/raid1/www/Hosts/bankrupt/TCR_Public/050620.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, June 20, 2005, Vol. 9, No. 144
Headlines
360NETWORKS: Settles Dispute Over H.G. Fenton's $3.8MM Claim
AIRCRAFT FINANCE: S&P's Rating Tumbles to D After Payment Default
AMERICAN BUSINESS: Wanamaker's $7,065,725 Unsecured Claim Allowed
AMERICAN BUSINESS: Jeremy Wright Gripes About 401(K) Plan Handling
AMERICAN BUSINESS: Creditors Transfer $3.8 Million Trade Claims
AMERICAN MEDIA: Hopes to Ink Bank Loan Amendment by June 23
ANY MOUNTAIN: Files Plan & Disclosure Statement in N.D. California
ASAT HOLDINGS: Apr. 30 Balance Sheet Upside-Down by $26.4 Million
ASAT HOLDINGS: Shareholder Commits $15 Million of Debt Financing
ASHLAND INC: 98.7% of Noteholders Agree to Amend Indenture
ATA AIRLINES: Retains Investment Bankers for Recapitalization
ATA AIRLINES: SBN Wants Premises Vacated Before Lease Rejection
ATA AIRLINES: Court Okays Rejection of GE Capital Bus Lease
B&M PROPERTIES: Involuntary Chapter 11 Case Summary
BANC OF AMERICA: Moody's Assigns Ba2 Rating to Class B-3 Certs.
BEHAVIORAL HOSPITAL: Voluntary Chapter 11 Case Summary
CAESARS ENT: Harrah's Entertainment Completes Merger Transaction
CANFIBRE OF RIVERSIDE: Files First Amended Plan of Liquidation
CATHOLIC CHURCH: Tucson Settle Disputes on 30 Tort Claims
CELESTICA INC: Sells $250 Mil. Senior Subordinated Notes Due 2013
CELLU TISSUE: $276 Mil. Kohlberg Sale Cues S&P to Watch Ratings
CENTRAL VERMONT: Fitch Shaves Pref. Stock Rating One Notch to BB+
CHAPARRAL STEEL: S&P Rates Proposed $200M Sr. Unsec. Notes at B
CIT RV: Interest Shortfall Causes S&P's Ratings to Tumble to D
COLAD GROUP: Wants to Settle W. Brosnahan Dispute for $1.6 Mil.
COMBUSTION ENG'G: Court Approves Amendments to CIBC's Retention
CREST CLARENDON: Fitch Affirms BB Rating on $10M Class D Certs.
DLJ COMMERCIAL: Expected Losses Prompt Fitch to Junk Ratings
DLJ COMMERCIAL: Fitch Lifts Ratings on 8 DLJ 1998-CG1 Certs.
ENRON CORP: Royal Bank of Scotland Inks $41.8 Million Settlement
EXIDE TECHNOLOGIES: Moody's Junks $290M Sr. Sec. Junior-Lien Notes
FC CBO: S&P Puts Senior Notes' BB Rating on Watch Positive
FEDERAL-MOGUL: Gets Court OK to Hire Hymans Robertson as Actuaries
FREMONT HOME: Moody's Rates $14.25MM Class M11 Certificate at Ba1
GLOBAL CROSSING: GCUK Balance Sheet Upside-Down by GBP170.4 Mil.
GMAC COMMERCIAL: Fitch Places Low-B Ratings on 6 Cert. Classes
H&E EQUIPMENT: Good Industry Conditions Cue S&P's Stable Outlook
IDC CLAMBAKES: Case Summary & 19 Largest Unsecured Creditors
J.P. MORGAN: Fitch Affirms Low-B Ratings on 6 Certificate Classes
KB HOME: Earns $304 Million of Net Income for Second Quarter 2005
KMART CORP: Asks Court for Judgment to Bar Workers' Comp. Claims
KPMG LLP: Negotiating to Avoid Criminal Prosecution
LEAP WIRELESS: Earns $12.6 Million of Net Income in First Quarter
LEAP WIRELESS: Form 10-Q Filing Prompts S&P to Remove Watch
LOWERY SMITH: Case Summary & 15 Largest Unsecured Creditors
MAGELLAN HEALTH: Executives Establish 10b5-1 Stock Trading Plans
MEI LLC: Case Summary & 20 Largest Unsecured Creditors
MERIDIAN AUTOMOTIVE: Court OKs Paying Prepetition Employee Debts
MERIDIAN AUTOMOTIVE: Court Approves Reclamation Claims Procedures
MERRIL DEAN: Voluntary Chapter 11 Case Summary
MERRILL LYNCH: Moody's Rates Class B-5 Sub. Certificates at Ba2
METALFORMING TECHNOLOGIES: Wants to Use Lenders' Cash Collateral
METALFORMING TECH: Asks Court to Okay $5 Million Interim DIP Loan
MIRANT CORP: Committee Joins in $2-Bil. Suit Against Southern Co.
MIRANT CORP: Court Denies Deutsche Bank's Claim Estimation Request
MIRANT CORP: Wants to Enter into Amended Anker Coal Deal
MMRENTALSPRO LLC: Case Summary & 20 Largest Unsecured Creditors
MULTI-PHASE INC: Voluntary Chapter 11 Case Summary
NUR MACROPRINTERS: Inspire Terminates Private Equity Investment
OFFICEMAX INC: SEC Probe Cues S&P to Retain Watch Negative
PANHANDLE REGIONAL: Moody's Pares Jr. Sub. Notes' Rating to Ba3
PARK PLACE: Moody's Rates Class M-11 Certificates at Ba2
PEGASUS SATELLITE: Plan Trustee Gets OK to Assign KB Scranton Pact
PLASTICERT INC: Voluntary Chapter 11 Case Summary
PORTRAIT CORPORATION: Notifies SEC on Late Filing of Reports
PRIME CAMPUS: Hires MT&C to Explore Claims Against Varde
QWEST COMMS: Eyes XO Communications for Possible Takeover
RDL INC: Case Summary & 20 Largest Unsecured Creditors
ROTECH HEALTHCARE: Lenders Waive Reporting Default Until July 15
SAKS INCORPORATED: Says S&P's Rating Downgrade is Perplexing
SASCO NET: Moody's Rates $3.5MM Classes B1A & B1B Notes at Ba1
STRUCTURED ASSET: Moody's Rates $257,000 Class B5 Certs. at B2
SUMMIT GENERAL: Voluntary Chapter 11 Case Summary
SUPERIOR WHOLESALE: Fitch Expects to Rate Class D Notes at BB+
TECNET INC: Ch. 7 Trustee Taps Dan Newell as Valuation Advisor
TEXAS INDUSTRIES: Moody's Rates $250M Sr. Unsec. Notes at Ba3
THILMANY LLC: $180 Mil. Kohlberg Sale Cues S&P to Hold Ratings
TOM'S FOODS: Hires Eugene Davis as Chief Restructuring Officer
TOMMY HILFIGER: Poor Performance Cues S&P to Retain Negative Watch
TRAVELCENTERS OF AMERICA: 98.4% of Noteholders Accept Tender Offer
US AIRWAYS: Court Okays Plan Funding Solicitation Protocol
USG CORP: Wants More Discovery in Asbestos Estimation
VARIG S.A.: Vicente Cervo Files Sec. 304 Petition in S.D. New York
VARIG S.A.: Section 304 Petition Summary
W.R. GRACE: Cytec Settles Environmental Disputes for $5.25 Million
WESTAR ENERGY: Improved Financial Profile Cues S&P to Hold Ratings
WESTPOINT STEVENS: Selling Longview Lot to Industrial for $2.85M
WILLBROS GROUP: Filing Delay Prompts Whitebox's Notice of Default
WORLDCOM INC: Settles Dispute Over Travelers Casualty's Claims
WORLDCOM INC: CoreComm Asks Court to Reconsider Claim Disallowance
YUKOS OIL: Moscow Court Rejects Complaint on Enforcement Fee
* Venable Expands NY Market with Heard & O'Toole LLP Combination
* BOND PRICING: For the week of June 13 - June 17, 2005
*********
360NETWORKS: Settles Dispute Over H.G. Fenton's $3.8MM Claim
------------------------------------------------------------
H.G. Fenton Company, formerly known as Western Salt Company, and
360networks, Inc., entered into an industrial lease agreement,
dated as of August 1, 2000, for the premises at 3554 Ruffin Road
South, in San Diego, California.
Subsequently, 360networks entered into an agreement with Kajima
Construction Services, Inc., for the design and construction of a
new facility at the Premises.
Kajima believed that the Debtors breached the Design-Build
Agreement by failing to pay $3,501,842. Thus, Kajima filed with
the County Recorder's Office of San Diego County a verified
mechanic's lien claim.
In 2001, the Debtors sought and obtained Court approval to reject
the Lease.
The Court lifted the stay to allow Kajima to enforce its Lien
against the Premises and H. G. Fenton. H.G. Fenton paid Kajima to
release the Lien.
On May 2, 2002, Fenton filed an unsecured, nonpriority proof of
claim for $4,392,261 for certain amounts owed by the Debtors in
connection with Lease rejection and the payment made to release
the Lien.
To resolve the dispute, the Parties stipulate and agree that:
(a) Fenton's claim will be reduced and allowed as a General
Unsecured Claim for $3,750,000;
(b) Distributions on the Allowed Claim will be made in
accordance with the Plan; and
(c) All other claims that have been asserted in the Debtors'
cases by Fenton, including any amendments to the Claim,
are disallowed and Fenton is prohibited from amending the
Claim or filing any additional claims.
The Court approves the parties' agreement.
Headquartered in Vancouver, British Columbia, 360networks, Inc. --
http://www.360.net/-- is a leading independent provider of fiber
optic communications network products and services worldwide. The
Company and its 22 debtor-affiliates filed for chapter 11
protection on June 28, 2001 (Bankr. S.D.N.Y. Case No. 01-13721),
obtained confirmation of a plan on October 1, 2002, and emerged
from chapter 11 on November 12, 2002. Alan J. Lipkin, Esq., and
Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, represent
the Company before the Bankruptcy Court. When the Debtors filed
for protection from its creditors, they listed $6,326,000,000 in
assets and $3,597,000,000 in liabilities. (360 Bankruptcy News,
Issue No. 85; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AIRCRAFT FINANCE: S&P's Rating Tumbles to D After Payment Default
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on Aircraft
Finance Trust's class B notes to 'D' from 'CC'. The default
follows a missed interest payment to the class B noteholders that
was due in June 2005.
The downgrade reflects the depletion of the class B cash reserves
that resulted from the missed payment. The missed payment was
expected due to continued revenue stress since 2001 and high
maintenance expenses experienced earlier in 2005.
Class A reserves have started to be drawn upon to meet class A
minimum principal payments. As a result, Standard & Poor's
lowered its rating on the class A notes on April 20, 2005.
AMERICAN BUSINESS: Wanamaker's $7,065,725 Unsecured Claim Allowed
-----------------------------------------------------------------
American Business Financial Services, Inc. and Wanamaker Office
Lease, L.P., are parties to a non-residential real property lease
dated November 27, 2002. Pursuant to the Lease, ABFS rented
234,807 square feet of space on several floors of a building
located in Philadelphia, Pennsylvania.
John T. Carroll, Esq., at Cozen O'Connor, in Wilmington,
Delaware, tells the Honorable Mary F. Walrath of the U.S.
Bankruptcy Court for the District of Delaware that ABFS'
obligations under the Lease are secured by a letter of credit
issued by JPMorgan Chase Bank, National Association, in favor of
Wanamaker for ABFS' benefit. The present available balance on the
Letter of Credit is $7,065,725.
Mr. Carroll says that the Letter of Credit is, in turn, secured
by an ABC Cash Collateral Account held by ABFS at JPMorgan,
pursuant to a pledge and security interest.
To date, Mr. Carroll notes, Wanamaker has not obtained a new
tenant to lease the Premises.
Moreover, on April 12, 2005, the Court extended the Debtors'
deadline to assume or reject the Lease through and including
June 19, 2005. George L. Miller, the Chapter 7 Trustee in the
Debtors' cases, has been informed that Wanamaker will oppose any
further extensions of the deadline to assume or reject the Lease.
Subsequently, Wanamaker filed a proof of claim in the Debtors'
cases asserting:
(a) a secured rejection damages claim for $7,065,725;
(b) an unsecured rejection damages claim for $469,947;
(c) an unsecured claim for prepetition late charges in excess
of $5,000; and
(d) an unliquidated prepetition claim for unspecified legal
fees and costs.
The ABFS Trustee disputes the Wanamaker Claim.
The ABFS Trustee no longer requires all of the square footage
leased from Wanamaker in the Building but desires to utilize a
portion of the Premises to facilitate an orderly wind-down and
liquidation of the Debtors' businesses. Mr. Carroll informs the
Court that the Debtors own various pieces of artwork, furniture
and equipment, computer room items, and certain fixtures, all of
which are located at the Premises. The ABFS Trustee, Mr. Carroll
says, has already vacated a portion of the Premises.
Wanamaker alleged that it has no obligation to amend the Lease or
otherwise permit the ABFS Trustee to utilize only a portion of
the Premises at a reduced rent.
Following extensive arm's-length negotiations, the ABFS Trustee
and Wanamaker have negotiated on a settlement providing for these
terms:
(1) The Wanamaker Claim will be reduced and allowed as a
secured claim against ABFS for $7,065,725.
(2) The automatic stay will be modified to allow Wanamaker to
draw immediately on the Letter of Credit, in full and
final satisfaction of the Wanamaker Claim and any other
existing claims that Wanamaker may have against the
Debtors arising out of the Lease.
(3) The automatic stay is modified to permit JPMorgan to pay
the proceeds of the Letter of Credit to Wanamaker and to
set off against the L/C Account any amounts paid by
JPMorgan to Wanamaker pursuant to the Letter of Credit.
(4) As of June 15, 2005 -- the date the parties executed the
Agreement -- the Debtors owe Wanamaker $801,838 for the
May and June 2005 base rent, taxes and other amounts owed
under the Lease. Wanamaker will be paid $364,887 in full
and final settlement of the outstanding rent and forgive
the difference between the Outstanding Rent and the
Settlement Amount. Wanamaker acknowledges the Debtors'
$295,000 payment towards the Settlement Amount, leaving
$69,887 payable from the Debtors to Wanamaker as of the
Execution Date.
(5) A portion of the furniture, computer room items, fixtures,
phone switch, handsets, telecommunications software and
hardware, routers, cabling and all other components of the
telecommunications system currently in the Premises as it
pertains to voice communications will be deemed to have
become Wanamaker's property on the date that the space in
which the Property is located was vacated. The Returned
Property located in the former Premises became Wanamaker's
property on the termination date. Wanamaker will allow
the ABFS Trustee to use the Returned Property in the
retained space during the entire term of the "New Lease."
The ABFS Trustee will return to Wanamaker all Returned
Property used during the term of the New Lease at the
expiration or sooner termination of the New Lease in
substantially the condition it was in when the Wanamaker
and the Debtors' representatives conducted a walk-through
inspection of the Premises on May 4, 2005.
(6) The Lease will be deemed rejected under Section 365 of the
Bankruptcy Code effective May 31, 2005.
(7) The ABFS Trustee, on behalf of the Debtors' estates, and
Wanamaker will enter into a new lease effective June 1,
2005. The Lease will terminate on September 30, 2005.
The New Lease provides that:
(a) The Trustee will rent and will have access to certain
portions of the Retained Space, including the
"Executive Suite," which contains the Artwork and a
filing cabinet and the telecommunications room on the
Building's seventh floor;
(b) Wanamaker will have a right to, during the term of the
New Lease, access the telecommunications room on the
sixth floor Retained Space;
(c) Wanamaker will lease the Retained Space to the ABFS
Trustee free of base rent for the entire term. During
that term, the ABFS Trustee will be responsible in
paying his share of operating expenses, real estate
taxes and utilities for the Retained Space for $10 per
square foot per year;
(d) If the ABFS Trustee fails to return a certain portion
of the Retained Space consisting of 33,495 square feet
by June 30, 2005, he will be obligated to pay
Wanamaker an additional $21,728 for June 2005, and for
any other month or portion that he continues to occupy
that space going forward;
(e) The ABFS Trustee will grant Wanamaker a $50,000 cash
deposit, which will be returned to him within five
business days following the expiration of the New
Lease;
(f) The ABFS Trustee will obtain adequate insurance
policies to cover the Retained Space as well as those
portions of the Building to which he will have access
to during the term of the New Lease;
(g) Wanamaker may relocate the ABFS Trustee to other
comparable space within the Building upon 10 days'
written notice, but Wanamaker will be responsible for
all moving and other expenses associated with
relocating the ABFS Trustee. However, the ABFS Trustee
will continue to have the exclusive right to use and
occupy the Data Center and the telecommunications room
throughout the term of the New Lease; and
(h) In the event that the ABFS Trustee is able to lease
any portion of the original Premises as a direct
result of his sale of assets to a third party until
the Termination Date, Wanamaker will pay the ABFS
Trustee a brokerage commission of $1 per square foot
so leased.
(8) The parties will exchange mutual releases.
(9) The releases will not waive or release:
* any obligations first occurring, accruing or to be
performed after the Execution Date;
* claims made after the Execution Date by third parties
against the releasing party to the extent covered by the
insurance of the released party; or
* Wanamaker's or the ABFS Trustee's obligations under the
Settlement Agreement.
The ABFS Trustee believes that the Wanamaker Settlement Agreement
is in the best interests of the Debtors' estate and their
creditors because it fully and finally resolves all of
Wanamaker's claims arising from the rejection and termination of
the Lease. In addition, the Settlement Agreement eliminates
future litigations costs, which would otherwise have been borne
by the Debtors' estates with respect to the Lease, the
calculation and allowance of the Wanamaker Claim, the filing and
prosecution of avoidance actions against Wanamaker and any other
claims arising prior to the Execution Date.
Furthermore, the Settlement Agreement provides for the ABFS
Trustee to occupy the least amount of office space necessary to
coordinate an orderly winding-down and liquidation of the
Debtors' business, free of base rent, with minimal interruption
to the Debtors' businesses.
Headquartered in Philadelphia, Pennsylvania, American Business
Financial Services, Inc., together with its subsidiaries, is a
financial services organization operating mainly in the eastern
and central portions of the United States and California. The
Company originates, sells and services home mortgage loans through
its principal direct and indirect subsidiaries. The Company,
along with four of its subsidiaries, filed for chapter 11
protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203).
Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $1,083,396,000 in
total assets and $1,071,537,000 in total debts. (American
Business Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AMERICAN BUSINESS: Jeremy Wright Gripes About 401(K) Plan Handling
------------------------------------------------------------------
Jeremy Wright, one of the past employees of American Business
Financial Services, Inc., informs the U.S. Bankruptcy Court for
the District of Delaware that none of the 401(k) rollover
applications submitted by the ABFS employees are being honored due
to lack of permission from the 401(k) plan administrator.
"The problem with this is that the plan administrator, Mr. Robert
Cohen, no longer works for ABFS," Mr. Wright says.
Representatives of the Debtors' 401(k) plan administrator, Bisys
Corporation, had informed Mr. Wright that when a company files
for bankruptcy, the time it takes to roll the 401(k) over can be
delayed as much as a year. Mr. Wright deems this "unacceptable."
Mr. Wright tells the Court that he tried seeking help from the
Chapter 7 Trustee for the Debtors, George Miller, but that
repeated phone calls have not produced anything. Subsequently,
in a response to an e-mail message sent by one of Mr. Wright's
colleagues, the Chapter 7 Trustee explained that he is not the
plan administrator, and since the 401(k) plan is not an asset of
the Debtors' estate, he would be unable to assist.
"The situation reeks of unprofessionalism," Mr. Wright complains.
"It is not beyond me how something might be overlooked but at the
same time we should expect some assistance in getting this
resolved."
Mr. Wright contends that he does not expect the problem to be
resolved overnight, but despite what Bysis indicated, three
months would be an abuse of fiduciary responsibility.
Headquartered in Philadelphia, Pennsylvania, American Business
Financial Services, Inc., together with its subsidiaries, is a
financial services organization operating mainly in the eastern
and central portions of the United States and California. The
Company originates, sells and services home mortgage loans through
its principal direct and indirect subsidiaries. The Company,
along with four of its subsidiaries, filed for chapter 11
protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-
10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed $1,083,396,000
in total assets and $1,071,537,000 in total debts. (American
Business Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AMERICAN BUSINESS: Creditors Transfer $3.8 Million Trade Claims
---------------------------------------------------------------
The Clerk of the U.S. Bankruptcy Court for the District of
Delaware recorded 75 claim transfers, aggregating over $3,800,000,
from May 26, 2005, to June 10, 2005, in the chapter 11 cases of
American Business Financial Services, Inc., its debtor-affiliates.
Hain Capital Investors, LLC, acquired 33 claims, totaling
$2,834,613, from these transferors:
Original Claimant Amount
----------------- ------
Barbara Bass 193,815
David Kennedy 13,632
David & Elizabeth Kennedy 4,549
CNB/fbo David Kennedy 72,598
CNB/fbo Elizabeth Kennedy 86,075
CNB/fbo Scott Kennedy 1,574
Dawn L. Pondish 70,811
CNB/fbo Dawn L. Pondish 7,539
Diana Joy Celeste 57,360
Diana Joy Celeste & Bruce Barclay 6,054
Francis Hennessy & Ingrid Fritzler 65,655
CNB/fbo Geraldin Medlen 51,246
Gizella Preston 381,096
CNB/fbo H. Peter Weiss 99,572
Harry Way 42,084
James D. Way 16,670
Louis Esposito 75,778
John E. Fontana, Jr. 253,555
Robert Lipson 367,234
Robert L. Morton & Joan A. Morton 77,279
Roger J. Werling & Kevin Concato 89,553
Joanne Concato 83,170
Sidney A. Adler 123,541
Sidney & Elizabeth Kees Adler 47,927
Elizabeth Kees Adler 14,577
CNB/fbo Sidney A. Adler 50,243
CNB/fbo Elizabeth Kees Adler 9,223
Stanley E. Golden 53,827
Karl & Tekla Kristofors 309,207
Joan Domenico 15,793
Sam & Joan Domenico 50,326
Alexander W. Chin and Eva S. Wong Chin 30,387
Karen Oy Chin 2001 Family 12,663
Sierra Liquidity Fund purchased 37 claims for an aggregate of
$909,180, from these trade creditors:
Original Claimant Amount
----------------- ------
Beverly J. & Lawrence Turner $120,000
Barbara J. Loe 56,797
Barry A. Knowles 30,500
Shirley M. Knowles 3,000
Eugene & Beverly Schlecht 26,063
Maurice David Bach 11,406
Louis J. & Brunhilde G. Padgug 8,000
Alfredo H. Parubrub 160,000
Matthew A. & Leonora Vogel 5,000
Henry B. Choi 40,000
Keith & Patricia J. Whittingslow 180,797
Herbert C. Gade 18,575
Ronald Daltorio 8,734
Roland & Catherine Keller 8,775
Billy F. and Gladys Wilson 17,500
Walter Hope 7,306
Howard H. & Ellen N. Stern 1,000
Howard H. Stern 1,000
Carla Branyan 605
Ausma K. Rand 3,000
Dewalt Hyde 5,000
Roland N. and Sandra S. Sanderson 39,603
William L. & Raylene M. Johnson 7,412
Community National Bank 2,500
Herman Poritzky & Elaine Hartel-Poritzky 511
Susana Greiss 30,535
Kenneth & Thelma McKinnis 2,500
Bertha Weisman & Enid Osterweil 5,000
VJ Kubjak Trust 8,000
Mary P. Lais 5,000
Floyd L. & Gertrude P. Guse 2,418
Claudia Rebaza 658
Community National Bank 22,234
Craig Prendergast 5,000
Brian & Zona Kendall-Jackson 4,986
Nancy Owens 38,599
William L. Johnson 21,166
Sierra Liquidity also bought four claims, each from James
Johnston, Lucylle Phillips, John Phillips, and Joseph Dolan.
Eva S. Wong Chin Trust, DTD, sold a $63,701 claim to Hain Capital
Opportunities, LLC.
Headquartered in Philadelphia, Pennsylvania, American Business
Financial Services, Inc., together with its subsidiaries, is a
financial services organization operating mainly in the eastern
and central portions of the United States and California. The
Company originates, sells and services home mortgage loans through
its principal direct and indirect subsidiaries. The Company,
along with four of its subsidiaries, filed for chapter 11
protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-
10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed $1,083,396,000
in total assets and $1,071,537,000 in total debts. (American
Business Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AMERICAN MEDIA: Hopes to Ink Bank Loan Amendment by June 23
-----------------------------------------------------------
American Media, Inc., is currently in the process of amending its
bank credit facility for the remainder of the term (April 2007) to
provide for less restrictive financial covenant requirements. The
Company anticipates that this amendment will be completed by June
23, 2005.
In connection with the preparation of this amendment, the Company
recently has had discussions with Standard & Poor's and Moody's
Investors Service. As a result of those discussions, the Company
understands that both rating agencies are reviewing the ratings of
its outstanding bank credit facility and senior subordinated debt.
American Media, Inc., publishes weekly celebrity journalism and
health and fitness magazines which includes: Star, Shape, Men's
Fitness, Muscle & Fitness, Flex, Fit Pregnancy, Natural Health,
Shape en Espanol, National Enquirer, Globe, National Examiner,
Weekly World News, Sun, Country Weekly and MIRA!, as well as other
special topic magazines. In addition to print properties, AMI
owns Distribution Services, Inc., the country's leading in-store
magazine sales and marketing company.
* * *
As reported in the Troubled Company Reporter on June 16, 2005,
Standard & Poor's Ratings Services lowered its ratings on American
Media Operations Inc., including lowering the corporate credit
rating to 'B' from 'B+'. The outlook is now stable.
The Boca Raton, Florida-based publisher had total debt of slightly
under $1 billion as of March 31, 2005.
"The rating action reflects the decline in fiscal fourth-quarter
operating performance, eroding tabloid circulation and
profitability, increased competition in the celebrity magazine
market niche, and rising debt leverage," said Standard & Poor's
credit analyst Hal F. Diamond.
ANY MOUNTAIN: Files Plan & Disclosure Statement in N.D. California
------------------------------------------------------------------
Any Mountain, Ltd., delivered its Third Amended Plan of
Reorganization and accompanying Disclosure Statement to the U.S.
Bankruptcy Court for the Northern District of California on
June 10, 2005.
Terms of the Third Amended Plan
The Plan calls for the reorganization of Any Mountain's operations
and a partial liquidation of its assets. The Debtor will choose
three stores to close among these locations:
* Shattuck Ave store in Berkeley,
* Hacienda Crossings in Dublin,
* Westgate Mall in San Jose, and
* The Willows in Concord.
The leases for the closed stores will be assigned at the best
price obtainable and the stores' inventory will be sold at a Going
Out of Business sale.
Half of the $3 million estimated net proceeds from the lease
assignment and proceeds of the inventory sale will be used to
settle Cardinal Financial Services' more than $1.13 million
allowed secured claim. The remaining half of the proceeds from
the lease assignment will be used to replenish the Debtor's
inventory.
The Debtor will continue operations in its Corte Madera and
Redwood City stores.
Avoidance actions will be initiated by the Debtor against:
* Belzer, Hulchly & Murray;
* Benchmark;
* San Francisco Chronicle;
* SBC Yellow Pages;
* The Mercury News;
* Columbia Sportswear;
* Osprey Packs;
* Hi Tec Sports;
* Spy Optic;
* Red Wing Brands;
* CSI Outdoors;
* Crazy Creek;
* Cerf Bros. Bag Co.;
* Pur/Katadyn;
* Johnson Camping;
* Stansport;
* Eldon "Bud" Hoffman; and
* Cardinal Financial.
The company's founder Bud Hoffman, will continue as CEO of
Reorganized Any Mountain with a salary of $225,000. Steven
Ferguson will also continue as the company's COO with a salary of
$140,000.
Treatment of Claims
Cardinal Financial Services' secured claim, plus interest, will be
paid in 18 monthly installments. The payments will begin one
month after the effective date of the Plan.
Marker Ltd., Marmot, Rossignol, Nordica USA and Performance Sports
Apparel's secured claims will be paid in six semi-annual
installments of principal and interest. Payments are due and
payable every December 30th and February 28th, beginning on
December 30, 2005.
Unsecured Creditors will be paid through a Disbursing Account set
up by the Debtor. The Disbursing Account will be funded with ten
semi-annual deposits of $300,000. These deposits will come from
the balance of the proceeds from the inventory and lease sales
after payments to the secured creditors are satisfied. Any
litigation recoveries will also be deposited to the Disbursing
Account. Payment will be made on an Annual Disbursement Date.
Committee's Position on the Plan
The Official Committee of Unsecured Creditors for Any Mountain,
Ltd.'s chapter 11 case intends to reject the proposed plan because
it offers creditors less than what they would receive if the
Debtor's entire business were liquidated.
The Committee complains that the Debtor failed to inform creditors
that:
a) the Debtor has incurred large operating losses for each of
the past several years and makes an operating profit only
during the months of December, January and February;
b) the Debtor has admitted that it will run out of cash in
September 2005, needs approximately $2,000,000 to cover its
operating and cash flow losses, but has no potential
sources of third party financing; and
c) the Debtor refuses to consider seven different, significant
offers submitted in March to purchase the Debtor's assets.
The Bankruptcy Court has entered an order saying that an operating
trustee will be appointed in Any Mountain's case 60 days after the
order approving the company's disclosure statement is entered
unless the Debtor's Plan is confirmed before that date.
A copy of the Debtor's Third Amended Plan or Reorganization is
available for a fee at:
http://www.researcharchives.com/bin/download?id=050617042120
Headquartered in Corte Madera, California, Any Mountain Ltd,
operates ten specialty outdoor stores throughout the San Francisco
Bay Area. The Company filed for chapter 11 protection on Dec. 23,
2004 (Bankr. N.D. Calif. Case No. 04-12989). Michael C. Fallon,
Esq., of Santa Rosa, California represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed below $50,000 in assets and more than
$10 million in debts.
ASAT HOLDINGS: Apr. 30 Balance Sheet Upside-Down by $26.4 Million
-----------------------------------------------------------------
ASAT Holdings Limited (Nasdaq: ASTT), reported financial results
for the fourth quarter and fiscal year 2005, ended April 30, 2005.
