The City Council also approved revocation of two special use
permits issued in 1989, one applicable to the administrative
office space at Mirant Potomac River's Plant and the other for
the Plant's transportation management plan. Under the terms of
the approved action, the revocation of the 1989 SUPs was to take
effect 120 days after the City Council revocation, provided,
however, that if Mirant Potomac River filed an application for a
Special Use Permit for the entire plant operations within the
120-day period, the effective date of the revocation of the 1989
SUPs would be stayed until final decision by the City Council on
the application.
Alexandria Zoning Action
On January 18, 2005, Mirant Potomac River and Mirant Mid-
Atlantic, LLC, filed a complaint against the City of Alexandria
and the City Council in the Circuit Court for the City of
Alexandria. The complaint seeks to overturn the actions taken by
the City Council on December 18, 2004, changing the zoning status
of Mirant Potomac River's generating plant and approving
revocation of the 1989 SUPs, on the grounds that those actions
violated federal, state and city laws.
The complaint asserts, among other things, that the actions taken
by the City Council:
-- constituted unlawful spot zoning;
-- were arbitrary and capricious;
-- constituted an unlawful attempt by the City Council to
regulate emissions from the Plant; and
-- violated Mirant Potomac River's due process rights.
Mirant Potomac River and Mirant Mid-Atlantic asked the Circuit
Court to enjoin the City of Alexandria and the City Council from
taking any enforcement action against Mirant Potomac River or
from requiring it to obtain a special use permit for the
continued operation of its generating plant.
Consent Order
On April 15, 2005, the City of Alexandria and Mirant Potomac
River agreed to a consent order to be entered by the Circuit
Court that extends through July 16, 2005 -- the period within,
which Mirant Potomac River may file an application for a Special
Use Permit for the entire Plant operations. The approved action
further provides that if that Special Use Permit application is
approved by the City Council, revocation of the 1989 SUPs will be
dismissed as moot, and if the City Council does not approve the
application, the revocation of the 1989 SUPs will become
effective and the Plant will be considered an illegal use.
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: Says T. Zerngast Can't Testify in Valuation Hearing
----------------------------------------------------------------
As previously reported, certain shareholders represented by The
Wilson Law Firm, P.C., in Atlanta, Georgia, asked the U.S.
Bankruptcy Court for the Northern District of Texas to reconsider
its Order denying the Shareholders' right to call witnesses in
support of their case-in-chief and in rebuttal in the Valuation
Hearing.
The Debtors oppose the Shareholders' request for reconsideration.
"There is no proper basis for the Court to entertain the Wilson
Shareholders' appeal," Robin E. Phelan, Esq., at White & Case,
LLP, in Dallas, Texas, asserts. "It is the well-settled law of
the Fifth Circuit that a motion for reconsideration must clearly
establish manifest error of law or fact or present newly-
discovered evidence." Mr. Phelan argues that the shareholders
are simply re-litigating the merits of an argument that the Court
already rejected.
Mr. Phelan points out that the Debtors would suffer substantial
prejudice if the Wilson Shareholders reopen discovery at this
juncture. "A digression to conduct belated discovery would
jeopardize the Debtors' ability to capitalize on favorable
financing opportunities." That prejudice is particularly
objectionable where the Wilson Shareholders would proffer
evidence that is largely cumulative of what the Equity Committee
has indicated it will present through the reports and testimony
of its four expert witnesses, Mr. Phelan says.
Mr. Phelan emphasizes that Terry Zerngast, the purported "CPA
Expert" that the Wilson Shareholders intend to call, is himself a
Mirant shareholder who has previously petitioned the Court to
participate pro se in the Valuation Hearing. "The Court has
specifically ruled that Mr. Zerngast would not be permitted to
testify as part of the Wilson Shareholders' direct case. In any
event, given his status as a Mirant shareholder and his stake in
the hearing, Mr. Zerngast's independence is severely
compromised," Mr. Phelan adds.
* * *
Judge Lynn resumed the Valuation Hearing on May 23, 2005, at
11:00 a.m. Central Time.
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. 64; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MITEK SYSTEMS: March 31 Balance Sheet Upside Down by $1.4 Million
-----------------------------------------------------------------
Mitek Systems, Inc. (OTC Bulletin Board: MITK) reported financial
results for the second quarter and first six months of fiscal 2005
ended March 31, 2005.
Net sales for the second quarter of fiscal 2005 were $1.8 million,
compared with $2.0 million in the same quarter last year, or
$1.5 million on an adjusted basis after the CheckQuest product
line divestiture for the same quarter last year. Net sales for
the first quarter of fiscal 2005 were $1.3 million.
Gross margin for the second quarter of fiscal 2005 was 87 percent,
compared with 61 percent for the same quarter last year, or 85
percent on an adjusted basis after the CheckQuest product line
divestiture for the same quarter last year. Gross margin for the
first quarter of fiscal 2005 was 86 percent.
Operating loss for the second quarter of fiscal 2005 was $548,000
compared with a loss of $813,000 for the same quarter last year
and a loss of $800,000 for the first quarter of fiscal 2005.
Included in the operating loss are additional legal and expert
witness expenses of approximately $450,000 associated with the
resolution of the dispute with BSM Software, Inc., as reported by
the Company on April 19, 2005, and further described below.
Net loss for the second quarter of fiscal 2005 was $799,000,
compared with a net loss of $816,000, for the same fiscal quarter
last year and a net loss of $917,000, for the first quarter of
fiscal 2005. The difference in net loss from the operating loss
was due primarily to expenses associated with registering the
securities underlying the previously disclosed convertible debt
instrument agreement entered into between the Company and Laurus
Master Fund, LLC on June 11, 2004. The Company's filing for
registration of these securities was declared effective on May 13,
2005.
Net sales for the first six months of fiscal 2005 were $3.1
million, compared with $3.7 million in the same period last year,
or $2.4 million on an adjusted basis after the CheckQuest product
line divestiture in the same period last year.
Gross margin for the first six months of fiscal 2005 was 87
percent, compared with 59 percent for the same period last year,
or 82 percent on an adjusted basis after the divestiture of the
CheckQuest product line in the same period last year.
Operating loss for the first six months of fiscal 2005 was $1.3
million, compared with a loss of $1.9 million for the same period
last year. The improvement in the operating loss was primarily
due to cost cutting measures and the divestiture of the CheckQuest
product line prior to the end of the 2004 fiscal year.
Net loss for the first six months of fiscal 2005 was $1.7 million,
compared with a net loss of $1.9 million, for the same period of
last year.
On April 19, 2005, the Company said it received a final payment of
$1.0 million from Harland Financial Solutions, Inc., a subsidiary
of John H. Harland Company (NYSE: JH) related to the sale last
July of the Company's CheckQuest product line to Harland. A
recent arbitration ruling on the Company's dispute with BSM Inc.
over the use of the Company's products and intellectual property
allowed the Company to complete the assignment of CheckQuest
software license rights to Harland and collect this final payment.
This gain will be reflected in the company's third quarter
operating results.
Additionally, Mitek announced on May 10, 2005, that the Company
and John H. Harland Company closed the second and final round of a
sale of Mitek's common stock and warrants pursuant to the
previously-disclosed Securities Purchase Agreement entered into
between the Company and Harland on February 22, 2005. In this
second round, Harland acquired 1,071,428 shares of Mitek's
commonstock and 160,714 Mitek warrants for a purchase price of
$750,000.
"Our second quarter and first half of 2005 results indicate the
success of our efforts to grow our revenues, improve our gross
margins, and increase our working capital for the launch of our
new identity verification and intelligent recognition products,"
Mitek's President and CEO James B. DeBello said. "The results
from the execution of our growth plan are encouraging."
About the Company
Mitek Systems, Inc., (OTC Bulletin Board: MITK) --
http://www.miteksystems.com/-- is an established global leader in
advanced image recognition software used by financial institutions
for identity verification and document processing. Sold to
partners and directly to end users, the Company's software is used
in the processing of over 8 billion transactions per year.
At Mar. 31, 2005, Mitek Systems, Inc.'s balance sheet showed a
$1,360,000 stockholders' deficit, compared to a $532,000 deficit
at Sep. 30, 2004.
MORGAN STANLEY: Fitch Affirms $20.8 Million Class H at B+
---------------------------------------------------------
Fitch Ratings upgrades Morgan Stanley Capital I, Inc.'s commercial
mortgage pass-through certificates, series 1997-C1:
-- $19.2 million class F to 'A+' from 'A'.
In addition, Fitch affirms these certificates:
-- $68 million class A-1C at 'AAA';
-- Interest only class IO-1 at 'AAA';
-- $51.3 million class B at 'AAA';
-- $38.4 million class C at 'AAA';
-- $35.2 million class D at 'AAA';
-- $11.2 million class G at 'BBB+';
-- $20.8 million class H at 'B+'.
The $6.4 million class E and the $20.4 million class J
certificates are not rated by Fitch.
The upgrades are primarily the result of increased credit
enhancement levels due to loan payoffs and amortization. As of
the May 2005 distribution date, the pool's collateral balance has
been reduced by 58%, to $271.1 million from $640.7 million at
issuance.
No loans are currently being specially serviced or delinquent.
Fitch remains concerned with the increasing concentration of
healthcare loans (29%). However, these loans continue to perform,
and Fitch analyzed the concentration in the context of the entire
pool. Given the increased credit enhancement and the limited
number of loans of concern, the upgrades are warranted.
NORCROSS SAFETY: $495 Mil. Odyssey Sale Cues S&P to Watch Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' corporate
credit rating and its other ratings on safety equipment provider
Norcross Safety Products LLC on CreditWatch with negative
implications. This action followed the announcement by the
company that Odyssey Investment Partners LLC will acquire it in a
transaction valued at $495 million. This buyout occurs just after
Norcross terminated an evaluation of strategic alternatives and
paid a $60 million preferred dividend to existing shareholders.
The purchase is expected to be funded with newly issued debt and
some equity, and there is about $50 million of cash at the
consolidated holding company. If the existing bank debt,
subordinated debt, and unsecured debt at the holding company are
redeemed, the ratings on those issues will be withdrawn. The
ratings on Norcross, including any new debt, will depend on the
as-yet-unknown capital structure. For the current 'B+' rating,
S&P's expectations are for total debt to EBITDA of 4x-5x. The
transaction is expected to close in the third quarter of 2005.
Closely held Oak Brook, Illinois-based Norcross is a leading
provider of personal protection equipment and has about $340
million in consolidated debt outstanding.
"Standard & Poor's will meet with management to discuss industry
fundamentals and the new owner's business and financial strategy
before we resolve the CreditWatch listing," said Standard & Poor's
credit analyst John R. Sico. The company has seen a modest
improvement in operating performance due to the recovery in the
manufacturing sector. It has also benefited from increased
government shipments of personal protection equipment and an
increased consumer focus on domestic security preparedness. Given
these factors, the resolution of the CreditWatch listing could be
either a rating affirmation or a one-notch downgrade, though the
outcome will also depend on the company's ultimate capital
structure.
NORSTAN APPAREL: Wants to Employ Abacus Advisors as Advisor
-----------------------------------------------------------
Norstan Apparel Shops Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Eastern District of New York for
permission to employ Abacus Advisors Group LLC as their advisor
and consultant, nunc pro tunc to April 8, 2005.
Abacus Advisors is expected to:
(a) assist the Debtors with the marketing and sale of all of
the assets of the Debtors, either as an ongoing business or
businesses, or as individual components;
(b) identify and contact proposed purchasers of select business
operations or assets, including possible store closing
sales;
(c) assist in the preparation of appropriate information
package for distribution to potential bidders;
(d) develop and conduct an auction process for all of the
Debtors' businesses and assets;
(e) review bid proposals and assist in negotiations with the
various parties to ensure recoveries are maximized;
(f) observe, if necessary, physical inventories that may be
taken;
(g) monitor the conduct and results of any sales efforts if a
third party is selected to liquidate the inventory and
other assets;
(h) assist the Debtors with the purchase of any additional
inventory.
In addition to these specific services, Abacus will provide
advisory and consulting services to the Debtors relating to these
matters as may be directed, or may be necessary to anticipate and
respond to the Debtors' needs.
The Debtors have also retained Capstone Advisory Group LLC as
their financial advisors. Their application to retain Capstone is
pending before the Court. Capstone will assist in preparing
financial information Abacus may require in connection with its
marketing efforts and will cooperate with Abacus with the goal of
maximizing value for their estates' creditors. The Debtors will
work with Abacus and Capstone to insure that there is no needless
duplication of services that increases the costs to the estates.
Alan Cohen, the chairman of Abacus Advisors, discloses that his
Firm received a $250,000 retainer.
The Retainer will be applied to the Transaction Fee to be paid to
Abacus upon the closing of sale. Pursuant to the Abacus
Agreement, Abacus will be retained for 90 days, after which
Abacus's retention will automatically continue on a month to month
basis until notified otherwise by the Debtors or Abacus.
In addition to reimbursement for itemized reasonable out-of-pocket
expenses by the Debtors, as compensation for the services
rendered, the Debtors will pay the following fees to Abacus:
(a) a transaction fee equal to 2.5% of the Consideration from
the sale or other disposition of assets and businesses
and the assumption of liabilities of Norstan Apparel.
Consideration will include:
(1) cash and cash equivalents, adjusted for risk, if
necessary;
(2) payment or assumption of obligation to pay:
(i) administrative expenses,
(ii) secured claims (but only to the extent of the
value of the security), and
(iii) cure costs relating to the assumption and
assignment of the Norstan Apparel's real property
leases paid by a purchaser of real property leases
or waived by a landlord; and
(3) to the extent real property leases are assumed or
terminated on or before the date on which substantially
all of Norstan Apparel's assets are sold or
subsequently as part of the sale of substantially all
of the assets, 100% of the amount of the capped damage
claim -- calculated at one year's base rent -- that
would have been incurred if the property leases had not
been assumed or terminated.
(b) The Transaction Fee, after application of the Retainer,
shall be paid from the gross proceeds, whenever received,
of any such sale or other disposition of assets or business
or assumption of liabilities of Norstan Apparel.
To the best of the Debtors' knowledge, Abacus and its respective
principals and professionals:
(i) do not have any connection with the Debtors, their
creditors, or any other party in interest, or their
respective attorneys or accountants,
(ii) are not creditors or insiders of the Debtors, and
(iii) do not have an interest materially adverse to the
interest of the estates or of any class of creditors or
equity security holders, by reason of any direct or
indirect relationship to, connection with, or interest in
the Debtors or an investment banker for a security
of the Debtors, or for any other reason.
Headquartered in Long Island City, New York, Norstan Apparel Shops
Inc., dba Fashion Cents, operates 229 retail stores selling
women's budget-priced apparel. The stores are located in 24
states throughout the Midwestern, Midsouthern, Mid-Atlantic and
southeastern regions of the United States. The Company and its
debtor-affiliates filed for chapter 11 protection on April 8, 2005
(Bankr. E.D.N.Y. Case No. 05-15265). Jeff J. Friedman, Esq., at
Katten Muchin Zavis Rosenman represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed total assets of $19,637,000 and total
debts of $44,776,000.
NORTEL NETWORKS: Appoints Paul Karr as Controller
-------------------------------------------------
Nortel Networks Corporation (NYSE:NT) (TSX:NT) and its principal
operating subsidiary Nortel Networks Limited, provided a status
update pursuant to the alternative information guidelines of the
Ontario Securities Commission. These guidelines contemplate that
the Company and NNL will normally provide bi-weekly updates on
their affairs until such time as they are current with their
filing obligations under Canadian securities laws.
Management Appointments
Nortel disclosed the appointment of Paul Karr as controller,
effective May 4, 2005. As controller, Mr. Karr is the chief
architect and driver of strengthening the financial controls for
the Company. Mr. Karr leads a large, global finance team and is
responsible for directing and improving the organization and for
the preparation of all external financial reporting in accordance
with U.S. generally accepted accounting principles.
Mr. Karr is a seasoned finance executive and accounting expert who
until recently was Vice President and Financial Controller for
Bristol-Myers Squibb Company in New York. He was specifically
recruited by Bristol-Myers Squibb to lead the financial function
during a difficult restatement process.
Prior to his tenure at Bristol-Myers Squibb, Mr. Karr held a
number of increasingly responsible positions at GE Capital Market
Services culminating in his role as Senior Vice President and
Chief Accounting Officer. Mr. Karr also spent fifteen years at
Deloitte & Touche where he was promoted to National Consultation
Partner.
A graduate of the University of Illinois, Urbana-Champaign, Mr.
Karr holds both a Bachelor of Science degree in Accounting, as
well a Master's Degree Accounting from the university.
Mr. Karr reports to executive vice-president and chief financial
officer Peter Currie. Karen Sledge, who had been serving as
interim controller since February 2005, is vice-president, finance
and continues to report to the CFO.
Mr. Karr and Ms. Sledge have also been appointed controller and
vice-president, finance, respectively, of NNL.
The Company and NNL reported that there have been no material
developments in the matters reported in their status updates of
June 2, 2004 through May 2, 2005, with the exception of the
matters described above.
The Company's and NNL's next bi-weekly status update is expected
to be released during the week of May 30, 2005.