Net revenue in the fourth quarter of fiscal year 2005 was
$44 million, compared with net revenue of $47.3 million in the
third quarter of fiscal year 2005.
Net loss in the fourth quarter was $36.7 million, or a loss of
$0.27 per American Depository Share (ADS). Net loss in the
fourth quarter includes a one-time non-cash accounting charge of
$19.9 million for the write-off and impairment of property, plant
and equipment, an accrual of $4.6 million consisting of cash,
warrants and rebates on future business associated with an
unexecuted settlement agreement that is expected to be executed
with Freescale Semiconductor, and a one-time cash charge of
$215,000 associated with a headcount reduction of approximately
160 direct labor employees in Hong Kong as part of the Company's
China transition plan. Fourth quarter net loss compares with a
net loss of $9.2 million for the third quarter of fiscal 2005, or
a loss of $0.07 per ADS.
After reviewing its individual asset utilization, sources of
revenues and cash flows, the Company believed that some of its
assets will likely be underutilized and should be impaired.
Applying the principles of SFAS No. 144, the Company determined
that it was appropriate to take a charge of $19.9 million for
specific fixed assets.
"We reached a significant milestone with China phase one reaching
volume production by the end of the fourth quarter," said Harry R.
Rozakis, President and chief executive officer of ASAT Holdings
Limited. "By achieving our production goals in China we were able
to reduce our headcount in Hong Kong in the fourth quarter. We
expect further headcount reductions will take place in Hong Kong
in the next several months and believe the anticipated cost
savings will have a positive impact on our bottom line performance
in fiscal 2006.
"In April, we announced a cross licensing agreement with Amkor in
which ASAT received a license for Amkor's Flip Chip packaging
technology. Also, in May we announced a licensing agreement with
LSI Logic in which LSI will provide ASAT with a license to use its
Flip Chip package assembly technology. We have already
experienced increased Flip Chip design activity as a result of
these agreements and expect Flip Chip will become a larger part of
our revenue in fiscal 2006," said Mr. Rozakis.
Additional Fourth Quarter Results
-- Net revenue for assembly was $39.5 million
-- Net revenue for test was $4.5 million
-- Capital expenditures were $13.6 million
-- Cash at the end of the fourth quarter was $32.7 million
Fiscal 2005 Financial Results
Net revenue for fiscal 2005 was $194.4 million, compared with
$214.7 million in fiscal 2004. Net loss for fiscal 2005 was
$60.4 million, or a loss of $0.45 per ADS. This compares with a
net loss of $16.7 million, or a loss of $0.12 per ADS in fiscal
2004.
Fiscal 2005 Highlights
"Our primary objectives entering 2005 were to have China phase one
in volume production by the end of the fiscal year, continue to
diversify our customer base, and expand our packaging technology
and intellectual property. We believe we achieved success with
these objectives," said Mr. Rozakis.
First Quarter Fiscal 2006 Outlook and Guidance
In the first quarter of fiscal 2006, ending July 31, 2005, the
Company expects revenue to be between $41 million and $45 million.
Board of Directors Changes
The Company disclosed that effective June 15, 2005, William Stuek,
Chairman of the Board of Directors of the Company, resigned to
pursue other opportunities. Henry Montgomery, who will continue
to be an independent director and Chairman of the Audit Committee
of the Board of Directors, was elected Chairman. Mr. Montgomery
currently serves as Chairman of the Board of Directors of Catalyst
Semiconductor, Inc. and is a director of Swift Energy Company.
Mr. Montgomery is also Chairman of both company's Audit
Committees.
Kei Chua, currently a principal in the Hong Kong office of J.P.
Morgan Partners Asia, which is a significant shareholder of the
Company, was elected as a member of the Board of Directors filling
the vacancy left by the resignation of Mr. Stuek. In addition,
Donald Beadle, one of the Company's independent directors,
resigned from the Board effective in May 2005 for personal
reasons.
About the Company
ASAT Holdings Limited -- http://www.asat.com/-- is a global
provider of semiconductor package design, assembly and test
services. With over 15 years of experience, the Company offers a
definitive selection of semiconductor packages and world-class
manufacturing lines. ASAT's advanced package portfolio includes
standard and high thermal performance ball grid arrays, leadless
plastic chip carriers, thin array plastic packages, system-in-
package and flip chip. ASAT was the first company to develop
moisture sensitive level one capability on standard leaded
products. Today the Company has operations in the United States,
Asia and Europe. ASAT, Inc. is a wholly owned subsidiary of ASAT
Holdings Limited and the exclusive representative of ASAT for
services in North America.
At Apr. 30, 2005, ASAT Holdings' balance sheet showed a
$26,456,000 stockholders' deficit, compared to $10,345,000 of
positive equity at Jan. 31, 2005.
ASAT HOLDINGS: Shareholder Commits $15 Million of Debt Financing
----------------------------------------------------------------
ASAT Holdings Limited (Nasdaq: ASTT) obtained a commitment for
$15 million of financing from one of its principal shareholders on
June 16, 2005. The other principal shareholder has an option to
participate up to 50% of this financing, or $7.5 million of the
$15 million. The financing would be in the form of two-year notes
bearing an interest at the rate of 5% per annum. In return for
the commitment, the company will issue five-year warrants for a
total of 25 million ordinary shares, which is the equivalent of
5 million ADSs, exercisable at a price of $0.01 per ordinary
share. The commitment is subject to preparation and execution of
definitive agreements and fulfillment of various conditions,
including receipt by the Board of a fairness opinion with respect
to the loan arrangements from an independent investment banking
firm.
While the company believes receipt of the financing is likely,
there can be no assurance that it will be obtained and if such
financing is not obtained for any reason, unless alternate
financing is obtained, the report of its independent public
accountants with respect to the Company's financial statements for
the year ended April 30, 2005, may contain a going concern
exception.
About the Company
ASAT Holdings Limited -- http://www.asat.com/-- is a global
provider of semiconductor package design, assembly and test
services. With over 15 years of experience, the Company offers a
definitive selection of semiconductor packages and world-class
manufacturing lines. ASAT's advanced package portfolio includes
standard and high thermal performance ball grid arrays, leadless
plastic chip carriers, thin array plastic packages, system-in-
package and flip chip. ASAT was the first company to develop
moisture sensitive level one capability on standard leaded
products. Today the Company has operations in the United States,
Asia and Europe. ASAT, Inc. is a wholly owned subsidiary of ASAT
Holdings Limited and the exclusive representative of ASAT for
services in North America.
At Apr. 30, 2005, ASAT Holdings' balance sheet showed a
$26,456,000 stockholders' deficit, compared to $10,345,000 of
positive equity at Jan. 31, 2005.
ASHLAND INC: 98.7% of Noteholders Agree to Amend Indenture
----------------------------------------------------------
Ashland Inc. (NYSE: ASH) received irrevocable consents to proposed
amendments in respect of series of notes representing
approximately 98.7% of the aggregate principal amount of debt
issued and outstanding as of May 31, 2005, under the Indenture as
of 5:00 p.m., New York time on June 15, 2005.
Receipt of the consents satisfies a condition to Ashland's
obligation to proceed with the series of transactions that, among
other things, effect the transfer of its interest in Marathon
Ashland Petroleum LLC to a wholly owned subsidiary of Marathon Oil
Corporation. The aggregate principal amount of such notes as of
May 31, 2005, was $1.149 billion.
As of 5:00 p.m., New York time, on June 15, 2005, holders of at
least 66-2/3% of the aggregate principal amount of each of the
following series of Ashland's outstanding notes:
-- 6.625% Senior Notes,
-- 8.80% Debentures,
-- Series E Medium-Term Notes,
-- Series F Medium-Term Notes,
-- Series G Medium-Term Notes,
-- 6.86% Series H Medium-Term Notes, and
-- 7.83% Series J Medium-Term Notes
have tendered their Consenting Notes and delivered their consents
to eliminate or modify substantially all of the restrictive
covenants, certain events of default and certain additional
covenants and rights in the Consenting Notes and the Indenture
related to each series of Consenting Notes in accordance with the
terms and subject to the conditions of the Offer to Purchase. For
this purpose, all of the Consenting Notes outstanding in a series
are treated as part of a single series.
As a result, Ashland has received the requisite consents to
execute a supplemental indenture to the Indenture related to each
series of the Consenting Notes, which sets forth the
Proposed Amendments. Following the receipt of such consents,
Ashland executed the First Supplemental Indenture which has become
effective. Pursuant to the First Supplemental Indenture, the
Proposed Amendments will become effective upon delivery by Ashland
to the trustee of a notice specifying the effective time, subject
to Ashland's prior or subsequent acceptance of the Consenting
Notes validly tendered by such holders pursuant to the applicable
tender offer described in the Offer to Purchase.
Ashland also disclosed that as of 5:00 p.m. New York time, on
June 15, 2005, consents were not received in respect of series of
notes having an aggregate principal amount of $15 million. As of
such time, holders of less than 66-2/3% of the aggregate principal
amount of the 9.35% Series B Medium-Term Notes and the 9.20%
Series D Medium-Term Notes have tendered their Non-Consenting
Notes and delivered their consents to the Proposed Amendments in
accordance with the terms and subject to the conditions of
Ashland's Offer to Purchase.
Ashland has not extended the consent payment deadline in respect
of any Notes. Accordingly, if a holder of Notes tendered or
tenders its Notes pursuant to the applicable tender offer after
5:00 p.m., New York time, on June 15, 2005, and the applicable
tender offer is consummated, it will not receive the consent
payment, which is $20 per $1,000 of the principal amount
of Consenting Notes validly tendered and accepted, even if the
Proposed Amendments become effective.
The tender offers and consent solicitations are being made on the
terms and subject to the conditions set forth in the Offer to
Purchase. Each of the tender offers will expire at 5:00 p.m., New
York time, on June 29, 2005, unless extended at the sole
discretion of Ashland. Notes tendered may not be withdrawn,
and consents given may not be revoked, unless the applicable
tender offer is terminated without any Notes being purchased.
Ashland will pay for Notes it accepts for purchase promptly
following the Expiration Date of the applicable tender offer. In
addition, Ashland will pay accrued and unpaid interest on tendered
and accepted Notes up to, but not including, the Settlement Date.
Credit Suisse First Boston LLC is the exclusive Dealer Manager and
Solicitation Agent for the tender offers and consent
solicitations. Requests for documents may be directed to Georgeson
Shareholder Communications Inc., the Information Agent, by
telephone at (888) 264-7028 (toll-free) or (212) 440-9800, or in
writing at 17 State Street - 10th Floor, New York, N.Y., 10004,
Attention: Patrick McHugh. Questions regarding the tender offers
or the consent solicitations may be directed to Credit Suisse
First Boston LLC at (800) 820-1653 (toll-free) or (212) 325-3784
(collect), or in writing at Eleven Madison Avenue, New York, N.Y.,
10010, Attention: Liability Management Group.
Ashland Inc. (NYSE: ASH) -- http://www.ashland.com/-- is a
Fortune 500 transportation construction, chemicals and petroleum
company providing products, services and customer solutions
throughout the world. Ashland Inc., headquartered in Covington,
Kentucky, owns a 38% equity interest in Marathon Ashland
Petroleum. Ashland through its four wholly owned businesses is a
leading North American distributor of chemicals and plastics; one
of the largest transportation construction contractors in the
United States; a global supplier of specialty chemicals; and a
leading marketer, distributor and producer of branded automotive
and industrial products and services. Ashland reported sales of
$8.8 billion on an LTM basis ended March 31, 2005.
* * *
As reported in the Troubled Company Reporter on May 3, 2005,
Moody's Investors Services commented that the senior unsecured
ratings of Ashland Inc. would likely be lowered to Ba1 following
the completion of the sale of its 38% equity interest in Marathon
Ashland Petroleum LLC to Marathon Oil Corporation. Moody's also
noted that Ashland's Baa2 ratings will remain under review for
possible downgrade until the completion of the tender offer. The
remaining stub bonds, if any, would be lowered to Ba1 at that time
and the commercial paper rating would be lowered to Not-Prime. If
the MAP transaction does not occur, Ashland's Baa2 and P-3 ratings
would likely be confirmed.
Ratings remaining under review for possible downgrade:
-- Ashland Inc.
* Issuer rating - Baa2
* Senior unsecured notes and debentures - Baa2
* Industrial revenue bonds supported by Ashland - Baa2
* Shelf registration for senior unsecured debt - (P)Baa2
* subordinated debt - (P)Baa3; preferred stock - (P)Ba1
* Rating for commercial paper - Prime-3
ATA AIRLINES: Retains Investment Bankers for Recapitalization
-------------------------------------------------------------
ATA Holdings Corp (Other OTC:ATAHQ.PK) intends to engage Jefferies
& Company, Inc., SkyWorks Capital, LLC and SkyWorks Securities,
LLC to raise funding to support ATA's exit from Chapter 11
reorganization. The engagement is subject to approval by the U.S.
Bankruptcy Court for the Southern District of Indiana next month.
"ATA has made tremendous progress in restructuring its routes,
fleet and assets. Our codeshare agreement with Southwest Airlines
provides a platform for future growth. As we complete our
reorganization and emerge from bankruptcy in 2006, we need to make
sure our new business plan has sufficient capital to be
successful," said John Denison, ATA Airlines' CEO.
About Jefferies
Jefferies & Company, Inc. -- http://www.jefferies.com/
-- a global investment bank and institutional securities firm, has
served growing and mid-sized companies and their investors for
over 40 years. Headquartered in New York, with more than 20
offices around the world, Jefferies & Company, Inc., provides
clients with capital markets and financial advisory services,
institutional brokerage, securities research and asset management.
The firm is a leading provider of trade execution in equity, high
yield, convertible and international securities for institutional
investors and high net worth individuals. Jefferies & Company,
Inc. is the principal operating subsidiary of Jefferies Group,
Inc. (NYSE:JEF)
About SkyWorks
SkyWorks Capital LLC and SkyWorks Securities LLC, MEMBER:
NASD/SIPC, provide expertise to participants in and capital
providers to the aviation and aerospace sectors across a broad
spectrum of financial products. The Companies provide advisory
services on financial restructurings, debt and equity offerings,
asset-based financings, and mergers and acquisitions. Since
inception, SkyWorks Capital LLC, and in instances where securities
transactions are involved SkyWorks Securities LLC, have completed
assignments for clients such as AirTran Airways, American
Airlines, Chautauqua Airlines, Frontier Airlines, Independence
Air, JetBlue Airways and Virgin USA, as well as for creditor
committees, bank groups and investors in various corporate and
structured finance transactions and restructuring and advisory
assignments.
About ATA Airlines
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: SBN Wants Premises Vacated Before Lease Rejection
---------------------------------------------------------------
As previously reported in the Troubled Company Reporter on May 31,
2005, Chicago Express sought the U.S. Bankruptcy Court for the
Southern District of Indiana's authority to reject eight
burdensome Agreements, effective when it:
(i) tenders notice of the rejection to the counterparty of the
Agreements; or
(ii) surrenders possession of the personal or real property
subject to the Agreements.
* * *
SBN, Inc., doing business as Corporate Wings, wants the rejection
of the June 2000 Wings Sublease Agreement be effective when
Chicago Express, Inc., removes its aircraft and other property
from the hangar in South Bend, Indiana.
Robert L. Konopinski, Esq., at Leone Halpin & Konopinski, LLP, in
South Bend, Indiana, explains that until Chicago Express actually
vacates the real property, SBN will be prevented from re-letting
the hangar to new tenants, causing it to incur additional damages.
Pursuant to Section 365 of the Bankruptcy Code, Chicago Express is
required to timely perform its obligations with respect to the
Sublease until the Sublease is assumed or rejected.
Mr. Konopinski also notes that Chicago Express has failed to make
the postpetition payments due under the Sublease and the fuelling
and de-icing services provided by SBN. Pursuant to Section 503,
SBN asks the Court to compel Chicago Express to pay the
postpetition sums due. SBN wants that the Debtor's continued
occupancy of the premises contingent on future payments required
under the Sublease until the time it vacates the hangar.
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. 26; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ATA AIRLINES: Court Okays Rejection of GE Capital Bus Lease
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana
gave ATA Airlines, Inc., and its debtor-affiliates permission to
reject the Bus Lease effective April 29, 2005, the date the
Debtors surrendered possession of the Buses.
As previously reported in the Troubled Company Reporter on May 23,
2005, ATA Airlines, Inc., and General Electric Capital Corporation
are parties to a Commercial Transportation Lease Agreement dated
March 23, 2001, pertaining to six buses manufactured by Thomas
Built Buses, Inc. ATA Airlines subleased the buses to Chicago
Express, Inc., which used them to transport passengers to and from
its airplanes and the terminal at Midway International Airport in
Chicago, Illinois.
Jeffrey Nelson, Esq., at Baker & Daniels, in Indianapolis,
Indiana, reminded the Court that Chicago Express ceased flight
operations in March 2005, and as a result, the Debtors no longer
have any use for the Buses. Accordingly, the Buses are no longer
necessary to the Debtors' continued operations.
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. 26; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
B&M PROPERTIES: Involuntary Chapter 11 Case Summary
---------------------------------------------------
Alleged Debtor: B&M Properties, LLC
c/o Walter Michael Williams
Registered Agent
9410 U.S. Highway 31
Hanceville, Alabama 35077
Involuntary Petition Date: June 17, 2005
Case Number: 05-83025
Chapter: 11
Court: Northern District of Alabama (Decatur)
Judge: Jack Caddell
Petitioners' Counsel: Danielle K. Greco, Esq.
Bradley Arant Rose & White LLP
1819 Fifth Avenue North
Birmingham, Alabama 35203
Tel: (205) 521-8000
Petitioners Nature of Claim Amount of Claim
----------- --------------- ---------------
SAIIA Construction, LLC Services rendered $2,759,238
c/o Danielle K. Greco, Esq. for site excavation
Bradley Arant Rose &
White LLP
One Federal Place,
1819 Fifth Avenue North
Birmingham, Alabama
35203-2104
Gallet & Associates, Inc. Services rendered $46,107
Roxanne Nichols,
Director of Finance
320 Beacon Parkway West
Birmingham, Alabama 35209
Paragon Engineering, Inc. Services rendered $32,497
A. Frazier Christy
President
2320 South Highland Avenue,
Suite 175
Birmingham, Alabama 35205
BANC OF AMERICA: Moody's Assigns Ba2 Rating to Class B-3 Certs.
---------------------------------------------------------------
Moody's Investors Service has assigned Aaa ratings to the senior
certificates issued by Banc of America Funding 2005-C Trust and
ratings ranging from Aa2 to Ba2 to the mezzanine and subordinate
certificates in the securitization.
The securitization is backed by adjustable-rate alternative "A"
mortgage loans originated or acquired by GreenPoint Mortgage
Funding, Inc. The ratings are based primarily on the credit
quality of the loans and the credit enhancement in the
transaction. The credit quality of the loan pool is in line with
that of other average ARM loan pools backing recent alternative
"A" securitizations.
GreenPoint will service the mortgage loans in the securitized
pool.
The complete rating actions are:
Banc of America Funding 2005-C Trust
Mortgage Pass-Through Certificates, Series 2005-C
* Class A-1 rated Aaa
* Class A-2 rated Aaa
* Class A-3A rated Aaa
* Class A-3B rated Aaa
* Class M-1 rated Aa2
* Class M-2 rated A2
* Class B-1 rated Baa2
* Class B-2 rated Baa3
* Class B-3 rated Ba2
BEHAVIORAL HOSPITAL: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Behavioral Hospital of Baton Rouge, LLC
4040 North Boulevard
Baton Rouge, Louisiana 70806
Bankruptcy Case No.: 05-12036
Chapter 11 Petition Date: June 16, 2005
Court: Middle District of Louisiana (Baton Rouge)
Debtor's Counsel: John Hass Weinstein, Esq.
407 South Union Street
Opelousas, Louisiana 70570-0008
Tel: (337) 948-4700
Estimated Assets: Less than $50,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
CAESARS ENT: Harrah's Entertainment Completes Merger Transaction
----------------------------------------------------------------
Harrah's Entertainment, Inc. (NYSE:HET) disclosed that its
previously announced acquisition of Caesars Entertainment, Inc.
(NYSE:CZR) has closed.
"We are pleased to bring our two great companies together," said
Gary Loveman, chairman, chief executive and president of Harrah's
Entertainment. "Today we begin the most important task in the
history of our company: Capitalizing on the tremendous potential
of this merger. By putting our proven capabilities and marketing
expertise to work in the incomparable Caesars portfolio, we
believe we can generate strong, sustainable growth that will
benefit our shareholders, our employees, our customers, and every
community where we operate."
Voting Results
Of the 314,824,856 shares of Caesars' stock outstanding as of
June 10, 2005:
-- 252,404,943 of the shares, or approximately 80.2%, elected
to receive Harrah's common stock; and
-- 62,419,913 of the shares, or approximately 19.8%, did not
make a valid election.
These election results do not include any shares subject to
guarantee of delivery, and therefore are expected to change.
The elections are subject to proration calculations so that the
aggregate number of shares of Caesars common stock to be converted
into shares of Harrah's common stock in the merger will equal
66.42% of the total number of shares of Caesars common stock
outstanding immediately prior to the closing of the merger.
Based on the election results received to date, Harrah's and
Caesars expect that nearly 100% of the shares of Caesars common
stock will elect to receive Harrah's common stock in the merger.
If 100% of the shares elect to receive Harrah's common stock, each
share of Caesars common stock will receive $5.96 in cash and .2157
of a share of Harrah's common stock due to the proration mechanism
in the merger agreement.
A more complete description of the adjustment and proration
mechanisms applicable to elections is contained in the joint proxy
statement/prospectus dated Jan. 24, 2005, and the election
materials previously mailed to Caesars stockholders, both of which
Caesars stockholders are urged to read carefully.
About Harrah's Entertainment
Harrah's Entertainment, Inc. -- http://www.harrahs.com/-- is the
world's largest provider of branded casino entertainment. Since
its beginning in Reno, Nevada 67 years ago, Harrah's has grown
through development of new properties, expansions and
acquisitions. On June 13, 2005, Harrah's Entertainment acquired
Caesars Entertainment, Inc., and now owns or manages through
various subsidiaries more than 40 casinos in three countries,
primarily under the Harrah's, Caesars and Horseshoe brand names.
With nearly 4 million square feet of casino space, more than
40,000 hotel rooms and nearly 100,000 employees, the Harrah's
portfolio is the most diverse in the gaming industry. Harrah's
Entertainment is focused on building loyalty and value with its
customers through a unique combination of great service, excellent
products, unsurpassed distribution, operational excellence and
technology leadership.
About Caesars Entertainment
Caesars Entertainment, Inc. -- http://www.caesars.com/-- is one
of the world's leading gaming companies. With annual revenue of
$4.2 billion, 20 properties on three continents, more than 25,000
hotel rooms, two million square feet of casino space and 50,000
employees, the Caesars portfolio is among the strongest in the
industry. Caesars casino resorts operate under the Caesars,
Bally's, Flamingo, Grand Casinos, Hilton and Paris brand names.
The company has its corporate headquarters in Las Vegas.
* * *
As reported in the Troubled Company Reporter on June 16, 2005,
Moody's Investors Service upgraded Caesars Entertainment Inc.'s
senior unsecured rating to Baa3. Caesars Entertainment was
acquired by Harrah's Entertainment Inc. on June 13, 2005. As a
result, Caesars merged into Harrah's Operating Company Inc. with
HOC as the surviving entity which assumed Caesars public debt
obligations.
Moody's rating action assumes that HET will guaranty each series
of Caesars notes outstanding if Caesars bondholders representing a
majority in aggregate principal amount of each and all series of
bonds outstanding approve the consent and solicitation to amend
the reporting covenants in the applicable indentures. If HET does
not receive the required consents, the guarantee will not be
provided. In this case, Moody's would downgrade Caesars bond
ratings by one notch to reflect the structural subordination of
Caesars debt relative to HOC's debt that is guaranteed by HET.
This completes the review of Caesar's ratings that commenced on
July 15, 2004.
Ratings upgraded:
* Sr. unsecured notes to Baa3 from Ba1. (to be guaranteed
by HET)
* Sr. subordinated notes to Ba1 from Ba2. (to be guaranteed by
HET on a subordinate basis)
Ratings upgraded and to be withdrawn
* Long-term issuer rating to Baa3 from Ba1.
* Senior implied rating to Baa3 from Ba1.
* Sr unsecured shelf to (P) Baa3 from (P) Ba1.
* Subordinated shelf to (P) Ba1 from (P) Ba2.
* Preferred shelf to (P) Ba2 from (P) Ba3.
CANFIBRE OF RIVERSIDE: Files First Amended Plan of Liquidation
--------------------------------------------------------------
Canfibre of Riverside, Inc., delivered its First Amended Plan of
Reorganization to the U.S. Bankruptcy Court to the District of
Delaware.
Relevant modifications contained in the Amended Plan include:
-- putting the assets into Group I, Group II, and Group III
categories;
-- full payment of administrative claims, fee claims, and
priority tax claims from the sale of Group II assets;
-- the Bondholders' secured portion of their claims -- totaling
$90.6 million -- will receive distributions from the Group I
assets, and the rest of their claims will be treated as
unsecured claims;
-- the Mechanics' Lien Settlement will be satisfied in
accordance with the terms of the settlement agreement;
-- general unsecured creditors, owed approximately $42 million,
will receive pro rata shares of any cash distributions from
Group II or Group III assets after all other allowed claims
are paid.
About Canfibre
Canfibre of Riverside, Inc., a Delaware corporation, developed,
constructed, owned and operated a waste wood recycling facility in
Riverside County, California. The Facility produced medium
density fiberboard -- MDF -- using a proprietary steam injection
process. Riverside's facility was unique due to its ability to
use recyclable dry fiber waste materials normally destined for
landfills, such as clean mill residue, construction and demolition
wood, packaging woods and waste panel board, without the use of
environmentally damaging urea formaldehyde resin.
Canfibre tumbled into chapter 11 on October 24, 2000, after it
failed to obtain working capital to operate its commercial scale
MDF plant using steam injection presses.
Howard Seife, Esq., Joseph H. Smolinsky, Esq., N. Theodore Zink,
Jr., Esq., at Chadbourne & Parke LLP, and James L. Patton, Jr.,
Esq., Brendan Linehan Shannon, Esq., Michael R. Nestor, Esq., and
Matthew B Lunn, Esq., at Young, Conaway, Stargatt & Taylor
represent Canfibre. John H. Knight, Esq., at Richards, Layton &
Finger, P.A., represents the Official Committee of Unsecured
Creditors. When the Company filed for protection from its
creditors, it listed estimated assets and debts of more than
$100 million each.
CATHOLIC CHURCH: Tucson Settle Disputes on 30 Tort Claims
---------------------------------------------------------
Pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, the Diocese of Tucson asks the U.S. Bankruptcy Court
for the District of Arizona to approve certain stipulations for
the resolution of 30 tort claims.
Susan G. Boswell, Esq., at Quarles & Brady Streich Lang LLP, in
Tucson, Arizona, explains that many of the Claimants are
plaintiffs in actions filed in the Superior Courts of Pima
County, Maricopa County, or Yuma County in Arizona or the
Superior Courts of Orange County and Los Angeles County in
California, and which were removed from the State Courts to, and
are presently pending before, the Arizona Bankruptcy Court except
with respect to the California actions. The removed California
actions are pending in the U.S. District Court for the District of
Arizona.
The Diocese is a defendant in the Removed State Court Actions.
The real names of Claimants are known to the parties to the
Stipulations and are available to the Bankruptcy Court in the
Proofs of Claim that were filed under seal.
The parties to the Stipulations have agreed and acknowledged that
in accepting the Initial Distribution Amounts under a confirmed
Plan of Reorganization for Tucson, the Diocese's liability is not
being extinguished nor does the Initial Distribution Amount
represent the value of the Tort Claim if the Tort Claim was to be
determined in a proceeding before a court or jury or in a
proceeding.
The parties further agreed that regardless of the amount of the
Diocese's liability, the parties will be bound by the terms of the
Plan and will not seek further relief or recovery from the Diocese
except to the extent specifically provided for in the Plan.
The parties have knowledge of the Claimants' allegations made in
the Proofs of Claim and the Removed State Court Actions, and the
pleadings, disclosures, expert opinions, and discovery, and the
books and records of the Diocese.
Ms. Boswell relates that the parties enter into stipulations in
light of the risks of litigation and the likelihood that if
liquidated in litigation or in a claim allowance proceeding, a
trier of fact would find damages in excess of the Initial
Distribution Amount for a Tier 1, 2, 3, 4 and California Claims,
and in order to, among other things, provide a framework within
which an acceptable plan of reorganization might be confirmed.
The parties agree to:
(a) resolve Claimants' claims in the context of a mutually
acceptable plan of reorganization; and
(b) preserve the parties' rights should a resolution pursuant
to an acceptable plan not be possible.
In addition, the parties acknowledge that it may become necessary
to determine the value of the Tort Claim; the parties have agreed
7for the manner in which the determination may be made.
Pursuant to the Stipulations, the parties agree to grant the
Claimants allowed claims in specified tiers:
Claimant Identified
By Claim No. 22 Agreed Tier Placement
------------------- ---------------------
22 2
33 3
34 3
35 3
36 3
37 3
38 4
39 2
40 3
43 California Tier
44 4
45 California Tier
47 California Tier
48 3
50 3
51 2
52 California Tier
53 California Tier
54 California Tier
57 4
58 4
59 4
60 3
61 2
62 2
41 and 42 5% of Tier 3
46 5% of Tier 4
55 and 56 5% of Tier 4
Tucson agrees that its Plan of Reorganization will provide that an
Allowed Tort Claim of Settling Tort Claimants will receive the
Initial Distribution Amounts within 30 days of funding the
Settlement Trust. The Initial Distribution Amounts for each Tier
are:
-- $100,000 for Tier 1,
-- $200,000 for Tier 2,
-- $425,000 for Tier 3,
-- $600,000 for Tier 4, and
-- $300,000 for the California Tier.
The Claims of parents or spouses of direct victims who have Tort
Claims will receive 5% of the highest amount recovered by a son or
daughter with an Allowed Tort Claim as more fully explained in the
Plan. The Stipulations with each Relationship Tort Claimant are
consistent with the terms of the Plan.
The Diocese further agrees that Claimants will be entitled to
subsequent distributions from the Settlement Trust as all other
allowed Tort Claims, as the distributions may be amended, so long
as the amendments are acceptable to the Claimant. The
distributions and any other compensation being made to Claimants
pursuant to the Stipulation and any plan of reorganization are for
compensation of physical injuries.
Tucson further agrees to cooperate with Claimants and Claimants'
attorneys to draft and execute the appropriate documents to allow
Claimants or Claimants' attorneys to place all or any portion of
the distributions in an annuity or structured settlement, if so
elected by Claimants.
The Claimants agree to support, vote for, and to elect to
participate in the Settlement Trust for any plan proposed by the
Diocese that provides for treatment of the Claimants' allowed
claim that is consistent with the terms of the Stipulation.
To the extent it is necessary to determine the full extent of the
Diocese's liability to a Claimant on account of Tier 1, Tier 2,
Tier 3, Tier 4, California Tier Claims and Relationship Tort
Claims, the parties agree that the determinations will be made in
a proceeding which may be before the Bankruptcy Court, provided
that, notwithstanding the amount of the liability, the Claimants
agree to be bound by the terms of the Plan in accordance with the
Stipulations and not seek further or additional recovery from the
Diocese so long as the Plan or any other Plan proposed by the
Diocese provides for treatment of the Claimants' Tort Claims in
accordance with the terms of the Stipulations.
Upon approval of the Stipulation, the Diocese and Claimant will
jointly move for remand, to the appropriate Arizona Superior
Court, of any portion of the Claimant's case that is not settled
pursuant to the Stipulation and alleges claims relating to the
Roman Catholic Church of the Diocese of Phoenix, Bishop Thomas
O'Brien or St. Gregory's Parish and Church.
The Roman Catholic Church of the Diocese of Tucson filed for
chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on
September 20, 2004, and delivered a plan of reorganization to the
Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye,
Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson
Diocese. (Catholic Church Bankruptcy News, Issue No. 30;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
CELESTICA INC: Sells $250 Mil. Senior Subordinated Notes Due 2013
-----------------------------------------------------------------
Celestica Inc. (NYSE:CLS, TSX:CLS/SV) intends to sell $250 million
aggregate principal amount of senior subordinated notes due 2013,
subject to market and other conditions.
The offering is being made pursuant to Celestica's shelf
registration statement previously filed with and declared
effective by the Securities and Exchange Commission. The net
proceeds of the offering of the senior subordinated notes are
currently anticipated to be used for the repurchase of Liquid
Yield Option Notes, or LYONs.
Banc of America Securities LLC, Citigroup Global Markets Inc. and
Deutsche Bank Securities Inc. will act as joint book-running
managers for Celestica's notes offering. When available, a
prospectus supplement relating to this proposed offering may be
obtained from Syndicate Operations, Banc of America Securities, 9
West 57th Street, 2M, New York, NY 10019.
About the Company
Celestica, Inc. -- http://www.celestica.com/-- is a world leader
in the delivery of innovative electronics manufacturing services
-- EMS. Celestica operates a highly sophisticated global
manufacturing network with operations in Asia, Europe and the
Americas, providing a broad range of integrated services and
solutions to leading OEMs (original equipment manufacturers).
Celestica's expertise in quality, technology and supply chain
management, enables the company to provide competitive advantage
to its customers by improving time-to-market, scalability and
manufacturing efficiency.
* * *
As reported in the Troubled Company Reporter on Feb. 8, 2005,
Moody's Investors Service has lowered the credit ratings of
Celestica Inc., concluding the review that was initiated on
December 10, 2004. Specifically, the senior implied rating was
lowered to Ba3 from Ba2, the senior unsecured issuer rating was
lowered to B1 from Ba3 and the subordinated notes' senior
subordinated and LYONS, rating was lowered to B2 from Ba3. The
SGL-1 liquidity rating was affirmed. Moody's says the rating
outlook is stable.
CELLU TISSUE: $276 Mil. Kohlberg Sale Cues S&P to Watch Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
its 'B' corporate credit rating, on tissue manufacturer Cellu
Tissue Holdings Inc., on CreditWatch with positive implications.
At the same time, Standard & Poor's affirmed its ratings,
including its corporate credit rating, on specialty paper producer
Thilmany LLC (B+/Stable/--).
"These rating actions follow Cellu Tissue's announcement that
private equity firm Kohlberg & Co. LLC will acquire it for $276
million, including the assumption of debt," said Standard & Poor's
credit analyst Pamela Rice.
Kohlberg plans to combine Cellu Tissue, based in Alpharetta,
Georgia, with Thilmany, a business Kohlberg recently purchased
from International Paper Co. (BBB/Negative/A-3) for about $180
million. IP retained an 11% interest in Thilmany. Kohlberg and
other investors will contribute about $120 million of equity to
support the transactions.
At Feb. 28, 2005, Cellu Tissue had about $170 million of debt,
including capitalized operating leases and debt to EBITDA of about
4.2x. Pro forma for its sale to Kohlberg, Thilmany, which has
operational headquarters in Kaukauna, Wisconsin, had debt of about
$150 million and debt to 2004 EBITDA of 3.6x.
"We believe that the business profile of the combined operations
could be slightly stronger than that of the individual companies--
driven by a larger financial base, greater product and geographic
diversity, and the potential for operating efficiencies and cost
synergies," Ms Rice said. "Nevertheless, the new entity will
still operate in highly competitive and mature markets, remain
subject to volatile pulp and energy costs, generate only modest
cash flows, and be likely to remain highly leveraged."
Standard & Poor's will meet with management to review its business
strategies, financial policies, projections, initiatives to
improve operational performance, and financing plans to determine
ratings for the combined entity. If, as we expect, overall debt
following these transactions is not significantly higher than the
pro forma combined debt of the two companies, the new entity's
corporate credit rating is likely to be 'B+'.
Cellu Tissue is a small manufacturer and converter of tissue and
machine-glazed paper, with sales of $333 million for the fiscal
year ended Feb. 28, 2005. Thilmany manufactures and converts
lightweight packaging and pressure-sensitive and industrial papers
and had sales of $458 million in 2004.
CENTRAL VERMONT: Fitch Shaves Pref. Stock Rating One Notch to BB+
-----------------------------------------------------------------
Fitch Ratings has downgraded the ratings of Central Vermont Public
Service's as follows:
-- Senior secured debt to 'BBB' from 'BBB+';
-- Preferred stock to 'BB+' from 'BBB-'.
The Rating Outlook is Stable.
The rating downgrade reflects the negative impact of the recent
rate decision issued by the Vermont Public Service Board and the
increased business risk resulting from the uncertain regulatory
environment. The PSB ordered CV to reduce its rates by 2.75%
($7.4 million annually) effective April 1, 2005 and to provide a
one-time refund of $6.5 million to customers for excessive
earnings over the past year. As a result, interest coverage (as
measured by earnings before interest, taxes, depreciation, and
amortization, EBITDA to interest) and leverage ratios (as measured
by debt to EBITDA) are expected to be more in line with lower
rated peers. The rate decrease also impairs CV's ability to
generate adequate cash flow to cover its future working capital
needs and planned capital expenditures.
The rate reduction coincides with a period of rising capital
expenditures as the company invests in the transmission grid to
improve reliability. In addition, CV could be required to post
additional collateral under contracts for both the sale and
purchase of electricity, which will further strain liquidity.
Favorably, CV has a cash balance of $55 million that should allow
the company to avoid any external financing but would not be
adequate in the event of an unplanned outage or other contingency.
This is of particular concern due to the unit contingent nature of
a below-market contract with Entergy Nuclear for 180 megawatts
from the Vermont Yankee nuclear plant. CV does not have a fuel
adjustment clause and relies on purchases from ISO New England for
about 10% of its load requirements, with the remainder sourced
through long-term contracts and owned units.
The Stable Outlook reflects Fitch's expectation that credit
measures will not deteriorate beyond current levels going forward
and that the company will maintain sufficient liquidity sources to
meet its needs.
CHAPARRAL STEEL: S&P Rates Proposed $200M Sr. Unsec. Notes at B
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Dallas, Texas-based Chaparral Steel Co. At the
same time, Standard & Poor's assigned its 'BB-' rating and its
recovery rating of '1' to Chaparral's proposed $150 million senior
secured revolving bank credit facility due 2010. The bank loan
rating and the '1' recovery rating indicate a high expectation of
full recovery of principal in the event of a payment default.
Standard & Poor's also assigned its 'B' rating to the Chaparral's
proposed $200 million senior unsecured notes due 2013 and its
$100 million senior floating rate notes due 2012. The outlook is
stable.
Proceeds of the notes, together with borrowings under Chaparral's
revolving credit facility, will be used to pay a cash distribution
of approximately $341 million to the company's parent, Texas
Industries Inc. (BB-/Stable/--), in connection with the proposed
spin-off of Chaparral to TXI's stockholders through a tax-free
stock dividend.
"Over the intermediate term, we expect the company to continue to
benefit from production discipline among domestic producers and
its fair liquidity levels," said Standard & Poor's credit analyst
Paul Vastola. "Ratings on the company could be lowered should
market fundamentals become more challenging and result in
significantly weaker financial performance. Conversely, ratings
on Chaparral could be raised if the company is able to
successfully ramp up and sustain higher production levels at its
Virginia mill while reducing its relatively high debt levels."
Chaparral is the second-largest structural steel producer in the
U.S.
CIT RV: Interest Shortfall Causes S&P's Ratings to Tumble to D
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the
Certificates issued by CIT RV Trust 1999-A to 'D' from 'CC',
reflecting the interest shortfall experienced by the Certificates
on the most recent distribution date.
The Certificates experienced a $69,187 interest shortfall on the
June 15, 2005, distribution date. They are expected to continue
to experience interest shortfalls, given that the reserve account
has been fully drawn and that there was a principal shortfall
carryover balance of $253,183.75 owed to the class A-4 notes,
which is senior to payments of interest to the Certificates under
the waterfall. Since current repossession inventory equals
$11.793 million and monthly recoveries rarely cover the balance of
liquidated contracts, the principal shortfall carryover balance
owed to the senior notes is likely to accrue, resulting in
continued Certificate interest shortfalls.
COLAD GROUP: Wants to Settle W. Brosnahan Dispute for $1.6 Mil.
---------------------------------------------------------------
The Colad Group, Inc., asks the U.S. Bankruptcy Court for the
Western District of New York for authority to pay $1,644,452 to
William P. Brosnahan.
William P. Brosnahan, Jr., is one of Colad's former shareholders.
Mr. Brosnahan now serves as a member of the Debtor's Board of
Directors. The Debtor owes Mr. Brosnahan $1,644,452 on account of
a loan.
When Mr. Brosnahan filed for chapter 7 liquidation on July 26,
2002, the money owed by Colad is listed in his schedules as an
asset.
Mark S. Wallach, the chapter 7 Trustee overseeing Mr. Brosnahan's
bankruptcy case, filed an action against the Debtor to recover the
amount owed to Mr. Brosnahan.
Colad, in turn, commenced a lawsuit against Mr. Wallach alleging
that the chapter 7 Trustee interfered with the Debtor's efforts to
obtain financing from the City of Buffalo.
To avoid inflicting further damages, the parties negotiated and
reached a settlement to resolve the payment of what's owed to Mr.
Brosnahan.
Because the Debtor has no means to pay the loan, members of the
Brosnahan family who are also directors of the Debtor (Anne Laura
Brosnahan, Mary Wachter, William P. Brosnahan, III, and Anne
Slubowski), will extend a new $1,644,452 loan to Colad to settle
its obligations to William Brosnahan.
The settlement agreement also allows for the exchange of mutual
general releases including the interference suit filed against the
chapter 7 Trustee.
The new loan will be subordinated to all of the allowed senior
claims, including the claims of allowed unsecured creditors.
Headquartered in Buffalo, New York, Colad Group, Inc., --
http://www.colad.com/-- designs, develops and manufactures
packaging products. The Company filed for chapter 11 protection
on Feb. 3, 2005 (Bankr. W.D.N.Y. Case No. 05-10765). Raymond L.
Fink, Esq., at Harter, Secrest & Emery LLP represents the Debtor
in its restructuring efforts. When the Debtor filed for
protection from its creditors, it estimated assets of $1 million
to $10 million and debts of $10 million to $50 million.
COMBUSTION ENG'G: Court Approves Amendments to CIBC's Retention
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware allowed
David T. Austern to modify the terms of CIBC World Markets Corp.'s
retention as his financial advisor.
Mr. Austern is the Official Representative for Future Asbestos
Personal Injury Claimants in Combustion Engineering, Inc.'s
chapter 11 proceedings.
Under the terms of a Second Amended Retention Letter, CIBC World
will continue to:
(a) analyze the financial position, cash flow requirements,
operations, competitive environment and assets of ABB and
its affiliates;
(b) evaluate the financial effect of the implementation of
any plan of reorganization upon the operations, assets
and securities of ABB and its affiliates including, but
not limited to, the liquidity and creditworthiness of
ABB, its bank and public bond debt and the common stock
of ABB;
(c) assist and advise Mr. Austern in connection with
finalizing the terms of the Debtor's proposed plan of
reorganization and related plan documents, and
confirmation and implementation of the Debtor's plan of
reorganization; and
(d) perform all other necessary professional services that
Mr. Austern requests and as may be appropriate in
connection with the chapter 11 proceedings.
Joseph J. Radecki, Jr., Managing Director of CIBC World, told the
Court that under the Third Agreement, the Firm will be paid:
(a) $100,000 per month beginning with the month of May 2005
through the month during which the Debtor's disclosure
statement is approved; and
(b) up through the month of the effective date of a plan of
reorganization or termination of the Second Amended
Retention Letter, whichever occurs first, the Firm shall
be paid $25,000 per month, except for the month of
confirmation for which the monthly fee will be $100,000.
The Chapter 11 Filing
ABB Ltd.'s U.S. subsidiary, Combustion Engineering, Inc., filed
for chapter 11 protection on February 17, 2003, and delivered its
prepackaged plan to the U.S. Bankruptcy Court for the District of
Delaware that day to halt and resolve the tide of asbestos-related
personal injury suits brought against the companies. Over the
dozen years prior to the chapter 11 filing -- according to
information obtained from http://www.LitigationDataSource.com--
the number of claims against Combustion Engineering, its
affiliates, ABB and former joint venture partners, skyrocketed:
Year Asbestos Claims Asserted Against CE
---- -----------------------------------
1990 18,891 .
1991 19,000 .
1992 20,000 +
1993 21,000 +
1994 22,000 ++
1995 23,842 +++
1996 27,577 ++++++
1997 28,976 +++++++
1998 28,264 ++++++
1999 33,961 ++++++++++
2000 39,138 +++++++++++++
2001 54,569 ++++++++++++++++++++++++
2002 79,204 ++++++++++++++++++++++++++++++++++++++++
CE is named as a defendant in cases pending in multiple
jurisdictions, with plaintiffs alleging injury as a result of
exposure to asbestos in products manufactured or sold by CE or
that was contained in materials used in CE's construction or
maintenance projects.
Combustion Engineering's History
Combustion Engineering was formed in Delaware in 1912 as
The Locomotive Superheater Co. and manufactured and sold
superheaters for steam locomotives. From the 1930s forward,
CE's core business is designing, selling and erecting power-
generating facilities, including major steam generators. CE
also services large steam boilers and related electrical power
generating equipment. From the 1930s through the 1960s,
asbestos insulation was used on many CE boilers.
Bankruptcy Professionals
Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart LLP, and Laura
Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones &
Weintraub, P.C., represent Combustion Engineering.
The Blackstone Group, L.P., provides CE with financial advisory
services.
David M. Bernick, Esq., at Kirkland & Ellis, provides legal
advice to ABB.
The CE Settlement Trust, holding the largest unsecured claim
against CE's estate, is represented by Hasbrouck Haynes, Jr.
CPA, at Haynes Downard Andra & Jones LLP.
CREST CLARENDON: Fitch Affirms BB Rating on $10M Class D Certs.
---------------------------------------------------------------
Fitch Ratings affirms all of the rated notes issued by Crest
Clarendon Street 2002-1, Ltd. The affirmation of these notes is a
result of Fitch's annual rating review process and is effective
immediately:
-- $228,000,000 class A notes 'AAA';
-- $29,000,000 class B-1 notes 'A-';
-- $10,000,000 class B-2 notes 'A-';
-- $15,000,000 class C notes 'BBB';
-- $10,000,000 class D notes 'BB'.
The rating of the class A notes addresses the likelihood that
investors will receive timely payments of interest, as per the
governing documents, as well as the aggregate principal amount by
the stated maturity date. The ratings of the class B-1, B-2, C,
and D notes address the likelihood that investors will receive
ultimate interest payments, as per the governing documents, as
well as the aggregate principal amount by the stated maturity
date.
Crest Clarendon 2002-1 is a collateralized debt obligation that
closed Sept. 19, 2002. MFS Investment Management selected the
initial collateral and serves as the collateral administrator.
The transaction is a static portfolio composed of 54.0% real
estate investment trusts and 46.0% commercial mortgage backed
securities. Fitch has reviewed the credit quality of the
individual assets comprising the portfolio.
According to the May 31, 2005 trustee report, the class A
overcollateralization was 131.6%, the class B OC was 112.4%, the
class C OC was 106.4%, and the class D OC was 102.7%, relative to
test levels of 118.0%, 106.0%, 102.3%, and 101.0%, respectively.
All classes are also passing their interest coverage test as of
the May 31, 2005 trustee report. Additionally, no collateral has
defaulted since closing.
Fitch will continue to monitor and review this transaction for
future rating adjustments. Additional deal information and
historical data are available on the Fitch Ratings web site at
http://www.fitchratings.com/. For more information on the Fitch
VECTOR model, see 'Global Rating Criteria for Collateralized Debt
Obligations,' dated Sept. 13, 2004, also available at
http://www.fitchratings.com/
DLJ COMMERCIAL: Expected Losses Prompt Fitch to Junk Ratings
------------------------------------------------------------
DLJ Commercial Mortgage Corp. mortgage pass-through certificates,
series 1999-CG3 are downgraded:
-- $9.0 million class B-7 to 'B-' from 'B';
-- $9.0 million class B-8 to 'CC' from 'B-';
-- $4.5 million class C to 'C' from 'CC'.
In addition, Fitch upgrades these classes:
-- $49.5 million class A-3 to 'AAA' from 'AA-';
-- $13.5 million class A-4 to 'AAA' from 'A';
-- $15.7 million class A-5 to 'AA+' from 'A-';
-- $18.0 million class B-1 to 'AA-' from 'BBB';
-- $15.7 million class B-2 to 'A' from 'BBB-';
-- $27.0 million class B-3 to 'BBB' from 'BB+';
-- $13.5 million class B-4 to 'BB+' from 'BB'.
These classes are also affirmed by Fitch:
-- $68.7 million class A-1A at 'AAA';
-- $509.1 million class A-1B at 'AAA';
-- $17.7 million class A-1C at 'AAA';
-- Interest-only class S at 'AAA';
-- $25.0 million class A-2 at 'AAA';
-- $9.0 million class B-5 at 'BB-';
-- $11.2 million class B-6 at 'B+'.
Class D is not rated by Fitch Ratings.
The downgrade is a result of an increase in the amount of expected
losses associated with the specially serviced loans. Losses are
expected to completely deplete the class C and D certificates and
significantly reduce the balance of the class B-8 certificates.
The upgrades are a result of increased subordination levels due to
additional defeasance and loan amortization. Fourteen loans
(17.9%) have been defeased.
As of the June 2005 distribution date, the pool's aggregate
certificate balance has been reduced approximately 8.6% to $821.7
million from $899.2 million at issuance. There are currently six
loans (5.7%) in special servicing. The largest loan (2.2%) is a
multifamily property located in Kalamazoo, MI and is currently 90
days delinquent.
In March 2005, a receiver was appointed at the property. The
special servicer is currently considering a note sale. A recent
appraisal of the property indicates the potential of a significant
loss upon liquidation. The second largest loan (1.1%) is
collateralized by an office property located in Richmond, VA and
is 90 days delinquent. A broker opinion of value has been ordered
and the special servicer is preparing for foreclosure if
negotiations with the borrower are unsuccessful.
DLJ COMMERCIAL: Fitch Lifts Ratings on 8 DLJ 1998-CG1 Certs.
------------------------------------------------------------
DLJ Commercial Mortgage Corp.'s commercial mortgage pass-through
certificates, series 1998-CG1, are upgraded by Fitch Ratings:
-- $78.2 million class A-3 to 'AAA' from 'AA+';
-- $23.5 million class A-4 to 'AAA' from 'AA-';
-- $70.4 million class B-1 to 'AA+' from 'A-'
-- $23.5 million class B-2 to 'AA-' from 'BBB';
-- $15.6 million class B-3 to 'A+' from 'BBB';
-- $66.5 million class B-4 to 'BBB-' from 'BB';
-- $15.6 million class B-5 to 'BB+' from 'BB-'
-- $27.4 million class B-6 to 'B+' from 'B'.
In addition, Fitch affirms the following classes:
-- $781.2 million class A-1B at 'AAA';
-- $39.1 million class A-1C at 'AAA';
-- Interest-only class S at 'AAA';
-- $39.1 million class A-2 at 'AAA';
-- $15.6 million class B-7 at 'B-'.
Fitch does not rate the $15 million class C certificates. Class
A-1A has paid in full.
The upgrades are a result of increased subordination levels due to
loan amortization and prepayments. Additionally, 24 loans (10.5%)
have been defeased. As of the June 2005 distribution date, the
pool's aggregate certificate balance has decreased 21% since
issuance, to $1.21 billion from $1.56 billion.
Currently, there are five loans (2.3%) in special servicing and
minimal losses are expected on one of the loans. The largest
specially serviced loan (0.8%) is a retail property located in
Austin, TX and is 90 days delinquent. The property is currently
under contract for sale.
The next largest specially serviced loan (0.5%) is a retail
property located in Austin, TX. The loan is current and expected
to return to the master servicer.
The three credit assessed loans (11.4% of the pool) remain
investment grade. Fitch reviewed operating statements analysis
reports and other performance information provided by Wachovia.
The DSCR for the loans are calculated based on a Fitch adjusted
net cash flow and a stressed debt service based on the current
loan balance and a hypothetical mortgage constant.
Rivergate Apartments (6.9%) is an apartment property located in
Manhattan, NY. Year-end 2004 debt service coverage ratio was 1.35
times (x) compared to 1.28x as of YE 2003 and 1.36x at issuance.
As of YE 2004, the property occupancy remains stable at 97%
compared to 97% at issuance.
The Camargue (2.11%) is an apartment property located in
Manhattan, NY. YE 2004 DSCR, without credit for amortization, was
1.48x compared to 1.61x as of YE 2003 and 1.22x at issuance. As
of YE 2004, the property occupancy declined slightly to 94% from
99% at issuance.
Resurgens Plaza (2.42%) is an office property located in Atlanta,
GA. YE 2004 DSCR was 1.70x compared to 1.84x at issuance. As of
YE 2004, the property occupancy remains strong at 97% compared to
96% at issuance.
ENRON CORP: Royal Bank of Scotland Inks $41.8 Million Settlement
----------------------------------------------------------------
Enron Corp. reached an agreement with The Royal Bank of Scotland
PLC (RBS) to settle RBS' portion of the MegaClaims litigation.
RBS is the first of ten financial institutions named as defendants
in the suit to settle with the Enron estate.
According to the terms of the agreement, RBS will pay Enron
$41.8 million in cash. In addition, RBS will subordinate or
assign to Enron approximately $329 million of claims filed by RBS
in the Enron bankruptcy in return for a $20 million cash payment
from the estate. This agreement resolves all open issues between
Enron and RBS.
"The terms of this settlement are commensurate with the modest
role we believe RBS played relative to others involved in this
case," said Stephen Cooper, Enron's interim CEO and chief
restructuring officer. "We are pleased that the agreement was
reached in a timely manner and achieved our objective of a cash
recovery in addition to the subordination of claims against the
estate."
Other financial institutions involved in the MegaClaims litigation
include:
-- Barclays PLC;
-- Canadian Imperial Bank of Commerce;
-- Citigroup Inc.;
-- Credit Suisse First Boston, Inc.;
-- Deutsche Bank AG;
-- J.P. Morgan Chase & Co.;
-- Merrill Lynch & Co., Inc.;
-- Royal Bank of Canada; and
-- The Toronto-Dominion Bank.
The complaint includes claims that the banks aided and abetted
breaches of fiduciary duties; aided and abetted fraud; and engaged
in civil conspiracy. The suit also includes:
-- bankruptcy-based claims relating to equitable subordination;
-- preferential and/or fraudulent transfers; and
-- the re- characterization of certain transactions.
The agreement remains subject to the approval of the United States
Bankruptcy Court for the Southern District of New York, which has
jurisdiction over the MegaClaims litigation. Enron is represented
in this matter by Susman Godfrey LLP; Togut, Segal & Segal; and
Venable LLP.
With this latest settlement, Enron investors obtained $4.7 billion
in settlements including:
-- $2.2 billion from J.P. Morgan Chase & Co.,
-- $2 billion from Citigroup,
-- $222.5 million from Lehman Brothers,
-- $69 million from Bank of America,
-- $168 million from Enron's outside directors, and
-- $32 million from Andersen Worldwide.
Headquartered in Houston, Texas, Enron Corporation is in the midst
of restructuring various businesses for distribution as ongoing
companies to its creditors and liquidating its remaining
operations. Before the company agreed to be acquired, controversy
over accounting procedures had caused Enron's stock price and
credit rating to drop sharply.
Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed. The Confirmed Plan took effect on
Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,
Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in
their restructuring efforts.
EXIDE TECHNOLOGIES: Moody's Junks $290M Sr. Sec. Junior-Lien Notes
------------------------------------------------------------------
Moody's Investors Service downgraded all ratings for Exide
Technologies, Inc., and its foreign subsidiary Exide Global
Holdings Netherlands CV by two notches, concluding the review for
possible downgrade initiated on May 19, 2005. The rating outlook
following these actions is negative.
Moody's based the adverse rating actions on Exide's negative free
cash flow before debt service and insufficient EBIT coverage of
cash interest, which are expected to persist for the next couple
of years. It is additionally Moody's opinion that Exide's results
are highly vulnerable to further deterioration. The company is
exposed to cyclical industry conditions, the vagaries of weather,
competitive threats, and commodity pricing pressures. Exide's
future prospects are additionally highly reliant upon customer
price increases to offset rising commodity costs, as well as upon
execution of ongoing restructuring and consolidation programs and
working capital reduction initiatives.
These specific rating actions affecting Exide Technologies, Inc.
and its foreign subsidiary Exide Global Holdings Netherlands CV
were taken:
-- Downgrade to Caa3, from Caa1, of the rating for Exide
Technologies' $290 million of senior secured junior-lien
notes due March 2013;
-- Downgrade to B3, from B1, of the ratings for approximately
$265 million equivalent of remaining guaranteed first-lien
senior secured credit facilities for Exide Technologies and
Exide Global Holdings Netherlands CV, consisting of:
-- $100 million multi-currency Exide Technologies, Inc. shared
US and foreign bank revolving credit facility due May 2009;
-- $89.5 million remaining term loan due May 2010 at Exide
Technologies, Inc.;
-- $89.5 million remaining term loan due May 2010 at Exide
Global Holdings Netherlands CV.;
-- Euro 67.5 million remaining term loan due May 2010 at Exide
Global Holdings Netherlands CV.;
-- Downgrade to Caa1, from B2, of the senior implied rating for
Exide Technologies, Inc.;
-- Downgrade to Caa3, from Caa1, of the senior unsecured issuer
rating for Exide Technologies, Inc.
Exide Technologies, Inc. additionally has in place a $60 million
floating rate convertible subordinated note due September 2013
which is not rated by Moody's.
Exide successfully executed the fourth amendment to its senior
secured credit agreement effective June 14, 2005 and thereby
obtained four quarters of financial covenant relief critical to
mitigating the impact of the company's very unfavorable
performance during the fourth quarter ended March 31, 2005 and
other more recent events.
However, it is Moody's opinion that these covenant amendments are
not far-reaching enough. Given Exide's wide array of operating
challenges, Moody's believes that there is significant potential
for Exide to violate its financial covenants once they revert back
after one year to pre-existing levels that were established per
the terms of the February 2005 second amendment to the senior
secured credit agreement. Exide's achievement of positive free
cash flow remains elusive, even when looking forward two or more
years.
Exide's liquidity could prove insufficient in the event that near-
to-intermediate-term operating cash flows fall short of
expectations. Exide already utilized a portion of the incremental
$85 million of liquidity that was realized upon the closing of the
March 2005 notes offerings due to the company's unexpectedly
difficult fourth quarter ended March 31, 2005.
Following the closing of the notes transactions Exide has spent
considerably more than was anticipated on non-lead commodities,
the Sarbanes-Oxley review in progress, the unwinding of a foreign
exchange swap, unfavorable cost absorption due to lowered
production levels at a European plant, and working capital growth.
The credit agreement amendment notably also increased pricing for
all loan tranches to Libor + 5.0% (1.0% increase for the term
loan, 1.5% increase for the revolver, pricing grid eliminated).
Total annualized cash interest costs are expected to rise by more
than $10 million as a result of these rate increases and the March
2005 issuance of $100 million of gross incremental debt. Exide
has limited ability to cut back its capital expenditure or
restructuring programs without risking being unable to meet
improved productivity goals built into projections. Moody's
believes that Exide's cash plus unused revolver availability will
average under $100 million during the fiscal year ending March
2006, or less than 4% of its revenue base approximating
$2.7 billion. An anti-cash-hoarding provision was added under the
fourth amendment to the credit agreement limiting Exide's cash
balance at all times to a maximum of $50 million.
Exide expects to continue realizing 70% or more recovery of
incremental lead commodity costs going forward through increased
pricing, hedging, and the benefits of captive smelting capacity
for a substantial portion of its North America requirements. The
company also maintains that it will begin realizing similar
recovery rates for other commodities such as caustic soda, coke,
soda ash, and polypropylene. However, given the commodity nature
of most of the company's lead acid battery product lines, Moody's
believes that Exide's ability to continue receiving increased
pricing is highly dependent upon actions taken by its key
competitors in each market (most notably JCI for transportation
batteries, Enersys and C&D Technologies for industrial batteries).