NORTHERN BERKSHIRE: Fitch Lowers 2004 Revenue Bonds to BB
---------------------------------------------------------
Fitch Ratings has downgraded the rating on approximately $25
million Massachusetts Health and Educational Facilities Authority,
Northern Berkshire Healthcare -- NBH, revenue bonds, series 2004
to 'BB' from 'BB+'. The Rating Outlook is revised to Negative
from Stable.
The rating downgrade is based on NBH's continued operating losses
and worsening financial condition, which is projected to lead to
debt service coverage of 0.87 for the fiscal year 2005. Through
the first half of 2005, NBH had a negative $1.3 million operating
loss compared to negative $946,000 the same period prior year.
Management has projected an operating loss of $2.6 million in
fiscal year 2005. The deteriorating operating performance has
been driven by lower than projected volume at the hospital.
Although physician recruitment has been successful, budgeted
associated volume growth has been materializing more slowly than
predicted.
Through the first half of fiscal 2005, inpatient revenue has
declined 4.7% with total patient revenue growing 2.7%.
Management's actions include eliminating several management
positions and replacing the chief financial officer. In addition,
Cambio Solutions has recently been hired as a management
consultant to recommend plans for operational improvement.
The Rating Outlook is Negative due to the current trend in
financial performance, the unknown impact of the Cambio engagement
and uncertainty surrounding the uncompensated care pool. Fitch
will evaluate Cambio's recommendations and NBH's ability to
implement the turnaround initiatives.
Ongoing credit strengths include NBH's dominant market position
and service area demographics. With the hospital located in a
rural, geographically isolated area, market share has remained
above 70% over the past five years. The nearest competitor,
Berkshire Medical Center (rated 'BBB+' by Fitch), is approximately
25 miles away and had only 16.7% market share. The service area
has a large percentage of the elderly population with 19% of the
primary service area over 65 years of age, which is viewed
favorably due to the higher utilization of services by this age
group.
Northern Berkshire Healthcare is located in North Adams,
Massachusetts with North Adams Regional Hospital (66 staffed bed
hospital), Sweetwood Continuing Care Retirement Community (70
independent living units), and Sweet Brook Care Centers (184 bed
skilled nursing facility) as the main revenue generating
components. Total revenue of the health system was $68 million in
fiscal 2004. NBH covenants to provide quarterly disclosure to
bondholders. Disclosure to Fitch has been good with the receipt
of timely, comprehensive quarterly information, which includes a
consolidated and consolidating balance sheet, income statement,
utilization statistics, and management discussion and analysis.
OUTSOURCING SOLUTIONS: Ask Ct. to Enter Final Decree & Close Case
-----------------------------------------------------------------
Outsourcing Solutions, Inc., and its debtor-affiliates ask the
U.S. Bankruptcy Court for the Eastern District of Missouri to
enter a final decree formally closing their chapter 11 cases.
On Oct. 15, 2003, the Debtors' Third Amended and Restated Joint
Plan of Reorganization was confirmed and that Plan became
effective on Dec. 9, 2003.
All adversary proceedings, contested matters and other court
dispositions have been completed in these cases, except for the
Curtis appeal.
Robert W. Curtis filed a motion for payment of an Administrative
Cure Expense and the Debtors objected to three claims filed by Mr.
Curtis. On August 6, 2004, the Bankruptcy Court entered its Order
Allowing Subordinated Unsecured Claim of Robert Curtis and Denying
Motion for Payment of Administrative Expense Claim with respect to
these matters. Mr. Curtis appealed, and on January 21, 2005, the
U.S. District Court for the Eastern District of Missouri, the
Honorable Donald J. Stohr presiding, entered an order affirming
the bankruptcy court's decision. Mr. Curtis has subsequently
appealed the District Court's order, and the matter is on appeal
to the U.S. Court of Appeals for the Eighth Circuit.
The pendency of the Eighth Circuit appeal should not delay closing
of the bankruptcy cases under the applicable provisions of Section
350 of the Bankruptcy Code. To the extent the remaining matters
are not fully resolved prior to or at the June 27, 2005 hearing,
they may be resolved after that hearing, notwithstanding the
closing of the Debtors' cases.
The Plan provides for pro-rata distributions to all holders of
allowed general unsecured claims against the Debtors in Classes 5A
and 6A -- that were not classified as De Minimis Claims, Critical
Business Claims or Allowed Utilities Claims -- from a fund
consisting of $500,000 cash and 250,000 shares of stock in the
reorganized Debtors.
The Reorganized Debtors have already distributed approximately 90%
of the Distribution Pool to holders of allowed unsecured claims in
Classes 5A and 6A under the Plan. However, because distributions
are made on a pro-rata basis, the Reorganized Debtors cannot make
final distributions from the Distribution Pool to Class 5A and 6A
creditors until the Curtis appeal is concluded and all claims and
outstanding objections to disputed claims are resolved.
The Reorganized Debtors have reserved within the Distribution Pool
consideration for a potential Class 5A distribution to be made on
account of those claims that are not yet resolved. Therefore,
these Chapter 11 cases need not remain open pending the
disposition of the pending appeal and claim matters described
herein.
Hearing
A hearing will be held on June 27, 2005 at 9:00 a.m., in
St. Louis, Missouri.
Headquartered in St. Louis, Missouri, Outsourcing Solutions, Inc.
-- http://www.osioutsourcing.com/-- and its subsidiaries are
collectively one of the largest providers of business process
outsourcing, or BPO, receivables services in the U.S. By
improving the revenue cycle, OSI enhances the financial
performance of America's leading companies, as well as government
entities, healthcare providers, educational institutions and other
credit grantors. With industry-specific strategies and services,
OSI delivers results that improve the bottom line through
accelerated cash flow, lower operating costs, reduced bad debt
expense, and improved customer retention. The Debtors filed for
Chapter 11 relief on May 12, 2003, (Bankr. E.D. Mo. Case No. 03-
46349). Gregory D. Willard, Esq., at Bryan Cave LLP represents
the Debtors in their restructuring efforts. When the Debtors
filed for protection from its creditors, it listed total assets of
$626 million and total debts of $699 million. On Oct. 15, 2003,
the Third Amended and Restated Joint Plan of Reorganization of the
Debtors was confirmed and that Plan became effective on Dec. 9,
2003.
OWENS CORNING: 30 Creditors Transfer $2,966,158 in Claims
---------------------------------------------------------
From March 17 through May 16, 2005, 30 creditors transferred
their claims against Owens Corning, aggregating $2,966,158, to
Longacre Master Fund, Ltd., SPCP Group, LLC, Portia Partners, LLC,
Fair Harbor Capital, LLC, Hain Capital Investors, LLC, or
Contrarian Funds, LLC.
Transferor Transferee Claim No. Amount
---------- ---------- --------- ------
Edwards Wood Products Contrarian Funds 4643 126,276
Manufacturers and
Traders Trust Company Contrarian 1,716,436
Ana Transportation Fair Harbor 1,017
B&B Glass & Paint Fair Harbor 3637 843
BMS Inc. Fair Harbor 6,418
Capp Inc. Fair Harbor 3595 7,244
Fischer Industrial Fair Harbor 1,231
General Rubber Fair Harbor 763
Greenbush Tape & Label Fair Harbor 1,239
H&S Floor Fair Harbor 917
Hammel Scale of KA Fair Harbor 1,413
Harrop Industries Fair Harbor 750
Import/Export Fair Harbor 985
Law General Contracting Fair Harbor 4,229
North Carolina Ports Fair Harbor 7,543
Quality Material Fair Harbor 690
USF Surface Fair Harbor 833
United States Welding Fair Harbor 3714 795
Valley Rubber & Gasket Fair Harbor 657
Walts Cleaning Fair Harbor 924
Aetna Building Hain Capital 8692 82,092
Raab Sales, Inc. Hain Capital 19,511
Shanks & Herbert Hain Capital 11850 14,015
Riley, McNulty Longacre Master 12292 99,544
General Coffee Inc. Portia Partners 237
Acorn Window Systems SPCP Group 2086 $111,465
Duferco Steel, Inc. SPCP Group 3965 258,406
Intra American Metals SPCP Group 4754 35,955
MeadWestvaco Corp. SPCP Group 5390 262,172
Newcome Corp. SPCP Group 7358 158,912
7438 42,646
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)
PROTEIN POLYMER: March 31 Balance Sheet Upside-Down by $1.4 Mil.
----------------------------------------------------------------
Protein Polymer Technologies, Inc. (OTC Bulletin Board: PPTI),
reported financial results for the first quarter ended March 31,
2005, including proforma balance sheet adjustments to show the
effect of an approximately $7.75 million equity financing
completed on April 15, 2005.
The net loss applicable to common shareholders for the quarter
ended March 31, 2005 was $1,072,000, compared to a net loss of
$921,000, for the same period in 2004. This net loss amounts
include accumulated dividends related to the Company's preferred
stock, and an "imputed dividend" charge of $482,000 recorded in
connection with a warrant exercise price reduction and issuance of
new warrants to holders of Series G Convertible Preferred Stock.
Total revenue was $514,000 for the quarter ended March 31, 2005,
compared to $191,000 for the same period in 2004. The contract
revenue primarily represents research and development payments and
receivables from Spine Wave, Inc. for the development of an
injectable spinal disc repair product for the treatment of lower
back pain. The increase in contract and licensing revenue from
the same period in 2004 is due primarily to a $250,000 benchmark
payment from Genencor International, the Company's licensee in the
fields of non-medical and personal care products.
Operating expenses for the quarter were $1,036,000, as compared to
$1,042,000 for the same period in 2004. When additional capital
becomes available, expenses are expected to rise in subsequent
quarters due to the increased expenditures for expanded human
clinical testing and patient follow-up of the Company's lead
product candidates currently in development.
William N. Plamondon III, Chief Executive Officer of Protein
Polymer Technologies, commented, "Recent events have positioned us
to make significant progress toward commercialization of our
current products, and enhance our ability to capitalize on our
large intellectual property portfolio."
About the Company
Protein Polymer Technologies, Inc., is a San Diego-based company
focused on developing bioactive products to improve medical and
surgical outcomes. From its inception in 1988, PPTI has been a
pioneer in protein design and synthesis, developing an extensive
portfolio of proprietary biomaterials. These genetically
engineered biomaterials are high molecular weight proteins,
processed into products with physical and biological
characteristics tailored to specific clinical performance
requirements. Targeted products include dermal augmentation
products for cosmetic and reconstructive surgery, urethral bulking
agents for the treatment of stress urinary incontinence, surgical
adhesives and sealants, scaffolds for wound healing and tissue
engineering, and depots for local drug delivery. To date, PPTI
has been issued twenty-six U.S. Patents on its core technology
with corresponding issued and pending patents in key international
markets.
At Mar. 31, 2005, Protein Polymer Technologies, Inc.'s balance
sheet showed a $1,448,752 stockholders' deficit, compared to a
$1,312,115 deficit at Dec. 31, 2004.
PERKINELMER INC: Moody's Raises Senior Implied Debt Rating to Ba1
-----------------------------------------------------------------
Moody's Investors Service raised the senior implied debt rating of
PerkinElmer, Inc. to Ba1 and moved the rating outlook to positive.
The rating actions reflect the sustainability of PKI's improvement
in operating margins, free cash flow generation and return on
assets as well as the company's steady debt reduction.
The positive outlook incorporates Moody's expectation of:
* favorable refinancing of the credit facility to an unsecured
basis;
* further organic revenue growth across many of the company's
end markets;
* gradual improvement in the operating margin and return on
assets;
* solid free cash flow generation despite increased investment
in working capital and capital expenditures; and
* prudent funding of potential "niche" acquisitions.
PKI continues to benefit from previously pent-up capital spending
in many of its end markets, particularly sectors within the
Optoelectronics and Fluid Sciences segments, which should result
in 2005 showing another year of solid organic revenue growth.
More specifically, genetic screening, medical imaging and
aerospace end-markets are experiencing solid growth momentum.
Accordingly, the company has increased its investment in research
& development, working capital and fixed assets in order to
position itself for continued revenue and earnings growth.
With some of PKI's global end markets historically cyclical,
sustainable improvement in credit metrics is key to maintaining
upward rating momentum. Moody's notes that obtaining an unsecured
credit facility in the near term is critical to reaching
investment grade status. The rating agency adds that based on
Moody's adjusted credit metrics, EBITA-to-average assets
approaching 8-10% and free cash flow generation consistently in
excess of $145 million could also have a positive effect on the
rating.
Moody's notes however, that with increased investments to meet
current demand, if end markets soften in the intermediate term,
PKI's return measures and cash generating ability will likely
weaken which could have a stabilizing effect on the rating
outlook. Furthermore, should the company take on a more
aggressive financial policy in the form of large debt-financed
acquisitions or substantial share repurchases or any combination
thereof that would cause credit metrics to deteriorate, the rating
and outlook could face downward pressure.
Ratings upgraded with a positive outlook include:
PerkinElmer, Inc.:
* Senior secured revolving credit facility and secured term
loan to Baa3 from Ba1;
* the senior implied rating to Ba1 from Ba2;
* senior unsecured notes to Ba1 from Ba2;
* senior subordinated notes and issuer rating to Ba2 from Ba3;
and
* securities to be issued pursuant to a 415 shelf registration
to (P)Ba1/(P)Ba2/(P)Ba3 from (P)Ba2/(P)Ba3/(P)B1.
PKI, with operations divided into Life & Analytical Sciences,
Optoelectronics and Fluid Sciences, is experiencing positive
trends in all three segments. PKI benefits from a high quality,
diverse customer base that generates a recurring revenue stream
approaching 50% of total revenues. Using Moody's adjusted credit
metrics for the year ended 2004, organic revenue growth of 7% and
expanding margins (EBIT margin of 9.7%) led to free cash flow of
$179 million. Debt-to-EBITDA was 2.8x versus 4.4x in 2003, EBITA-
to-average assets strengthened to 6.9% from 5.1% in 2003 and free
cash flow-to-debt improved to 24% from just 12.3% the previous
year.
For the latest twelve months ended April 3, 2005, the EBIT margin
rose slightly to 10% while debt-to-EBITDA, EBITA-to-average assets
and free cash flow-to-debt remained relatively flat with the 2004
year-end figures. With attractive growth opportunities emerging
in all three operating segments, Moody's anticipates further
improvement in credit metrics during the remainder of 2005 and
into 2006.
PKI's liquidity is sound. At the end of the first quarter of
2005, balance sheet debt levels are below $375 million while cash
on hand is about $184 million. In 2002, the company entered into
a secured credit facility consisting of a $315 million six-year
term loan and a $100 million five-year revolving credit facility.
The term loan has been paid down to $50 million following an
additional $20 million prepayment early in the second quarter of
this year. The $100 million revolver, which is subject to several
covenants including minimum interest coverage, minimum fixed
charge coverage, maximum senior leverage and maximum total
leverage, had no borrowings at April 3, 2005.
Moody's notes that PKI was in compliance with these covenants for
its first quarter ended April 3, 2005. The rating agency added
that the term loan could potentially be paid off by the end of
2005 which may place PKI in a position to refinance its revolver
on an unsecured basis. In addition, the company has $20 million
in availability under its $65 million accounts receivables
securitization facility that has been renewed until January 2006.
The facility has a rating trigger if PKI's unsecured debt rating
falls below Ba2 at Moody's and BB at S&P.
PerkinElmer, Inc. headquartered in Wellesley, MA, is a
$1.7 billion diversified high-technology company operating in
three business segments:
* Optoelectronics,
* Life and Analytical Sciences and
* Fluid Sciences.
SCHUFF INTERNATIONAL: Moody's Upgrades $81M Sr. Notes Junk Rating
-----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of Schuff
International, Inc. based upon the company's improved financial
performance in FY 2004 including strong revenue growth, margin
expansion, cash flow generation, and debt reduction. The change
in the ratings outlook to positive reflects the company's improved
coverage levels for 2004 and Moody's expectation that Schuff will
be successful in replacing some of its large contracts as they
roll-off in 2005.
These rating changes were made:
* Senior implied rating upgraded to Caa1 from Caa2;
* $81 million of 10.5% Senior Notes due 2008 upgraded to Caa1
from Caa2; and
* Senior unsecured issuer rating upgraded to Caa2 from Caa3.
The ratings upgrade reflects the company's strong revenue growth
of 8.8% for the LTM period through March 31, 2005. For the same
period, operating income grew by 25%. The improvement in the
company's financial performance is due primarily to increased
demand for the company's structural steel and heavy steel plate as
a result of increased strength in the commercial and industrial
construction project sector.
The ratings action also reflects an expectation for a continuation
of positive free cash flow generation and the recent improvement
in the company's liquidity due to the removal of restrictions on
$8 million of cash and an increase in the company's revolving
credit limit to $20 million from $15 million. As of March 31,
2005, the company had almost $14 million of letters of credit
outstanding under its revolver which is not rated by Moody's.
The company's financial performance has been inconsistent in
recent years. The company's revenues and EBITDA peaked in 2000 at
$278 million and $31 million, respectively, and declined through
2003 when the company reported revenues and EBITDA of $174 million
and $4.4 million, respectively. For FY 2003 EBITDA to interest
declined to 0.5 times from the 1.6 times experienced in FY 2002.