Over the past several months Exide experienced another changeover
of senior management, and the ability of the current management
team to overhaul the company in the midst of so many external
pressures will have to be proven over time. These individuals
were notably successful with regard to closing the bank amendment
referred to above, as well as reaching an agreement effective June
13, 2005 with the Pension Benefit Guaranty Corporation with regard
to pension waivers for plan years 2003 and 2004. Exide will
provide second liens on certain agreed-upon collateral security to
support the delayed payment of approximately $50 million of
funding obligations over a five-year period through 2010.
To review, the final terms of Exide's $290 million of senior notes
due March 2013 include junior liens on all assets that secure the
obligations under the senior secured credit agreement. The
security interest for these notes is also specifically designated
as junior to up to $50 million for any liens granted to the PBGC
for the deferred pension payments. While no domestic subsidiary
guarantees are currently in effect due to the fact that Exide does
not presently have any significant subsidiaries, the indenture
provides that any significant future domestic subsidiaries would
have to provide guarantees. These notes contain an equity claw-
back provision for up to 35% of the principal at 110.5% of face,
an asset sale proceeds clawback provision at 100% of face, a
change of control provision at 101% of face, and call provisions
at scheduled redemption prices after March 15, 2009.
The two-notch differential between Exide's senior implied rating
and its senior secured (junior lien) notes rating reflects:
* the up-notching of the senior secured first-lien bank
facilities;
* the existence of the higher-priority $50 million PBGC
obligation; and
* the deteriorating credit protection metrics of the company.
Moody's believes that realization of recovery on the notes may be
dependent upon achieving favorable enterprise valuations through
the sale of the whole company or significant operating segments,
as opposed to just liquidating assets. These notes contain a 30-
day grace period non-payment of interest when due.
Exide's $60 million of floating rate convertible subordinated
notes due September 2013 (not rated) are general unsecured
obligations. They are convertible into common stock of the
company at an initial conversion price of $17.37 per share, which
is currently out-of-the-money given the today's market price
approximating $5.30 per share. Interest on the notes is payable
in cash quarterly at a rate of Libor less 1.5%. There is a 30-day
grace period in effect for non-payment of interest when due. The
notes indenture does not contain any optional redemption
provisions, but does contain a change of control provision for
repurchase at 100% of face value.
Exide, now headquartered in Alpharetta, Georgia, is one of the
largest global manufacturers of lead acid batteries, with net
sales approximating $2.7 billion. The company manufactures and
supplies lead acid batteries for transportation and industrial
applications worldwide.
FC CBO: S&P Puts Senior Notes' BB Rating on Watch Positive
----------------------------------------------------------
Standard & Poor's Ratings Services placed its rating on the senior
notes issued by FC CBO Ltd./FC CBO Corp., an arbitrage CBO
transaction, on CreditWatch with positive implications.
The current rating action reflects factors that have positively
affected the credit enhancement available to support the senior
notes since the previous rating action in February 2005. The
primary factor was an increase in the level of
overcollateralization available to support the senior notes due to
de-levering of the senior notes. According to the June 3, 2005
payment date report, the senior notes paid down approximately
$83.215 million (or 31.91%), $2.097 million of which was paid from
interest proceeds. Standard & Poor's also noted that FC CBO Ltd.
carries defaulted securities at zero value in its par value tests.
As part of its analysis, Standard & Poor's will be reviewing the
results of the current cash flow runs generated for FC CBO Ltd./FC
CBO Corp. to determine the level of future defaults the rated
tranches can withstand under various stressed default timing and
LIBOR scenarios, while still paying all of the rated interest and
principal due on the notes. The results of these cash flow runs
will be compared to the projected default performance of the
performing assets in the collateral pool to determine whether the
rating assigned to the notes remains consistent with the credit
enhancement available.
Rating Placed on CreditWatch Positive
FC CBO Ltd.
Rating
------
Class To From
----- -- ----
Senior notes BB/Watch Pos BB
Other Outstanding Rating
FC CBO Ltd.
Class Rating
----- ------
Second priority notes CC
Transaction Information
Issuer: FC CBO Ltd.
Co-issuer: FC CBO Corp.
Current manager: Prudential Investment Management
Underwriter: Goldman Sachs
Trustee: JPMorganChase Bank N.A.
Transaction type: Arbitrage corporate high-yield CBO
Tranche Initial Prior Current
Information Report Action Action
----------- ------- ------ ------
Date (MM/YYYY) 7/1997 2/2005 6/2005
Senior note rating AA BB BB/Watch Pos
Senior note bal (Mil. $) 802.50 260.81 177.59
Sec priority nt bal (Mil. $) BBB CC CC
Sec priority nt bal (Mil. $) 92.50 123.496 128.701
FEDERAL-MOGUL: Gets Court OK to Hire Hymans Robertson as Actuaries
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave
Federal-Mogul Corporation and its debtor-affiliates permission to
hire Hymans Robertson to provide expert actuarial advice, analysis
and consulting services related to the T&N Pension Scheme, nunc
pro tunc to April 19, 2005.
Hymans Robertson is expected to:
(a) review and analyze the actuarial assumptions and
calculations of Mercer Human Resources Consulting with
respect to the T&N Pension Scheme;
(b) develop and analyze alternative methods to account for the
funding or assumption of the T&N Pension Scheme;
(c) provide consulting services related to the T&N Pension
Scheme as is necessary in the negotiation of a plan of
reorganization. These services may include advising
Federal-Mogul in connection with negotiations with
pensions regulators in the United Kingdom and the Pension
Protection Fund, a newly created independent funding
service for pensions in the United Kingdom that serves a
function roughly similar to that of the Pension Benefit
Guaranty Corporation in the United States; and
(d) provide other actuarial and consulting services with
respect to the T&N Pension Scheme, including possible
expert witness testimony, as needed. (Federal-Mogul
Bankruptcy News, Issue No. 81; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
About Hymans Robertson
Hymans Robertson is an independent limited liability partnership
that has provided advisory and management services with respect to
occupational pension schemes in the United Kingdom since 1921.
Hymans Robertson's core services include actuarial consultancy and
pension scheme design and management. Hymans Robertson can be
contacted at:
London Finsbury Tower
103-105 Bunhill Row
London EC1Y 8LZ
Tel: 020 7847 6000
Fax: 020 7847 6060
About Federal-Mogul
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some US$6
billion. The Company filed for chapter 11 protection on October
1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J.
Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at
Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
US$10.15 billion in assets and US$8.86 billion in liabilities.
At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925
billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's
balance sheet showed a US$2.048 billion stockholders' deficit,
compared to a US$1.926 billion deficit at Dec. 31, 2004.
FREMONT HOME: Moody's Rates $14.25MM Class M11 Certificate at Ba1
-----------------------------------------------------------------
Moody's Investors Service has assigned a rating of Aaa to the
senior certificates issued in Fremont Home Loan Trust 2005-B
transaction, and ratings ranging from Aa1 to Ba1 to the mezzanine
certificates in the deal.
The securitization is backed by subprime mortgage loans originated
by Fremont Investment & Loan. The ratings are based primarily on
the credit quality of the loans and the credit enhancement in the
transaction, which consists of subordination,
overcollateralization, and excess spread.
Fremont will act as servicer for the loans in this transaction.
Wells Fargo Bank, N. A. will be the master servicer for the
transaction.
The complete rating actions are:
Issuer: Fremont Home Loan Trust 2005-B
Securities: Mortgage-Backed Certificates, Series 2005-B
Class Size Rating:
* 1-A-1 $202,612,000 Aaa
* 1-A-2 $50,654,000 Aaa
* 2-A-1 $221,575,000 Aaa
* 2-A-2 $253,176,000 Aaa
* 2-A-3 $18,961,000 Aaa
* M1 $17,201,000 Aaa
* M2 $41,771,000 Aa1
* M3 $39,807,000 Aa2
* M4 $19,657,000 Aa3
* M5 $19,657,000 A1
* M6 $17,200,000 A2
* M7 $14,743,000 A3
* M8 $14,743,000 Baa1
* M9 $12,286,000 Baa2
* M10 $13,269,000 Baa3
* M11 $14,252,000 Ba1
GLOBAL CROSSING: GCUK Balance Sheet Upside-Down by GBP170.4 Mil.
----------------------------------------------------------------
Global Crossing (Nasdaq: GLBC) reported financial results for the
first quarter of 2005 for its Global Crossing (UK)
Telecommunications Limited (GCUK) subsidiary. These results were
previously announced according to US Generally Accepted Accounting
Principles (US GAAP) as part of Global Crossing's consolidated
results, which were reported on May 10, 2005.
"Our UK business secured approximately 140 new contracts in the
first quarter, attesting to Global Crossing's strength as a
provider of managed IP services -- services for which our network
was built," said John Legere, Global Crossing's chief executive
officer. "This new business, combined with continued migration
from legacy services and a shift away from lower-margin customers,
shows why GCUK is a model for successful transformation of Global
Crossing's business as a whole."
First Quarter Results
GCUK's results below are based on UK Generally Accepted Accounting
Principles (UK GAAP) and in British pounds sterling. Its first
quarter report to noteholders, which will be filed by Global
Crossing on Form 8-K, includes a reconciliation to US Generally
Accepted Accounting Principles (US GAAP).
Revenue
GCUK revenue for the first quarter of 2005 was 60 million pounds,
compared with 68 million pounds in the first quarter of 2004 and
67 million pounds in the fourth quarter of 2004. The year-over-
year revenue decline reflected a 3 million pound net decline in
"invest and grow" revenue from a discrete set of customers, as
previously disclosed in GCUK's annual report to noteholders for
the year ended December 31, 2004. The remaining 5 million pound
year- over-year decline was a result of global wholesale voice
restructuring activities initiated by Global Crossing in 2004.
The sequential decline in revenue was primarily attributable to
the loss of two customers who chose to manage operations
themselves or through affiliates, as well as a 2 million pound
reduction in non-cash deferred indefeasible rights of use (IRU)
revenue due to the positive impact of an adjustment in the fourth
quarter. The remaining difference in sequential reported revenue
was the result of previously announced wholesale voice
restructuring initiatives.
Global Crossing's UK subsidiary signed approximately 140 new
contracts in the first quarter of 2005, including a seven-year,
56 million pound contract with the British Council and more
recently, a contract with the Forestry Commission that is expected
to generate 14 million pounds over seven years.
Managed services accounted for the majority of the solutions sold
and managed by GCUK, comprising 87 percent of the company's total
revenue stream for the first quarter of 2005. The migration of
legacy managed services to converged Internet Protocol (IP)
managed services has progressed, resulting in 5 percent IP revenue
growth and improved margins.
Cost of Access
Cost of access expense was 19 million pounds in the first quarter
of 2005, compared to 25 million pounds in the first quarter of
2004 and 14 million pounds in the fourth quarter of 2004. The
year-over-year reduction resulted from lower mobile phone
termination rates and company initiatives including lower
wholesale voice volumes and reduced facility costs. The
sequential increase in cost of access was principally the result
of credits from dispute settlements and regulatory savings which
significantly improved the cost of access expense line in the
fourth quarter of 2004.
Gross Margin
Gross margin (defined as revenue less cost of access) for the
first quarter of 2005 was 69 percent of revenue, compared to 64
percent in the first quarter of 2004. The year-over-year
improvement resulted primarily from improvements in cost of access
expense. Gross margin in absolute terms declined slightly to
42 million pounds in the first quarter, versus 43 million pounds
in the same quarter last year. Gross margin for the fourth
quarter of 2004 was 79 percent of revenue. In absolute terms,
gross margin declined from 53 million pounds in the fourth quarter
of 2004 to 42 million pounds in the first quarter of 2005. This
sequential decline in gross margin, both as a percentage of
revenue and in absolute terms, was due to the above-described
unusual cost of access benefits and the one time adjustment for
deferred IRU revenue, both of which positively impacted the fourth
quarter of 2004.
Operating Expenses
Operating expenses for the first quarter of 2005 were 24 million
pounds, compared to 25 million pounds in the first quarter of 2004
and 16 million pounds in the fourth quarter of 2004. The slight
year-over-year decline was due to lower customer-specific costs.
The sequential increase in operating expenses was primarily due to
unusual items that benefited the fourth quarter; specifically
4 million pounds in reduced real estate costs mostly due to real
estate restructuring reserve release and a rates rebate, and a
2 million pound accrual reversal due to a year-to-date corporate
overhead recalculation.
Third party maintenance remained flat year over year and
sequentially at approximately 5 million pounds.
Earnings
GCUK's earnings before interest, taxes, depreciation and
amortization (EBITDA) for the first quarter of 2005, as defined in
Table 5 that follows, were 10 million pounds, compared with
15 million pounds in the first quarter of 2004 and 38 million
pounds in the fourth quarter of 2004. UK GAAP EBITDA includes
foreign exchange gains and losses, which significantly impacted
EBITDA results in each quarter.
The year-over-year decline in EBITDA was primarily attributable to
the impact of foreign exchange rate fluctuations on dollar-
denominated debt, resulting in a loss of 3 million pounds in the
first quarter of 2005 on the Senior Notes due 2014, compared to a
3 million pound gain on inter-company balances in the first
quarter of 2004. The foreign exchange gains and losses were
unrealized, and therefore did not impact cash. Excluding the
foreign exchange impacts, EBITDA remained relatively flat.
"GCUK's performance in the first quarter of 2005 showed a
consistent trend of managing margins and costs," commented Mr.
Legere. "GCUK's fourth quarter results last year were positively
affected by several unusual and infrequent items, including
dispute settlements, corporate overhead accrual reversals, and
favorable foreign exchange rates."
The significant decline in EBITDA from the fourth quarter is
attributed primarily to the unusual and infrequent items discussed
that benefited fourth quarter results. Specifically, these
items included:
* 7 million pounds in credits from the settlement of cost-of-
access disputes and regulatory savings;
* a 2 million pound accrual reversal for a corporate overhead
recalculation;
* 4 million pounds in reduced real estate costs due to real
estate restructuring reserve release and a rates rebate; and
* a 5 million pound foreign exchange benefit on dollar-
denominated debt.
The 5 million pound foreign exchange benefit, combined with a 3
million pound loss in foreign exchange in the first quarter of
2005, amounted to an 8 million pound variance sequentially. The
remaining difference in EBITDA resulted primarily from reduced
gross margin associated with the loss of recurring revenue and
non- cash deferred IRU revenue.
GCUK's net loss for the first quarter of 2005 was 6 million
pounds, compared to a net loss of less than 1 million pounds in
the first quarter of 2004 and to net income of 37 million pounds
in the fourth quarter of 2004. The year-over-year variance was
attributable to 5 million pounds in lower EBITDA for the reasons
described above and 5 million pounds in additional interest
expense, partially offset by 3 million pounds in increased
recognition of deferred tax assets in the current quarter. The
sequential variance primarily comprised 28 million pounds in lower
EBITDA for the reasons described above, 6 million pounds in higher
depreciation and amortization, and 7 million pounds in increased
interest expense.
Capital Expenditures
In the first quarter of 2005, cash used for capital expenditures
and leases was 4 million pounds, versus 5 million pounds in the
first quarter of 2004 and 4 million pounds in the fourth quarter
of 2004.
Cash and Financing
As of March 31, 2005, GCUK had 22 million pounds of unrestricted
cash on hand and short-term deposits.
Beginning cash for 2005 was 21 million pounds. Cash flow for the
first quarter of 2005 reflected annual bonus payments for 2004,
certain professional fees relating to the high yield bond
offering, and full year payments against annual maintenance
contracts.
About Global Crossing (UK) Telecommunications Ltd.
Global Crossing (UK) Telecommunications Ltd. provides a full range
of managed telecommunications services in a secure environment
ideally suited for IP-based business applications. The company
provides managed voice, data, Internet and e-commerce solutions to
the strong and established commercial customer base, including
more than 100 UK government departments, as well as systems
integrators, rail sector customers and major corporate clients. n
addition, GCUK provides carrier services to national and
international communications service providers.
Global Crossing (UK) Telecommunications operates a high-capacity
UK network comprising over 5,600 route miles of fiber optic cable
connecting 150 towns and cities and reaching within just over one
mile of 64 percent of UK businesses. The UK network is linked into
the wider Global Crossing network that connects more than 300
cities and 30 countries worldwide, and delivers services to more
than 500 major cities, 50 countries and 6 continents around the
globe.
At March 31, 2005, GCUK's balance sheet showed a GBP170,397,000
stockholders' deficit, compared to a GBP161,565,000 deficit at
Dec. 31, 2004.
About Global Crossing
Headquartered in Florham Park, New Jersey, Global Crossing Ltd. --
http://www.globalcrossing.com/-- provides telecommunications
solutions over the world's first integrated global IP-based
network, which reaches 27 countries and more than 200 major cities
around the globe. Global Crossing serves many of the world's
largest corporations, providing a full range of managed data and
voice products and services. The Company filed for chapter 11
protection on January 28, 2002 (Bankr. S.D.N.Y. Case No.
02-40188). When the Debtors filed for protection from their
creditors, they listed $25,511,000,000 in total assets and
$15,467,000,000 in total debts. Global Crossing emerged from
chapter 11 on December 9, 2003.
At March 31, 2005, Global Crossing's total liabilities exceed its
total assets by $30 million.
GMAC COMMERCIAL: Fitch Places Low-B Ratings on 6 Cert. Classes
--------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc., series 2005-C1
commercial mortgage pass-through certificates are rated by Fitch
Ratings:
-- $61,200,000 class A-1 'AAA';
-- $344,507,000 class A-1A 'AAA';
-- $300,000,000 class A-2 'AAA';
-- $187,300,000 class A-3 'AAA';
-- $68,100,000 class A-4 'AAA';
-- $157,393,000 class A-5 'AAA';
-- $1,490,771,000 class X-2* 'AAA';
-- $1,597,857,327 class X-1* 'AAA';
-- $159,785,000 class A-M 'AAA';
-- $127,829,000 class A-J 'AAA';
-- $33,954,000 class B 'AA';
-- $11,984,000 class C 'AA-';
-- $23,968,000 class D 'A';
-- $15,979,000 class E 'A-';
-- $15,978,000 class F 'BBB+';
-- $15,979,000 class G 'BBB';
-- $19,973,000 class H 'BBB-';
-- $5,992,000 class J 'BB+';
-- $5,992,000 class K 'BB';
-- $7,989,000 class L 'BB-';
-- $3,995,000 class M 'B+';
-- $3,995,000 class N 'B';
-- $3,994,000 class O 'B-';
-- $21,971,327 class P 'NR'.
* Notional Amount and Interest Only
Classes A-1, A-1A, A-2, A-3, A-4, A-5, X-2, A-M, A-J, B, C, and D,
are offered publicly, while classes X-1, E, F, G, H, J, K, L, M,
N, O, and P 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 91
fixed-rate loans having an aggregate principal balance of
approximately $1,597,857,327, as of the cutoff date.
For a detailed description of Fitch's rating analysis, please see
the report titled 'GMAC Commercial Mortgage Securities, Inc.,
series 2005-C1' dated May 24, 2005 available on the Fitch Ratings
web site at http://www.fitchratings.com/
H&E EQUIPMENT: Good Industry Conditions Cue S&P's Stable Outlook
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its ratings outlook for
H & E Equipment Services LLC (B+/Stable/--) to stable from
negative, on improving credit protection measures stemming from a
recovery in the equipment rental industry. All ratings were
affirmed. H&E had about $300 million of total debt outstanding
at March 31, 2005.
"Although conditions have improved, the ratings continue to
reflect our assessment of H&E's weak business position as a
provider of construction equipment rental services and its highly
leveraged financial profile," said Standard & Poor's credit
analyst John Sico.
H&E, based in Baton Rouge, Louisiana, is a regional operator in
the competitive equipment rental industry. The company offers
construction and industrial equipment for sale or rent through a
network of 39 locations in the intermountain and Gulf Coast
regions of the U.S.
The outlook is now stable. Market conditions have improved, and
the industry recovery is expected to continue through 2005. The
company should now operate within credit metrics commensurate for
the rating over the business cycle, given the modestly improving
conditions. However, upside potential is limited. Should
operating performance weaken more than expected in the next down
cycle, or if liquidity were to weaken because of acquisitions, the
outlook could be revised to negative or the ratings lowered.
Industrywide conditions have improved after suffering declines in
construction spending and an excess of equipment for rent.
Nonresidential construction spending rose a modest 4% in 2004,
following decreases of about 5% in 2003 and about 15% in 2002.
Spending is expected to grow further in 2005, bolstering demand
for rental equipment. Improved conditions are reflected in
increased rental rates, improved used-equipment pricing, and
reduced excess fleet capacity. H&E sales rose 15% in 2004, mainly
attributable to better conditions in the rental industry, and the
momentum has continued into the first quarter of 2005, with sales
up 15% and EBITDA up 74% from the first quarter of 2004.
Conditions are expected to be still better in the seasonally
strong second and third quarters.
Still, performance in the Gulf Coast region remains sluggish
because of the extended turnaround period for petrochemical plant
maintenance; H&E has significantly reduced its crane fleet, while
maintaining its service level, in the region. The company has
consolidated some locations in both its regions and benefited from
the reduced costs.
H&E is expected to increase its fleet spending in 2005 as a result
of the improved market conditions. Fleet age was about 44 months
at the end of March 2005 and is not a concern.
IDC CLAMBAKES: Case Summary & 19 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: IDC Clambakes, Inc.
dba The Newport Regatta Club
Two Goat Island
Newport, Rhode Island 02840
Bankruptcy Case No.: 05-12267
Type of Business: The Debtor owns a property designed for wedding
receptions and special celebrations. The
property is set on six acres of oceanfront lawn
in the center of Newport Harbor.
See http://www.newportexperience.com/
Chapter 11 Petition Date: June 16, 2005
Court: District of Rhode Island (Providence)
Debtor's Counsel: Diane Finkle, Esq.
Winograd Shine & Zacks
123 Dyer Street
Providence, Rhode Island 02903
Tel: (401) 273-8300
Total Assets: $3,190,000
Total Debts: $565,000
Debtor's 19 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Sysco Food Services Trade debt $7,784
P.O. Box AP
Norton, MA 02766
Del Nero, Inc. Trade debt $2,637
11 Farewell Street
Newport, RI 02840
Kinnealey Quality Meats Trade debt $2,479
P.O. Box 847191
Boston, MA 02284
Copley Distributors Trade debt $2,048
Anthony's Seafood Trade debt $1,506
Green Acres Distributors, Trade debt $1,203
Inc.
GCS Service, Inc. Trade debt $825
Chaves' Gardens, Inc. Trade debt $597
Perkins, Inc. Trade debt $569
Sid Wainer & Son Trade debt $457
RI Distributing Trade debt $437
Oak Grove Laundries Trade debt $215
Martignetti Companies of RI Trade debt $208
McLaughlin & Moran, Inc. Trade debt $152
Newport County Propane, Inc. Trade debt $143
Newport Specialty Foods Trade debt $136
One Stop Building Supply Trade debt $33
Baynes & Jones Electric Trade debt $20
Supply
Goat Island South Condo Unknown
Association
J.P. MORGAN: Fitch Affirms Low-B Ratings on 6 Certificate Classes
-----------------------------------------------------------------
Fitch Ratings affirms J.P. Morgan Chase Commercial Mortgage
Securities Corp.'s, pass-through certificates, series 2001-CIBC3:
-- $15.4 million class A-1 'AAA';
-- $174.8 million class A-2 'AAA';
-- $457.3 million class A-3 'AAA';
-- Interest-only classes X1 and X2 'AAA';
-- $36.9 million class B at 'AA+';
-- $36.9 million class C at 'A+';
-- $9.8 million class D at 'A';
-- $27.1 million class E 'BBB';
-- $10.8 million class F 'BBB-';
-- $17.3 million class G 'BB+';
-- $6.5 million class H 'BB';
-- $6.5 million class J 'BB-';
-- $7.6 million class K 'B+';
-- $4.3 million class L 'B';
-- $4.3 million class M 'B-'.
The $16.3 million class NR is not rated by Fitch.
The affirmations are due to the stable pool performance and
scheduled paydown of the transaction. As of the May 2005
distribution date, the pool's aggregate principal balance has been
reduced 4.1% to $831.8 million from $867.5 million at issuance.
The certificates are collateralized by 125 fixed-rate mortgage
loans secured by 137 properties.
There is one specially serviced loan in the transaction (1.07%).
This loan is secured by a 259-unit multifamily property located
Middletown, OH. The loan transferred to the special servicer due
to monetary default and is 90 days delinquent. The borrower has
been unable to reinstate the loan and the special servicer is
considering workout alternatives.
Fitch reviewed credit assessments of the Franklin Park Mall loan
(10.4%) and the Kings Plaza pooled note (5.7%). The Fitch
stressed debt service coverage ratio for each loan is calculated
using servicer-provided net operating income less reserves divided
by Fitch stressed debt service payment. Based on their improved
performance, both loans maintain investment grade credit
assessments.
The Franklin Park Mall loan is secured by a 1,072,383 square foot,
291,215 sf in-line, regional mall located in Toledo, OH. The
Fitch stressed DSCR for the loan remains strong at 1.64 times (x)
for year-end 2004 compared to 1.45x at issuance.
The Kings Plaza pooled note (5.7%) is secured by a 1,050,000 sf
mall located in Brooklyn, NY. The Kings Plaza mortgage loan
consists of notes A1, A2, and B, with an aggregate original
balance of $222 million. The A2 note, included in this
transaction, is pari passu with the A1 note, in the JPMCC 2001-KP
trust, which also contains the B note. The Fitch stressed DSCR
for the pooled note remains strong at 2.24x for year-end 2004
compared to 2.15x at issuance.
KB HOME: Earns $304 Million of Net Income for Second Quarter 2005
-----------------------------------------------------------------
KB Home (NYSE: KBH) reported financial results for its second
quarter ended May 31, 2005.
"Our outstanding second quarter performance underscores the
strength of KB Home's geographically diverse operations," said
Bruce Karatz, chairman and chief executive officer. "Consumer
demand in our markets remains vibrant, fueling strong growth in
unit deliveries and selling prices, and driving the 36% increase
in second quarter revenues to more than $2.1 billion. And the
significant improvement in our margins during the quarter
amplified the impact of top-line growth to produce a 78% increase
in year-over-year second quarter net income. Our ability to
capitalize on these strong market conditions strengthens our
optimism for the balance of 2005."
Company-wide revenues reached $2.13 billion in the second quarter,
increasing 36% from $1.57 billion in the year-earlier quarter,
reflecting higher revenues from the Company's homebuilding
operations. Second quarter housing revenues grew 37% to $2.11
billion from $1.54 billion in the second quarter of 2004 on a 20%
increase in unit deliveries and a 14% increase in the average
selling price. Unit deliveries rose to 8,535 in the second
quarter of 2005 from 7,124 in the corresponding quarter of 2004.
The Company's overall average selling price jumped to $247,800 in
the second quarter from $216,800 in the year-earlier quarter,
reflecting substantial pricing power across all of the Company's
U.S. geographic regions and in France.
Higher housing revenues and a significantly improved operating
margin boosted construction operating income 77% to $294.8 million
in the second quarter of 2005 from $166.8 million in the year-
earlier quarter. The Company's construction operating margin
improved by 3.2 percentage points in the second quarter of 2005 to
13.9% from 10.7% in the year-earlier period, reflecting a higher
housing gross margin (26.8% versus 23.8%) and a slight improvement
in the Company's selling, general and administrative expenses as a
percentage of housing revenues (12.9% versus 13.0%). The
Company's pretax income rose to $275.0 million in the current
quarter, increasing 80% from $152.5 million in the second quarter
of 2004, largely the result of higher revenues and an improved
operating margin. The pretax margin expansion of 3.2 percentage
points to 12.9% further contributed to the higher pretax income.
Earnings per diluted share rose 72% to $2.06, up from $1.20 in the
second quarter of 2004, as the impact of higher pretax income was
partially offset by slight increases in the Company's effective
income tax rate and average number of diluted shares outstanding.
"Housing demand in our major markets during the second quarter
continued to outstrip supply, producing the highest number of net
new orders for any single quarterly period in our Company's
history," said Karatz. "Backlog at the end of the quarter was up
across the board, both in units and dollars, in all five of our
geographic regions. We now have approximately $6.79 billion of
future revenues in the pipeline, a solid platform for continued
growth through the second half of 2005. To support that growth
and enhance our financial position, following the end of the
second quarter we issued $300 million of 6 1/4% senior notes due
2015. The transaction extends our debt maturity at a very
favorable rate, improves our liquidity and provides us with
greater flexibility to accomplish our financial and operational
goals. Our overall financing strategy remains unchanged: to
ensure adequate capacity for future growth while working to
achieve year-over-year improvement in our leverage ratio."
The Company generated 12,290 net orders in the second quarter of
2005, up from 10,726 net orders in the year-earlier period. This
15% growth in net orders contributed to a 52% increase in the
Company's backlog value to approximately $6.79 billion at May 31,
2005, up from approximately $4.48 billion at May 31, 2004. Unit
backlog rose 31% to 27,089 units at May 31, 2005 from 20,636 units
at May 31, 2004. Each of the Company's geographic regions posted
double-digit increases in backlog value as of May 31, 2005.
For the six months ended May 31, 2005, KB Home delivered 15,382
homes, an increase of 16% from the 13,320 homes delivered in the
first half of 2004. Total revenues for the first six months of
2005 reached $3.77 billion, up 29% from $2.92 billion in the same
period of 2004. Net income in the first half of the year
increased 73% to $304.3 million, up from $176.3 million in the
first half of 2004. Diluted earnings per share for the period
rose 67% to $3.47, up from $2.08 per diluted share in the first
six months of 2004.
"As our results demonstrate, KB Home continues to deliver on its
commitment to increase shareholder value," said Mr. Karatz. "Our
business is clearly benefiting from a strong focus on strategic
market positions, a proven operating model and organic growth.
Our recent 2-for-1 stock split is tangible evidence of the
confidence our board of directors has in the future of our
business. And, with excellent first half financial results and
record backlog levels supporting our projections, we are
comfortable raising our earnings guidance for 2005 to $9.00 per
diluted share. This new guidance represents a 14% improvement
from our previous estimate and a 58% increase over our 2004
earnings per share of $5.70."