The weak performance experienced from 2000 through 2003 highlights
the deeply cyclical and competitive nature of the steel
fabrication and erection business as well as the post 9-11
environment; however, the company's performance for 2004 was very
strong when compared to previous years' performance although not
all of the company's subsidiaries reported the same level of
improvement.
Given the volatility in Schuff's historical performance and the
relatively short turnaround period, Moody's feels the need for a
longer period of strengthening financial performance before
considering the company for further upgrade. Additionally, the
company's backlog decreased to $138 million as of March 31, 2005
from $162 million at December 31, 2004 against 2004 revenues of
$264 million.
The ratings may improve if the company continues to report
positive cash flow generation, debt balances continue to decline,
and coverage ratios (EBITDA to interest for 2004 was 2.1 times)
remain around 2.0 times which is strong for the rating category.
While total debt to EBITDA has improved to 3.9 times for the LTM
period ended in March 31, 2005 from around 11 times for the LTM
period ended in June 30, 2004, reduced volatility in revenue
generation or expectation for greater predictability in the
company's financial performance over the immediate term would be
supportive of a higher rating. The ratings may deteriorate if the
company's cash flow generation turns negative or if the outlook
for commercial construction were to deteriorate significantly. An
inability to pass on higher raw material prices would also be a
ratings negative.
Established in 1976 and headquartered in Phoenix, Arizona, Schuff
International, Inc. is a steel fabrication and erection company
that provides a fully integrated range of steel services,
including:
* design,
* engineering,
* detailing,
* joist manufacturing and
* erection.
The company's shares are traded on the pink sheets under the
symbol SHFK.
SIRIUS SATELLITE: Moody's Withdraws Planned Notes Junk Rating
-------------------------------------------------------------
Moody's Investors Service has withdrawn the Caa1 senior implied
rating and a SGL-3 speculative grade liquidity rating for SIRIUS
Satellite Radio, Inc., as well as a Caa2 rating for the proposed
$250 million senior unsecured notes due 2015.
Sirius has informed Moody's that it does not intend to proceed
with the financing under current market conditions. As a result,
Moody's has withdrawn the ratings. Sirius may proceed with a
financing at a later date should market conditions improve.
Moody's has withdrawn these ratings:
-- the Caa1 senior implied rating;
-- the Caa2 rating to the proposed $250 million senior
unsecured notes due 2015;
-- the Caa2 senior unsecured issuer rating; and
-- the SGL-3 speculative grade liquidity rating.
SIRIUS Satellite Radio, Inc., headquartered in New York, NY,
provides subscription-based satellite radio services in the US.
SOUNDVIEW HOME: Fitch Puts Low-B Ratings on 3 Certificate Classes
-----------------------------------------------------------------
Soundview Home Loan Trust asset-backed certificates, series 2005-
DO1, are rated by Fitch Ratings:
-- $491.8 million classes I-A1, II-A1, II-A2, II-A3, II-A4 'AAA';
-- $21.7 million class M-1 certificates 'AA+';
-- $18.2 million class M-2 certificates 'AA+';
-- $11.4 million class M-3 certificates 'AA';
-- $10.5 million class M-4 certificates 'AA-';
-- $9.5 million class M-5 certificates 'A+';
-- $9.2 million class M-6 certificates 'A';
-- $7.7 million class M-7 certificates 'A-';
-- $5.9 million class M-8 certificates 'BBB+';
-- $6.2 million class M-9 certificates 'BBB';
-- $6.2 million class M-10 certificates 'BBB-';
-- $6.2 million class M-11 certificates 'BB+';
-- $3.4 million class B-1 certificates 'BB';
-- $4.9 million class B-2 certificates 'BB-'.
The 'AAA' rating on the senior certificates reflects the 20.13%
total credit enhancement provided by:
* the 3.53% class M-1,
* the 2.95% class M-2,
* the 1.85% class M-3,
* the 1.70% class M-4,
* the 1.55% class M-5,
* the 1.50% class M-6,
* the 1.25% class M-7,
* the 0.95% class M-8,
* the 1.00% class M-9,
* the 1.00% class M-10,
* the 1.00% class M-11,
* the 0.55% class B-1,
* the 0.80% class B-2 and
* the 0.50% initial overcollateralization.
All certificates have the benefit of monthly excess cash flow to
absorb losses. In addition, the ratings reflect the quality of
the loans, the integrity of the transaction's legal structure as
well as the capabilities of Countrywide Home Loans Servicing LP,
as servicer and Deutsche Bank National Trust Company, as trustee.
As of the cut-off date, the mortgage loans have an aggregate
balance of $615,829,922. The weighted average loan rate is
approximately 7.044%. The weighted average remaining term to
maturity is 356 months. The average cut-off date principal
balance of the mortgage loans is approximately $148,286. The
weighted average original loan-to-value ratio is 80.19% and the
weighted average Fair, Isaac & Co. score was 622. The properties
are primarily located in:
* California (13.65%),
* Florida (9.76%) and
* Illinois (5.52%).
Decision One Mortgage is a wholly owned subsidiary of HSBC Group.
Decision One Mortgage is a mortgage company that originates,
purchases and sells first-lien and second-lien mortgage loans.
Decision One Mortgage commenced lending operations on May of 1996.
It is headquartered in Charlotte, North Carolina.
SPECTRX INC: March 31 Balance Sheet Upside-Down by $5 Million
-------------------------------------------------------------
SpectRx, Inc. (OTCBB: SPRX) reported its operating results for the
first quarter 2005.
Revenue for the first quarter of 2005 was $369,000 compared to
revenue of $125,000 in the first quarter of 2004. The increase in
revenue was primarily due to a three-fold increase in sales of
SimpleChoice(R) products.
The net loss attributable to common stockholders for the first
quarter of 2005 was $1.4 million, compared to a loss of $7.5
million in the comparable quarter of 2004.
"We are pleased to report a significant gain in revenue in the
first quarter for our SimpleChoice product line and look forward
to the launch of our new twist brand 90-degree infusion set," said
Mark A. Samuels, SpectRx, Inc. chairman and chief executive
officer. "We believe that the new set, combined with our existing
product offerings, will be vehicles for continuing revenue
growth."
"In addition to increasing product revenues, we continue to
receive expense reimbursement and income from government contracts
and grants. We are managing our cash very carefully and plan to
secure near-term, asset-based financing that should offset
expenses generated by our expected SimpleChoice twist product
launch, and provide sufficient working capital into the first
quarter of 2006," Mr. Samuels said.
About the Company
SpectRx, Inc. (OTCBB: SPRX) is a diabetes management company
developing and providing innovative solutions for insulin delivery
and glucose monitoring. SpectRx markets the SimpleChoice(R) line
of innovative diabetes management products, which include insulin
pump disposable supplies. SpectRx also plans to develop a
consumer device for continuous glucose monitoring. The company is
commercializing its non-invasive cancer detection technology
through subsidiary company Guided Therapeutics, Inc., which
SpectRx intends to separately finance with private funds.
SpectRx's can be found in the Web at http://www.spectrx.com/
http://www.mysimplechoice.com/and
http://www.guidedtherapeutics.com/
At Mar. 31, 2005, SpectRx, Inc.'s balance sheet showed a
$5,075,000 stockholders' deficit, compared to a $3,695,000 deficit
at Dec. 31, 2004.
SPIEGEL INC: Plan Solicitation and Tabulation Results
-----------------------------------------------------
Pursuant to the Amended Disclosure Statement Order, Bankruptcy
Services, LLC, was instructed to solicit votes from the holders
of claims entitled to vote as of March 29, 2005, in Class 4,
General Unsecured Claims, and Class 5, Convenience Claims in
Spiegel Inc. and its debtor-affiliates' chapter 11 plan.
Each holder of a claim in the Voting Classes was sent a
Solicitation Package and received an appropriate form of ballot.
Bankruptcy Services Case Manager Cassandra Murray tells the U.S.
Bankruptcy Court for the Southern District of New York that
collectively, the creditors have voted to accept the Debtors'
Amended Plan.
Ms. Murray reports the results of the tabulation of properly
executed ballots received prior to the Voting Deadline:
_______________________________________________________________
| | Total Ballots Received |
| |_____________________________________________|
| | Accept | Reject |
| Claims |________________________|____________________|
| | Claim | No. of | Claim | No. of |
| | Amount | Claims | Amount | Claims |
|_______________|______________|_________|__________|_________|
| | | | | |
| Class 4 |$1,081,801,236| 423 |$1,368,027| 3 |
| (General | | | | |
| Unsecured | (99.87%) |(99.30%) | (0.13%) | (0.70%) |
| Claims) | | | | |
|_______________|______________|_________|__________|_________|
| | | | | |
| Class 5 | $627,801 | 338 | $6,228 | 3 |
| (Convenience | | | | |
| Claims) | (99.02%) |(99.12%) | (0.98%) | (0.88%) |
|_______________|______________|_________|__________|_________|
Headquartered in Downers Grove, Illinois, Spiegel, Inc. --
http://www.spiegel.com/-- is a leading international general
merchandise and specialty retailer that offers apparel, home
furnishings and other merchandise through catalogs, e-commerce
sites and approximately 560 retail stores. The Company filed for
Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No.
03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq.,
at Shearman & Sterling, represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $1,737,474,862 in assets and
$1,706,761,176 in debts. The Court approved the Company's amended
disclosure statement on March 28, 2005. (Spiegel Bankruptcy News,
Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SPIEGEL INC: Judge Lifland Confirms Joint Plan of Reorganization
----------------------------------------------------------------
The Honorable Burton Lifland of the U.S. Bankruptcy Court for the
Southern District of New York confirmed the Modified First Amended
Joint Plan of Reorganization filed by Spiegel Inc. and its debtor-
affiliates on May 23, 2005.
Ownership of the Company will be given to Commerzbank AG and
unsecured creditors which include Dresdner Kleinwort Wasserstein
and DZ Bank AG. Spiegel's former owner, Otto GmbH will lose all
of its interest in the company.
Judge Lifland determined that the Plan:
* properly classifies the claims,
* specifies the unimpaired classes of claims,
* specifies the treatment of unimpaired classes of claims,
* provides for the same treatment of each claim in each
class,
* provides adequate and proper means for its
implementation,
* is not inconsistent with applicable provisions of the
Bankruptcy Code,
* complies with applicable provisions of the Bankruptcy
Code,
* was proposed in good-faith,
* provides for the payment for services or costs and
expenses in connection with the Debtors Chapter 11 cases,
* provides for the proper treatment of administrative and
tax claims pursuant to the requirements of Section
1129((a)(9) of the Bankruptcy Code,
* is feasible,
* calls for the payment of fees payable under Section 1930
of the Judiciary Procedures Code,
* does not alter retiree benefits,
* is fair and equitable, and
* does not call for the avoidance of taxes or the
application of Section 5 of the Securities Act of 1933.
Spiegel will emerge from bankruptcy as Eddie Bauer Holdings Inc.
Impaired creditors overwhelmingly voted to accept the Plan. The
company expects to start paying creditors 90% of their claims by
June 17. Based on current estimates, each recovery will be
comprised of approximately 52 percent cash and 48 percent equity.
Eddie Bauer Holdings plans to register its class of common stock
with the Securities and Exchange Commission and have its shares
approved for trading on NASDAQ.
Pursuant to the Plan, Eddie Bauer will close 34 furniture stores
and cut 700 jobs. The company says it will try to put displaced
employees in other positions among the 400 Eddie Bauer stores in
the United States and Canada.
JP Morgan Chase & Co., General Electric Co., and Credit Suisse
First Boston Corp. will provide Spiegel a $300 million credit to
pay off creditors.
A $150 million loan from the Bank of America Corp., Fleet Retail
Group Inc., CIT Group/Business Credit Inc. and GE will be used by
Spiegel as working capital.
Company Statement
Statement from Eddie Bauer President and Chief Executive Officer
Fabian Mansson:
"With the formation of Eddie Bauer Holdings Inc. and the company's
emergence from Chapter 11 quickly approaching, we at Eddie Bauer
could not be more excited about our impending future as a stand-
alone company. Throughout the restructuring process our team has
achieved significant success in establishing Eddie Bauer as a
profitable organization and building a strong foundation for the
new company.
"During the past two and a half years, over the course of the
bankruptcy, we have recruited a world-class team. On the product
side, new talent brings experience from industry leading apparel
retailers. As a result, Eddie Bauer is quickly becoming a stronger
competitor in the marketplace, solidifying our brand position as
the premium retailer for apparel and accessories that reflect a
modern outdoor lifestyle.
"We also added the experience of seasoned professionals with
unparalleled experience in operations, corporate legal affairs and
finance to our senior management team.
"As an endorsement of this good news around the Eddie Bauer
business and brand, we are even more encouraged by the strong
support of the Creditors' Committee in their desire to participate
in the company's future as equity holders and of the commitment
and excitement of our recently named board of directors.
"With optimism and enthusiasm, we look forward to our emergence
from Chapter 11, to the establishment of Eddie Bauer Holdings,
Inc. and to continuing to provide best-in-class customer service
and nature-inspired, stylish apparel and accessories to the
consumer."
Eddie Bauer offers intelligently designed, stylish clothing and
accessories for actively engaged men and women who get inspired by
nature, wherever they are. Established in 1920, Eddie Bauer
operates more than 400 stores across the U.S. and Canada, and an
Online store at http://www.eddiebauer.com/ Eddie Bauer also
distributes more than 90 million catalogs annually and has joint
venture partnerships in Japan and Germany
Headquartered in Downers Grove, Illinois, Spiegel, Inc. --
http://www.spiegel.com/-- is a leading international general
merchandise and specialty retailer that offers apparel, home
furnishings and other merchandise through catalogs, e-commerce
sites and approximately 560 retail stores. The Company filed for
Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No.
03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq.,
at Shearman & Sterling, represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $1,737,474,862 in assets and
$1,706,761,176 in debts.
STATEN ISLAND: Ba3 Bond Rating Remains on Moody's Watchlist
-----------------------------------------------------------
On May 17, 2005, the New York State Attorney General announced a
settlement with Staten Island University Hospital that will
require the hospital to repay $76.5 million over a 12 year period
for overpayments received under the State's Medicaid program.
Separately, SIUH continues to negotiate with the federal Office of
the Inspector General and the U.S. Attorney's Office to settle
Medicare over-billings disclosed by the Hospital related to
residency training program costs for multiple years going back to
1996.
SIUH's bond rating of Ba3 continues on Watchlist for possible
downgrade. We expect to make a formal rating decision within the
next two weeks upon completion of discussions with SIUH management
and its parent, North Shore-Long Island Jewish Health System, and
receipt of SIUH's audited financial statements for the year ended
December 31, 2004. Our evaluation will incorporate the impact of
any upfront cash payments on SIUH's already thin liquidity
position and ongoing payments over the next 12 years that are
likely to stress SIUH's ability to fund necessary payments for
operations, capital and debt service.
SUNNY DELIGHT: $144 Mil. PepsiCo Sale Prompts S&P to Hold Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating and other ratings on juice drink provider Sunny
Delight Beverages Company.
Sunny Delight has entered into an agreement to sell its Punica
assets to PepsiCo Inc. (A+/Stable/A-1) after which it will use
approximately $144.5 million of proceeds to repay in full its $85
million second lien term loan, and repay $59.5 million of its $170
million first lien term loan, thereby reducing the balance on this
loan to $105 million. Sunny Delight will also pay an approximate
$20 million distribution to the company's owners.
These actions are subject to approval of a first amendment to the
credit facility. The ratings on the second lien term loan will be
withdrawn upon close of the transaction. The outlook on
Cincinnati, Ohio-based Sunny Delight is negative. Standard &
Poor's estimates that Sunny Delight will have about $105 million
of total debt outstanding at closing.
THILMANY LLC: Moody's Assigns B2 Rating to $145 Million Term Loan
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Thilmany, LLC's
$145 million term loan and $30 million revolving credit facility,
both due in 2010. In addition, Moody's assigned a B2 senior
implied rating. The ratings outlook is stable.
Thilmany consists of the industrial papers segment of
International Paper, which is being acquired by Kohlberg & Company
for approximately $180 million. The acquisition will be funded
with $145 million of debt and contributed equity of $40 million
from Kohlberg & Company and $5 million from International Paper.
Thilmany's product mix focuses on specialty papers operating in
four business segments:
1) lightweight papers that includes machine glazed, machine
finished, extensible and coated papers for food and non-food
packaging;
2) pressure sensitive release base papers for labels;
3) Thilmany Packaging which converts lightweight paper, plastic
resins, and aluminum foil into a finished product; and
4) Akrosil a global converter of silicone coated release
liners.
The B2 senior implied rating reflects:
* the modest size of Thilmany's operations;
* nominal revenue growth;
* deterioration in profitability;
* minimal tangible asset coverage; and
* high level of customer concentration.
The ratings also incorporate:
* the challenges of transitioning to an independent company;
* the increased leverage associated with the proposed
transaction;
* the likelihood of acquisitions; and
* limited sources of external liquidity.
However, the ratings are supported by:
* relatively good credit metrics pro forma for this
transaction;
* a leading market position for several of its product lines
based on company estimates; and
* the benefits derived from various sale and purchase
agreements with International Paper that secure a source of
fiber and provide a committed buyer for various products
during the initial years of the contract.
Although Thilmany is exposed to the paper industry's overall
volatility, a large percentage of its product mix is focused
towards more specialty items, which tend to have less volatile
pricing. However, over the past three years revenue growth
remained soft as economic weakness and competitive pressures
limited price improvements for a majority of its products. The
company also remains exposed to higher input costs, predominantly
fiber, that have continued to erode margin and is not expected to
subside in the near term. Thilmany's gross margins (excluding
depreciation, amortization) declined from approximately 18.3% in
2002 to 13.8% in 2004.
Reduced SG&A costs have mitigated the decline in gross margin to a
certain extent. These arose from various restructuring
initiatives in 2001 and 2003, which eliminated approximately 280
positions. In late 2001, the company also recorded a pretax
impairment charge of $164 million to revalue net assets down to
realizable value. Despite this adjustment, Moody's believes the
company's asset value compared to potential debt levels would be
relatively thin in a stress scenario.
Moody's also views the transition Thilmany faces as it moves from
being a wholly owned subsidiary of a much larger entity to an
independent company as carrying some risk. Thilmany, however, was
already a division of International Paper and had operated as an
asset held for sale for a period of time, which should mitigate
these challenges to a certain extent. Thilmany must still
transition to having its own management and support systems within
a reasonable time period. At the same time, it must continue to
navigate the challenging business environment, and its actions
will likely include acquisitions. In the event acquisitions do
occur Moody's believes they will be smaller tuck-ins that will not
negatively impact credit metrics or liquidity.
In regards to liquidity, the company has entered into a
$30 million revolving credit facility as part of this financing.
Given relatively tight covenant levels, however, Moody's believes
access could be limited. Over the next twelve months, leverage on
a debt to EBITDA basis cannot exceed 4.0x, while interest coverage
must exceed 1.80x and EBITDA must be at least $36 million. Based
on 2004 EBITDA of approximately $40 million and expected debt
levels pro forma for this transaction of $147 million leverage
would have been about 3.68x. After incorporating capital
expenditures of approximately $12 million, adjusted leverage would
have increased to 5.25x. In the event operating costs continue to
exceed price realizations we believe revolver access could be
limited.
Supporting the ratings are Thilmany's relatively good credit
metrics historically on a pro forma basis for this transaction
with leverage of under 4.0x and interest coverage of about 4.0x.
Based on management's estimates, Thilmany also has the number one
or number two market positions for the majority of its segments,
including industrial and packaging papers, specialty and roll
label SCK, and various converted products. Thilmany estimates the
size of its target market at about 1.2 million tons, of which it
believes it has a market share of approximately 27%.
Thilmany also benefits from long-term contracts for about 54% of
its customers with an average contract life of between one to
three years. Although contract terms vary, the primary benefit is
committed volumes with pricing generally market based. After the
sale is complete, International Paper has also committed to
purchasing certain quantities of product such as paper ream wrap,
film wrap and glossy poly wrap, and will provide a secure source
of fiber through three separate pulp and wood supply agreements.
As part of the transaction, Thilmany will not be acquiring the
Androscoggin paper machine that is located in one of International
Paper's larger mills in Jay, Maine. However, Thilmany will
receive all of the production from that machine, which produces
products such as paper ream wrap. Thilmany will pay all
production costs and non-maintenance capital requirements
associated with the machine, while International Paper will be
responsible for maintenance capex.
The stable outlook reflects Moody's view that operating
performance continues to improve and liquidity will remain
adequate as prices continue to improve and various cost
initiatives help to stem margin erosion resulting from increasing
input costs. The outlook does not incorporate debt financed
acquisitions nor does it consider the divestiture of any existing
operations. Factors that would negatively impact the ratings
would be deterioration in credit metrics or liquidity due in part
to a decline in product pricing or further margin erosion from
escalating input costs. Whereas, a sustained improvement in
pricing and moderating input costs resulting in a sustained
improvement in operating performance and liquidity could result in
higher ratings.
Thilmany LLC, a privately owned company headquartered in Kaukauna,
Wisconsin, is a producer of specialty printing and packaging
papers and converted paper products.
TRANSGENE S.A.: Ernst & Young Raises Going Concern Doubt
--------------------------------------------------------
Ernst & Young raised substantial doubt about Transgene S.A.'s
(Nasdaq: TRGNY; Eurolist Paris: FR0005175080) ability to continue
as a going concern after it audited the Company's financial
statements for the fiscal year ended 2004. The auditors said
Transgene has incurred significant operating losses as a result of
which Transgene's ability to meet its financial needs, depends on
the successful execution of its action plans before December 2005.
Transgene believes that its current cash position will be
sufficient to meet expected financial requirements for continuing
operations through September 2005. In December 2004, Transgene's
principal shareholder informed the Board of Directors of its
commitment to cover Transgene's cash needs until the end of 2005
unless an alternative financing option is adopted during this
timeframe.
"We are actively pursuing appropriate steps to obtain the
financing we need to continue funding the clinical trials of our
broad product portfolio," said Philippe Poncet, Chief Financial
Officer of Transgene.
Transgene, based in Strasbourg, France, is a biopharmaceutical
company dedicated to the discovery and development of therapeutic
vaccines and immunotherapy products for the treatment of cancer
and infectious diseases. Transgene has a broad portfolio of
products in clinical development.
TRUMP HOTELS: Distribution Record Date is Still March 28
--------------------------------------------------------
As previously reported in the Troubled Company Reporter on May 16,
2005, Trump Hotels & Casino Resorts, Inc., and its debtor-
affiliates seek Judge Wizmur's permission to modify their
confirmed Second Amended Plan of Reorganization to:
a. provide that the "Distribution Record Date" and the "New
Class A Warrants Record Date" will be the Effective Date --
which occurred on May 20, 2005; and
b. adjust Plan provisions to allow for the Effective Date to
occur on May 20, 2005.
* * *
Judge Wizmur granted the Debtors' request to modify the Debtors'
Plan of Reorganization to allow the Effective Date to occur "on
or before May 23, 2005."
The Court makes it clear that the Plan will not be modified to
change the "Distribution Record Date" and the "New Class A
Warrants Record Date" from March 28, 2005.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc. nka Trump Entertainment Resorts, Inc. --
http://www.thcrrecap.com/-- through its subsidiaries, owns and
operates four properties and manages one property under the Trump
brand name. The Company and its debtor-affiliates filed for
chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No.
04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A.
Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and
Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N.
Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano,
P.A., represent the Debtors in their successful chapter 11
restructuring. When the Debtors filed for protection from their
creditors, they listed more than $500 million in total assets and
more than $1 billion in total debts. The Court confirmed the
Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005,
and the plan took effect on May 20, 2005.
TRUMP HOTELS: Trump Indiana Will Pay $20.7MM to Settle Tax Claims
-----------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
April 6, 2005, Trump Indiana, Inc., asks the U.S. Bankruptcy Court
for the District of New Jersey to approve its settlement agreement
with the Indiana Department of Revenue.
Charles A. Stanziale, Jr., Esq., at Schwartz Tobia Stanziale
Sedita & Campisano, in Montclair, New Jersey, relates that on
January 11, 2005, the Revenue Department filed a proof of claim
in the Debtors' Chapter 11 cases. The Revenue Department
asserted $23,832,065 in unpaid taxes, interest and penalties:
-- a $9,773,320 secured claim;
-- a $12,736,555 priority tax claim; and
-- a $1,322,190 unsecured claim.
Trump Indiana disputes certain of the tax obligations asserted in
the Claim. At the same time, Mr. Stanziale points out, Trump
Indiana is sensitive to the costs of litigating disputes and the
risks inherent in any litigation. Consequently, Trump Indiana
entered into negotiations with the Revenue Department to resolve
the disputes between them. On March 23, 2005, the parties
executed the Settlement Agreement.
Pursuant to the Settlement Agreement, Trump Indiana will pay the
Revenue Department $20,708,071 in satisfaction of the Claim.
* * *
Judge Wizmur makes it clear that the Settlement Payment will be
in full and final satisfaction of the Indiana Department of
Revenue's Claim No. 1269. Upon Trump Indiana, Inc.'s payment,
the Claim will be deemed disallowed.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc. nka Trump Entertainment Resorts, Inc. --
http://www.thcrrecap.com/-- through its subsidiaries, owns and
operates four properties and manages one property under the Trump
brand name. The Company and its debtor-affiliates filed for
chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No.
04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A.
Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and
Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N.
Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano,
P.A., represent the Debtors in their successful chapter 11
restructuring. When the Debtors filed for protection from their
creditors, they listed more than $500 million in total assets and
more than $1 billion in total debts. The Court confirmed the
Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005,
and the plan took effect on May 20, 2005.
UAL CORP: Court Postpones Ruling on Machinists' Pact Until May 31
-----------------------------------------------------------------
The Hon. Eugene Wedoff of the U.S. Bankruptcy Court for the
Northern District of Illinois deferred his final ruling until
May 31, 2005, on UAL Corporation and its debtor-affiliates request
to abrogate contracts with the International Association of
Machinists and Aerospace Workers.
The Court urges both sides to use the time to negotiate a
mutually acceptable cost-saving agreement.
Judge Wedoff said an immediate decision would be
"counterproductive to ongoing negotiations. The best outcome, as
recognized by both sides, remains a consensual agreement,"
according to the Associated Press.
* * *
Negotiations between IAM District 141 and United Airlines will
resume in Chicago this week "without the immediate distraction of
a court decision that could lead to abrogated contracts and a
strike at the bankrupt carrier," IAM District 141 President and
Directing General Chairman, S.R. (Randy) Canale, said in a
message posted at the union's Web site on May 24, 2005.
The District 141 Negotiating Committee acknowledges the need for
additional cost savings to secure exit financing for the bankrupt
airline, according to Mr. Canale. However, it is essential that
any sacrifice be fair and equitable and that a secure replacement
pension plan is also part of any new agreement, he said.
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.
UAL CORPORATION: Details Tentative Agreement with Mechanics
-----------------------------------------------------------
As reported in the Troubled Company Reporter on May 18, 2005, UAL
Corporation and its debtor-affiliates reached a tentative
concessionary agreement with the negotiating committee of the
Aircraft Mechanics Fraternal Association. O.V. Delle Femine,
National Director of the AMFA, tells members that the Tentative
Agreement will become effective as of May 15, 2005.
The salient terms of the Agreement include:
(1) Pay Rates
Base pay rates and other pay components, including shift
premiums, Hawaii differential, skill premium, and license
premiums, in effect as of May 1, 2004, will be reduced by
3.9%. The reductions will take effect on the payroll period
closest to June 1, 2005. The reduced base pay rates will
increase by 1.5% on January 1, 2006, 1.5% on January 1,
2007, 1.5% on January 1, 2008, and 1.5% on January 1, 2009.
(2) Defined Benefit Pension Plan
According to Mr. Delle Femine, the AMFA waives any claim that
the termination of the United Air Lines, Inc. Union Ground
Employees' Retirement Plan violates the 2003 Mechanics'
Agreement. The AMFA will not oppose efforts to terminate the
Plan. However, the AMFA does not endorse Plan termination.
The AMFA does not waive any of its rights to proceed against
the Pension Benefit Guaranty Corporation over the termination
date of the Plan. The AMFA agrees that under the 2005-2009
Mechanics' Agreement, the Debtors are not be required to
maintain the Plan or provide any defined benefit pension
benefits.
(3) Pension Contributions
On the Plan Termination Date, the Debtors will make a
Replacement Plan Base Contribution each payroll period to a
defined contribution plan for 4.0% of each participant's
Considered Earnings. The Debtors will make an Additional
Contribution for all eligible participants employed on
May 15, 2005, based on points schedule. The Additional
Contribution plus the Base Contribution will equal the
Considered Earnings for all eligible participants. The
Additional Contribution for each participant will not change.
Every year, the Debtors will calculate their contributions as
a percentage of the Considered Earnings for all participants.
If the total is less than 5%, the Debtors will make an
additional Base Contribution so that the total contribution
for the year equals 5% of total Considered Earnings.
All those employed on May 15, 2005, will be 100% vested in
the Replacement Plan Contributions. Replacement Plan
Contributions for employees hired after May 15, 2005, will be
subject to a vesting schedule:
Years of Service % Vested
---------------- --------
Fewer than one year of service 0%
1 year of service but fewer than 2 20%
2 years of service but fewer than 3 40%
3 years of service but fewer than 4 60%
4 years of service but fewer than 5 80%
5 or more years of service 100%
(4) Convertible Notes
Pursuant to the 2005-2009 Mechanics' Agreement and the Plan
of Reorganization, the Debtors will issue $40,000,000 of UAL
Convertible Notes to a trust or other entity designated by
AMFA. The Notes will have a 15-year term and may be modified
for accounting, securities law and tax law reasons. The
conversion price of the Notes will be the product of 125% and
the average closing price of the Stock for 60 consecutive
trading days following the Exit Date. The Notes may not be
called for five years from the Issuance Date. Thereafter,
the Notes are callable in cash or Common Stock if the Stock
has traded at 125% of the Conversion Price for 60 consecutive
trading days prior to the call date.
(5) Fees and Expenses
The Debtors will reimburse the AMFA for fees and expenses
incurred in connection with this Tentative Agreement, up to
$1,000,000. Of this total, $500,000 will be paid on the
Effective Date of the Tentative Agreement and $500,000 will
be paid on the Exit Date. The Debtors will reimburse the
AMFA only after the review, design, negotiation, approval,
effective ratification, and execution of the Tentative
Agreement.
(6) Outsourcing
If the Debtors provide the AMFA with evidence of service
contracts for $30,000,000 or more in hardware or software
upgrades, replacements, or improvements, the Debtors will
have the unrestricted right to outsource all Computer
Technician work systemwide and to furlough all Computer
Technicians. The Debtors must try to place the furloughed
Computer Technicians with the vendors to which Computer
Technician work is outsourced. Computer Technicians who are
furloughed will be entitled to severance and other benefits,
except if they accept employment with the vendors.
The Debtors will have the unrestricted right to outsource all
fueling work systemwide. The Debtors will have the
unrestricted right to outsource all Utility work systemwide
and to furlough all Utility employees. Utility employees who
are furloughed will be entitled to severance and other
benefits. The three "C" check lines currently performed by
the Debtors in-house at the San Francisco Maintenance Center,
will not be outsourced.
The Debtors may contract out the work of heavy maintenance
visits. The Debtors may contract out up to 20% of remaining
maintenance work annually as measured by the Maintenance
Operations Division's gross annual budget, excluding the cost
of heavy maintenance visits, plus the portion of the gross
annual budgets attributable to building maintenance and
ground equipment maintenance. This percentage may be
exceeded if the Debtors have fully utilized the existing
equipment or facilities.
(7) Annual Audit
In 2006, the AMFA will perform an annual audit to verify
compliance with the outsourcing limits. The Debtors will
reimburse the AMFA for the cost of an independent auditor, up
to $75,000 per year. The Debtors will reimburse the AMFA
within 30 days of receipt of the auditor's final report. The
AMFA must provide documentation of the costs to prepare the
report. The Debtors will provide the auditor with access to
documents necessary for the audit, as long as the auditor has
executed a confidentiality and non-disclosure agreement.
(8) Profit Sharing
The Profit Sharing Plan will begin January 1, 2005, so that
the first year covered will be calendar year 2005. The
Debtors will establish a Profit Sharing Pool. If the Debtors
have more than $10,000,000 in Pre-Tax Earnings for a calendar
year, they will contribute 7.5% of Pre-Tax Earnings in 2005
and 2006 and 15% of Pre-Tax Earnings in 2007 and thereafter,
to the Profit Sharing Pool.
A full-text copy of the Tentative Agreement is available at no
charge at:
http://bankrupt.com/misc/amfa_tentative_pact.pdf
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: U.S. Bank's Move for Adequate Protection Draws Fire
---------------------------------------------------------------
As reported in the Troubled Company Reporter on Nov 3, 2004, U.S.
Bank National Association and U.S. Bank Trust National Association
wants adequate protection on their aircraft deals with US Airways,
Inc., and its debtor-affiliates.
U.S. Bank National Association and U.S. Bank Trust National
Association, act as:
(1) Trustee of certain Pass Through Trusts;
(2) Loan Trustee under Indenture and Security Agreements;
(3) Owner Trustee under Trust Agreements; and
(4) Liquidating Trustee under Liquidating Trust Agreements.
U.S. Bank asked the U.S. Bankruptcy Court for the Eastern District
of Virginia to condition the Debtors' use of its collateral upon
the provision of adequate protection pursuant to Sections 361 and
363(e) of the Bankruptcy Code.
Ira H. Goldman, Esq., at Shipman & Goodwin, in Hartford,
Connecticut, outlined the financial transactions that U.S. Bank
has helped the Debtors arrange:
(A) Publicly Placed Transactions
The Debtors sold Pass Through Certificates to finance
aircraft they owned or leased. The Debtors formed separate
Pass Through Trusts with U.S. Bank as Pass Through Trustee.
The Certificate Holders are beneficiaries of the issuing Pass
Through Trust with a pro rata interest in the property of the
Trust.