About the Company
Building homes for nearly half a century, KB Home --
http://www.kbhome.com/-- is one of America's premier homebuilders
with domestic operating divisions in some of the fastest-growing
regions and states: West Coast-California; Southwest-Arizona,
Nevada and New Mexico; Central-Colorado, Illinois, Indiana and
Texas; and Southeast-Florida, Georgia, North Carolina and South
Carolina. Kaufman & Broad S.A., the Company's publicly-traded
French subsidiary, is one of the largest homebuilders in France.
In fiscal 2004, the Company delivered 31,646 homes in the United
States and France. It also operates KB Home Mortgage Company, a
full-service mortgage company for the convenience of its buyers.
* * *
As reported in the Troubled Company Reporter on June 2, 2005,
Moody's Investors Service assigned a Ba1 rating to KB Home's $300
million of 6.25% senior notes due June 15, 2015. At the same
time, Moody's affirmed all of the company's existing ratings,
including the ratings on the company's existing senior notes at
Ba1 and on its senior subordinated debt at Ba2. The ratings
outlook is positive.
The positive ratings outlook reflects KB Home's improving
financial results and profile and success at reducing its earnings
concentration in California.
The ratings incorporate the company's:
* leading share position in many of the markets that it serves;
* successful track record both in de novo expansions and in
integrating acquisitions; and
* long history through various cycles.
However, the ratings also consider:
* the financial and integration risks that accompany an
aggressive expansion strategy;
* the still-sizable concentration of land inventory values and
profits in California;
* the growing proportion of profits coming out of one market-
Las Vegas; and
* the historically large share repurchase program.
Proceeds of the new note offering will be used to pay down
drawings under the company's revolver. Pro forma for this
$300 million note offering and repayment of $300 million of the
$436 million drawn under the revolver as of the company's first
fiscal quarter ended February 28, 2005, total homebuilding
debt/capitalization would be a seasonally high 52.2%%. Moody's
expects this ratio to be worked down to under 50% by fiscal year-
end.
Going forward, consideration for further improvement in the
company's ratings will depend on the company's continuing to
improve key financial metrics while further deleveraging the
balance sheet. Factors that could stress the ratings going
forward include a sizable share repurchase program, a large
impairment charge, and/or a major acquisition involving large
amounts of issued or assumed debt that had a significant effect on
debt leverage.
KMART CORP: Asks Court for Judgment to Bar Workers' Comp. Claims
----------------------------------------------------------------
A number of current and former employees of Kmart Corporation
filed proofs of claim for workers' compensation. Several state
agencies also filed claims on behalf of Kmart employees in their
states, anticipating that Kmart would not continue to honor
prepetition workers' compensation claims.
A complete list of the 112 claims is available for free at:
http://bankrupt.com/misc/Kmart_workers_compensation.pdf
Kmart has objected to the Claims in its Eighth Omnibus Objection
for the reason that "pursuant to the [Plan of Reorganization],
Kmart is obligated to continue the Workers' Compensation programs
in accordance with applicable state law and is responsible for all
valid claims for benefits and liabilities under the Workers'
Compensation programs regardless of when the applicable injuries
were incurred."
Although the Plan provided for the continuation of workers'
compensation benefits, the holders of the 112 Claims nonetheless
responded to Kmart's Objection. Each response created a contested
matter subject to Rule 9014 of the Federal Rules of Bankruptcy
Procedure.
By this motion, Kmart asks the U.S. Bankruptcy Court for the
Northern District of Illinois to enter judgment in its favor with
respect to the 112 Claims.
William J. Barrett, Esq., at Barack Ferrazzano Kirschbaum Perlman
& Nagelberg LLP, in Chicago, Illinois, asserts that each of the
Claims should be disallowed for the reason that the Plan preserved
the Claimants' rights under state law, and thus the Claimants do
not need to receive a distribution under the Plan to obtain a
recovery on their Claim. In fact, any recovery received by a
claimant under the Plan would duplicate the benefits the claimant
receives under state law on its workers' compensation claim.
Mr. Barrett maintains that summary judgment in Kmart's favor is
appropriate for each of the Claims because no claimant is entitled
to a double recovery.
Mr. Barrett further argues that a claim should not be allowed if
Kmart has otherwise assumed and agreed to pay the obligation in
full or if allowance of the claim would result in a double
recovery. Besides, Kmart has honored, in accordance with
applicable state law and its Plan, all prepetition and
postpetition claims for workers' compensation benefits.
Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART
Holding Corporation) -- http://www.bluelight.com/-- operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam. The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474). Kmart emerged from chapter 11 protection on May 6,
2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts. The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection. Kmart bought Sears, Roebuck & Co., for $11 billion to
create the third-largest U.S. retailer, behind Wal-Mart and
Target, and generate $55 billion in annual revenues. The
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act expired on Jan. 27, without complaint by the Department of
Justice. (Kmart Bankruptcy News, Issue No. 96; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
KPMG LLP: Negotiating to Avoid Criminal Prosecution
---------------------------------------------------
KPMG LLP is negotiating with the U.S. Department of Justice to
avoid prosecution on charges that it obstructed justice and sold
abusive tax shelter products that deprived the Government of more
than $1 billion in tax revenue.
The Department of Justice has been investigating certain tax
services that KPMG offered from 1996 to 2002. This is part of a
larger tax shelter investigation into the role of accounting
firms, law firms, large banks and taxpayers who participated in
the development, promotion and implementation of tax shelters.
On July 9, 2002, the Justice Department, on behalf of the Internal
Revenue Service, filed a lawsuit in the U.S. District Court for
the District of Columbia (Dist. D.C. Case No. 1:02-mc-00295)
against KPMG LLP. In that the proceeding, the Government asked
the court to compel the public accounting firm to disclose to the
IRS information about all tax shelters it marketed since 1998. On
Sept. 7, 2004, the DOJ and KPMG advised Judge Hogan that the
accounting firm had produced all of the documents sought by the
IRS. Robert S. Bennett, Esq., and Kenneth W. Gideon, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, and John M. Bray, Esq.,
at King & Spaulding LLP, represent KPMG in this civil proceeding.
"KPMG takes full responsibility for the unlawful conduct by former
KPMG partners during that period, and we deeply regret that it
occurred," the accounting firm said in a statement last week.
In order to ensure that this type of conduct does not occur again,
KPMG says that:
* it no longer provides the services in question.
* it has put in place a process to ensure that those
responsible for wrongdoing have been separated from the
firm.
* it has instituted firm-wide structural, cultural and
governance reforms to ensure the highest ethical standards.
* it has undertaken significant change in its business
practices.
"We remain in discussions with the Department of Justice and
continue to cooperate fully in its investigation," KPMG said, and
"looks forward to a resolution that recognizes the significant
reforms the firm has already made in response to this matter while
appropriately sanctioning the firm for this wrongdoing."
"We take this matter very seriously and seek to resolve it fairly
and expeditiously," the auditing firm stressed.
About KPMG
KPMG is a global network of professional services firms providing
Audit, Tax and Advisory services. It operates in 148 countries
and have around 6,500 partners, 70,000 client service
professionals, and 17,000 administration and support staff working
in member firms around the world.
LEAP WIRELESS: Earns $12.6 Million of Net Income in First Quarter
-----------------------------------------------------------------
Leap Wireless International, Inc. (OTCBB: LEAP) reported strong
financial results for the first quarter of 2005, including solid
growth in total revenues, the Company's first full quarter with
positive net income following the Company's emergence from
Chapter 11 bankruptcy in the third quarter of 2004, and record
adjusted consolidated earnings before interest, taxes,
depreciation and amortization (EBITDA). Operational results were
likewise strong, led by Leap's Cricket(R) service adding nearly
46,000 net new customers during the first quarter to end the
period with approximately 1,615,000 total customers and reporting
a customer churn rate of 3.3%.
Total consolidated revenues for the first quarter were
$228.4 million, an increase of $21.6 million over the total
consolidated revenues of $206.8 million for the first quarter of
2004 and the highest reported by the Company to date.
Consolidated operating income for the first quarter was
$21.9 million, an increase of $44.2 million over the consolidated
operating loss of $22.3 million for the first quarter of 2004.
Consolidated net income was positive, totaling $12.6 million for
the first quarter, or net earnings of $0.21 per share,
representing a $40.6 million improvement over the consolidated net
loss of $28.0 million, or a net loss of $0.48 per share, reported
for the first quarter of 2004.
Adjusted consolidated EBITDA for the first quarter was a record
$70.0 million, representing a 32% increase over the adjusted
consolidated EBITDA of $53.2 million for the first quarter of
2004. Adjusted consolidated EBITDA represents EBITDA adjusted to
exclude the effects of: reorganization items, net; other income
(expense), net; gains on sale of wireless licenses; impairment of
intangible assets; impairment of long-lived assets and related
charges; and stock-based compensation awards. The adoption of
fresh-start reporting as of July 31, 2004, resulted in material
adjustments to the historical carrying values of the Company's
assets and liabilities. As a result, the Company's post-emergence
balance sheet, statements of operations and statements of cash
flows are not comparable in many respects to the Company's
financial statements for periods ending prior to the Company's
emergence from Chapter 11.
"The strong accomplishments of the first quarter, which include
the Company's first full quarter of positive net income since
emerging as a reorganized entity, clearly demonstrate that we are
building on the financial performance we delivered in 2004," said
Doug Hutcheson, president and chief executive officer of Leap.
"In addition to delivering these outstanding results for the
quarter, we strengthened our management team, improved our
customer satisfaction, introduced our new brand awareness campaign
and delivered on our product development commitments while
maintaining the Company's strong financial position."
"As we move forward with our business, we expect to continue to
focus on our balanced growth strategies, which include the
strengthening of our distribution network, increasing the number
of payment locations available to our customers and expanding the
Company's market presence through the development of new,
potentially high-value markets that we believe are very attractive
for our business. All in all, we are very encouraged by the start
of 2005 and we look forward to further building on our progress as
consumers come to understand and embrace the improvements the
business has achieved," concluded Mr. Hutcheson.
Key operational and financial performance measures for the first
quarter of 2005 include:
-- Average revenue per user per month (ARPU) for the first
quarter, based on service revenue, was $39.03, an
improvement of $1.58 from the ARPU of $37.45 for the first
quarter of 2004.
-- Cost per gross customer addition (CPGA) for the first
quarter was $128, nearly even with the CPGA of $124 reported
for the first quarter of 2004.
-- Non-selling cash costs per user per month (CCU) was $18.94
for the first quarter, an improvement of $1.14 from the CCU
of $20.08 for the first quarter of 2004.
-- Average minutes of use per customer per month (MOU) during
the first quarter of 2005 remained at approximately 1,500,
over twice the industry average and consistent with the MOU
data reported for the fourth quarter of 2004.
-- Cumulative purchases of property and equipment (capital
expenditures) for the three months ending March 31, 2005
were $24.5 million.
"Our performance reflects the Company's continuing focus on
operational excellence, and we are very pleased with the strong
results reported across the board in the first quarter," said Dean
Luvisa, Leap's acting chief financial officer. "We believe that
the results we are reporting today demonstrate yet again the
operating efficiency of our business. We have completed the first
quarter confident in our ability to profitably execute our
business plan and meet our financial goals."
Headquartered in San Diego, California, Leap Wireless
International Inc. -- http://www.leapwireless.com/-- is a
customer-focused company providing innovative communications
services for the mass market. Leap pioneered the Cricket
Comfortable Wireless(R) service that lets customers make all of
their local calls from within their local calling area and receive
calls from anywhere for one low, flat rate. As of December 31,
2004, the company's consolidated assets show $2,090,482,000 and
consolidated liabilities show $620,632,000.
The Company filed for chapter 11 protection on April 13, 2003
(Bankr. S.D. Calif. Case No. 03-03470). The Honorable Louise
DeCarl Adler entered an order confirming the Company's Fifth
Amended Plan on October 22, 2003, and the plan became effective on
Aug. 17, 2004. Robert A. Klyman, Esq., Michael S. Lurey, Esq.,
and Eric D. Brown, Esq., at Latham and Watkins LLP, represent the
Debtors in their restructuring efforts.
* * *
As reported in the Troubled Company Reporter on May 20, 2005,
Standard & Poor's Ratings Services kept its rating for San Diego,
Calif.-based wireless carrier Leap Wireless International Inc.
(B-/Watch Neg/--) on CreditWatch with negative implications, where
they were placed on April 5, 2005, despite the company's recent
filing of its 2004 10-K. The company has not yet filed its 10-Q
for the first quarter of 2005, as required under terms of its bank
loan. The waiver it previously received for the late filing of
its financial statements provides an extension until June 15,
2005, to deliver results for the first quarter of 2005. Assuming
the company files its 10-Q by June 15, the ratings are expected to
be affirmed. However, a negative outlook may be assigned, to
reflect the incremental financial and business risk associated
with the funding and build-out of new licenses. The recovery
rating of "3" on the $610 million secured bank loan at Cricket
Communications Inc. is not on CreditWatch, because it is unlikely
to be impaired by the factors that would drive a potential
downgrade.
"The company has not yet provided good clarity on its funding
plans for build-out and launch of wireless markets covered by FCC
spectrum licenses obtained in broadband PCS Auction No. 58 in
early 2005," said Standard & Poor's credit analyst Catherine
Cosentino.
LEAP WIRELESS: Form 10-Q Filing Prompts S&P to Remove Watch
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B-' corporate
credit and senior secured debt ratings on San Diego, California-
based wireless carrier Leap Wireless International Inc., and
removed them from CreditWatch following the June 15 release of the
company's 10-Q. The outlook is stable.
The ratings were placed on CreditWatch with negative implications
on April 5, 2005, following the failure of Leap to file its 2004
10-K by the March 31, 2005, deadline, which constituted a breach
of the terms of the company's secured bank facility. However, the
company was able to obtain waivers. The delay resulted from its
internal review of lease accounting practices. Leap later released
its 10-K on May 16, 2005.
"Standard & Poor's simultaneously raised its recovery rating on
the company's subsidiary Cricket Communications Inc.'s $610
million senior secured facility to '2' from '3', reflecting the
purchase of additional wireless licenses by Leap in the FCC's
Auction 58 in February 2005," said Standard & Poor's credit
analyst Allyn Arden. The new licenses provide the company with
greater asset coverage of the company's senior secured bank
facility in the event of default. Standard & Poor's ratings on
Leap Wireless are constrained by the very high degree of business
risk, given its nontraditional wireless business model and limited
operating history.
Leap's business strategy is to focus on keeping customer
acquisition costs low by providing service at lower price points
with unlimited minutes but within a limited geographic area. The
company's average cost per gross add is roughly $135-$145,
approximately one-third that of a traditional provider. Leap's
target market consists of the lower income and younger segment of
the population. As a result, average revenue per user tends to be
low, while churn rates generally are higher than the industry
average. Leap's target market tends to be a less mobile consumer
group, which uses the wireless phone as an inexpensive wire line
alternative. Leap customers are attracted to the unlimited minute
plans and the average minutes of use for a Leap subscriber is
roughly double that of other wireless companies, at 1,500 per
month. However, the resultant lower income and youth segments
generally are less attractive groups than those of many other
wireless carriers, given that wireless usage by this customer
segment is more sensitive to changes in macroeconomic factors.
LOWERY SMITH: Case Summary & 15 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Lowery W. & Gail Clark Smith
3204 Camp Street
New Orleans, Louisiana 70115
Bankruptcy Case No.: 05-15024
Chapter 11 Petition Date: June 16, 2005
Court: Eastern District of Louisiana (Mew Orleans)
Debtors' Counsel: Phillip K. Wallace, Esq.
2027 Jefferson Street
Mandeville, Louisiana 70448
Tel: (985) 624-2824
Fax: (985) 624-2823
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtors' 15 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Hibernia National Bank $259,551
P.O. Box 61336
New Orleans, LA 70161
Hibernia National Bank $220,792
P.O. Box 61336
New Orleans, LA 70161
Bank One $150,000
P.O. Box 2071
Milwaukee, WI 53201
Bank One Credit card $25,000
purchases
City of New Orleans Taxes on 3230 $22,760
Camp Street
Bank One Credit line $17,024
Iberia Bank Line of credit $15,899
American Express Credit card $10,660
purchases
H. Hunter White, III $6,362
Standard Mortgage $3,704
Sears Credit card $2,171
purchases
Ladner's Pools $1,273
Dillards Credit card $1,234
purchases
Louisiana Landscape $997
Iberia Bank Unknown
MAGELLAN HEALTH: Executives Establish 10b5-1 Stock Trading Plans
----------------------------------------------------------------
Magellan Health Services, Inc. (Nasdaq:MGLN) disclosed that
Chairman and Chief Executive Officer Steven J. Shulman, President
and Chief Operating Officer Rene Lerer, M.D., and Chief Financial
Officer Mark S. Demilio have each established individual stock
trading plans in accordance with Rule 10b5-1 under the Securities
Exchange Act of 1934.
Rule 10b5-1 allows corporate officers and directors to adopt
written stock trading plans at a time when they do not possess
material, non-public information. Once adopted, participants have
no discretion over the transactions subsequently effectuated under
the plans, which are independently administered in accordance with
criteria provided by the plans.
Under the plans adopted, over a period beginning June 16, 2005,
Magellan shares may be acquired upon the exercise of vested stock
options held by Shulman, Lerer and Demilio and those and other
shares owned by them may be sold as determined by the parties
administering the plans and in accordance with objective criteria
pre-established by the plans. The plans were established by these
officers in order to diversify personal holdings and to qualify
for an exception from the new tax that would otherwise be
applicable to their stock options under the American Jobs Creation
Act of 2004, which became effective Jan. 1, 2005.
In October 2004, Congress enacted the American Jobs Creation Act,
which imposes new tax treatment on deferred compensation
arrangements, including stock options with exercise prices below
the fair market value of the stock on the date of grant. Magellan
granted to certain executives, including Shulman, Lerer and
Demilio, upon and soon after its emergence from bankruptcy in
January 2004, options which started to vest in 2005 that for tax
purposes are deemed to have exercise prices below the stock's fair
market value on the date the options were granted. The Act
provides that, as options of this kind vest, the holders become
subject to income tax at ordinary rates plus a 20 percent
additional tax on the amount by which the market value of the
stock on the date of vesting exceeds the option exercise price.
However, under transitional Internal Revenue Service regulations,
an exception from the additional tax is available for options that
are exercised during 2005.
Headquartered in Farmington, Conn., Magellan Health Services
(Nasdaq:MGLN) is the country's leading behavioral health disease
management organization. Its customers include health plans,
corporations and government agencies.
* * *
As reported in the Troubled Company Reporter on May 5, 2005,
Standard & Poor's Ratings Services revised its outlook on Magellan
Health Services Inc. to positive from stable.
At the same time, Standard & Poor's affirmed its 'B+' counterparty
credit rating on Magellan and its 'B+' issue credit ratings
assigned to Magellan's $241 million 9.375% senior notes due
November 2008 and its $185 million credit facility due August
2008.
"The revised outlook reflects Magellan's better than expected
profitability and cash flow since emergence from bankruptcy in
January 2004 and the potential for the company to achieve
sustained improvement in its underlying financial condition by
year-end 2005," explained Standard & Poor's credit analyst Joseph
Marinucci.
MEI LLC: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Debtor: MEI, LLC
P.O. Box 6408
Evansville, Indiana 47719-0408
Bankruptcy Case No.: 05-71351
Type of Business: The Debtor is a real estate developer.
Chapter 11 Petition Date: June 17, 2005
Court: Southern District of Indiana (Evansville)
Debtor's Counsel: Adria S. Price, Esq.
Price & Associates, LLC
P.O. Box 100
Santa Claus, Indiana 47579
Tel: (812) 937-4444
Fax: (812) 937-4441
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Rick Buck $139,437
P.O. Box 6408
Evansville, IN 47719-0408
Thomas E. Price $13,046
Attorney at Law
P.O. Box 443
Mt. Carmel, IL 62863
Sommer Barnard Ackerson Attorneys, PC $16,016
One Indiana Square, Suite 3500
Indianapolis, IN 46204-2023
CitiBusiness Card $6,376
Kinney, Kasha & Buthod, LLP $6,066
John Friend and Co., P.C. $5,340
Stewart & Irwin $5,146
Regional Services Corp. $3,683
Mundy Insurance & Real Estate $3,681
Jerome Alles $3,200
TestAmerica Analytical Testing Corp. $3,009
Fyle & Hawkins $2,090
Liberty Mutual Insurance Group $651
Petroleum Club $563
Glenn A. Grampp $500
Verizon Wireless $409
Audio-Tech Business Book Summaries $365
American Family Insurance $275
AT&T $258
Indiana Department of Revenue Unknown
MERIDIAN AUTOMOTIVE: Court OKs Paying Prepetition Employee Debts
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave
Meridian Automotive Systems, Inc., and its debtor-affiliates the
authority to:
(1) pay all prepetition employee wages, salaries and other
accrued compensation;
(2) reimburse all prepetition employee business expenses;
(3) make all contributions to prepetition benefit programs;
(4) make all payments for which prepetition payroll deductions
were made; and
(5) pay all processing costs and administrative expenses
relating to all payments and contributions.
As previously reported, the Debtors currently employ approximately
4,700 domestic employees, of whom 3,740 are hourly employees and
960 are full-time salaried employees. The Debtors also contract
for approximately 350 temporary hourly positions.
The Debtors' average aggregate monthly compensation for their
Employees is approximately $15 million. Majority of payroll
payments are made by direct deposit through electronic transfer
of funds directly to the Employees, and the remaining Employees
are paid via check.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed
for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case
Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
MERIDIAN AUTOMOTIVE: Court Approves Reclamation Claims Procedures
-----------------------------------------------------------------
Judge Walrath approves the proposed uniform procedures for the
treatment and reconciliation of all Reclamation Claims of Meridian
Automotive Systems, Inc., and its debtor-affiliates:
(a) Any vendor asserting a Reclamation Claim must satisfy all
requirements entitling it to a right or reclamation under
applicable state law and Section 546(c)(1) of the
Bankruptcy Code;
(b) The Debtors will file a notice with the Court listing
those Reclamation Claims the Debtors deem to be valid and
its amount. The Debtors will serve the Reclamation Notice
on any official committee appointed in the Debtors' cases
and on each Reclamation Claimant;
(c) The Reclamation Notice will be filed by the Debtors no
later than 60 days after the Court's entry of the
Reclamation Order;
(d) If the Debtors fail to file the Reclamation Notice prior
to the expiration of the Notice Deadline, any Reclamation
Claimant may ask the Court to determine the validity of
its Reclamation Claim, provided that any request will not
be filed prior to the expiration of the Notice Deadline;
(e) All parties-in-interest will have 20 days from the date
the Reclamation Notice is filed with the Court to object
to the inclusion or exclusion in the Reclamation Notice of
any Reclamation Claim or its amount. All Reclamation
Claims in the Reclamation Notice that do not draw any
objection will be fixed in the amount provided in the
Reclamation Notice without further Court Order;
(f) With respect to any Reclamation Claim on account of which
a timely objection to the Reclamation Notice is filed, the
amount of the Reclamation Claim will be fixed pursuant to
an agreement of the relevant parties, or by Court Order;
and
(g) The Debtors reserve the right to further object to any
Reclamation Claim fixed pursuant to these Reclamation
Procedures or Court order on any other grounds, including
that all Reclamation Claims are subject to a creditor's
security interest in or lien on the goods subject to the
Reclamation Claim. The fixing of a Reclamation Claim will
not be deemed a final allowance of any Reclamation Claim.
Two Creditors Withdraw Objections
Delta Polymers Company and Empire Electronics, Inc., have
withdrawn their objections to the Debtors' request.
As previously reported in the Troubled Company Reporter on
June 8, 2005, Delta Polymers Company and Empire Electronics, Inc.,
contend that the Reclamation Procedures include a reservation
which, if granted, would allow the Debtors to strip reclamation
claimants of their rights under Section 546(c) of the Bankruptcy
Code at any time during the bankruptcy cases.
In separate filings with the Court, the Claimants explain that
under the proposed Reclamation Procedures, the Debtors will be
entitled to effectively extinguish reclamation claimants' rights
to reclaim goods by providing reclamation claimants with sham
priority administrative expense claims or liens while at the same
time preserving the Debtors rights to take away the claim or lien
at a future date.
Delta Polymers has demanded the segregation and reclamation of
goods totaling $62,977 that it delivered to the Debtors before
the Petition Date.
Empire has sought the return of $269,018 in prepetition goods
sold to the Debtors.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed
for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case
Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
MERRIL DEAN: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Merril Clark & Tamara Tisdale Dean
11245 East Del Timbre Drive
Scottsdale, Arizona 85259
Bankruptcy Case No.: 05-10985
Chapter 11 Petition Date: June 17, 2005
Court: District of Arizona (Phoenix)
Judge: George B. Nielsen Jr.
Debtors' Counsel: Donald W. Powell, Esq.
Carmichael & Powell, P.C.
7301 North 16th Street, #103
Phoenix, Arizona 85020
Tel: (602) 870-0777
Fax: (602) 870-0296
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
The Debtors did not file a list of their 20 Largest Unsecured
Creditors.
MERRILL LYNCH: Moody's Rates Class B-5 Sub. Certificates at Ba2
---------------------------------------------------------------
Moody's Investors Service has assigned Aaa ratings to the senior
certificates issued by Merrill Lynch Mortgage Investors Trust,
Series 2005-HE1, and ratings ranging from Aa2 to Ba2 to the
subordinate certificates in the deal.
The securitization is backed by adjustable-rate (84%) and fixed-
rate (16%) subprime mortgage loans acquired by Merrill Lynch
Mortgage Capital Inc. from various originators. The ratings are
based primarily on the credit quality of the loans, and on the
protection from subordination, overcollateralization, excess
spread as well as from a lender paid mortgage insurance policy.
The credit quality of the loan pool is stronger than the average
loan pool backing recent subprime mortgage securitizations.
Moody's expects collateral loss to range from 2% to 2.25%.
Wilshire Credit Corporation, a wholly owned subsidiary of the
Seller (Merrill Lynch Mortgage Capital Inc., which is indirectly
owned by Merrill Lynch, will service the loans. Moody's has
assigned a SQ2 servicer quality rating to Wilshire as a primary
servicer of subprime loans.
The complete rating actions are:
Merrill Lynch Mortgage Investors Trust
Mortgage Loan Asset-Backed Certificates, Series 2005-HE1:
* Class A1-A, rated Aaa
* Class A1-B, rated Aaa
* Class A2-A, rated Aaa
* Class A2-B, rated Aaa
* Class A2-C, rated Aaa
* Class M-1, rated Aa2
* Class M-2, rated A2
* Class M-3, rated A3
* Class B-1, rated Baa1
* Class B-2, rated Baa2
* Class B-3, rated Baa3
* Class B-4, rated Ba1
* Class B-5, rated Ba2
METALFORMING TECHNOLOGIES: Wants to Use Lenders' Cash Collateral
----------------------------------------------------------------
Metalforming Technologies, Inc., and its debtor-affiliates ask the
U.S. Bankruptcy Court for the District of Delaware for authority
to use cash collateral securing repayment of obligations to its
prepetition lenders led by Patriarch Partners, LLC, and Canadian
Imperial Bank of Commerce acting as Administrative Agent.
The Debtors' primary prepetition indebtedness consists of:
-- $44 million of borrowings under a senior secured term loan
which includes:
(i) a $31.8 million term A loan; and
(ii) a $12.2 million term B loan,
plus unpaid accrued interest as of June 10, 2005, of
$868,922 under the term A loan and $225,946 under the term B
loan.
-- $4.4 million owed to the Prepetition Term Loan Lenders by
their Canadian non-Debtor affiliate;
-- $8 million owed under a revolving credit facility; and
-- $52 million of miscellaneous unsecured debt.
Patriarch Partners, and its affiliates hold approximately 52% of
the outstanding common equity in MTI, 55% of the Debtors'
outstanding indebtedness under the Prepetition Term Loans and 75%
of the Debtors' indebtedness under the Prepetition Revolving
Credit Facility.
The cash collateral will be used in accordance with a sixteen-week
budget projecting:
Weekly Budget
June 29, 2005 to Oct. 2, 2005
Total Receipts $50,516,000
Total Operating
Disbursements 61,193,000
Other Income/Expense 1,567,000
-----------
Net Loss $9,110,000
A full-text copy of the Debtors' 16-Week Budget is available at no
charge at http://ResearchArchives.com/t/s?2a
Headquartered in Chicago, Illinois, Metalforming Technologies,
Inc., and its debtor-affiliates manufacture seating components,
stamped and welded powertrain components, closure systems, airbag
housings and charge air tubing assemblies for automobiles and
light trucks. The Company and eight of its affiliates, filed for
chapter 11 protection on June 16, 2005 (Bankr. D. Del. Case Nos.
05-11697 through 05-11705). Joel A. Waite, Esq., Robert S. Brady,
Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt &
Taylor, represent the Debtors in their restructuring efforts. As
of May 1, 2005, the Debtors reported $108 million in total assets
and $111 million in total debts.
METALFORMING TECH: Asks Court to Okay $5 Million Interim DIP Loan
-----------------------------------------------------------------
Metalforming Technologies, Inc., and its debtor-affiliates ask the
U.S. Bankruptcy Court for the District of Delaware for authority
to access $5 million on an interim under a debtor-in-possession
financing provided by a consortium of lenders led by Patriarch
Partners, LLC, and Canadian Imperial Bank of Commerce as
Administrative Agent.
The Debtors tell the Court that without immediate access to fresh
financing, they will not have sufficient liquidity to sustain
their business operations. Over the past few months, the Debtors
have been operating on a negative cash-flow basis and have been
surviving on a day-to-day basis for several weeks.
The lenders agreed to provide a $12 million revolving DIP
financing facility, to allow the Debtors to operate their chapter
11 cases as they seek to market and sell substantially all of
their assets to the highest and best bidder.
The key provisions of the DIP Financing are:
-- the Debtors obtain access to $5 million of interim DIP
financing, to be increased to the $12 million upon the entry
of a final DIP Financing Order;
-- interest will accrue at CIBC's Alternate Base Rate plus
2.5%;
-- in the event of a default, the interest payable on the loan
increases by 2%;
-- the commitment termination date is Sept. 30, 2005;
-- priming liens will be granted to the DIP Lenders on all
unencumbered property or property that is otherwise
encumbered by liens of the Prepetition Lenders. To give
adequate protection for diminution in the value of their
collateral, the Prepetition Lenders will be given
replacement liens on all and pre- and post-petition property
subject to the liens of the DIP lenders; and
-- a carve-out of $400,000 for the Debtors' professionals and
$100,000 for the committee's professionals; and
-- an event of default will occur if the Debtors fail to
consummate a Section 363 sale of substantially all of their
assets by October 14, 2005.
The Debtors assure the Court that the DIP Credit Agreement is the
result of arms' length negotiations between the Debtors and the
DIP Agent for the DIP Lenders.
A full-text copy of the Debtors' DIP Financing is available for a
fee at:
http://www.researcharchives.com/bin/download?id=050617042632
Headquartered in Chicago, Illinois, Metalforming Technologies,
Inc., and its debtor-affiliates manufacture seating components,
stamped and welded powertrain components, closure systems, airbag
housings and charge air tubing assemblies for automobiles and
light trucks. The Company and eight of its affiliates, filed for
chapter 11 protection on June 16, 2005 (Bankr. D. Del. Case Nos.
05-11697 through 05-11705). Joel A. Waite, Esq., Robert S. Brady,
Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt &
Taylor, represent the Debtors in their restructuring efforts. As
of May 1, 2005, the Debtors reported $108 million in total assets
and $111 million in total debts.
MIRANT CORP: Committee Joins in $2-Bil. Suit Against Southern Co.
-----------------------------------------------------------------
Mirant Corp. (MIRKQ) and the Official Committee of Unsecured
Creditors of Mirant Corp. in its bankruptcy proceeding filed a
lawsuit against Mirant's former parent company, Southern Company
(NYSE: SO), seeking recovery of at least $2 billion in connection
with transfers made to Southern prior to Southern's spin-off of
Mirant in April 2001.
The lawsuit was filed in the U.S. Bankruptcy Court for the
Northern District of Texas, in Ft. Worth, where Mirant's
Chapter 11 reorganization case is being heard by the Honorable
Judge D. Michael Lynn. Mirant and the Mirant Corp. Committee are
plaintiffs in the lawsuit.
Mirant is represented in the lawsuit by the law firm of White &
Case LLP, reporting directly to a Special Committee of the Board
of Directors that is composed of board members who were not on the
Mirant board prior to Mirant's spin-off from Southern on April 2,
2001. The Mirant Corp. Committee is represented by the Texas-
based law firm Andrews Kurth LLP.
"As detailed in the complaint, Southern Company caused Mirant to
incur a mountain of debt and then stripped out approximately
$2 billion in payments and transfers in anticipation of Mirant's
April 2001 spin-off, even though Southern knew or should have
known that Mirant had been left with inadequate resources to meet
the obligations that its former parent had caused it to incur,"
said Thomas E. Lauria, lead attorney for White & Case in Mirant's
Chapter 11 case.
"The Special Committee's investigation revealed that Southern had
been advised as early as 1997 that its fledgling merchant energy
subsidiary was undercapitalized and was creating potential
regulatory issues for the utility giant. Without informing
Mirant's management, Southern developed a strategy to capitalize
on the then white-hot merchant energy sector to raise billions of
dollars of financing, much of which Southern caused Mirant to flow
upstream, only to then spin-off the debt-burdened subsidiary
before its latent problems could come home to roost," Mr. Lauria
said.
The lawsuit asks the bankruptcy court to issue orders that would:
-- Avoid fraudulent payments, dividends and other transfers
that Southern forced Mirant to make during 1999-2001
totaling more than $1.9 billion;
-- Reverse Southern's conversion of nearly a billion dollars of
equity investments it made in Mirant into debt (which it
then caused Mirant to repay with interest), entitling Mirant
to recover all amounts paid;
-- Declare Mirant to be the alter ego of Southern, so that
Southern is liable to Mirant's creditors for the full extent
of Mirant's obligations to creditors;
-- Declare that Southern induced Mirant to breach its duty of
loyalty to creditors and Initial Public Offering (IPO)
investors;
-- Sustain Mirant's objections to all claims made by Southern
against the Mirant estate in the Chapter 11 proceeding,
which total approximately $70 million, and;
-- Equitably subordinate all Southern claims in the Chapter 11
proceeding to the claims of all other Creditors (thus
putting Southern's claims "last in line" for payment, behind
all other creditors).
The lawsuit states that Southern made cash advances to Mirant to
fund early investments in power generation projects, and that any
differences between project financings and the purchase price were
characterized in Southern's financial statements through the end
of 1996 as equity contributions to Mirant.
However, Southern later re-characterized all subsequent equity
contributions to Mirant as cash advances or loans in order to
strip Mirant of much-needed cash prior to the IPO and spin-off of
Mirant, and required Mirant not only to repay the principal amount
of the advances (totaling more than $926 million) but also
required Mirant to pay interest on those advances totaling
approximately $108 million, the lawsuit charges.
The lawsuit further alleges that during 1997, 1998, and 1999,
Southern caused Mirant to make or commit to make acquisitions
totaling more than $6 billion, for which Mirant was unable to
obtain significant project financing because it grossly overpaid
for most of the acquisitions in that time frame.
The lawsuit states that Mirant's own energy trading and marketing
group consistently warned management that it did not expect to be
able to sell the output of those power plants at the high energy
prices that were used to justify the purchase price for many of
those power plant acquisitions.
However, Southern nevertheless caused Mirant to proceed with the
acquisitions, the lawsuit says. Because it paid more than fair-
market value for those acquisitions, Mirant's balance sheet showed
a total increase in "goodwill" in 1997 of approximately
$1.6 billion.
The lawsuit additionally describes how an analysis in 1997 of
Mirant's business prospects by independent consultants hired by
Southern concluded that Mirant was undercapitalized by
$893 million, and recommended that Southern consider an IPO of
19.9% of Mirant's stock to raise potentially $500 million, to be
followed by a complete spin-off of Mirant to Southern's
shareholders. However, the lawsuit alleges, Southern kept the IPO
and spin-off plan secret from Mirant's senior management until
late December 1999.
The lawsuit also asserts that Southern caused Mirant to borrow
$700 million in July 1999, of which $192.5 million was used to
reduce advances and $97 million was used to pay interest on the
advances, which, again, Southern had previously characterized to
investors as equity contributions that would not require interest
payments.
Further, in October 1999 Southern caused a Mirant subsidiary to
borrow $1.45 billion, which was used in part to repay an
additional $734.5 million of advances and an additional $10.3
million of interest. In total, advances and interest payments
returned by Mirant to Southern in the last half of 1999 totaled
$1.03 billion, the lawsuit states.
Between December 1999 and May 2000, Southern caused Mirant to pay
dividends to Southern totaling over $668 million, even though
Mirant had to borrow all the funds needed to pay those dividends,
the lawsuit states.
Then, in preparation for the planned spin-off, Southern caused
Mirant to acquire certain generating businesses from Potomac
Electric Power Co. (PEPCO) at grossly excessive prices, resulting
in Mirant booking over $1.5 billion in "goodwill" related to the
transaction and assuming out-of-market power sales contracts with
a long term liability in excess of $2.3 billion, the lawsuit
states.
The acquisition was necessary from Southern's viewpoint in order
for the Mirant spin-off to pass the so-called active trade or
business test, which was necessary to obtain a favorable tax
treatment ruling, the lawsuit says.
Southern also caused Mirant to issue one share of Series B
Preferred Stock to Southern, valued at $234.5 million, which
Southern later caused Mirant to redeem in exchange for Mirant's
interest in a subsidiary jointly owned by the two companies.
Mirant's interest in the subsidiary was valued for book purposes
at approximately $247.9 million at the time of redemption of the
Series B preferred share.
Once Mirant was spun off by Southern on April 2, 2001, the company
immediately began to experience cash flow and liquidity problems,
which caused the company to liquidate some of its most valuable
assets and terminate expensive contractual obligations incurred
while Southern was in control. Despite their efforts, Mirant's
debt was downgraded to below investment grade by Moody's Investor
Service in December 2001, just seven months after the spin-off.
Upon advice of its new auditors, Mirant restated its financial
statements for 2000 and 2001 with significant reductions in
earnings and equity positions.
These developments forced Mirant's energy trading business to
begin posting 100 percent collateral on all energy transactions,
further constricting liquidity and leading to Mirant having to
file for protection under Chapter 11 of the U.S. Bankruptcy Code
in July 2003, when the company could not repay over a billion
dollars of then maturing debt, the lawsuit says.
Southern was aware that the $2 billion of "upstream" payments it
caused Mirant to make before the spin-off would jeopardize
Mirant's liquidity and its ability to generate much-needed cash
flow from its energy trading business, the lawsuit asserts.
In early 2004, Mirant's board of directors formed a special
committee to investigate potential claims and causes of action
arising from transfers to Southern in connection with Mirant's
initial public offering and spin-off.
The members of the special committee are Stuart Eizenstat,
Chairman, Robert McCullough and Ray Robinson. None of these
directors have ever had any affiliation with Southern, and they
all joined the board after Mirant became an independent company in
April 2001. The special committee directed the law firm White &
Case to conduct an investigation into the transfers and report its
findings to the committee.
In turn, the committee made a recommendation to the Mirant board
with respect to the actions to be taken in connection with the
subject matter of the investigation. Subsequently, the board
authorized the litigation against Southern, which was filed today.
S. Marce Fuller, Mirant's President and CEO, and A.W. Dahlberg,
chairman of the Mirant board, recused themselves from all board
discussions and decisions relating to the legal action against
Southern because they had been Southern Co. officers before the
formation and ultimate spin-off of Mirant from Southern.
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 CORP: Court Denies Deutsche Bank's Claim Estimation Request
------------------------------------------------------------------
Judge Lynn of the U.S. Bankruptcy Court for the Northern District
of Texas denies Deutsche Bank Securities, Inc.'s request to
estimate Mirant Americas Energy Marketing, LP's intercompany claim
against Mirant Americas, Inc.
As reported in the Troubled Company Reporter on June 9, 2005, the
MAEM Claim is premised on a Makewhole Reimbursement Agreement,
dated September 1, 2001, between MAI and MAEM. Prior to execution
of the Makewhole Agreement, Mirant Corp., agreed to reimburse MAEM
for certain costs arising from:
(1) MAEM's transition power agreements with Potomac Electric
Power Company; and
(2) MAEM's agreements with PEPCO relating to PEPCO's power
purchase agreements.
Shortly after MAI executed the Purchase Agreements, Mirant Corp.,
"pushed down" its MAEM obligations to MAI, yet remained
secondarily liable for the obligations. Ms. Kirpalani relates
that MAI did not receive any consideration in exchange for
undertaking the obligations under the Makewhole Agreement.
The Court further rules that in connection with its objection to
the confirmation of the Debtors' Plan, and if it becomes relevant
whether or not Mirant Americas, Inc., should be substantively
consolidated with the other Consolidated Mirant Debtors, Deutsche
Bank Securities may assert:
(a) an objection to the MAEM Claim; or
(b) that the MAEM Claim should be estimated under Section
502(c) of the Bankruptcy Code, including, that the MAEM
Claim should be reduced or disallowed in its entirety.
In the event that the Plan as currently proposed would not be
confirmed or the Debtors will abandon the Plan, the denial will
be without prejudice to Deutsche Bank Securities' rights to
challenge the MAEM Claim.
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. 66; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MIRANT CORP: Wants to Enter into Amended Anker Coal Deal
--------------------------------------------------------
Mirant Americas Energy Marketing, LP, and Anker Energy
Corporation are parties to two Coal Transaction Confirmations,
both dated February 28, 2003. MAEM agreed to purchase coal from
Anker during the period from February 15, 2003, through
December 31, 2005.
Anker was required to deliver coal to MAEM for each calendar year
during the Original Term from its Anker Sentinel mine at a price
per ton that escalated annually. Anker was also required to
deliver coal to MAEM from its Anker Sawmill at an annually
escalating per-ton price.
Ian T. Peck, Esq., at Haynes and Boone, LLP, in Dallas, Texas,
relates that Anker consistently delivered coal in amounts less
than originally set. Mr. Peck also contends that Anker would
deliver the deficient amounts at a later date but at the same
purchase price.
The Debtors tell the Court that MAEM suffered losses attributable
to the under-deliveries.
Subsequently, MAEM and Anker have negotiated with regard to
certain commercial terms, including the price and the resolution
of disputes concerning certain quantity and delivery obligations
under the Original Confirms.
Thus, by this motion, the Debtors seek the Court's authority to
assume the Original Confirms and enter into and perform under an
Amended and Restated Coal Transaction Confirmation.
Mr. Peck explains that the Amended Confirm documents a
restructuring of the existing financial settlements, delivery
obligations and scheduling requirements between MAEM and Anker
under the Original Confirms and amends, restates and replaces the
Original Confirms. Under the Amended Confirm, Anker will deliver
coal to MAEM from its Anker Sawmill for a period beginning on
June 1, 2005, and ending on December 31, 2007.
Mr. Peck also informs the Court that the Amended Confirm includes
a provision that remedies the current problems concerning the
under-deliveries by Anker. The "Carry Over Tonnage" provision
applies if the actual tons of coal delivered by Anker during the
Amended Term are less than the quantities agreed on by the
parties. Pursuant to the provision, Anker agrees to sell and
MAEM agrees to purchase coal in an amount equal to the difference
between the tons contracted and the tons actually delivered.
MAEM will pay the price per each ton delivered which was
applicable during the period in which delivery failed to occur.
The Amended Confirm also allows MAEM to assign the Amended
Confirm to Mirant Energy Trading, LLC, without any prior written
consent from Anker. Pursuant to the assignment, MAEM will be
relieved of the obligations it incurred before the effective date
of the assignment or in the event it fails to perform under the
Amended Confirm after the assignment occurs.
Agreements Filed Under Seal
Pursuant to Section 107 of the Bankruptcy Code, the Debtors ask
the Court for authority to file under seal the related documents
of the coal transaction:
(1) Amended and Restated Coal Transaction Confirmation, dated
June 6, 2005;
(2) Coal Transaction Confirmation dated February 28, 2003,
Trade ID No. SEMA00760302; and
(3) Coal Transaction Confirmation dated February 28, 2003,
Trade ID No. SEMA00770302.
According to Mr. Peck, the business transactions evidenced by the
Confirms contain confidential and sensitive business terms
between MAEM and Anker, which, if disclosed, would disadvantage
the Debtors in future negotiations for similar arrangements with
third parties.
Judge Lynn permits the Debtors to file the documents under seal.
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. 67; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MMRENTALSPRO LLC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: MMRENTALSPRO, LLC
4105 Dayton Boulevard, Suite F
Chattanooga, Tennessee 37415
Bankruptcy Case No.: 05-13814
Debtor affiliate filing separate chapter 11 petition:
Entity Case No.
------ --------
Roy Michael Malone, Sr. 05-13813
Chapter 11 Petition Date: June 17, 2005
Court: Eastern District of Tennessee (Chattanooga)
Judge: John C. Cook
Debtor's Counsel: Richard C. Kennedy, Esq.
Kennedy, Fulton & Koontz
320 North Holtzclaw Avenue
Chattanooga, Tennessee 37404
Tel: (423) 622-4535
Estimated Assets: $0 to $50,000
Estimated Debts: $10 Million to $50 Million
Roy Michael Malone, Sr.'s 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
GMAC Commercial Mortgage Corporation $4,314,777
One Charles River Place
63 Kendrick Street
Needham Heights, MA 02494
Northwest Georgia Bank $83,728
P.O. Box 789
Ringgold, GA 30736
Maytag $37,104
P.O. Box 95764
Chicago, IL 60694
Tile Source $26,162
2300 Chattanooga Road
P.O. Box 1359
Rocky Face, GA 30740
Chad Supply/Hughes $25,731
P.O. Box 101760
Atlanta, GA 30392
Tennessee American Water Company $19,872
P.O. Box 11661
Charleston, WV 25339
Johnstone Supply $13,015
P.O. Box 53008
Knoxville, TN 37950
Vivian Holland $10,500
First Bank of the South
P.O. Box 9
Rainsville, AL 35986
Maintenance USA $7,639
P.O. Box 404295
Atlanta, GA 30384
Electric Power Board $6,908
P.O. Box 182254
Chattanooga, TN 37422
Porter Paints $6,761
103 Vista Drive
Dalton, GA 307420
Harrison Carpets $6,446
4663 E.Nance Road Southeast
Dalton, GA 30721
Regions Bank $5,657
500 East Walnut Avenue
Dalton, GA 30720
Dalton Utilities $5,411
P.O. Box 869 1200 VD Parrott J
Dalton, GA 307220869
BB&T $4,826
BB&T of Georgia Business
Loan Center
P.O. Box 580003
Charlotte, NC 282580003
Tech Shop $4,508
2409 West Wind Drive
Soddy Daisey, TN 37379
Ed' s Supply Inc $3,575
706 South Spencer Street
Dalton, GA 307213323
Regions Bank $3,316
500 East Walnut Avenue
Dalton, GA 30720
BFI $2,809
P.O. Box 9001665
louisville, KY 40290
Guardian Alarm Systems $2,764
P.O. Box 4776
Chattanooga, TN 37405
MULTI-PHASE INC: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Multi-Phase, Inc.
173 Old Beaver Grade Road
Coraopolis, Pennsylvania 15108
Bankruptcy Case No.: 05-27822
Chapter 11 Petition Date: June 16, 2005
Court: Western District of Pennsylvania (Pittsburgh)
Debtor's Counsel: Robert O. Lampl, Esq.
960 Penn Avenue, Suite 1200
Pittsburgh, Pennsylvania 15222
Tel: (412) 392-0330
Fax: (412) 392-0335
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
NUR MACROPRINTERS: Inspire Terminates Private Equity Investment
---------------------------------------------------------------
NUR Macroprinters Ltd. (Pink Sheets:NURM) had been notified by
Inspire Investments Ltd. that Inspire had terminated the
investment agreement associated with the previously announced
private investment by Inspire of $10 million in NUR, announced in
May 2005. The Inspire agreement had been conditioned upon, among
other things, Inspire's completion of its due diligence review.
On Feb. 2, 2005, NUR disclosed the $10 million Inspire investment,
in return for the issuance of approximately 15.4 million ordinary
shares to Inspire at $0.65 per share and warrants to purchase
7.2 million ordinary shares at $0.75 per share. As previously
announced, if the Debt Restructuring is completed and approved,
Inspire would be granted for no additional consideration warrants
to purchase an additional 8.2 million ordinary shares (bringing
Inspire's total to 15.4 million warrants) at $0.75 per share.
As a result of the termination of the Inspire agreement, NUR's
previously announced restructuring agreement with its bank lenders
-- Bank Hapoalim B.M., Bank Leumi le Israel B.M. and Israel
Discount Bank Ltd. -- will terminate since the debt restructuring
was conditioned upon the closing of the Inspire investment. The
combination of the Inspire investment and the restructuring of
NUR's outstanding bank debt was supposed to strengthen NUR's
financial position by infusing $10 million in cash into the
business, reducing NUR's current debt burden by 35% and
rescheduling NUR's remaining $28 million of debt over the next 7
years under commercial terms that better suit NUR's business
model. The termination of the restructuring agreement with NUR's
bank lenders will result in the acceleration of NUR's outstanding
bank debt.
NUR's management intends to meet with its lender banks in order to
discuss alternative restructuring plans. NUR is also actively
considering alternative plans to address its immediate and long-
term financing requirements, which alternatives include, but are
not limited to, seeking protection from creditors under the
Israeli bankruptcy laws.
NUR's independent auditors completed their audit of NUR's 2004
financial statements. As a result of the termination of the
Inspire investment and the termination of the restructuring
agreement and acceleration of NUR's outstanding bank debt, NUR
expects that its financial reports will include a "going concern"
qualification in the Independent Auditor's report to be included
in its Annual Report on Form 20-F.
About the Company
NUR Macroprinters (Pink Sheets:NURM) -- http://www.nur.com/--
supplies wide-format inkjet printing systems used for the
production of out-of-home advertising materials. From entry-level
photo-realistic printers to high-throughput production presses,
NUR's complete line of cost-effective, reliable printing solutions
and companion inks are helping customers in over 100 countries
worldwide address the full spectrum of wide-format printing
requirements. NUR customers, including commercial printing
companies, sign printers, screen printers, billboard and media
companies, photo labs, and digital printing service providers,
count on NUR to help them deliver the high quality and fast
turnaround they need to meet their clients' exacting demands and
succeed in today's competitive marketplace.
OFFICEMAX INC: SEC Probe Cues S&P to Retain Watch Negative
----------------------------------------------------------
Standard & Poor's Ratings Services 'BB' corporate credit and
senior unsecured debt ratings on Office Max Inc. remain on
CreditWatch with negative implications following the company's
announcement that the SEC has launched a formal investigation of
its accounting for vendor income.
"The timing and consequences of the resolution of the SEC
investigation are uncertain," said Standard & Poor's credit
analyst Ana Lai. "Ratings could be adversely impacted if
additional material accounting issues are uncovered during the
investigation and result in material financial restatements of
earning."
OfficeMax had completed its own internal investigation on
accounting for vendor income in March 2005. The result of the
investigation was not material and consisted of an overstatement
of $4.3 million of its cumulative net operating income for the
first three quarters of 2004. In addition, the company has taken
steps to remediate internal control weaknesses identified in the
company's 10-K filing.
The CreditWatch listing reflects Standard & Poor's concerns
regarding the company's soft operating results at its retail
division and uncertainties related to recent changes in
management. The ratings on OfficeMax were placed on CreditWatch
with negative implications on Feb. 14, 2005.
Standard & Poor's will resolve this CreditWatch listing after
reviewing the company's operating performance, business outlook,
future strategy, progress in filling its key senior management
positions, as well as developments from the SEC investigation.
Although OfficeMax recently filled the CEO position, the company
still needs to fill two other key senior management positions,
including that of CFO and president of the retail business.
PANHANDLE REGIONAL: Moody's Pares Jr. Sub. Notes' Rating to Ba3
---------------------------------------------------------------
Moody's Investors Service has downgraded from Baa1 to Baa3 the
rating on the Panhandle (TX) Regional Housing Finance Corporation
Multi-Family Housing Revenue Bonds (Canterbury/Three
Fountains/River Falls/Puckett Place Apartments) Senior Series 2000
A based on a continuing decline in the properties financial
performance. Moody's has also downgraded the Ba1 rating on the
Subordinate Series 2000 C bonds to Ba2 and the Ba2 rating on the
Junior Subordinate Series 2000 D to Ba3. The ratings are being
downgraded with negative outlooks based on the declining financial
performance of the properties that secure the bonds.
Revenue from four multi-family rental properties located in
Amarillo, Texas (Canterbury, Three Fountains, River Falls and
Puckett Place Apartments) largely secure the bonds. These
properties are all located in the southwestern portion of the city
of Amarillo in an area designated as the Panhandle of Texas. The
properties performance continues to show evidence of a decline due
to decreasing revenue and increasing expenses on an aggregate
basis for all properties. This is evidenced by debt service
coverage levels at 1.30x on the Senior bonds, 1.16x on the
Subordinate bonds and 1.06x on the Junior Subordinate bonds as of
the April 2005 unaudited operating statements for the previous 12
month period. These debt service coverage levels are
demonstrating a continued decline from 2004 and 2003 levels.
The owner reported in late 2004 that there has been a softening of
the Amarillo multifamily rental market which has caused rent
levels to decline and concessions to increase at the subject
properties. Additionally, two new multifamily tax credit
properties with superior amenities to the subject properties have
come on line since November 2003 providing a total of 340
additional units to the market.
The Canterbury rental property is a 95 unit apartment complex
built in 1976, composed of 8 two-story garden style walk up
apartment buildings. Canterbury had a 94% physical occupancy rate
as of April 2005. The Puckett Place rental property is a 255 unit
apartment complex built in 1969, composed of 6 four-story
apartment buildings. Puckett Place maintained a 91% physical
occupancy rate as of April 2005. The River Falls multifamily
property is a 288 unit apartment complex built in 1979, composed
of 8 three-story apartment buildings. River Falls had a 90.6%
physical occupancy rate as of April 2005. The Three Fountains
multifamily property is a 223 unit apartment complex built in
1978, composed of 6 three-story apartment buildings. Three
Fountains had a 91% physical occupancy rate in April 2005.
Management reports that in aggregate, the properties experienced
economic vacancy of 19.5% for the twelve month period ending April
30, 2005 which includes an aggregate physical vacancy factor of
8.8% for the same period of time.
The American Housing Foundation is the current owner of the
properties and Simpson Housing continues to act as property
manager. The owner has experience in affordable housing ownership
and management with ownership interest in properties in Texas and
Oklahoma. Simpson Housing has been involved in the management of
these properties since their construction and Moody's views this
as a positive credit factor.
The outlook for the bonds remains negative in light of declining
property financial performance together with the bonds remaining
debt service structure. Management's ability to grow revenue and
maintain expense levels at the four properties remains key to the
maintenance of sound debt service coverage levels for the bonds.
Key Statistics (Unaudited 4/30/05 Operating Statements)
* Number of Units: 861
* Current Physical Occupancy: 91% - 94%
* Total Revenue: $5,013,484
* Total Operating Expense: $3,071,175
* Net Operating Income: $1,942,309
* Debt Service Coverage Series A: 1.30
* Debt Service Coverage Series C: 1.16
* Debt Service Coverage Series D: 1.06
* NOI per unit: $2,255
* Total revenue per unit: $5,822
* Total operating expense/cost per unit: $3,567
PARK PLACE: Moody's Rates Class M-11 Certificates at Ba2
--------------------------------------------------------
Moody's Investors Service has assigned a rating of Aaa to the
senior certificates issued in Park Place Securities Series
2005-WLL1 transaction, and ratings ranging from Aa1 to Ba2 to the
subordinate certificates in the deal.
The securitization is backed by subprime mortgage loans originated
through Ameriquest's wholesale channel using underwriting
guidelines that are slightly less stringent than those used by
Ameriquest's retail channel. The ratings are based primarily on
the credit quality of the loans and on various forms of credit
enhancement including:
* subordination,
* overcollateralization,
* excess interest, and
* allocation of losses.
The credit quality of the loan pool is consistent with the
mortgage loan pools backing recent Ameriquest wholesale
securitizations. Park Place deals are different from traditional
Ameriquest deals in that the Servicer will be a party other than
Ameriquest. In this transaction, Litton Loan Servicing LP, will
act as Servicer, but future Park Place deals may involve different
servicing entities. Moody's views Litton Loan Servicing LP as a
strong servicer of subprime loans, as evidenced by its SQ1
servicer rating.
Ameriquest Mortgage Company is a specialty finance company engaged
in originating, purchasing and selling sub-prime mortgage loans.
Ameriquest originates loans through more than 200 retail outlets,
primarily through telemarketing and direct mailing efforts, and
deals with more than 3,000 approved brokers.
The complete rating actions are:
Issuer: Park Place Securities, Inc.
Securities: Asset-Backed Pass-Through Certificates,
Series 2005-WLL1
Servicer: Litton Loan Servicing LP
Class Size Rating:
* Class A-1A, rated Aaa
* Class A-1B, rated Aaa
* Class M-1, rated Aa1
* Class M-2, rated Aa2
* Class M-3, rated Aa3
* Class M-4, rated A1
* Class M-5, rated A2
* Class M-6, rated A3
* Class M-7, rated Baa1
* Class M-8, rated Baa2
* Class M-9, rated Baa3
* Class M-10, rated Ba1
* Class M-11, rated Ba2
PEGASUS SATELLITE: Plan Trustee Gets OK to Assign KB Scranton Pact
------------------------------------------------------------------
As previously reported, Ocean Ridge Capital Advisors, LLC, the
Liquidating Trustee of The PSC Liquidating Trust established under
the Plan, sought the U.S. Bankruptcy Court for the District of
Maine's authority to:
(a) assume an asset purchase agreement between Pegasus
Satellite Communications, Inc., and KB Prime Media, LLC,
to sell television station WSWB (Channel 38), in Scranton,
Pennsylvania; and
(b) assign the KB Scranton Agreement to Mystic Television of
Scranton, LLC.
Kenneth A. Rosen, Esq., at Lowenstein Sandler, PC, in Roseland,
New Jersey, relates that the Pegasus Satellite Communications,
Inc. and its debtor-affiliates' Broadcast Assets include
television stations owned and operated by the Debtors in five
market areas. Based on various prepetition agreements with
KB Prime and related persons, certain of the Debtors have the
right to program and receive advertising revenues from other
television stations, the licenses of which are owned directly by
KB Prime.
KB Prime owned licenses to operated full-powered television
stations, including WSWB-TV (Channel 38) in Scranton/Wilkes-
Barre, Pennsylvania and WPME-TV (Channel 35) in Lewiston, Maine.
The Debtors owned and operated television stations in the
designated market areas where KB Prime owns television stations
WSWB-TV and WPME-TV.
KB Prime Objects
KB Prime Media, LLC, points out that the Asset Purchase Agreement
for TV station WPME, in Lewiston, Maine, the Asset Purchase
Agreement for TV station WSWB-TV, in Scranton, Pennsylvania, and
the option agreement to provide collateral to secure certain loans
issued by Wachovia Bank, N.A., constitute one integrated contract
that must be assumed in its entirety.
Multiple contracts "which are essentially inseparable can be, and
should be, viewed as a single, indivisible agreement between the
parties" for purposes of Section 365 of the Bankruptcy Code,
Randy J. Creswell, Esq., at Perkins, Thompson, Hinckley & Keddy,
P.A., in Portland, Maine, said, citing In re Karafakis, 162 B.R.
719, 725 (Bankr. E.D. Pa. 1993).
According to Mr. Creswell, the KB Scranton Agreement and the KB
Lewiston Agreement specifically refer to the Option Agreement for
a computation of the purchase price. There is no mechanism for
determining or calculating the purchase price unless the Option
Agreement is assumed.
Thus, the Option Agreement and the KB Lewiston and KB Scranton
Agreements are an integrated series of transactions. The Debtors
may not obtain the benefit of the KB Lewiston and KB Scranton
Agreements without also assuming all of their obligations under
the Option Agreement, Mr. Creswell says.
Furthermore, Mr. Creswell contends that the Debtors impermissibly
seek to avoid certain obligations under the KB Scranton
Agreements, while enjoying the benefits thereof.