(B) Privately Placed Transactions
U.S. Bank serves as Loan Trustee and Owner Trustee in several
privately placed Leveraged Lease and Owned Aircraft
transactions:
1. Owned Aircraft Transactions
The Debtors financed owned Aircraft by issuing Private
Owned Notes. The Private Owned Notes were issued under a
separate indenture and security agreement between the
Debtors and U.S. Bank, as Loan Trustee, relating to the
subject Aircraft.
2. Leveraged Lease Transactions
In the Leveraged Lease transactions, one or more entities
formed an Owner Trust to acquire an Aircraft, which in
turn leased it to the Debtors. To finance the Aircraft,
the Owner Participant contributed a portion of the
purchase price to the Owner Trust. The remainder of the
purchase price was financed through the issuance of
Private Leased Notes. To secure its obligation to pay
principal, premium and interest on the Private Leased
Notes, the Owner Trustee assigned its rights to the lease,
to receive basic rent, to certain other payments and to
the subject Aircraft, to U.S. Bank as Loan Trustee.
3. Single Investor Lease Transactions
In a Single Investor Lease, one or more entities formed an
Owner Trust to acquire an Aircraft, which in turn leased
it to the Debtors. The Owner Participant is the only
investor in the Aircraft. The Owner Trustee issued no
notes or associated debt to finance the Aircraft.
(C) Liquidating Trusts
U.S. Bank serves as Liquidating Trustee for 29 Liquidating
Trusts formed in connection with the restructuring of Pass
Through transactions in the first US Air bankruptcy. Each
Liquidating Trust is a Connecticut Statutory Trust,
administered by a Liquidating Trust Agreement. The
Liquidating Trusts take and hold title to, and ultimately to
dispose of, those Aircraft involved in the pass through
transactions that were either:
-- originally owned by the Debtors and returned during the
first bankruptcy, or
-- were subject to leases rejected by the Debtors during the
first bankruptcy.
Mr. Goldman explained that the underlying Aircraft and engines
that secure the Notes and Private Notes constitute U.S. Bank's
Collateral. This Collateral is at risk. The Debtors are
presently using the Collateral in revenue producing service. This
diminishes its value as each day, hour and cycle of operation
brings the airframes and components closer to their next scheduled
maintenance events. The value of a commercial jet depends on
where in the maintenance cycle the airframe, landing gears,
Auxiliary Power Units and engines are. Even if the Debtors are
performing maintenance, the accrual of days, hours and cycles
diminishes the value.
U.S. Bank assumes an additional risk due to the Debtors' potential
failure to make rent and other payments under the Liquidating
Trusts, the Pass Through Trusts, the Single Investor Leases and
the Leveraged Leases.
Mr. Goldman insisted that U.S. Bank is entitled to adequate
protection under Section 363. A secured creditor and lessor like
U.S. Bank is entitled to adequate protection as compensation for
depreciation, deterioration or diminution in the value of its
collateral. Adequate protection maintains the status quo between
the Petition Date and before confirmation or rejection of the
Debtors' restructuring plan.
According to Mr. Goldman, to adequately protect U.S. Bank's
interests in the Collateral, the Debtors should:
(a) comply with the Federal Aviation Act regulations and any
other laws with respect to the Collateral;
(b) comply with all provisions of the Owned Security
Agreements, Leased Security Agreements, Owned Aircraft
Indentures, Leased Aircraft Indentures, the Liquidating
Trust Leases, Single Investor Leases and other Operative
documents concerning the operation, maintenance and use of
the Collateral;
(c) continue to carry, maintain and pay for sufficient
insurance on the Collateral;
(d) be enjoined from removing or replacing any component
parts;
(e) pay postpetition interest on all Financial Transactions;
(f) pay U.S. Bank's fees and expenses;
(g) confirm whether the Collateral continues to be used and
provide evidence that storage and maintenance is
consistent with industry practices; and
(h) pay monthly cash maintenance reserves to U.S. Bank for
the operation of the Collateral from the Petition Date,
including:
(i) airframe reserves toward the next scheduled heavy
structural and system checks;
(ii) engine reserves on each engine toward their next
shop visit for heavy maintenance and life limited
parts replacement based on industry averages;
(iii) landing gear reserves based on last overhaul; and
(iv) APU reserve based on the Debtors' typical shop
visit interval for performance restoration for
similar APUs in its fleet.
To the extent this provides insufficient protection of U.S. Bank's
interests in the Collateral, U.S. Bank should be granted a "super-
priority" administrative claim pursuant to Section 507(b), which
is higher in priority than all administrative claims.
Objections
(1) The United States of America
The United States of America, on behalf of the Air Transportation
Stabilization Board and the ATSB Lender Parties, objects to U.S.
Bank's request for adequate protection.
According to Peter D. Keisler, Esq., Assistant Attorney General,
in Washington, D.C., the U.S. Government takes no position on
U.S. Bank's request for adequate protection. However, the
Government wants the Court to clarify that any administrative
claim granted to U.S. Bank must be subject and subordinate to the
superpriority administrative claim granted to the ATSB Lender
Parties pursuant to the Supplemental Cash Collateral Order.
If U.S. Bank is granted a superpriority claim without the consent
of the ATSB Lender Parties, Mr. Keisler argues that the
Supplemental Cash Collateral Order would then cease to be valid
and binding, constituting an event of default under the
Supplemental Cash Collateral Order. Therefore, if the Court
grants U.S. Bank's request, the Government wants that claim to be
subject and subordinate to the superpriority administrative claim
of the ATSB Lender Parties.
(2) Electronic Data Systems
Pursuant to a long-term Service Contract, Electronic Data Systems
Corporation and EDS Information Services, L.L.C., provide back
office information technology support to the Debtors.
In November 2004, EDS asked the Court for adequate assurance
related to the Contract with the Debtors. A Consent Order,
approved by the Court in February 2005, provides that EDS is
allowed a superpriority administrative claim for accrued and
unpaid postpetition services under the Contract, not to exceed
$28,000,000.
Michael D. Warner, Esq., at Warner, Stevens, in Forth Worth,
Texas, contends that U.S. Bank should not be granted a
superpriority administrative claim that is senior to the EDS
Superpriority Administrative Claim. There is no basis in law or
fact for U.S. Bank to be afforded senior status. If U.S. Bank is
granted a superpriority administrative claim, EDS's claim should
be senior to U.S. Bank's. This arrangement makes more sense
because EDS is providing future services and is extending
unsecured credit to the Debtors. Therefore, EDS is aiding the
Debtors on a current basis and the equities dictate that the EDS
Superpriority Administrative Claim be satisfied ahead of U.S.
Bank.
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. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000)
US AIRWAYS: San Francisco Wants Notice Before Bond Cancellation
---------------------------------------------------------------
As reported in the Troubled Company Reporter on May 25, 2005, US
Airways, Inc., and its debtor-affiliates asked the U.S.
Bankruptcy Court for the Eastern District of Virginia to:
(a) approve a settlement of certain surety-related claims;
(b) authorize the continuation of the Debtors' surety bond
program with St. Paul Travelers Casualty & Surety Company
of America;
(c) approve a related extension of secured surety credit; and
(d) approve a related granting of liens and superpriority
administrative expense claims.
Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado,
related that the Debtors' business requires licenses, permits and
other governmental authorizations, which require the Debtors to
pay or perform under certain obligations to local, state and
federal governmental agencies. The obligations include payment
of landing fees, real estate lease obligations, and workers'
compensation obligations. Before the Petition Date, the Debtors
secured these obligations by procuring Prepetition Surety Bonds
from St. Paul Travelers under:
1) the Current Indemnity Agreement in favor of St. Paul
Travelers;
2) the Collateralized Bond Surety Program Registered
Pledge and Master Security Agreement; and
3) the Pledged Collateral Account Agreement.
The Debtors have $13,800,000 in cash collateral on deposit in a
pledged securities account at Smith Barney, Inc., that is under
the control of St. Paul Travelers. There is currently an
outstanding claim against the Bonds for $961,000.
Mr. Leitch told the Court that the parties have been negotiating
the terms and conditions under which St. Paul Travelers will
extend or renew the Prepetition Surety Bonds, increase the penal
sum amounts of the Prepetition Surety Bonds as required by
obligees, and issue new surety bonds as needed by the Debtors.
The Debtors and St. Paul Travelers have now reached an agreement.
The principal provisions of the Surety Bond Program are:
a) Issuance of New Bonds: St. Paul Travelers and the Debtors
will continue their bonding relationship. St. Paul
Travelers will issue new surety bonds and/or extend, renew
or increase any surety bond in the aggregate not to exceed
$25,000,000. St. Paul Travelers retains the right to accept
or reject any request for Bonds.
b) Indemnity Agreements: The Debtors and St. Paul Travelers
will enter into a new Indemnity Agreement, which will
include ratification of the Current Indemnity Agreement.
c) Collateral: The Debtors will secure their obligations under
the Bonds with collateral consisting of:
(1) a "clean" irrevocable, standby letter of credit; or
(2) cash or cash equivalents, with the collateral equal
to the amount of any Bonds written by St. Paul
Travelers.
d) Use of Collateral: The automatic stay pursuant to Section
362 will be vacated and St. Paul Travelers may draw upon the
collateral for claims and expenses arising from any Bond or
Surety Documents or obligations under the Indemnity
Agreements, or premiums, losses and expenses.
e) Release of Collateral: St. Paul Travelers will hold the
collateral until:
(1) presented with a full, final and unconditional
release or other written evidence of discharge of
all Bonds;
(2) all premiums have been paid;
(3) all obligations pursuant to the Indemnity
Agreements have been discharged; and
(4) there are no amounts owed to St. Paul Travelers.
f) Administrative Super-Priority Claim: If there is a loss in
excess of the collateral, St. Paul Travelers will be
entitled to an administrative expense claim with priority
over all other administrative expense claims, but
subordinate to the super-priority administrative claims
granted to:
(1) the lenders under the ATSB Loan;
(2) Eastshore under the Eastshore DIP Loan;
(3) postpetition wages and benefits;
(4) any new debtor-in-possession financing; and
(5) General Electric Capital Corporation.
g) Fees and Expenses: The Debtors will pay all fees and
expenses of St. Paul Travelers, including outside counsel
for the negotiation, preparation, documentation,
implementation and enforcement of the Surety Bond Program.
h) Payment of Claims: The Debtors will pay for any obligations
which are covered by the Bonds and cooperate with St. Paul
Travelers in any claim investigations.
i) Bond Cancellation: St. Paul Travelers will retain the right
to cancel the Bonds under certain circumstances. The
automatic stay should be vacated so St. Paul Travelers may
cancel the Bonds if:
(1) an obligation under the Bonds or a premium is not
paid and the collateral proves insufficient;
(2) the Debtors cease to operate their businesses;
(3) the Debtors dispose of their assets through a sale
or plan of reorganization;
(4) the Debtors are unable to pay allowed
administrative expenses and claims; or
(5) the Debtors cease the operations or activities
covered by the Bond.
The City and County of San Francisco Responds
The City and County of San Francisco, acting by and through the
San Francisco Airport Commission, operates the San Francisco
International Airport. The Debtors use the Airport pursuant to a
30-year Lease and Use Agreement dated July 1, 1981. Douglas W.
Jessop, Esq., at Jessop & Company, in Denver, Colorado, explains
that the Lease requires the Debtors to maintain a bond to insure
performance of its obligations to the Airport and protect San
Francisco in the event of default. The surety underwriter must
provide San Francisco with 30 days' written notice of
cancellation or material changes to the performance bond. The
Debtors maintain a performance bond that guarantees two months of
rent, full and complete performance of all terms, conditions of
the Lease and associated permits, including rentals and fees.
Pursuant to the Lease, the Debtors obtained Performance Bond No.
103700826 for $1,660,025, from Travelers Casualty and Surety
Company of America. US Airways, Inc., is the Principal and San
Francisco is the Obligee under the Bond. On April 4, 2005, San
Francisco notified Travelers that the Debtors failed to perform
under the Lease and associated permits. San Francisco submitted
a claim for $587,962 as a partial draw on the Performance Bond.
San Francisco reserved its right to make further draws on the
Performance Bond if the Debtors demonstrated other failures to
perform. To date, Travelers has not paid San Francisco's claim.
Mr. Jessop says the Debtors' request should be denied because it
permits Travelers to unilaterally cancel existing and future
surety bonds. Specifically, it allows Travelers to cancel the
Performance Bond that covers the Debtors' Lease at the Airport.
The terms of the Performance Bond do not give Travelers the right
to unilaterally terminate its obligations. The Bankruptcy Code
does not permit Travelers to insert terms into the Performance
Bond more than four years after it was written. The Bankruptcy
Code does not permit Travelers to introduce a new hurdle to
payment, namely that the Debtors resolve disputes prior to any
payment on the Performance Bond.
San Francisco asks Judge Mitchell to:
(a) preclude Travelers from unilaterally canceling any
surety bonds without notice;
(b) bar the Debtors from introducing new conditions to
San Francisco's rights under the Performance Bond; and
(c) require the Debtors to specify the outstanding claims
with a course for their resolution.
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. 92; Bankruptcy Creditors' Service, Inc., 215/945-7000)
US AIRWAYS: Mediating Air Wisconsin Jet Service Pact with UAL
-------------------------------------------------------------
As reported in the Troubled Company Reporter on Mar. 17, 2005, US
Airways, Inc., and its debtor-affiliates asked Judge Mitchell of
the U.S. Bankruptcy Court for the Eastern District of Virginia for
a Protective Order to guard the confidentiality of the redacted
terms in the Jet Service Agreement with Air Wisconsin Airlines
Corporation.
On February 28, 2005, the Court authorized the Debtors to obtain
$125,000,000 in DIP Financing from Eastshore Aviation LLC and
enter into the Jet Service Agreement. The JSA was integral to
the approval of the Debtors' DIP Loan. The JSA contains
confidential commercial information. Accordingly, only a
redacted version of the JSA was filed.
Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado,
explained that on March 4, 2005, UAL Corporation filed a request
in its Chapter 11 bankruptcy case in the United States Bankruptcy
Court for the Northern District of Illinois, to conduct an
examination of Air Wisconsin pursuant to Rule 2004 of the Federal
Rules of Bankruptcy Procedure. The Rule 2004 Motion seeks to
direct Air Wisconsin to provide United with a copy of the
unredacted JSA.
Creditors Committee Supports Need for Protective Order
The Official Committee of Unsecured Creditors supports the
Debtors' request for a Protective Order. Scott L. Hazan, Esq.,
at Otterbourg, Steindler, Houston & Rosen, in New York City,
argues that United Air Line's discovery request infringes upon
the Debtors' protection of highly sensitive competitive business
information in the Jet Service Agreement. United is well aware
of the need for special protection for these documents. In
United's own bankruptcy proceeding, it asked the Court to file
its agreement with Air Wisconsin Airlines Corporation under seal.
Mr. Hazan reminds the Court that the Debtors' bankruptcy
proceedings have been complex, punctuated by accomplishments that
bring the Debtors closer to the goal of emergence from
bankruptcy. To complete the process and rehabilitate the
airline, the Debtors must formulate and implement a business plan
for a profitable business enterprise. The Debtors' route and
fleet structure are among the more important components of the
business plan. The JSA with Air Wisconsin represents tremendous
progress in the Debtors' post-emergence fleet strategy. Without
protection from the Court, this critical information will be
compromised.
Parties Agree to Mediation
United Airlines Corporation, Air Wisconsin Airlines Corporation
and the Debtors agree to enter into mediation to resolve the
dispute.
Pursuant to a Mediation Agreement approved by the Court, the
parties agree that Professor James J. White, Professor at the
University of Michigan Law School, will serve as Mediator. The
Mediator will review the JSA between the Debtors and Air
Wisconsin to determine if the terms constitute a breach or
repudiation of the Air Wisconsin-United Regional Jet Agreement.
If the Mediator sides with the Debtors, United will dismiss its
request seeking a Rule 2004 examination of the JSA. If the
Mediator sides with United, United will have the right to view
all redacted text of the JSA that gives rise to this finding and
the Debtors will withdraw the request for a protective order
pending in both the US Airways and UAL bankruptcy cases. All
three parties will equally share the expenses of the Mediator.
During the Mediation Period, the various motions related to this
matter will be temporarily stayed and not prosecuted. The
parties will dismiss claims, restrain from bringing actions, and
respect the confidentiality terms of the Mediation Agreement.
The Official Committee of Unsecured Creditors of the Debtors, the
Official Committee of Unsecured Creditors of United, and all
other interested parties will help implement the Mediation
Agreement and be bound by its terms. Any violation of the
Mediation Agreement's confidentiality requirements will be a
violation of the Approval Order.
The parties to the Mediation Agreement will share any report by
the Mediator with the UAL Committee. The UAL Committee agrees
that all information disclosed in the report and all information
disclosed in the JSA is subject to the confidentiality provisions
of the Mediation Agreement.
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. 86; Bankruptcy Creditors' Service, Inc., 215/945-7000)
USG CORP: Gets Court OK to Employ Meckler as Environmental Counsel
------------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
authorized USG Corporation and its debtor-affiliates to employ
Meckler Bulger & Tilson LLP as their special environmental
counsel.