The KB Scranton Agreements require the Debtors to wire-transfer
the purchase price in immediately available funds to KB Prime
pursuant to wire instructions delivered by KB Prime to Pegasus at
least two business days prior to the closing date. "Yet, the
Assumption Motions request authority for alternative payment
arrangements, which are less favorable to KB Prime," Mr. Creswell
notes.
Debtors and Liquidating Trustee Respond
John P. McVeigh, Esq., at Preti, Flaherty, Beliveau, Pachios &
Haley, LLP, in Portland, Maine, argues that KB Prime simply relies
on the fact that the purchase price under each Purchase Agreement
is calculated according to a computation that is contained in the
Option Agreement to support its contention that the Option
Agreement and Purchase Agreements are one integrated transaction.
However, Mr. McVeigh explains that the reference to the Option
Agreement is no different than if a purchase price is determined
by reference to a stock price or if an interest rate under a loan
documents is determining by reference to some type of index
interest rate. "The fact that the Option Agreement is a reference
point for the purchase price does not suggest, let alone
establish, that the Option Agreement and Purchase Agreements are
one inseparable agreement," Mr. McVeigh says.
KB Prime contends that the Purchase Agreements cannot be assumed
because the Debtors have not provided adequate assurance of the
cure of alleged defaults under the Purchase Agreement and Option
Agreement. However, these alleged defaults, Mr. McVeigh argues,
are vaguely described and do not have any basis in fact.
According to Mr. McVeigh, the Debtors aim to protect their estate
from an improper diversion of funds by KB Prime and its
principals. "KB Prime is in fact not harmed at all by [the
Debtors and the Liquidating Trustee's] request and its refusal to
agree to this relief is extremely troubling and suggests that
[their] concern is legitimate," Mr. McVeigh notes.
* * *
Judge Haines authorizes the Reorganized Debtors to assume the KB
Scranton Agreement and assign it to Mystic Television of
Scranton, LLC. No monetary or other defaults exist under the KB
Scranton Agreement that prohibits the Reorganized Debtors from
assuming and assigning the KB Scranton Agreement.
Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite
Communications, Inc. -- http://www.pgtv.com/-- is a leading
independent provider of direct broadcast satellite (DBS)
television. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. D. Maine Case No. 04-20889) on
June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and
Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and
Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein,
Shur, Sawyer & Nelson, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $1,762,883,000 in assets and
$1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue
No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PLASTICERT INC: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: PlastiCert, Inc.
3438 Bridgeview Road
Stewartstown, Pennsylvania 17363
Bankruptcy Case No.: 05-04022
Type of Business: PlastiCert provides complete Plastic
Injection Molding Solutions from product
inception to a customer's finished product.
PlastiCert offers insert molding, design
and engineering, in-house tool facility,
plastic injection molding, ultrasonic welding,
plastic part thread taping, sub assembly
construction, pad printing, and packaging
services. See http://www.plasticert.com/
Chapter 11 Petition Date: June 16, 2005
Court: Middle District of Pennsylvania (Harrisburg)
Debtor's Counsel: Markian R. Slobodian, Esq.
Law Offices of Markian R. Slobodian
801 North Second Street
Harrisburg, Pennsylvania 17102
Tel: (717) 232-5180
Fax: (717) 232-6528
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
PORTRAIT CORPORATION: Notifies SEC on Late Filing of Reports
------------------------------------------------------------
Portrait Corporation of America, Inc., has filed Form 12b-25,
Notification of Late Filing, in connection with its Quarterly
Report on Form 10-Q, which was due on June 15, 2005. In its
filing, the Company noted it was unable to timely file its 10-Q
for the thirteen weeks ended May 1, 2005, because it has not yet
filed its Annual Report on Form 10-K for the fiscal year ended
January 30, 2005.
In addition, the Company disclosed that during fiscal 2004, the
Company became aware of a tax claim for amounts due to the
Servicio de Administracion Tributaria, the Mexican Tax Authority
from the Company's Mexican subsidiary. The amounts alleged due by
the SAT related predominantly to a tax audit for fiscal years 1997
and 1998 in the amount of $1.4 million as well as approximately
$100,000 for January through June of 2000. Due to the time lapse
of the non payment, fines, penalties and interest of $4.5 million
had been added to the outstanding claim. Following a preliminary
investigation by the Company, the Company engaged legal
representation in Mexico and the U.S. to assist in negotiating a
settlement with SAT, and engaged an independent accounting firm to
complete forensic accounting work to determine the extent of
suspected fraudulent transactions conducted by former employees of
the subsidiary.
In conjunction with the forensic accounting work, the Company
conducted its own internal accounting investigation. As a result,
the Company concluded that certain adjustments were required to
the underlying books and records of the historical financial
statements which are in the process of being completed.
Further, the Company disclosed in its Form 12b-25 filing that it
anticipates sales to be lower in the fiscal quarter ended May 1,
2005, than in the fiscal quarter ended May 2, 2004, $78.2 million
as compared to $79.9 million. This is a result of weaker same
studio sales attributable to a decline in customer sittings
partially offset by an increase in average order size per
customer. The increase in average order size is primarily the
result of a higher percentage of customers purchasing higher-value
custom offers versus introductory package offers. The Company
believes the lower customer sittings in the first quarter of 2005
are partially due to the effects of this year's early Easter, a
seasonally important time for family and pre-school portrait
sales. Historically, the Company has recognized lower Easter-
related sales and lower customer sittings in those years when
Easter falls earlier on the calendar.
These same studio sales trends have reduced gross profit to 19.5%
of sales in first quarter of 2005, or $15.2 million, as compared
to 21.5% in first quarter of 2004, or $17.2 million. Income from
operations has been reduced to 3.2% of sales in first quarter of
2005, or $2.5 million, as compared to 6.8% in first quarter of
2005, or $5.5 million. The decline in sales, gross profit and
income from operations in fiscal 2004 and first quarter of 2005
has had a significant impact on the Company's liquidity and the
Company is in discussions to obtain additional financing which the
Company believes is necessary to provide the amount of liquidity
which the Company will require for operating purposes during
fiscal 2005. Such financing will have a significant effect on the
disclosures in the Company's Form 10-Q, including the consolidated
financial statements and the footnotes thereto.
About the Company
Portrait Corporation of America, Inc., is the largest operator of
retail portrait studios in North America and one of the largest
providers of professional portrait photography products and
services in North America based on sales and number of customers.
Operating under the trade name Wal-Mart Portrait Studios, the
Company is the sole portrait photography provider for Wal-Mart
Stores, Inc. As of January 30,
2005, the Company operated 2,401 permanent portrait studios in
Wal-Mart discount stores and supercenters in the United States,
Canada, Mexico, Germany and the United Kingdom and provided
traveling services to approximately 1,000 additional Wal-Mart
store locations in the United States. The Company also serves
other retailers and sales channels with professional portrait
photography services.
At Oct. 31, 2004, Portrait Corporation of America, Inc.'s balance
sheet showed a $177,025,000 stockholders' deficit, compared to a
$139,750,000 deficit at Feb 1, 2004.
PRIME CAMPUS: Hires MT&C to Explore Claims Against Varde
--------------------------------------------------------
Prime Campus Housing, LLC sought and obtained permission from the
U.S. Bankruptcy Court for the Northern District of Texas, Lubbock
Division, to employ Mansfield, Tanick & Cohen, P.A. as special
counsel.
MT&C is a full service law firm providing legal services to
individuals, businesses, and other organizations in the Twin
Cities, throughout Minnesota and the Upper Midwest.
MT&C will investigate and determine the viability of Varde Fund,
L.P.'s claim against the Debtor's estate. The Firm will be
responsible for preparing an objection to Varde's claim together
with the preparation of an adversary complaint if it is determined
that the Debtor possess viable claims against Varde.
The Debtor will pay MT&C its customary hourly rates, and expects
to spend $1,500 to $2,000 for an opinion about the viability of
claims against Varde. The Debtor will also reimburse the firm for
expenses incurred in connection with its investigation.
The Debtor believes that MT&C is disinterested as that term is
defined in Section 101(14) of the U.S. Bankruptcy Code.
The Dispute with Varde
Varde says it's owed more than $10.9 million, secured by a first
lien on a dormitory known as "University Plaza" that houses
students at Texas Tech University. Varde has applied continuous
pressure on Prime Campus to obtain DIP Financing because it
doesn't want to keep funding the Debtor's operating losses. David
Weitman, Esq., and Daniel I. Morenoff, Esq., at Hughes & Luce,
LLP, Varde's counsel, tell Judge Jones there's a long list of
promises Prime Campus has made and broken.
Prime Campus, says everything's Varde's fault. Prime Campus
alleges in an objection to Varde's claims that Varde has:
-- breached its contractual agreement with the Debtor;
-- breached its duties of good faith and fair dealing; and
-- exercised excessive control over the Debtor and in doing
so has interfered with the ability of the Debtor to enter
into contractual relations with other parties, including
refinancing transactions.
Prime Campus wants Judge Jones to disallow Varde's secured claim.
Headquartered in Omaha, Nebraska, Prime Campus Housing, LLC,
operates a 1,017-bed coeducational full-service dormitory located
in Lubbock County, Texas. Prime Campus filed for chapter 11
protection on March 21, 2005 (Bankr. N.D. Tex. Case No. 05-50311).
Joseph F. Postnikoff, Esq., at Goodrich, Postnikoff & Albertson
represents the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed total
assets of $15,963,311.54 and total debts of 11,090,311.54
QWEST COMMS: Eyes XO Communications for Possible Takeover
---------------------------------------------------------
The Network World Inc. reports that QWest International Inc. has a
new target for a possible takeover after it lost out to Verizon
Wireless in its bid to acquire MCI. Speculations are high that
QWest might look to acquire XO Communications and other smaller
carriers with nationwide reach, a focus on enterprise customers
and little debt.
According to the article from the Network World, QWest performed
due diligence on XO and the move is viewed as a precursor to an
offer to acquire the carrier.
Richard C. Notebaert, chairman and chief executive officer of
QWest, was quoted saying in a conference last week that his
company faces scale and access problems. Mr. Notebaert believes
"...that consolidation remains necessary and that the probable
strategy is a roll-up of smaller assets that could compete with an
AT&T and an MCI in the enterprise space."
About XO Communications
Headquartered in Reston, Virginia, XO Communications --
http://www.xo.com/-- provides local, long distance, and data
services to small and midsize business customers as well as to
national enterprise accounts. In addition to its metropolitan
fiber, XO has an OC-192 IP backbone with OC-12 uplinks in its
markets and data centers. The Company filed for chapter 11
protection on June 17, 2002 (Bankr. S.D.N.Y. Case No. 02-12947).
XO's stand-alone plan of reorganization was confirmed on Nov. 15.
2002, and the company emerged from bankruptcy in January 2003.
XO's market capitalization is $404 million. Revenue for the first
quarter of this year, ended March 31, was $361.5 million, an
increase of 39% from the first quarter of last year. Consolidated
net loss for the first quarter of this year was $42.9 million, an
improvement of $5.6 million compared with a net loss of $48.5
million in the same period last year.
About the Company
Qwest Communications International Inc. (NYSE: Q) --
http://www.qwest.com/-- is a leading provider of voice, video
and data services. With more than 40,000 employees, Qwest is
committed to the "Spirit of Service" and providing world-class
services that exceed customers' expectations for quality, value
and reliability.
At Mar. 31, 2004, Qwest Communications' balance sheet showed a
$2,564,000,000 stockholders' deficit, compared to a $2,612,000,00
deficit at Dec. 31, 2004.
Standard & Poor's Ratings Services assigned its 'B' rating to
Denver, Colorado-based telephone company Qwest Communications
International Inc.'s proposed offering of senior unsecured notes
due 2014 (a tack-on to the existing 7.5% notes due 2014), and its
'BB-' rating to incumbent local exchange carrier operating
subsidiary Qwest Corp.'s proposed offering of senior unsecured
notes due 2013 and 2015. All are 144A with registration rights.
RDL INC: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Debtor: RDL, Inc.
4716 New Bern Avenue
Raleigh, North Carolina 27610
Bankruptcy Case No.: 05-02531
Type of Business: The Debtor operates a hotel.
Chapter 11 Petition Date: June 16, 2005
Court: Eastern District of North Carolina (Raleigh)
Judge: A. Thomas Small
Debtor's Counsel: Gregory B. Crampton, Esq.
Nicholls & Crampton, P.A.
P.O. Box 18237
Raleigh, North Carolina 27619
Tel: (919) 781-1311
Fax: (919) 782-0465
Total Assets: $3,700,000
Total Debts: $2,438,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
North State Bank Line of credit $100,000
6200 Falls of Neuse Road
Raleigh, NC 27619
Chase MC Business credit card $13,887
P.O. Box 15650
Wilmington, DE 19886
InterContinental Group Franchise, $8,990
11580 Great Oaks Way fees/royalty,
Alpharetta, GA 30022 equipment, contract
Bank of America Business credit card $7,400
Capital One Business credit card $3,800
Great Central Insurance Co. Property insurance $2,532
American Hotel Register Hotel supplies $2,157
Guest Supply Hotel supplies $1,975
BB & T Bank check card $879
Sam's Club Store CC $750
Time Warner Cable Cable service $726
US Lec Hotel phone service $725
AT & T Phone service $707
Sam's Club Business CC $681
EG Forrest Hotel food supplies $650
A&S Hospitality Hotel food supplies $552
Otis Spunkmeyer Hotel food supplies $306
Milner Copy machine $90
Maintenance
Bell South Yellow Pages Phone book advertising $87
Home Depot Supply Hotel supplies $80
ROTECH HEALTHCARE: Lenders Waive Reporting Default Until July 15
----------------------------------------------------------------
Rotech Healthcare Inc. (Pink Sheets:ROHI) obtained a waiver of any
defaults and events of default that have arisen under its credit
agreement due to the Company's failure to timely deliver:
(i) its unaudited financial statements for the quarter ended
March 31, 2005 and other related deliverables and
(ii) an appraisal of certain of the Company's assets.
As previously announced, the Company has been delayed in filing
its Form 10-Q for the quarter ended March 31, 2005, due to the
pending restatement of certain of the Company's previously issued
financial statements. The delay in this filing beyond the 30-day
cure period provided under the credit agreement which expired at
the end of the day on June 15 would have technically resulted in
an "event of default" under such agreement. However, the lenders
under the Company's credit agreement have agreed to waive the
applicable defaults and events of default under the credit
agreement.
Under the terms of the waiver, the Company has until July 15 to
file its Form 10-Q for the quarter ended March 31, 2005, and
furnish the related deliverables and the required appraisal. The
delay in filing the Company's Form 10-Q has also resulted in a
technical default under the Company's indenture. However, such
default is subject to a cure period under the indenture through
July 15.
Rotech Healthcare Inc. is a leading provider of home respiratory
care and durable medical equipment and services to patients with
breathing disorders such as chronic obstructive pulmonary diseases
(COPD). The Company provides its equipment and services in 48
states through approximately 475 operating centers, located
principally in non-urban markets. The Company's local operating
centers ensure that patients receive individualized care, while
its nationwide coverage allows the Company to benefit from
significant operating efficiencies.
* * *
Rotech was part of Integrated Health Services, Inc., and filed for
chapter 11 protection on Feb. 2, 2000 (Bankr. D. Del. Case Nos.
00-00389 through 00-00825). Judge Walrath confirmed a separate
standalone plan of reorganization for Rotech on Feb. 13, 2002, and
Rotech emerged from chapter 11 independent of IHS on March 26,
2002.
Deloitte & Touche LLP serves as Rotech's auditors. Rotech's
balance sheet dated Dec. 31, 2004, shows $1 billion in assets and
$446 million in liabilities.
Rotech Healthcare Inc., is the borrower under a $275,000,000
Credit Agreement, dated as of March 26, 2002 (as twice amended)
with Ubs Warburg LLC and Goldman Sachs Credit Partners L.P., as
joint lead arrangers and joint bookrunners, Goldman Sachs Credit
Partners L.P., as Syndication Agent, The Bank Of Nova Scotia,
Deutsche Bank Securities Inc. (formerly known as Deutsche Banc
Alex. Brown Inc.) and General Electric Capital Corporation, as
Co-Documentation Agents, General Electric Capital Corporation, as
Collateral Agent, and UBS AG, Stamford Branch, as Administrative
Agent.
SAKS INCORPORATED: Says S&P's Rating Downgrade is Perplexing
------------------------------------------------------------
Retailer Saks Incorporated (NYSE:SKS) issued a response to
Standard & Poor's decision to downgrade the Company's credit
ratings.
Douglas E. Coltharp, Executive Vice President and Chief Financial
Officer of the Company, noted, "We are extremely surprised and
perplexed with [Wednes]day's announcement from S&P. We believe
this action was unfounded given the overall strength of our
financial position and our ability and intent to fully retire any
accelerated debt, as well as the fact that we have the 60-day cure
period to negotiate with note holders if we choose to do so. As
we reiterated [Wednes]day, we expect to file our prior year Form
10-K and our first quarter Form 10-Q on or before September 1,
2005, thereby addressing the specific reason the notice of default
was issued in the first place. It is and remains business as
usual for our Company."
As reported in the Troubled Company Reporter on June 16, 2005,
Saks Incorporated received a notice of default with respect to
its $230 million 2% Convertible Senior Notes due March 15, 2024.
The notice of default was given by a hedge fund that states that
it owns more than 25% of the Convertible Notes.
The notice of default states that the Company breached covenants
in the indenture for the Convertible Notes that require the
Company to:
(1) file with the Securities and Exchange Commission and the
trustee for the Convertible Notes Annual Reports on Form
10-K and other reports, and
(2) deliver to the trustee for the Convertible Notes, within
a 120-day period after the end of the Company's fiscal
year ended January 29, 2005, a compliance certificate
specified by the Convertible Notes indenture.
Following this announcement, Standard & Poor's Ratings Services
lowered its corporate credit rating and senior unsecured debt
rating on Saks Inc. to 'CCC+' from 'B+'. The ratings remain on
CreditWatch with developing implications, where they have been
since April 18, 2005.
"This action follows the company's announcement that it had
received a notice of default with respect to its $230 million 2%
convertible senior notes due 2024," said Standard & Poor's credit
analyst Gerald A. Hirschberg.
Saks Incorporated operates Saks Fifth Avenue Enterprises (SFAE),
which consists of 57 Saks Fifth Avenue stores, 52 Saks Off 5th
stores, and saks.com. The Company also operates its Saks
Department Store Group (SDSG) with 232 department stores under the
names of Parisian, Proffitt's, McRae's, Younkers, Herberger's,
Carson Pirie Scott, Bergner's, and Boston Store and 47 Club Libby
Lu specialty stores. On April 29, 2005, the Company announced
that it had entered into an agreement to sell 22 Proffitt's stores
and 25 McRae's stores to Belk, Inc. The Company expects to
complete the sale on July 5, 2005, subject to various closing
conditions.
* * *
As reported in the Troubled Company Reporter on June 17, 2005,
Moody's Investors Service downgraded the ratings of Saks Inc. and
left the ratings on review for further possible downgrade
following the company's announcement that it has received notice
of a default under its $230 million senior convertible notes. The
notice of default was triggered by the company's delay in filing
its financial statements for the last fiscal year and for the
first quarter of the current fiscal year as a result of the
ongoing investigation into accounting and other financial matters.
These ratings are downgraded:
Saks, Inc.:
* Senior implied from B1 to B2;
* Senior unsecured debt guaranteed by operating subsidiaries
from B1 to B2;
* Senior unsecured long term issuer rating from B2 to B3;
* Prospective ratings for prospective senior unsecured debt,
subordinated debt and preferred stock issued from the
company's shelf registration from (P) B1; (P) B3, (P) B3 to
(P) B2; (P) Caa1, (P) Caa1.
Proffit's Capital Trust I, II, III, IV, and V:
* Preferred Stock Shelf from (P) B3 to (P) Caa1.
SASCO NET: Moody's Rates $3.5MM Classes B1A & B1B Notes at Ba1
--------------------------------------------------------------
Moody's Investors Service has assigned a rating of Baa1 to the
Class A notes and a rating of Ba1 to the Class B1A and B1B notes
of SASCO Net Interest Margin Notes, Series 2005A-XS. The notes
are backed by the residual and prepayment penalty cash flows from
the SASCO 2005-2XS and SASCO 2005-4XS Alt-A mortgage
securitizations (Underlying Deals).
Daniel Gringauz, a Moody's analyst, says that the ratings assigned
to the notes are primarily based on the cash flows from the
underlying transactions' residual and prepayment penalty
certificates. The notes will receive interest payments on their
outstanding principal amounts at each distribution date.
The risk faced by the SASCO 2005A-XS NIM noteholders depends on
the size and timing of the excess spread and prepayment penalty
cash flows. According to Daniel Gringauz, the cash flows
available to repay the notes are most significantly impacted by
the level of prepayments and the timing and amount of losses on
the underlying mortgage pool. The prepayment penalty and excess
spread cash flows counter-balance each other, thus stabilizing
cash flows in various prepayment environments. High prepayment
speeds on the underlying loans reduce excess spread cash flows but
increase prepayment penalty cash flows and vice versa. Moody's
applied various combinations of loss and prepayment scenarios to
evaluate the adequacy of cash flows to fully amortize the rated
notes.
The complete rating actions are:
Issuer: SASCO ARC Company
Securities: SASCO Net Interest Margin Notes, Series 2005A-XS
* $20,900,000, Class A Notes, rated Baa1
* $1,000,000, Class B1A Notes, rated Ba1
* $2,500,000, Class B1B Notes, rated Ba1
The notes are being offered in privately negotiated transactions
without registration under the 1933 Act. The issuance was
designed to permit resale under Rule 144A.
STRUCTURED ASSET: Moody's Rates $257,000 Class B5 Certs. at B2
--------------------------------------------------------------
Moody's Investors Service has assigned Aaa to B2 ratings to the
senior and subordinate classes of the Structured Asset Securities
Corporation Mortgage Pass-Through Certificates Series 2005-RF2.
The transaction consists of the securitization of FHA insured, and
VA or RHS guaranteed reperforming loans virtually all of which
were repurchased from GNMA pools.
The credit quality of the mortgage loans the underlying
securitization is comparable to that of mortgage loans underlying
subprime securitizations. However after the FHA, VA and RHS
insurance is applied to the loans, the credit enhancement levels
are comparable to the credit enhancement levels for prime-quality
residential mortgage loan securitizations. The insurance covers a
large percent of any losses incurred as a result of borrower
defaults. Moody's expects collateral losses to range from 0.45%
to 0.55%.
The Federal Housing Administration is a federal agency within the
Department of Housing and Urban Development whose mission is to
expand opportunities for affordable home ownership, rental
housing, and healthcare facilities. The Department of Veterans
Affairs, formerly known as the Veterans Administration, is a
cabinet-level agency of the federal government. The Rural Housing
Service (RHS) is a part of the U.S. Department of Agriculture.
The rating of this pool is based on the credit quality of the
underlying loans and the insurance provided by FHA and the
guarantee provided by the VA and RHS. Specifically, about 73% of
the loans have insurance provided by FHA, 20% from the VA, and 7%
from the RHS. The rating is also based on the structural and
legal integrity of the transaction.
The complete rating action is:
Issuer: Structured Asset Securities Corporation Series 2005-RF2
Class Amount ($) Rate Rating
* A $168,300,000 Variable Aaa
* AIO Notional Amount Variable Aaa
* R $100 None Aaa
* B1 $945,000 Variable Aa2
* B2 $945,000 Variable A2
* B3 $429,000 Variable Baa2
* B4 $429,000 Variable Ba2
* B5 $257,000 Variable B2
SUMMIT GENERAL: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Summit General Contractors, Inc. N.W.
dba Summit, Inc.
P.O. Box 90
Issaquah, Washington 98027
Bankruptcy Case No.: 05-17771
Type of Business: The Debtor operates as a general contractor.
Chapter 11 Petition Date: June 16, 2005
Court: Western District of Washington (Seattle)
Judge: Karen A. Overstreet
Debtor's Counsel: Larry B. Feinstein, Esq.
Vortman & Feinstein
500 Union Street #500
Seattle, Washington 98101
Tel: (206) 223-9595
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
SUPERIOR WHOLESALE: Fitch Expects to Rate Class D Notes at BB+
--------------------------------------------------------------
Fitch Ratings has issued a presale report on Superior Wholesale
Inventory Financing Trust XII, series 2005-A, discussing the
rating analysis behind Fitch's expected 'AAA', 'A', 'BBB+', and
'BB+' ratings on the class A term notes, class B term notes, class
C term notes, and class D term notes, respectively.
As in prior SWIFT transactions, the collateral securing the notes
consists of receivables generated under revolving floor plan
agreements between General Motor Acceptance Corporation and retail
automotive dealers franchised by General Motors to finance their
inventory of new and used vehicles.
The presale report is available to all investors on Fitch's
corporate site, http://www.fitchratings.com/. For more
information about Fitch's comprehensive subscription service Fitch
Research, which includes all presale reports, surveillance, and
credit reports on more than 20 asset-backed securities asset
classes, including collateralized debt obligations, contact
product sales at +1-212-908-0800 or at webmaster@fitchratings.com
TECNET INC: Ch. 7 Trustee Taps Dan Newell as Valuation Advisor
--------------------------------------------------------------
Scott M. Seidel, the Chapter 7 Trustee overseeing the liquidation
of TecNet, Inc., asks the U.S. Bankruptcy Court for the Northern
District of Texas, Dallas Division, for authority to employ Dan
Newell as his lease valuation expert, nunc pro tunc to
April 29, 2005.
The Chapter 7 Trustee wants to employ Dan Newell to determine the:
-- fair value of some leases,
-- fair market value of some properties, and
-- appropriate amount, if any, of rejection damage and
administrative claims.
Mr. Newell will be paid $225 per hour for his work.
The Chapter 7 Trustee believes that Dan Newell is disinterested as
that term is defined in Section 101(14) of the U.S. Bankruptcy
Code.
Headquartered in Garland, Texas, TecNet, Inc., provides
telecommunication services, filed for chapter 11 protection on
April 8, 2004 (Bankr. N.D. Tex. Case No. 04-34162) and its case
was converted to a chapter 7 liquidation proceeding on June 4,
2004. Scott M. Siedel serves as the chapter 7 Trustee. Mark A.
Weisbart, Esq., represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed estimated debts of over $10 million and
estimated debts of over $100 million. On June 7, 2005, the Court
converted the chapter 11 case to a chapter 7 proceeding. Scott M.
Seidel was appointed as the Chapter 7 Trustee.
TEXAS INDUSTRIES: Moody's Rates $250M Sr. Unsec. Notes at Ba3
-------------------------------------------------------------
Moody's Investors Service has assigned a Ba3 rating to Texas
Industries, Inc.'s $250 million in senior unsecured notes and a
Ba2 rating to the company's new 5-year senior secured credit
facility. In addition, Moody's has upgraded the company's senior
implied rating to Ba3 from B1 and its $200 million subordinated
convertible trust preferred securities to B2 from B3. The ratings
outlook has been changed to stable from developing following the
company's announcement earlier this year that it intends to spin
off its steel business, Chaparral Steel Company (B1 senior
unsecured rating).
Ratings affected include:
Texas Industries, Inc.:
Assigned:
* Ba2 -- $200 million 5-year senior secured credit facility
due 2010
* Ba3 -- $250 million senior unsecured notes due 2013
Upgraded:
* Ba3 from B1 -- senior implied
* B1 from B2 -- senior unsecured issuer rating
TXI Capital Trust I:
Upgraded:
* B2 from B3 -- $200 subordinated convertible trust preferred
securities
The company will use proceeds from the senior unsecured notes,
cash on hand, and a dividend from Chaparral prior to the spin, in
order to retire its outstanding $600 million 10.25% senior
unsecured notes due 2011 (B1). Upon successfully closing the
transaction, Moody's will withdraw the rating on those notes.
The Ba3 senior implied rating is supported by:
* TXI's solid market position in cement, aggregates and
concrete production in Texas and California;
* favorable industry dynamics with the demand for cement
outstripping supply, particularly in Texas and California
where population and construction growth exceed the national
averages; and
* increased revenue growth associated with the company's plans
to spend more than $350 million over the next 24 months to
rebuild and increase capacity at its primary California
cement plant.
In addition, the rating is supported by:
* moderate debt levels, despite the additional capital
expenditures in California;
* stable free cash flow following the spin off of the volatile
steel business;
* modest asset coverage of total debt; and
* ample liquidity.
The Ba3 rating also reflects Moody's concerns regarding:
* industry consolidation and acquisition event risk given TXI's
small size relative to the 5 largest U.S. cement producers;
* the company's exposure to a cyclical U.S. construction
market;
* volatile fuel and energy prices; and
* the potential risk of construction cost overruns.
The stable outlook is predicated upon Moody's expectations for
middle to high single digit annual revenue growth given the
company's California cement capacity expansion plans and favorable
industry pricing dynamics, the maintenance of 10% EBIT margins,
debt-to-EBITDA below 4.0x, debt-to-free cash flow (excluding
capital investment in California) of 10%, and 2.5x EBIT interest
coverage. Failure to maintain these levels due to weaker
operating performance, construction cost overruns associated with
the California expansion, or cash financed acquisitions,
particularly in the lower margin, lower barrier to entry concrete
business could result in a ratings downgrade. Conversely, Moody's
would consider a ratings upgrade if the company were able to
sustain levels in excess of these thresholds despite any potential
volatility in its construction markets while additional cement
capacity becomes available.
The Ba2 rating on TXI's $200 million senior secured credit
facility represents Moody's belief that asset collateral coverage
of senior secured debt, which is likely to peak during the
company's significant capital investment in the California cement
plant expansion in fiscal 2007, is meaningful despite the
exclusion of a priority of claim security interest in the
company's real property. Even with a fully drawn facility secured
debt only represents approximately 30% of total debt, which
indicates that in a distressed situation only the subordinated
"SPURS" would be significantly impaired. The Ba3 senior unsecured
rating reflects its pari passu priority of claim with secured debt
holders on real property and Moody's expectation that it will
remain the largest component of the company's total debt capital
structure.
Over the next 24 months, during the California construction
period, TXI will retain ample liquidity given Moody's estimation
of approximately $60 million in annual free cash flow generation
and significant excess availability under the bank credit
facility. Moody's does not believe the company will borrow and
back letters of credit for more than half of the $200 million bank
credit facility given the company's significant cash balances and
the anticipated dividend from Chaparral. Cash balances and
estimated cash flow from operations will pay for approximately
$275 million of the more than $350 million capital investment in
California.