Meckler's services include, but not limited to, advising the
Debtors regarding various environmental compliance and regulatory
matters in connection with their operations at certain facilities
in Pennsylvania, North Carolina, Minnesota, Michigan, New Jersey,
Indiana, Iowa, Texas, and Mississippi. The Debtors informed the
Court that Meckler has represented them and provided legal
services in connection with these and similar environmental
matters as an Ordinary Course Professional since the Petition
Date.
As reported in the Troubled Company Reporter on Apr. 12, 2005,
pursuant to the Court's OCP Order, the Debtors were authorized to
pay Meckler's fees and expenses up to $25,000 per month, on
average, over any consecutive three-month period. In September
2002, the Court entered an order modifying the OCP Order to
increase Meckler's average monthly payment cap to $50,000. In
August 2004, the Court approved another amendment to the OCP
Order and established a procedure for increasing the amount the
Debtors are authorized to pay an ordinary course professional.
The Debtors relate that since the Petition Date, they have paid
Meckler's fees and expenses pursuant to the provisions of the OCP
Order. The Debtors have disclosed these payments periodically in
their OCP Reports as required.
However, as a result of an increase in activity in matters
regarding which Meckler is representing the Debtors, the firm's
incurred monthly fees and expenses have approached, and in some
cases, exceeded the OCP Fee Limit in recent months. As a result,
a portion of Meckler's incurred fees and expenses since September
2004 remain unreimbursed. The Debtors intend to seek Court
authority to pay the Unreimbursed OCP Fees and Expenses in
connection with Meckler's first Interim Fee Application.
Nonetheless, the Debtors have paid Meckler only the amounts
authorized by the OCP Order.
The Debtors further anticipate that Meckler's monthly fees and
expenses likely will continue to exceed the OCP Fee Limit in the
coming months. Therefore, for them to be able to pay Meckler the
full amount of its services on a timely basis, the Debtors want
to move the firm's employment in their Chapter 11 cases from an
ordinary course professional to a specifically retained special
environmental counsel pursuant to Section 327(e) of the
Bankruptcy Code.
The Debtors believed that Meckler is well qualified to perform the
required services and represent their interests in their Chapter
11 cases. Brett D. Heinrich, Esq., a partner at Meckler and the
chair of the firm's environmental practice group, has handled a
variety of environmental matters for clients throughout the
country in his nearly 20 years of practice. He has extensive
experience negotiating with governmental agencies on litigation
and compliance issues regarding air, water, hazardous and solid
waste. In addition, Mr. Heinrich and the Meckler environmental
practice group have wide-ranging experience in federal regulatory
and cost-recovery actions initiated by governmental agencies and
individuals.
The Debtors will pay Meckler according to its standard hourly
rates:
Brett D. Heinrich, Esq. (Partner) $275
Peter Petrakis, Esq. (Of-Counsel) $325
Matther E. Cohn, Esq. (Associate) $190
Paralegals $95
Meckler will also be reimbursed for out-of-pocket expenses
incurred.
Mr. Heinrich assured the Court that Meckler has no connection
with the Debtors, their creditors, the United States Trustee or
any other party with an actual or potential interest in the
Debtors' Chapter 11 cases. Meckler does not represent, and has
not represented, any entity other than the Debtors in matters
related to the Debtors' Chapter 11 cases. Moreover, Mr. Heinrich
attests that Meckler does not represent or hold any interest
adverse to the Debtors with respect to the matters for which the
firm is proposed to be employed.
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. 84; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
V-ONE CORP: AEP Networks Inks Pact to Acquire V-ONE Corp.
---------------------------------------------------------
AEP Networks, entered into an agreement to acquire V-ONE
Corporation (OTCPK: VNECQ). The acquisition is expected to close
within 30 days. Terms of the transaction were not disclosed.
V-ONE is an Internet security pioneer and one of the earliest
commercial vendors of application layer SSL VPN technology that
provides secure access to enterprise applications and data. V-
ONE's products are widely used across diverse U.S. governmental
agencies, including the Departments of Defense, Homeland Security,
Justice and Treasury, and are deployed in critical infrastructure
companies from the financial service, healthcare, transportation
and high-tech sectors.
By combining V-ONE's extensive public-sector customer base,
expertise and select products with its own broad suite of secure
networking solutions, AEP Networks is poised to offer one of the
most comprehensive, cost-effective and secure solution portfolios
available to the fast-growing public-sector IT marketplace.
The V-ONE business will now become the AEP Networks Government
Solutions Group. Margaret E. Grayson, formerly V-ONE's president
and CEO, will serve as executive vice president and general
manager of the new Government Solutions Group, headquartered in
Rockville, Md.
"This strategic acquisition gives AEP Networks, virtually
overnight, critical mass in the important U.S. government market
for secure networking infrastructure," said Pat Donnellan, CEO of
AEP Networks. "U.S. federal and state agencies tasked with
critical duties such as homeland security have comprehensive
security requirements for information-sharing across disparate
networks that many VPN products simply do not address. The V-ONE
acquisition makes an excellent fit with our Secure Networking and
Secure Application business. And as we expand our presence in the
public sector, we're fortunate to have Margaret Grayson, one of
the nation's top cybersecurity experts, at the helm of our new
business."
Mr. Donnellan added: "With this asset acquisition, we continue to
execute on the strategic goals defined last December, when AEP
Systems merged with Netilla Networks to form AEP Networks. We
will continue to pursue targeted acquisitions in keeping with our
goal of being the premier global specialist provider of secure
networking and application access solutions."
The new Government Solutions Group becomes AEP Networks' third
division, joining the Secure Networking Business Unit (headed by
executive vice president and general manager Rob Lane; based in
Hemel Hempstead, U.K.) and the Secure Application Access Business
Unit (headed by executive vice president and general manager
Reggie Best; based in Somerset, N.J.).
"I am pleased that V-ONE is becoming a part of AEP Networks," said
Margaret E. Grayson, executive vice president and general manager
of AEP Government Solutions Group. "The combination of V-ONE and
AEP will provide necessary stability and the opportunity to serve
our customers long term. We remain committed to customer
responsiveness as our highest priority and will continue working
together to deliver secure solutions today and in the future to
protect our customers' cybersecurity environments."
Acquisition Includes Key Patents
V-ONE had undergone a corporate reorganization prior to the
acquisition agreement with AEP Networks. Under the terms of the
agreement, AEP Networks will acquire all V-ONE assets, including
important security technology.
V-ONE's flagship product is SmartGate, an application-layer SSL
VPN client/server software solution with multi-platform
capability. V-ONE's intellectual property assets include eight
patents in security protection technology and one patent pending.
AEP Networks is assuming all V-ONE customer support obligations
and is retaining its engineering, customer support, sales and
marketing staff. Following a comprehensive review, AEP will
determine how V-ONE products will be integrated with the other
lines in its Secure Application Access Business Unit.
The new Government Solutions Group now becomes AEP's focal point
for public-sector marketing of its existing product lines -- all
of which have earned important government security certifications.
These include the Netilla Security Platform SSL VPN, which
recently achieved FIPS (Federal Information Processing Standards)
140-2, Level 3 certification. AEP also offers the Net line of
highly secure IPSec-based VPN encryptors, which are certified to
"Enhanced Grade" standard by the British government's
Communications-Electronics Security Group (CESG). Rounding out
AEP's public-sector product offering is the Keyper line of
hardware security modules for protected key storage and
management.
About AEP Networks
AEP Networks -- http://www.aepnetworks.com/-- the specialist in
network and application access security, delivers infrastructure
security solutions that are easy to use and manage while offering
exceptional value and mission-critical reliability. AEP Networks
was formed as a result of the 2004 merger between AEP Systems and
Netilla Networks. The company provides a full range of innovative
secure networking and application access products to meet the most
demanding requirements of public-sector and commercial customers.
A privately held company backed by leading technology investors,
AEP Networks is based in Somerset, N.J., with European
headquarters in London.
Located in Germantown, Maryland, V-ONE (fka Virtual Open Network
Environment Corp.), is a global Internet security company offering
secure, cost effective and easy to manage network solutions for
the remote access, wireless and satellite markets.
At Sept. 30, 2004, V-ONE's balance sheet shows $1 million in
assets and $4 million in liabilities. The company's accumulated
deficit topped $70 million at Sept. 30, 2004.
V-ONE Corp. -- http://www.v-one.com/-- products have been
deployed by U.S. government agencies charged with homeland
security, including the FBI, NSA, and Departments of Defense,
Justice and the Treasury, and by Fortune 1000 companies in
healthcare, banking & finance, transportation and high-tech.
People rely upon V-ONE's proven track record for providing SSL VPN
information security technology for use over the Internet,
intranets, extranets and private networks.
VECTOR GROUP: Reselling $30 Million Senior Convertible Notes
------------------------------------------------------------
Vector Group Ltd. (NYSE: VGR) filed with the Securities and
Exchange Commission a registration statement on Form S-3. The
registration statement relates to the resale by the holders of
$30 million principal amount of Vector Group's 5% Variable
Interest Senior Convertible Notes due 2011 and the common stock
issuable upon conversion of the notes.
The notes were originally sold on April 13, 2005, in a private
placement to qualified institutional buyers. The filing of this
registration statement is required by the registration rights
agreement entered into by Vector Group.
A registration statement relating to these securities has been
filed with the Securities and Exchange Commission but has not yet
become effective. These securities may not be sold nor may offers
to buy be accepted prior to the time the registration statement
becomes effective. This press release shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any
such state.
About the Company
Vector Group -- http://www.vectorgroupltd.com/-- is a holding
company that indirectly owns Liggett Group Inc., Vector Tobacco
and a controlling interest in New Valley Corporation.
At March 31, 2005, Vector Group's balance sheet showed a deficit
of $91,171,000 stockholders' deficit, compared to a $84,803,000
deficit at Dec. 31, 2004.
VILLAS AT HACIENDA: Section 341 Meeting Slated for June 23
----------------------------------------------------------
The U.S. Trustee for Region 14 will convene a meeting of Villas at
Hacienda del Sol, Inc.'s creditors at 10:30 a.m., on June 23,
2005, at the Office of the Trustee, located in the James A. Walsh
Courthouse, in Tucson, Arizona.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Tucson, Arizona, Villas at Hacienda del Sol,
Inc., operates a gated rental community. Matthew R.K. Waterman,
Esq., at Waterman & Waterman, PC, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated between $10 million to $50 million in
assets and debts.
VISTEON CORP: Inks Deal to Give Back 24 Plants to Ford Motor Co.
----------------------------------------------------------------
Visteon Corporation (NYSE: VC) signed a non-binding memorandum of
understanding with Ford Motor Company on May 24, 2005, which
provides, among other things, for the transfer of 24 North
American plants to an entity that will be managed by Ford and the
issuance to Ford of warrants to purchase the Company's common
stock. The deal provides for significant structural changes to
Visteon's North American manufacturing operations. When
finalized, the transaction is expected to increase Visteon's
competitiveness by streamlining and improving the cost structure
of its North American operations.
A 26-slide PowerPoint presentation Mike Johnston, Visteon's
chairman-elect and chief executive officer, and Jim Palmer,
executive vice president and chief financial officer, used to
describe the transaction in a conference call yesterday is
available at no charge at http://tinyurl.com/bns9h
"This is a milestone agreement which, upon completion, will create
a more competitive business structure for Visteon in the United
States and remove a number of structural barriers to the company's
long-term sustainable success," Mr. Johnston said. "Visteon will
have a more competitive North American structure, a more balanced
global customer portfolio and a healthy regional mix. We will be
able to accelerate our focus on products most valued by our
customers and be well-positioned for growth."
Going forward, a smaller, leaner Visteon will focus its
engineering and capital resources on products that have been
generating significant new business with major vehicle
manufacturers -- interiors, climate control and electronics,
including lighting. Visteon has significant global scale in these
products and intends to strengthen its position through a more
focused investment in capital, people and technology.
"The completion of this transaction will be a significant step
forward for Visteon. We will now have the opportunity to
appropriately size our operations on a global basis," said
Johnston. "This positions us to achieve our vision of being a
world-class automotive supplier. In every aspect of our business,
we're strengthening Visteon as a global competitor. However, we
will need to take significant additional restructuring actions
over the next several years to bring our vision to full fruition."
Key aspects of the proposed agreement include:
* Transfer of manufacturing facilities and other locations
listed below and certain associated assets, including
machinery, equipment, tooling, inventory, purchase and
supply contracts, and prepaid assets to a separate entity
that will be acquired by Ford. Following the closing of
the transaction, Visteon will not have any ownership of
this new entity.
* Termination of the current leasing arrangements for
approximately 17,400 Ford-UAW employees.
* Relief of Visteon's remaining liability, including about
$1.5 billion of previously deferred gains, related to Ford-
UAW post-retirement health care and life insurance benefit
obligations (OPEB) for former assigned employees and
retirees and certain salaried retirees, totaling about
$2 billion.
* Transfer of all assets in the Visteon Corporation UAW
Voluntary Employee Beneficiary Association (VEBA) to the
Ford-UAW VEBA.
* Ford would agree to reimburse up to $550 million of further
restructuring actions by Visteon.
* Payment of transferred inventory based on net book value at
the time of closing.
* Upon the signing of the definitive agreement, Ford will
provide a secured loan of $250 million to refinance
Visteon's public notes due August, 1, 2005. Visteon will
repay the loan when the transaction is closed.
* Visteon will issue to Ford warrants to purchase 25 million
shares of Visteon stock at an exercise price of $6.90 per
share.
Under the proposed arrangement, Visteon will also provide
transition services, such as information technology, human
resources and accounting support to facilitate the operations of
the Ford-managed legal entity. These services will be available
to the Ford-managed legal entity at cost for up to 39 months after
closing the transaction, and for a period thereafter at an
agreed upon mark-up. In addition, certain salaried and hourly
employees will be leased from Visteon and will be directly
assigned to support the operations of the Ford-managed legal
entity. These resources will be leased at cost from Visteon until
transitioned to a subsequent buyer.
The non-binding memorandum of understanding is subject to certain
customary conditions, regulatory approvals and the ratification of
the affected Ford-UAW members assigned to Visteon. Visteon and
Ford expect to sign a definitive agreement on or before Aug. 1,
2005 and close the transaction by the end of the third quarter
of 2005.
Transferred Plants and Facilities
At closing, Visteon will transfer the following plants and
facilities, in alphabetical order by location:
Plant/Facility Location Operation
-------------- -------- ---------
Bellevue Bellevue, OH Service Parts
Chesterfield Chesterfield, MI Interior
Autovidrio Chihuahua, Mexico Glass
El Jarudo Chihuahua, Mexico Powertrain
Commerce Park South Dearborn, MI Admin./Support
Glass Labs Dearborn, MI Glass
Product Assurance Center Dearborn, MI Engineering
Visteon Technical Center Dearborn, MI Engineering/Support
Indianapolis Indianapolis, IN Chassis
Kansas City VRAP* Kansas City, MO Interior
Carlite Automotive Lebanon, TN Glass
Milan Milan, MI Powertrain
Monroe Monroe, MI Chassis
Nashville Nashville, TN Glass
Lamosa Nuevo Laredo, Mexico Chassis/Powertrain
VitroFlex Nuevo Leon, Mexico Glass
Sheldon Road Plymouth, MI Climate Control
Saline Saline, MI Interior
Sandusky Sandusky, OH Powertrain/Lighting
Sterling Sterling Heights, MI Chassis
Tulsa Tulsa, OK Glass
Utica Utica, MI Interior/Exterior
Rawsonville Ypsilanti, MI Powertrain
Ypsilanti Ypsilanti, MI Powertrain
* VRAP -- Visteon Regional Assembly Plant
A Leaner, More Competitive Visteon
The agreement will reshape Visteon from a company that had $18.7
billion in revenue in 2004 to a leaner, more competitive $11.4
billion organization, based on estimated 2005 pro forma revenue.
"Visteon is extremely well-positioned around the world, with
strong systems and engineering expertise and manufacturing
capabilities serving our customers on a 24 / 7 schedule," Johnston
said. "This agreement begins to place our North American
structural issues behind us and we are preparing to restructure to
be a more efficient, productive and competitive Tier I supplier."
Upon completion of the transactions, Visteon will have a more
balanced regional sales mix. Based on 2005 estimated pro forma
revenue, regions outside North America would represent about 60
percent of Visteon's total sales -- up from 30 percent in 2004.
Global revenue would be more equally distributed between North
America and Europe with Asia Pacific accounting for the remaining
20 percent of sales. Including unconsolidated sales from joint
ventures in the Asia Pacific region, Visteon's geographic sales
mix would become more balanced across all regions.
Visteon's customer portfolio would also gain balance as sales to
customers other than Ford would increase to nearly 50 percent of
the company's total global revenue, up from the 2004 level of 30
percent.
"Through the proposed Ford agreement and additional restructuring
activities that will need to be implemented, Visteon has defined a
path to profitability that builds on its previous operational
improvements and restructuring actions", said Jim Palmer,
executive vice president and chief financial officer. "While this
agreement places the company on track for sustainable long-term
success, we will continue efforts to improve our operational and
financial performance," he said.
The completion of the transaction contemplated by the memorandum
of understanding with Ford will allow Visteon to strengthen its
global competitive position in interiors, climate, electronics and
lighting. On a limited basis in Europe, Visteon will continue to
serve customers in certain chassis and powertrain products lines.
Visteon's Aftermarket operations in North America and Europe will
continue to offer mobile electronics and underhood parts. The
transfer of operations to the new entity will remove glass
products from Visteon's aftermarket product portfolio.
Visteon expects that the transaction will result in a net gain in
the range of about $450 million to $650 million depending upon the
actual amount of assets transferred. It is expected that Visteon
would recognize a non-cash charge of approximately $1.3 billion in
the second quarter offset by the gains primarily associated with
the relief of liabilities associated with the transaction upon
closing of the transaction at the end of the third quarter.
Cash and Liquidity
Visteon and Ford also amended their March 10 Funding Agreement to
further change the payment terms for certain components supplied
by Visteon in the United States and received from and after June
1, 2005 to an average 18 days through July 31, 2005, then 22 days
from August 1, 2005 to December 31, 2005. If the transaction is
completed, payment terms would continue at 22 days through
December 31, 2006. Payment terms would be 26 days in 2007.
Effective January 1, 2008, the payment terms would be increased to
34.5 days and effective Jan. 1, 2009, normal payment terms would
apply.
On Friday, May 20, 2005, Visteon received amendments from its
lenders under its major credit facilities that will permit it to
delay delivery of its first quarter 2005 financials until July 29,
2005.
Further, Visteon is currently in discussions with its global
credit line banks regarding its financing alternatives, including
the renewal or replacement of its 364 day facility. As previously
reported in the Troubled Company Reporter, VISTEON CORPORATION, as
Borrower, is party to a 364-DAY CREDIT AGREEMENT dated as of June
18, 2004, with a Lending Consortium led by JPMORGAN CHASE BANK, as
Administrative Agent, and CITIBANK, N.A., as Syndication
Agent. The Lenders' aggregate commitments under that facility
total $565,000,000. As of December 31, 2004, there were no
outstanding borrowings under the 364-day facility. Visteon also
has a $775,000,000 five-year revolving credit line in place which
expires June 2007. As of December 31, 2004, there were no
outstanding borrowings under 5-year facility, although
$100 million of obligations under stand-by letters of credit have
been issued against the 5-year facility.
Visteon Corporation is a leading full-service supplier that
delivers consumer-driven technology solutions to automotive
manufacturers worldwide and through multiple channels including
the global automotive aftermarket. Visteon has about 70,000
employees and a global delivery system of more than 200 technical,
manufacturing, sales and service facilities located in 24
countries.
As reported in the Troubled Company Reporter on May 13, 2005,
Moody's Investor Service has lowered the senior implied and senior
unsecured ratings of Visteon Corporation to B3 from B1 and the
Speculative Grade Liquidity Rating to SGL-4 from SGL-3.
Also, Standard & Poor's Ratings Services lowered its corporate
credit rating on Visteon Corp. to 'B-' from 'B+'. The action
reflects concerns about Visteon's liquidity and ongoing viability
after it announced that its cash flow from operations will be
insufficient to fund obligations in 2005. The company also faces
bank covenant violations. And it has delayed the filing of its
first quarter 10-Q because of an internal review of certain
accounting errors. This delay could eventually limit the
company's access to its bank credit facilities.
Citing unnamed people familiar with the situation as their source,
Joann S. Lublin and Joseph B. White at The Wall Street Journal
reported earlier this month that Visteon Corporation hired J.P.
Morgan Chase as its financial advisor.
VISTEON CORP: Ford Agreement Prompts S&P's Watch Positive
---------------------------------------------------------
Standard & Poor's Ratings Services said that its 'B-' corporate
credit rating on Visteon Corp. remains on CreditWatch, but the
implications have been revised to positive from developing.
The action follows Visteon's announcement that it has signed a
memorandum of understanding (MOU) with Ford Motor Co.
(BB+/Negative/B-1), its largest customer and former parent. The
MOU provides for structural changes to Visteon's operations that
are expected to strengthen the company's competitive position and
improve its earnings and cash flow.
Van Buren Township, Michigan-based Visteon, a manufacturer of
automotive components, has total debt of about $2.2 billion.
The proposed agreement with Ford would lower Visteon's cost
structure, improve its customer and geographic diversity, and
allow it to divest underperforming businesses and focus on core
products that generally have favorable growth prospects.
Nevertheless, about 50% of the company's sales still go to Ford,
which has been losing market share in North America. Besides this
sales concentration, the company will also be limited by its need
to restructure its remaining businesses and thus streamline its
cost structure and improve efficiency. The ongoing competitive
and cyclical challenges of the auto parts sector will further
hinder Visteon.
"The company has faced intense earnings and cash flow pressures as
a result of its high fixed costs, inflexible labor agreements, and
underperforming businesses," said Standard & Poor's credit analyst
Martin King. "These factors exacerbate the growing challenges in
the automotive supply industry. The proposed new agreement with
Ford should help to alleviate some of these pressures."
According to the agreement:
* Visteon will transfer all United Auto Worker master
agreement plants (and several related Mexican plants), as
well as technical centers and warehouses, to a separate
entity that will be managed by Ford. Visteon will have no
ownership interest in the new entity.
* Visteon's leasing arrangements with Ford covering 17,400 UAW
master agreement employees will be terminated. Ford will
assume wage and benefit liabilities associated with these
employees, as well as other post-employment benefit
obligations of certain retired salaried employees.
* Visteon will provide transition business services to Ford at
cost for up to 39 months, and for a period thereafter, they
will be provided at an agreed upon markup. These services
will include information technology, accounting, and human
resources support. In addition, certain employees will be
leased from Visteon and will be directly assigned to support
the operations of the new Ford-managed entity.
* Ford will reimburse Visteon by up to $550 million for future
restructuring actions and temporarily provide the auto
supplier with accelerated payment terms.
Visteon expects to complete a definitive agreement with Ford by
Aug. 1, 2005, and finalize the transaction by the end of September
2005. Standard & Poor's will meet with Visteon management and
review the details of its proposed agreement with Ford. We will
also assess Visteon's improved pro forma profitability, cash flow,
and liquidity after the transaction, and look at the company's
prospects and time frame for further operating improvements. The
rating could be raised modestly if Visteon achieves sustainable
improvements to its competitive position and financial profile.
We expect to conclude our review within the next few weeks.
VIVA INT'L: Zero Revenue & Net Losses Trigger Going Concern Doubt
-----------------------------------------------------------------
Kempisty & Company CPAs, P.C., raised substantial doubt about Viva
International Inc.'s ability to continue as a going concern after
it audited the Company's financial statements for the fiscal year
ended Dec. 31, 2004. The auditors cite Viva's $14.9 million net
loss for the period from April 18, 1995, to December 31, 2004,
and zero operating revenue for the two-year period ended Dec. 31,
2004.
The Company will require substantial additional funds to finance
its business activities on an ongoing basis and will have a
continuing long-term need to obtain additional financing. The
Company's future capital requirements will depend on numerous
factors including, but not limited to, continued progress
developing its airline business. The Company plans to continue to
engage in ongoing financing efforts.
The Company's consolidated financial statements consist of the
Company and its wholly owned subsidiaries, Viva Airlines, Inc., CT
Industries, Inc. (to July 27, 2004), Universal Filtration
Industries, Inc. (to November 9, 2004), Harvey Westbury Corp. (to
January 9, 2003), Hardyston Distributors, Inc. (to December 31,
2004) and its 49% owned Viva Air Dominicana S.A., all of which are
under common control.
The Company, during 2004 and 2003, has been unable to pay its
employees with any consistency due to its lack of regular cash
flows and its undercapitalization. It has made certain payments
to its employees in lieu of regular payroll as partial advances
against earned wages. The Company expects that during 2005 it
will begin operations and will begin to fund its obligations for
previously earned payroll. Accordingly, the Company expects that
it will recover the amounts advanced to employees as it makes
payments against earned payroll.
On February 9, 2005, Viva International, Inc., by and through its
newly formed Puerto Rican subsidiary, Eastern Caribbean Airlines
Corporation (corporate charter approved on March 18, 2005) entered
into a purchase option/joint venture agreement with Cool Travels,
Inc. d/b/a San Juan Aviation. Under the terms of the agreement,
Eastern Caribbean Airlines Corporation gains immediate control of
the airline charter operation of Cool Travels, Inc., in exchange
for the assumption of approximately $300,000 in underlying
indebtedness. All debts are subject to audit verification. The
purchase price gives the Company and its subsidiary immediate
access to all licensing rights, utilization of any and all
aviation equipment, control of the files, data base, customer
lists, goodwill and any and all other related assets.
Viva International is looking to exploit the U.S.-Caribbean
connection. Armed with one jet aircraft, the airline plans to fly
between the U.S. and the Dominican Republic.
W.R. GRACE: Can't Hire Cahill Gordon to Appeal Solow's NY Action
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware denied W.R.
Grace & Co. and its debtor-affiliates' application to employ
Cahill, Gordon & Reindel as special counsel, to represent, defend,
and advise them in the appeal brought forth by these companies in
a New York civil action:
* Sheldon H. Solow,
* Solow Development Corporation,
* Solow Solovieff Realty Co., LLC, and
* Solow Building Company, LLC.
due to some objections to the application.
As reported in the Troubled Company Reporter on Mar. 15, 2005, St.
Paul Fire and Marine Insurance Company is the principal and
indemnitor of certain bonds that have been executed by St. Paul
pursuant to:
* a General Agreement of Indemnity, dated August 1, 1991,
between St. Paul and W.R. Grace & Co.-Conn.; and
* a General Indemnity Agreement dated August 14, 1997, between
Grace and St. Paul.
The Bonds obligate St. Paul to pay third-party obligees on
account of certain of the Debtors' liabilities, including at
least one asbestos property damage claim.
Prior to the W.R. Grace & Co.'s bankruptcy petition date, Sheldon
H. Solow, Solow Development Corporation, Solow Solovieff Realty
Co., LLC, and Solow Building Company, LLC, sued Grace-Conn. in New
York state court for alleged asbestos property damage. On January
16, 2001, a judgment was entered in favor of Solow against Grace-
Conn. for $25,650,742.
Grace-Conn. filed an appeal of the Solow Judgment with the
Appellate Division of the Supreme Court of the State of New York,
First Department. Since the Petition Date, the prosecution of
the Solow Appeal has been stayed by the Debtors' automatic stay.
St. Paul filed four proofs of claim against the Debtors' estates,
two of which were partially on account of potential claims
against the Solow Appeal Bond.
St. Paul has raised certain issues with the Debtors concerning
their Plan and Disclosure Statement with respect to that portion
of the St. Paul Claim dealing with the Solow Appeal Bond and with
the classification and treatment of any St. Paul claim under the
Plan for any payments required under the Solow Appeal Bond,
including whether that classification and treatment under the
Plan should be as an asbestos property damage claim or as a
general unsecured claim. St. Paul has also requested that the
Debtors seek to resolve the Solow Judgment and the Solow Appeal.
On February 14, 2005, St. Paul and the Debtors filed a
Stipulation settling certain issues concerning the Solow Appeal
Bond and resolving the classification and treatment of the St.
Paul Claims. St. Paul and the Debtors agreed that the automatic
stay will be modified to allow the Solow Appeal to proceed to a
final resolution.
Objections
1. Solow Entities
Sheldon H. Solow, Solow Development Corporation, Solovieff Realty
Company, LLC, and Solow Building Company, LLC, assert that the
Debtors' application to employ Cahill, Gordon & Reindel as their
special counsel in connection with the Solow Appeal will
unnecessarily increase their litigation expenses. The Solow
Entities argue that bringing in yet another firm to handle the
Solow matter when the Debtors' lead defense counsel in the Solow
trial has already been approved by the court as their special
asbestos counsel will just add to the estate's financial burdens.
2. PD Committee
The Official Committee of Asbestos Property Damage Claimants
opposes the Stipulation with regard to the Solow Appeal because
"the Debtors fail to adhere to fundamental principles of
bankruptcy law regarding the treatment of surety claims in a
chapter 11 proceeding." Therefore, since the only matter for
which the Debtors are seeking to employ Cahill Gordon is in
respect of the Solow Appeal, the PD Committee wants the
Application denied.
* * *
Judge Fitzgerald denies the Debtors' application to employ Cahill
Gordon.
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. 86; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
WELLSFORD REAL: Joint Venture to Sell Office Building for $31.4MM
-----------------------------------------------------------------
Wellsford Real Properties, Inc. (AMEX: WRP) disclosed that
Wellsford/Whitehall Group, L.L.C., a joint venture among WRP and
the Whitehall Funds, completed the sale of a 147,000 square foot
building in Ridgefield Park, New Jersey, for $31.4 million.
Approximately $10.5 million of the net proceeds and $8 million of
restricted cash were used to pay existing debt, leaving the
Venture without any mortgage debt. The remaining cash from the
sale of $20.2 million, after selling expenses, will be available
for operations of the Venture and distributions to partners. WWG
expects to report a gain of approximately $10.1 million on this
transaction, of which WRP's share is approximately $3.5 million.
After the sale, the Venture will have completed the sale of 13
buildings and one parcel of land since January 1, 2005, leaving
the Venture with only one office building and a parcel of land,
both in New Jersey. The remaining two properties are expected to
be sold during 2005.
WRP is a real estate merchant banking firm headquartered in New
York City, which acquires, develops, finances and operates real
properties, constructs for-sale single family home and condominium
developments and organizes and invests in private and public real
estate companies. WRP has a 35.21% interest in WWG.
Whitehall is a private equity fund managed by The Goldman Sachs
Group Inc.
Wellsford Real Properties, Inc., is a real estate merchant banking
firm headquartered in New York City which acquires, develops,
finances and operates real properties, constructs for-sale single
family home and condominium developments and organizes and invests
in private and public real estate companies.
WINN-DIXIE: Has Until Sept. 19 to Make Lease Decisions
------------------------------------------------------
As previously reported in the Troubled Company Reporter on
March 31, 2005, D. J. Baker, Esq., at Skadden, Arps, Meagher &
Flom LLP, in New York, relates that Winn-Dixie Stores, Inc., and
its debtor-affiliates are lessees under more than 900 Unexpired
Leases, majority of which are used to operate grocery and drug
retail stores. The facilities and premises leased under the
Unexpired Leases form the platform of the Debtors' ongoing
business operations and are key assets of their estates.
The Debtors, with their advisors' assistance, have begun
identifying Unexpired Leases that will be critical to their
reorganization. The Debtors are evaluating a variety of factors
to determine whether it is appropriate to assume, assume and
assign, or reject a particular Unexpired Lease.
The Debtors sought and obtained permission from the U.S.
Bankruptcy Court for the Middle District of Florida to extend
their time to make lease decisions through and including September
19, 2005, without prejudice to their right to seek further
extensions.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. --
http://www.winn-dixie.com/-- is one of the nation's largest food
retailers. The Company operates stores across the Southeastern
United States and in the Bahamas and employs approximately 90,000
people. The Company, along with 23 of its U.S. subsidiaries,
filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y.
Case No. 05-11063). The Honorable Judge Robert D. Drain ordered
the transfer of Winn-Dixie's chapter 11 cases from Manhattan to
Jacksonville. On April 14, 2005, Winn-Dixie and its debtor-
affiliates filed for chapter 11 protection in M.D. Florida (Case
No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps
Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and
Brian C. Walsh, Esq., at King & Spalding LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $2,235,557,000 in
total assets and $1,870,785,000 in total debts. (Winn-Dixie
Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
WORLDCOM INC: Board Re-Elected Despite Protest from 9 Shareholders
------------------------------------------------------------------
Majority of the shareholders of MCI, Inc. reappointed the nine-
member Board of Directors at the May 16 annual shareholders'
meeting, despite a protest by some of the Company's largest
shareholders.
Nine MCI shareholders, representing roughly 28% of MCI Inc.
shares, withheld their votes to demonstrate their displeasure with
the Board's acceptance of Verizon Communications Inc.'s $8.45
billion bid. According to Bloomberg News, the dissenting
shareholders include Omega Advisors, Inc., Fairholme Capital
Management LLC and Legg Mason, Inc.
The newly elected MCI Board is led by Chairman Nicholas Katzenbach
and CEO Michael Capellas, who both got about 72% of the total
votes cast, the Associated Press reported.
The re-elected Directors are:
Director Background
-------- ----------
Dennis R. Beresford, 66 Mr. Beresford is a Professor of
Accounting at the J.M Tull School of
Accounting, Terry College of Business,
The University of Georgia and
previously served as Chairman of the
Financial Accounting Standards Board
from 1987 to 1997. Mr. Beresford
serves as a director and chairman of
the audit committee of Legg Mason, Inc.
and Kimberly-Clark Corporation. Mr.
Beresford is Chairman of the Audit
Committee and a member of the
Nominating and Corporate Governance
Committee of the Board of Directors.
Michael Capellas, 50 Mr. Capellas has been Chief Executive
Officer of the Company since December
2002. From December 2002 to March 2004,
he was also Chairman of the Board of
Directors. In March 2004, he was also
named the Company's President. Prior to
joining the Company, Mr. Capellas was
President of Hewlett-Packard Company
from May to November 2002. Before the
merger of Hewlett-Packard and Compaq
Computer Corporation in May 2002, Mr.
Capellas was President and Chief
Executive Officer of Compaq, a position
he held since July 1999, and Chairman
of the Board of Compaq, a position he
had held since September 2000. Mr.
Capellas held earlier positions as
Chief Information Officer and Chief
Operating Officer of Compaq. From
1997-1998, Mr. Capellas was a Senior
Vice President with Oracle Corporation.
W. Grant Gregory, 64 Mr. Gregory is Chairman and co-founder
of Gregory & Hoenemeyer, Inc. Mr.
Gregory spent 24 years at Touche Ross &
Co., serving as its Chairman from 1982
to 1986. Mr. Gregory serves as a
director of AMBAC, Inc. and
DoubleClick, Inc. Mr. Gregory is a
member of the Audit and Compensation
Committees.
Judith R. Haberkorn, 58 Prior to her retirement in June 2000,
Ms. Haberkorn served since 1998 as
President of Bell Atlantic Consumer
Sales and Service, having served since
1990 as an officer of NYNEX
Corporation. Ms. Haberkorn serves as a
director of Enesco Group, Inc. and
Armstrong Holdings, Inc. Ms. Haberkorn
is Chairperson of the Risk Management
Committee and a member of the
Compensation Committee.
Laurence E. Harris, 69 Mr. Harris is "of counsel" to the law
firm of Patton Boggs LLP and was a
partner with the firm from 2001 until
the end of 2004. Prior to his joining
Patton Boggs, Mr. Harris was Senior
Vice President and General Counsel of
Teligent beginning in December 1996.
Mr. Harris is a member of the
Nominating and Corporate Governance and
the Risk Management Committees.
Eric Holder, 54 Mr. Holder is a partner at Covington &
Burling and has been with the firm
since 2001. Prior to his joining
Covington and Burling, Mr. Holder
served as Deputy Attorney General of
the United States beginning in 1997.
Mr. Holder is Chairman of the
Nominating and Corporate Governance
Committee.
Nicholas deB.
Katzenbach, 83 Mr. Katzenbach is a private attorney
and was a partner and of counsel in the
law firm Riker, Danzig, Scherer, Hyland
& Peretti from 1986 to 1994. Mr.
Katzenbach previously served as
Attorney General of the United States
from 1965 to 1966, Under Secretary of
State of the United States from 1966 to
1969 and as Senior Vice President and
General Counsel of IBM Corporation from
1969 to 1986. Mr. Katzenbach is
Chairman of the Board of Directors.
Mark Neporent, 47 Mr. Neporent is a Senior Managing
Director and the Chief Operating
Officer and General Counsel of Cerberus
Capital Management, L.P. Mr. Neporent
was a partner in the Business
Reorganization Group of Schulte Roth &
Zabel L.L.P. from 1989 to 1997. Mr.
Neporent is a director of SSA Global
Technologies, Inc., Exco Resources
Corp., Aegis Mortgage Corporation, and
several other portfolio companies owned
or controlled by affiliates of Cerberus
Capital Management, L.P. Mr. Neporent
is a member of the Compensation and
Risk Management Committees.
Clarence B. Rogers, 75 Mr. Rogers served as an executive
officer and director of Equifax, Inc.
for several years, serving as Chief
Executive Officer from October 1989 to
October 1995 and Chairman of the Board
of Directors from 1995 to 1999. Mr.
Rogers also held numerous executive
positions with IBM Corporation from
1960 to 1987, including Senior Vice
President for Corporate Staff
Operations, Senior Vice President and
Group Executive of the Information
Systems Group and President of its
General Systems Division. Mr. Rogers
is Chairman of the Compensation
Committee and a member of the Audit
Committee.
According to MCI, in its Proxy Statement filed with the
Securities and Exchange Commission, all directors receive an
annual retainer of $150,000 payable in quarterly installments.
In addition, the members of the Compensation, Nominating and
Corporate Governance and Risk Management Committees receive a
retainer of $35,000 per year, paid quarterly, and members of the
Audit Committee receive a retainer of $50,000 per year, paid
quarterly. The Chairmen of the Compensation, Nominating and
Corporate Governance and Risk Management Committees receive an
additional retainer of $15,000 per year, paid quarterly and the
Chairman of the Audit Committee receives an additional retainer of
$25,000 per year, paid quarterly. The Chairman of the Board of
Directors receives an additional annual retainer of $125,000 paid
quarterly. The Chairman of the Board of Directors does not serve
on any committees of the Board of Directors.
During 2004, Messrs. Beresford, Katzenbach and Rogers each
received additional fees of $150,000 for their service on the
Board of Directors of WorldCom, the Company's predecessor
corporation.
Pursuant to the terms of the Company's Certificate of
Incorporation, all directors use 25% of their fees to purchase
stock in the Company.
At the May 16 annual meeting, MCI shareholders also ratified the
selection of KPMG, LLP, as the Company's independent auditors to
examine the consolidated financial statements for fiscal year
2005.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on
October 31, 2003, and on April 20, 2004, the company formally
emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom
Bankruptcy News, Issue No. 91; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
YUKOS OIL: Plans to Restructure & Wind Up Three Units
-----------------------------------------------------
According to Kommersant, Yukos Oil Company plans to launch a
restructuring that will entail the gradual winding-up of three
units, the axing of 70% of the Company's 1,200 people, and the
dissolution of the board to give way for the post of vice
presidents. CEO Steven Theede will be appointed president.
The first unit to be wound up will be OOO Yukos Moscow, which
already has ceased providing management function to Yukos Oil. It
will be followed by Yukos EP, a management sub-unit that deals
with exploration and production, and Yukos RM, which is involved
in refinement and sale of oil.
Interfax said its sources disclosed that a large-scale layoff
already took place. Two-thirds of Yukos EP's staff and more than
half of Yukos Moscow's have been cut. Yukos RM employees have
also been laid off.
Under the plan, 30% of Yukos Moscow will be transferred to Yukos
Oil and AO Torgovy Dom Yukos, which will take care of the group's
public and state relations service. The remaining 70% will be
discharged through its liquidation. Some of Yukos EP and Yukos
RM employees will also be given similar offers. But 850 workers
have to be laid off.
Yukos will still directly own stocks of all its subsidiaries after
the reorganization, but the units will be managed separately to
protect the group from crippling tax and judicial assaults.
Kommersant reports that a company official, who asked not to be
identified, said: "Every subsidiary will be preparing the balance
on its own. Moreover, every subsidiary will export oil and oil
products, will purchase and refine on its own. Yukos no longer
uses intra-corporate schemes. The subsidiary will become the
owners of their products, each of their deals will concern only
them, and they will be the centers of profits."
Headquartered in Houston, Texas, Yukos Oil Company is an open
joint stock company existing under the laws of the Russian
Federation. Yukos is involved in the energy industry
substantially through its ownership of its various subsidiaries,
which own or are otherwise entitled to enjoy certain rights to oil
and gas production, refining and marketing assets. The Company
filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex.
Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq.,
Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton,
Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent
the Debtor in its restructuring efforts. When the Debtor filed
for protection from its creditors, it listed $12,276,000,000 in
total assets and $30,790,000,000 in total debts. (Yukos
Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ZAKOTAMENTH INVESTMENTS: Case Summary & 4 Largest Creditors
-----------------------------------------------------------
Debtor: Zakotamenth Investments, LLC
P.O. Box 11946
Lexington, Kentucky 41579-1946
Bankruptcy Case No.: 05-51990
Chapter 11 Petition Date: May 25, 2005
Court: Eastern District of Kentucky (Lexington)
Debtor's Counsel: E. David Marshall, Esq.
259 West Short Street First Floor
Lexington, Kentucky 40507
Tel: (859) 253-0708
Total Assets: $3,399,700
Total Debts: $2,513,546
Debtor's 4 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Tommy Burus January 2005, $3,400
312 Bassett Avenue Heating and air-
Lexington, KY 40502 conditioning service
Carpet World Carpet purchased, $1,200
390 New Circle Road various dates
Northeast
Lexington, KY
Hunter Plumbing Plumbing services, $1,200
P.O. Box 54388 various dates
Lexington, KY
Capital One Visa Various dates credit $1,000
P.O. Box 650010 card purchases
Dallas, TX 75265-0010
* Dr. David Friend Joins Alvarez & Marsal as Managing Director
--------------------------------------------------------------
Alvarez & Marsal, a global professional services firm, welcomes
David Friend M.D., a veteran executive with extensive expertise in
pension, investment and healthcare finance as well as turnaround
situations, to the firm as a managing director and member of the
firm's North American Turnaround Management and Healthcare
Industry Groups. He will be based in Boston and New York.
Prior to joining A&M, Dr. Friend was a senior partner and board
member at Watson Wyatt Worldwide, where he was responsible for its
pension, investment management and healthcare consulting business
in the United States and served as chairman of the pension and
finance committee. In addition to working with Fortune 500
companies, state, local and international governments and academic
health centers during his nine years at Watson Wyatt, he helped to
lead the firm's turnaround, setting the stage for a successful
public offering.
Previously, Dr. Friend served as chief operating officer as well
as the president of multiple divisions at High Voltage
Engineering, a specialty industrial/medical conglomerate taken
private in a leveraged buyout, where he restructured more than a
dozen operating divisions. Before that, he was an investment
banker at Robertson, Stephens and earlier served as vice president
for operations for Sanus Managed Care, guiding the company from
start up to nearly $200 million in revenue prior to its sale. He
began his career as a principal at Mercer Consulting.
"David brings a long and distinguished track record of creating
value for stakeholders through skills in management, operations,
technology and strategy as well as expertise in pension,
investment and healthcare finance," said Guy Sansone, managing
director and head of A&M's Healthcare Industry Group. "As
companies in many industries struggle with mounting employee
pension and healthcare liabilities and face escalating external
market pressures, we're happy to welcome Dr. Friend to the team.
His unique qualifications further strengthen our ability to help
organizations address complex challenges, define their missions,
improve performance and position operations for greater long term
stability."
Dr. Friend currently serves on the alumni board of The Wharton
School of the University of Pennsylvania. He is also on the board
of trustees of The University of Connecticut School of Medicine
and its John Dempsey University Teaching Hospital, where he serves
on the compliance, audit, and clinical affairs committees. He
holds a B.A. in economics from Brandeis University, an MBA from
The Wharton School of the University of Pennsylvania and an M.D.
from the University of Connecticut School of Medicine.
Alvarez & Marsal
Alvarez & Marsal (A&M) is a leading global professional services
firm with expertise in guiding companies and public sector
entities through complex financial, operational and organizational
challenges. The firm recently established a dedicated Healthcare
Industry Group serving the needs of both commercial and non-profit
providers, payors and suppliers. Employing a unique hands-on
approach, A&M works closely with clients to improve performance,
identify and resolve problems and unlock value for stakeholders.
Founded in 1983, Alvarez & Marsal draws on a strong operational
heritage in providing services including turnaround management
consulting, crisis and interim management, performance
improvement, creditor advisory, financial advisory, dispute
analysis and forensics, tax advisory, real estate advisory and
business consulting. A network of 400 seasoned professionals in
locations across the US, Europe, Asia and Latin America, enables
the firm to deliver on its proven reputation for leadership,
problem solving and value creation. For more information, visit
www.alvarezandmarsal.com/ Contact: Chief Marketing Officer
Rebecca Baker at +1 212 759 4433, or e-mail
rbaker@alvarezandmarsal.com/
* FTI Consulting to Acquire Cambio Health for $43 Million
---------------------------------------------------------
FTI Consulting, Inc. (NYSE: FCN), the premier provider of
corporate finance/restructuring, forensic/litigation/ technology,
and economic consulting, announced Tuesday that it has entered
into a definitive agreement to acquire the assets of privately-
held Cambio Health Solutions, LLC. The acquisition, which is
valued at approximately $43.0 million, is subject to customary
closing conditions. FTI expects to complete the transaction by
May 31, 2005.
Cambio Health Solutions is a leading provider of change management
solutions for hospital and health systems. It provides strategic,
operational and turnaround management consulting services to
improve the operational efficiency and financial performance of
its clients which include academic medical centers, integrated
delivery systems, stand-alone community hospitals, investor-owned
hospitals and special medical facilities. Cambio was founded in
1989 and is based in Nashville, Tennessee.
Commenting on the acquisition, Jack Dunn, FTI's president and
chief executive officer, said, "Cambio represents yet another
important step in our commitment to deepen our domain expertise in
selected industries. The addition of Cambio enables us to expand
our activities in the burgeoning healthcare and life sciences
industry, enabling us to provide a full range of coordinated, end-
to-end, consulting resources from all three of our business
segments as well as our senior investment bankers in FTI Capital
Advisors. Cambio will be integrated into FTI's corporate
finance/restructuring practice under the name FTI Cambio Health
Solutions."
Thomas Singleton, president of Cambio, said, "FTI Consulting is an
ideal partner for Cambio. Similar to FTI, our senior
professionals are respected leaders in their fields prior to
becoming consultants, and distinguish themselves competitively by
bringing real life experience to bear on our clients' situations.
We believe our expertise in managing sustainable turnarounds
within the medical systems industry will integrate well with FTI's
growing healthcare and life science practice, and we are looking
forward to the opportunity."
The purchase price comprises approximately $30.0 million of cash
plus $13.0 million in shares of FTI common stock, or approximately
four times estimated pro forma earnings before interest, taxes,
depreciation and amortization for Cambio's unaudited trailing
twelve months ended March 31, 2005. Cambio had revenues for such
period of approximately $29.0 million. The cash portion of the
purchase price will be financed by FTI from cash on hand.
Assuming completion by May 31, 2005, the acquisition is forecasted
to generate revenues for the seven month period through December
31, 2005 of approximately $18.0 million with operating income of
approximately $6.0 million, and be accretive to FTI's earnings per
share for 2005 by approximately $0.05 per share, net of the effect
of rapid amortization of intangible assets.
About FTI Consulting
FTI is the premier provider of corporate finance/restructuring,
forensic/litigation/ technology consulting, and economic
consulting. Located in 24 of the major US cities and London,
FTI's total workforce of approximately 1,000 employees includes
numerous PhDs, MBA's, CPAs, CIRAs, CFEs, and technologists who are
committed to delivering the highest level of service to clients.
These clients include the world's largest corporations, financial
institutions and law firms in matters involving financial and
operational improvement and major litigation.
* J. Gordon Joins Navigant Consulting's Discov. Services Practice
-----------------------------------------------------------------
Navigant Consulting, Inc. (NYSE: NCI) disclosed that James E.
Gordon has joined the Company as a Managing Director in the
national Discovery Services practice. Mr. Gordon has more than 25
years of experience conducting and managing complex, multi-party
litigation in such matters as internal corporate fraud, electronic
discovery, money laundering, product and environmental liability,
defense of class action litigation, royalty licensing disputes,
patent litigation and computer forensics. He has worked for a
number of corporate audit committees to investigate issues
relating to companies' financial reporting, public disclosures and
internal controls.
"Over the past 25 years, James Gordon has established himself as
one of the premier experts in the U.S. in numerous complex
litigation matters, e-discovery and computer forensics," stated
Jennifer Baker, Managing Director of Navigant Consulting's
Discovery Services practice. "His leadership adds tremendous
value to our national practice, and both our clients and
consultants will benefit from his expertise in high-profile and
complex investigations."
Prior to joining Navigant Consulting, Mr. Gordon was a Vice
President of Pinkerton Consulting and Investigations, and practice
chair for both its Discovery Services and Computer Forensics
practices. Mr. Gordon has managed over 400 major investigations,
including more than 100 matters involving large-scale e-discovery
and computer forensics. He has a national reputation for
excellence in conducting complex, multi-party and multi-district
investigations and has worked for more than 40 steering committees
in matters ranging from a $1 billion bankruptcy proceeding to the
national defense coordinating counsel for a multi-billion dollar
class action. One of the initial litigation matters managed by
Gordon was the subject of "A Civil Action," the best-selling book
and Oscar-nominated movie.
Navigant Consulting's national Discovery Services practice
provides expertise in all aspects of the management of electronic
data, including discovery, computer forensics, e-retention and
network security issues. The practice assists corporations in
finding solutions for the preservation and retention of electronic
and hard copy documents, including assisting law firms, corporate
legal departments and other corporate officers in responding to
electronic data inquiries where time is critical to locating,
reviewing and producing millions of electronic documents.
About Navigant Consulting
Navigant Consulting, Inc. (NYSE: NCI) --
http://www.navigantconsulting.com/-- is a specialized independent
consulting firm providing dispute, financial, regulatory and
operational advisory services to government agencies, legal
counsel and large companies facing the challenges of uncertainty,
risk, distress and significant change. The Company focuses on
industries undergoing substantial regulatory or structural change,
including healthcare, energy and financial and insurance services,
and on the issues driving these transformations. "Navigant" is a
service mark of Navigant International, Inc. Navigant Consulting,
Inc. (NCI) is not affiliated, associated, or in any way connected
with Navigant International, Inc. and NCI's use of "Navigant" is
made under license from Navigant International, Inc.
*********
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-
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*** End of Transmission ***