TXI, headquartered in Dallas, Texas, is a leading supplier of
cement, aggregates and concrete in Texas and California.
THILMANY LLC: $180 Mil. Kohlberg Sale Cues S&P to Hold Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
its 'B' corporate credit rating, on tissue manufacturer Cellu
Tissue Holdings Inc., on CreditWatch with positive implications.
At the same time, Standard & Poor's affirmed its ratings,
including its corporate credit rating, on specialty paper producer
Thilmany LLC (B+/Stable/--).
"These rating actions follow Cellu Tissue's announcement that
private equity firm Kohlberg & Co. LLC will acquire it for $276
million, including the assumption of debt," said Standard & Poor's
credit analyst Pamela Rice.
Kohlberg plans to combine Cellu Tissue, based in Alpharetta,
Georgia, with Thilmany, a business Kohlberg recently purchased
from International Paper Co. (BBB/Negative/A-3) for about $180
million. IP retained an 11% interest in Thilmany. Kohlberg and
other investors will contribute about $120 million of equity to
support the transactions.
At Feb. 28, 2005, Cellu Tissue had about $170 million of debt,
including capitalized operating leases and debt to EBITDA of about
4.2x. Pro forma for its sale to Kohlberg, Thilmany, which has
operational headquarters in Kaukauna, Wisconsin, had debt of about
$150 million and debt to 2004 EBITDA of 3.6x.
"We believe that the business profile of the combined operations
could be slightly stronger than that of the individual companies--
driven by a larger financial base, greater product and geographic
diversity, and the potential for operating efficiencies and cost
synergies," Ms Rice said. "Nevertheless, the new entity will
still operate in highly competitive and mature markets, remain
subject to volatile pulp and energy costs, generate only modest
cash flows, and be likely to remain highly leveraged."
Standard & Poor's will meet with management to review its business
strategies, financial policies, projections, initiatives to
improve operational performance, and financing plans to determine
ratings for the combined entity. If, as we expect, overall debt
following these transactions is not significantly higher than the
pro forma combined debt of the two companies, the new entity's
corporate credit rating is likely to be 'B+'.
Cellu Tissue is a small manufacturer and converter of tissue and
machine-glazed paper, with sales of $333 million for the fiscal
year ended Feb. 28, 2005. Thilmany manufactures and converts
lightweight packaging and pressure-sensitive and industrial papers
and had sales of $458 million in 2004.
TOM'S FOODS: Hires Eugene Davis as Chief Restructuring Officer
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Georgia gave
Tom's Foods Inc. permission to employ Eugene I. Davis, founder and
chairman of PIRINATE Consulting Group, LLC, as its Chief
Restructuring Officer.
PIRINATE Consulting specializes in turnaround management,
liquidation and sales management, M&A consulting, hostile and
friendly takeovers, proxy contests and strategic planning advisory
services for public and private businesses.
Mr. Davis will report to the Debtor's Board of Directors and will
be responsible for the management and oversight of all strategic
aspects of the Debtor's case, such as:
a) evaluating the viability of the Debtor's business units and
recommending to the Board whether to continue or modify
operations or whether to sell, liquidate or pursue other
alternatives;
b) identifying and recommending to the Board immediate targets
for quick action as part of the restructuring process such
as staffing, cost reductions and asset dispositions;
c) developing and recommending to the Board a comprehensive
business plan, including budgeting, cash management and
finance;
d) serving as lead negotiator for the Debtor in any asset
disposition and related activities;
e) managing compliance with administrative processes and other
requirements imposed by the Court;
f) developing and recommending to the Board financing
arrangements including, without limitation, financing for
emergence from the Debtor's chapter 11 case; and
g) serving as the Debtor's primary liaison with the lenders,
the noteholders, the senior note trustee, the committee and
the Ad hoc committee and their respective financial
advisors and legal counsel, subject to fiduciary duties of
and officer of the debtor.
The Debtor will retain Mr. Davis and PIRINATE Consulting for an
initial period of six months. PIRINATE Consulting will receive
$30,000 monthly compensation during this period.
Mr. Davis replaces the Debtor's interim Chief Restructuring
Officer, Gene R. Baldwin of Corporate Revitalization Partners,
LLC. Mr. Baldwin will continue to serve the Debtor and the new
chief restructuring officer by:
a) assisting in the preparation of schedules, statements of
financial affairs, budgets, cash flow management charts,
and other financial reports.
b) consulting with and advising the Debtor and the chief
restructuring officer in connection with any plan of
reorganization that may be proposed in the Debtor's chapter
11 case; and
c) advising the Debtor with respect to business and
reorganization issues related to this case.
The Debtor will pay Mr. Baldwin $325 per hour for services
rendered under this new retention agreement.
The Debtor assures the Court that Mr. Davis and PIRINATE
Consulting does not represent any interest adverse to the Debtor
or its estate.
Headquartered in Columbus, Georgia, Tom's Foods Inc. manufactures
and distributes snack foods. Its product categories include
chips, sandwich crackers, baked goods, nuts, and candies. The
Company filed for chapter 11 protection on April 6, 2005 (Bankr.
M.D. Ga. Case No. 05-40683). David B. Kurzweil, Esq., at
Greenberg Traurig, LLP, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed total assets of $93,100,000 and total debts of
$79,091,000.
TOMMY HILFIGER: Poor Performance Cues S&P to Retain Negative Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services ratings on Tommy Hilfiger USA
Inc., including its 'BB-' corporate credit rating, remain on
CreditWatch with negative implications, where they were placed on
Nov. 3, 2004.
The men's and women's sportswear, jeanswear, and childrenswear
company had about $343 million in long-term debt outstanding as of
March 31, 2005.
The ratings remain on CreditWatch and reflect Standard & Poor's
concern regarding the company's negative operating trends,
including the continued decline in revenues and the significant
contraction in pre-tax earnings for the fiscal year ended March
2005. (The company currently does not report after-tax earnings
and has not filed 10Qs for the past three fiscal quarters, due to
a previously disclosed government investigation. The U.S.
Attorney's office for the Southern District of New York is
conducting an investigation regarding commission payments to a
foreign subsidiary.) The company also has delayed filing its 10K
statement with the SEC, but expects to file all of the financial
statements no later than Aug. 10, 2005.
Tommy Hilfiger reported weaker-than-expected results for fiscal
2005, primarily in its U.S. wholesale segment, which continued to
experience significant revenue declines as a result of reduced
orders from major customers. Tommy Hilfiger's U.S. wholesale
revenues declined by about 29% for the year. In addition, the
company also revised its fiscal 2006 forecast downwards,
reflecting the negative effect of lower revenues and higher
expenses as the company expects to make incremental investments in
its H Hilfiger and Karl Lagerfeld brands, and its ecommerce
initiative.
While the company currently has sufficient liquidity resources,
Standard & Poor's remains concerned with potential constraints
that could affect the company's financial resources due to the
additional legal costs arising from the government investigation
and the class action lawsuits against the company.
Standard & Poor's will continue to closely monitor developments as
they occur. Resolution of the CreditWatch will depend on the
outcome of the government investigation and Standard & Poor's
review of the company's business strategies and operating trends.
TRAVELCENTERS OF AMERICA: 98.4% of Noteholders Accept Tender Offer
------------------------------------------------------------------
TravelCenters of America, Inc., had received valid tenders and
consents from holders of approximately $187,000,000 principal
amount (approximately 98.42%) of its 12-3/4% Senior Subordinated
Notes due May 1, 2009, as of 5:00 p.m., New York City time, on
June 15, 2005, in connection with its previously announced cash
tender offer and consent solicitation for the Notes.
The Company will as soon as practicable execute a supplemental
indenture amending the indenture governing the Notes to eliminate
substantially all of the restrictive covenants, certain events of
default and certain other related provisions. Although the
supplemental indenture will be executed as soon as practicable,
the amendments will not become operative unless and until all
validly tendered Notes are accepted for purchase pursuant to the
tender offer. The tender offer will expire at midnight, New York
City time, on June 29, 2005, unless extended.
The total consideration to be paid for each $1,000 principal
amount of Notes validly tendered prior to the Consent Date will be
a price equal to:
(i) the present value, determined in accordance with standard
market practice, on a date promptly following the
Expiration Date, of $1,063.75 per $1,000 principal amount
of the Notes, the amount payable with respect to the
earliest redemption date, November 1, 2005, and all
future interest payments payable up to the earliest
redemption date, determined on the basis of a yield to
the earliest redemption date equal to the sum of:
(x) the bid side yield on the 1-5/8% (1.625%) U.S.
Treasury Note due October 31, 2005, as calculated by
the Dealer Managers and Solicitation Agents in
accordance with standard market practice, based on
the bid price of such reference security as of 2:00
p.m., New York City time, on the second business day
immediately preceding the Expiration Date, as
displayed on the Bloomberg Government Pricing
Monitor on "Page PX3" or any recognized quotation
source selected by the Dealer Managers and
Solicitation Agents in their sole discretion, plus
(y) 50 basis points, minus
(ii) accrued and unpaid interest on such $1,000 principal
amount to, but not including, the date of payment.
All holders whose Notes are accepted for purchase will also be
paid accrued and unpaid interest. To receive the Total
Consideration for their Notes, holders were required to have
validly tendered Notes and consents at or prior to the Consent
Date.
In the event that any Notes are accepted for purchase pursuant to
the tender offer and consent solicitation and the proposed
amendments to the indenture become operative, the Company will
make a consent payment of $30.00 per $1,000 principal amount of
the Notes for which consents have been validly delivered on or
prior to the Consent Date. The Consent Payment is included in
Total Consideration. Holders who validly tender their Notes after
the Consent Date but prior to the Expiration Date will be eligible
to receive only the Tender Offer Consideration, which equals the
Total Consideration less the Consent Payment. The Company may
amend, extend or terminate the tender offer and consent
solicitation at any time.
J.P. Morgan Securities Inc. and Lehman Brothers Inc. are the
Dealer Managers and Solicitation Agents for the tender offer and
the consent solicitation. The depositary and information agent is
D.F. King & Co., Inc. Questions or requests for assistance may be
directed to J.P. Morgan Securities Inc. (telephone: (212) 834-3424
(collect) or (866) 834-4666 (toll free)) or to Lehman Brothers
Inc. (telephone: (212) 528-7581 (collect) or (800) 438-3242 (toll
free)). Requests for documentation may be directed to D.F. King &
Co., Inc., the Information Agent (telephone: (212) 269-5550 (for
banks and brokers only) and (800) 488-8075 (for all others toll
free)).
About TravelCenters of America
TravelCenters of America -- http://www.tatravelcenters.com/--
headquartered in Westlake, Ohio, is the largest network of full-
service travel centers and heavy truck repair facilities in North
America. The Company has more than 11,500 employees at 159
locations in 40 states and Canada. With more than 30 years of
experience, TravelCenters of America has established itself as a
leader in serving professional drivers and motorists alike.
* * *
TravelCenters of America's 12-3/4% senior subordinated notes due
2009 carry Moody's Investors Service's Caa1 rating and Standard &
Poor's 'B' rating.
US AIRWAYS: Court Okays Plan Funding Solicitation Protocol
----------------------------------------------------------
Overruling the objections of Pension Benefit Guaranty Corporation
and Air Line Pilots Association, International, Judge Mitchell of
the U.S. Bankruptcy Court for the Eastern District of Virginia
approves, on a final basis:
a) the procedures to consider plan funding proposals;
b) the procedures for providing notice of competing offers; and
c) approve the break-up fees.
The Notice of Opportunity to Submit Competing Offers to Fund and
Facilitate a Plan of Reorganization for the Debtors is approved.
The Debtors will mail a copy of the Procedures Notice and the
Court's Order to potential plan sponsors and all entities on the
Master Service List. The Debtors will cause the Procedures
Notice to be published in The Wall Street Journal (National
Edition).
At the hearing scheduled for July 7, 2005, at 9:30 a.m., each
investment agreement, which comprises part of a plan proposal,
will be separately approved by Judge Mitchell. If no qualified
competing plan proposal is received by the deadline, or if no
proposal is approved by the Court, the Debtors' Merger Agreement
and Investment Agreements will be deemed approved.
The Debtors will incorporate the Approved Proposal, with the
related Investment Agreements, into a plan of reorganization.
Judge Mitchell rules that if the Merger Agreement becomes the
Approved Proposal, the Creditors Committee and its advisors are
not permitted to facilitate inquiries, proposals or offers for:
(1) an alternative merger, reorganization, share exchange,
consolidation or similar transaction involving the
purchase or acquisition of the Debtors;
(2) a purchase of an equity interest or interests in the
Debtors; or
(3) a purchase of assets, securities or ownership interests of
the Debtors.
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. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000)
USG CORP: Wants More Discovery in Asbestos Estimation
-----------------------------------------------------
As previously reported, USG Corporation and its debtor-affiliates
proposed to estimate asbestos claims by presenting evidence that
certain categories of claimants have sustained no compensable harm
based on alleged asbestos exposures.
The Asbestos PI Committee maintained that estimation should
consist only of testimony with respect to U.S. Gypsum's claims
resolution history and a prediction on the number of future
claims that should be paid. The PI Committee had argued that
evidence about the characteristics of claimants who have no
compensable injury or no meaningful exposure to U.S. Gypsum's
products should be excluded entirely from estimation.
On February 11, 2005, the Debtors and the PI Committee, along
with the Futures Representative, filed decisional trees pursuant
to District Judge Conti's order.
The PI Committee and the Futures Representative requested
discovery in three general areas:
(i) the scientific evidence regarding the merits of
the personal injury claims;
(ii) the Debtors' tort system experience; and
(iii) the Debtors' proposed sampling of personal injury
claims for estimation purposes.
The Debtors opposed the discovery proposed by the PI Committee
and the Futures Representative, asserting that the claimants do
not contemplate mutual and complete discovery, but, rather, one-
sided discovery.
Equity Committee Wants Discovery by All Parties
The Statutory Committee of Equity Security Holders also finds the
PI Committee and the Futures Representative's proposal one-sided.
The ET Committee asserts that it is appropriate for the District
Court to establish a scheduling order in the estimation
proceeding that allows for discovery by "all parties" to commence
and proceed concurrently.
"Indeed, it is apparent that the Asbestos Claimants seek to
procure a ruling in the guise of a discovery dispute that would
dictate the result in the estimation proceeding," Gregory
Werkheiser, Esq., at Morris, Nichols, Arsht & Tunnell, in
Wilmington, Delaware, contends.
Mr. Werkheiser argues that the Asbestos Claimants seek to confine
the District Court to an analysis of the Debtors' claims history
to prevent it from considering all of the evidence the Equity
Committee and the Debtors will present, proving the prevalence of
bogus claims that taint the claims history data and identifies
the changes in the state law that render non-meritorious the bulk
of the asbestos PI claims to be estimated. That "common sense
approach," Mr. Werkheiser says, is consistent with District Judge
Wolin's order in the Debtors' case, issued on February 19, 2003,
which stated that "in an asbestos bankruptcy, the Court will,
within the constraints of the law, reject unsubstantiated claims,
bogus medical evidence and fanciful theories of causation. The
Court will protect those have been truly harmed."
Mr. Werkheiser further contends that the Court should not allow
the Asbestos Claimants to continue to hide the evidence that will
prove that the vast majority of the claims are without merit.
In addition, the Equity Committee wants to address the Asbestos
Claimants' mischaracterizations of the relevant case law relating
to the estimation suit. The Equity Committee explains that
certain governing legal standards fully contemplate that courts
conducting estimation proceedings can and should consider a wide
range of evidence.
Moreover, Mr. Werkheiser points out that the asbestos PI claims
to be estimated will now be resolved in federal courts -- not in
state courts -- thus, it is perfectly appropriate for the
District Court to establish the procedural and evidentiary
criteria by which the asbestos claims will be estimated.
Mr. Werkheiser ascertains that the recent decision in the Owens
Corning case, which the Asbestos Claimants mischaracterize,
reflects the court's determination that factors that skewed the
debtors' claim history should be taken into account in the
estimation process. Among the factors that will need to be
evaluated in that context are:
(a) state procedural devices that will not apply in the
federal courts where those claims will now be resolved;
(b) new evidence of fraudulent medical data that has been
submitted in support of claims against asbestos
defendants; and
(c) recent charges in state laws that curtail the ability of
claimants who have no evidence of physical impairment to
file claims.
Mr. Werkheiser informs District Judge Conti that the Owens
Corning court allowed discovery, heard evidence, and relied on a
number of factors in striking over $4 billion off the asbestos
committees' expert's valuation. In light of this, Mr. Werkheiser
believes that the Equity Committee is also entitled to take
discovery on the asbestos and other issues in the Debtors' case.
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. 89; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
VARIG S.A.: Vicente Cervo Files Sec. 304 Petition in S.D. New York
------------------------------------------------------------------
Vicente Cervo, the foreign representative appointed in Varig,
S.A., and its debtor-affiliates' Brazilian bankruptcy proceedings,
filed a Section 304 petition in the U.S. Bankruptcy Court for the
Southern District of New York on June 17, 2005. Mr. Cervo filed
the petition to:
-- devote their limited time and resources to achieving a
successful sale or reorganization of their businesses;
-- prevent the dissipation and piecemeal distribution of the
Debtors' assets; and
-- prevent certain creditors from gaining an advantage over
other creditors, including those located in the United
States.
The loss of market share to the low-cost carriers, the increase in
fuel prices, and the decline in value of the Brazilian Real
against the dollar have put the Debtors in a cash flow deficit.
Mr. Cervo tells the Court that while most of the Debtors' debts
are in U.S. dollars, most of its revenues are in Brazilian
currency. Accordingly, the continued devaluation of the Brazilian
Real has increased the impact of the Debtors' debt burden. The
Debtors' current financial situation consists of:
-- a US$2.5 billion negative net worth;
-- US$2.8 billion in balance sheet debt; and
-- approximately US$2 billion in off-balance sheet debt.
For the year ending Dec. 31, 2004, the Debtors generated
$3.4 billion in total operating revenues, of which approximately
$3.2 billion was attributable to flight operations and the
remainder to ancillary activities.
In early June 2005, one or more of the Debtors' principal aircraft
lessors declared a default under various aircraft leases. The
lessors then ordered the Debtors to cease any further use or
operation of the aircraft until all amounts due under the leases
have been paid and threatened to repossess a portion of the
Debtors' fleet immediately.
Against this backdrop, the Debtors sought protection under the New
Bankruptcy and Restructuring Law of Brazil and the U.S. Bankruptcy
Court to prohibit these lessors from taking action to seize,
repossess or interfere with the Debtors' ability to operate and
fly the aircraft.
The Debtors said they are currently in discussions with a
potential equity investor, but any agreement will be conditional
on a successful restructuring of the business and a viable
business plan and balance sheet.
Section 304 of the U.S. Bankruptcy Code was specifically designed
to assist foreign representatives in the performance of its
duties. It provides that a U.S. bankruptcy court, upon the filing
of a petition by a foreign representative, may enjoin the
commencement or continuation of any action against the debtor in a
foreign proceeding or its property, and may order the turnover of
the foreign debtor's property to a foreign representative.
Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin America.
VARIG's principal business is the transportation of passengers and
cargo by air on domestic routes within Brazil and on international
routes between Brazil and North and South America, Europe and
Asia. VARIG carries approximately 13 million passengers annually
and employs approximately 11,456 full-time employees, of which
approximately 133 are employed in the United States.
The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a competitive
landscape, high fuel costs, cash flow deficit, and high operating
leverage. The Debtors may be the first case under the new law,
which took effect on June 9, 2005. Similar to a chapter 11
debtor-in-possession under the U.S. Bankruptcy Code, the Debtors
remain in possession and control of their estate pending the
Judicial Reorganization. Each of the Debtors' Boards of Directors
authorized Vicente Cervo as foreign representative.
In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17,
2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B.
Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents
Mr. Cervo in the United States and Sergio Bermudes, Esq., in
Brazil. As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts.
VARIG S.A.: Section 304 Petition Summary
----------------------------------------
Petitioner: Vicente Cervo
Foreign Representive
Debtors: VARIG S.A. (Viacao Aerea Rio-Grandense)
Avenida Almirante Silvio de Noronha,
365 Rio de Janeiro, RJ 20021-010
Brazil
-- and --
Rio Sul Linhas Aerea S.A.
Avenida Almirante Silvio de Noronha,
365 Rio de Janeiro, RJ 20021-010
Brazil
-- and --
Nordeste Linhas Aereas S.A.
Avenida Almirante Silvio de Noronha,
365 Rio de Janeiro, RJ 20021-010
Brazil
Case Nos.: 05-14400 through 05-14402
Type of Business: VARIG is Brazil's largest air carrier and the
largest air carrier in Latin America. VARIG's
principal business is the transportation of
passengers and cargo by air on domestic routes
within Brazil and on international routes
between Brazil and North and South America,
Europe and Asia. VARIG carries approximately 13
million passengers annually and employs
approximately 11,456 full-time employees.
See http://www.varig.com/
Section 304 Petition Date: June 17, 2005
Court: Southern District of New York
Judge: Robert D. Drain
Petitioner's Counsel
In the United States: Rick B. Antonoff, Esq.
Pillsbury Winthrop Shaw Pittman LLP
1540 Broadway
New York, New York 10036
Tel: (212) 858-1000
Fax: (212) 858-1500
Petitioner's Counsel
In Brazil: Sergio Bermudes, Esq.
Escritorio de Advocacia Sergio Bermudes
Praca XV de novembro, no 2o
7o e 8o andares, Centro
CEP: 20010-101, Rio de Janeiro BRAZIL
Tel: 55-21-3981-0030
Fax: 55-21-2981-0031
Consolidated Financial Condition as of March 31, 2005:
Total Assets: BRL2,979,309,000
Total Debts: BRL9,474,930,000
W.R. GRACE: Cytec Settles Environmental Disputes for $5.25 Million
------------------------------------------------------------------
Before 1943, American Cyanamid & Chemical Corporation owned a
real property identified as 214Y Main Street and Parcel 2322 in
the Town of Concord, Massachusetts. In 1945, W.R. Grace & Co.'s
predecessor, Dewey & Almy Chemical Company, acquired the
Massachusetts Property. The Debtors still own the Property.
In 1946, American Cyanamid merged into American Cyanamid Company,
which is now known as Wyeth Holdings Corporation. On
December 17, 1993, American Cyanamid transferred to Cytec
Industries Inc. substantially all assets of its global chemical
business assets. In connection with that transaction, Cytec
undertook a contractual obligation to American Cyanamid to defend
and indemnify it against environmental liabilities arising in
connection with certain former American Cyanamid Company
businesses, including claims based on the alleged releases or
threatened releases of hazardous materials at or from the
Massachusetts Property.
By issuing a Notice of Responsibility letter dated December 3,
2001, the Massachusetts Department of Environmental Protection
required the Debtors to investigate and remediate certain
releases of hazardous substances from the Property.
On April 21, 2004, the Debtors made a demand against Cytec and
Wyeth to recover remediation costs related to the hazardous
substances disposed of on the Property before and during American
Cyanamid's ownership. The hazardous substances are primarily
composed of nitrocellulose, which is associated with the
production of gun cotton. However, soil impacted by
Polychlorinated Biphenyl, debris including asbestos-containing
materials, and metals are also present.
David M. Bernick, Esq., at Kirkland & Ellis LLP, in Chicago,
Illinois, relates that the Debtors' demand relied on Section 6901
of the Resource Conservation and Recovery Act, Chapter 21E of the
Massachusetts General Law, and other federal and state
environmental regulations. Consistent with the requirements of
Chapter 21E, Cytec and the Debtors have exchanged information,
discussed legal issues, and negotiated a settlement over the past
year.
Cytec and Wyeth dispute that they have any responsibility in
connection with the Property. And since the Parties acknowledge
that any litigated solution to the dispute would be time-
consuming, costly and uncertain, they find it to be in their best
interests to resolve the dispute pursuant to a Settlement
Agreement.
Under the terms of the Settlement Agreement, Cytec will pay
$5,250,000, in two installments, into a trust intended to be a
qualified settlement fund under Section 468B of the Internal
Revenue Code. The first payment -- $1,000,000 -- will be paid by
the fifth business day following the later of the date on which
Cytec is notified of the Agreement becoming effective and the
execution of the Trust Agreement. The $4,250,000 balance of the
settlement amount will be paid on May 1, 2006.
Mr. Bernick explains that the trust account established will be
used for paying or reimbursing the Debtors for response costs and
attorney's fees accrued or expended in connection with the
investigation and remediation of releases at the Property.
Should any funds remain in the trust account at the conclusion of
the remediation, when a licensed site professional submits a
Response Action Outcome to the MADEP, the balance of the trust
account will be available to the Debtors.
Moreover, pursuant to the Settlement Agreement, the Debtors agree
to indemnify and release Cytec and Wyeth for claims related to
the Property, except for those pertaining to personal injury
arising and property damage caused by Cytec or Wyeth.
The Debtors have advised Cytec that they estimate remediation
costs to be less than $10,000,000, yet actual costs will depend
on which remedial technology is found to be most effective and
acceptable. Mr. Bernick contends that given the uncertainties of
litigation outcomes and actual remediation costs, the negotiated
settlement amount is fair and reasonable.
In addition, Mr. Bernick asserts that the matter being disputed
is complicated and involves extensive factual investigation.
Also, the law with respect to appropriate remediation
responsibilities is not well settled. Thus, litigation would
involve, at best, significant expense, inconvenience and delay
both with respect to the implementation of the continuing
remediation as well as delay in the Debtors' obtaining
reimbursement from Cytec for the funds that they have already
expended on the remediation and those they are likely to expend
in the future. At worst, litigation could lead to significant
expense and no recovery at all, in the event of an unfavorable
litigation outcome.
Accordingly, the Debtors seek the U.S. Bankruptcy Court for the
District of Delaware's authority to execute the Settlement
Agreement. The Debtors ask the Court to enter an order requiring
the creation of a trust under a Trust Agreement intended to be a
qualified settlement fund.
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. 87; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
WESTAR ENERGY: Improved Financial Profile Cues S&P to Hold Ratings
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB+' corporate
credit ratings on electric generation and transmission company
Westar Energy Inc. and its subsidiary Kansas Gas & Electric Co.
The outlook remains positive.
At the same time, Standard & Poor's assigned its 'BBB-/BB-'
preliminary ratings to Westar's $1 billion amended shelf
registration that covers $600 million of first mortgage bonds and
$400 million of unsecured debt securities.
"The ratings on Westar and its subsidiary KG&E reflect an average
business profile, based on the core vertically integrated electric
utility operations in Kansas and a weak but improving financial
profile," said Standard & Poor's credit analyst Barbara Eiseman.
The Topeka, Kansas-based company has taken significant actions
during the past two years to reduce its business risk and
strengthen its aggressively leveraged balance sheet.
The positive outlook recognizes the significant actions management
has taken to strengthen the company's financial condition and
reduce its business risk.
However, to make the transition to investment grade, Westar must
achieve and sustain cash flow measures that are solidly investment
grade and receive a reasonable rate decision in its pending rate
case.
WESTPOINT STEVENS: Selling Longview Lot to Industrial for $2.85M
----------------------------------------------------------------
For the past 16 years, WestPoint Stevens, Inc. and its debtor-
affiliates have owned and operated a plant to manufacture bedding
accessories at a 260,060 square-foot single story facility located
at 2839 Second Avenue NW in Longview, North Carolina.
John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New
York, tells Judge Drain that the Debtors ceased their operations
at the Longview Property in December 2004. To avoid the accrual
of any further costs associated with the continued maintenance of
the property, the Debtors decided to proceed with a sale. In this
regard, the Debtors retained Corporate Properties LLC as their
exclusive real estate broker to market the Longview Property to
prospective purchasers.
Marketing Efforts
CPL undertook an intensive marketing campaign to sell the
Longview Property. By means of local real estate brokers and
economic development agencies, CPL estimates that the marketing-
package booklet was distributed to at least 30 potential
purchasers -- a significant number given the small size of the
community, Mr. Rapisardi notes.
Due to the severely depressed local real estate market, the rural
and remote location of the Longview Property, and the large size
and unique use of the property by the Debtors, CPL faced a
substantial obstacle in locating a prospective purchaser who would
be interested in acquiring the Longview Property as a whole.
CPL received minimal and scattered interest in the Longview
Property. After participating in discussions with potential
purchasers, it became evident most purchasers were only interested
in acquiring or leasing parcels of the Longview Property, rather
than the property as a whole. Although the Debtors recognized
that the weakened market conditions for the sale of the Longview
Property might compel them to offer the property on a subdivided
basis, Mr. Rapisardi explains that a piecemeal sale would require
a substantial commitment of time and would therefore be
inconsistent with their restructuring needs. Moreover, that
process would not likely yield as high a purchase price as an
offer for the Longview Property as a whole.
In conjunction with its marketing efforts, CPL identified certain
parties interested in leasing the Longview Property in its
entirety. CPL advised the Debtors that receiving interest from
potential lessees would likely make the property more attractive
to potential purchasers of the property as a whole because it
would guarantee the purchaser a source of long-term income.
Sale Agreement
After identifying various parties interested in leasing the
Longview Property, CPL began marketing the property again -- this
time referencing the parties interested in leasing the property
-- and was able to find a purchaser interested in purchasing the
property in its entirety, Industrial Realty Group.
The Debtors reached an agreement with Industrial Realty for the
sale of the Longview Property. The Purchaser agrees to pay the
Debtors $2,850,000 for the property, $25,000 of which has been
paid as a deposit upon execution of the Sale Agreement. The
balance of the purchase price will be paid at the closing.
In the event the Debtors default on the full and timely
performance of any obligations under the Sale Agreement for any
reason other than the Purchaser's default, the deposit will be
returned to the Purchaser and the Sale Agreement will terminate.
If the Purchaser fails to consummate the purchase of the Longview
Property, and the conditions to the Purchaser's obligations have
been satisfied, the Debtors may retain the deposit, that amount
being agreed on as liquidated damages for the failure of the
Purchaser to perform its duties, liabilities, and obligations
under the Sale Agreement.
Accordingly, the Debtors ask the U.S. Bankruptcy Court for the
Southern District of New York to approve the sale of the
Longview Property to the Purchaser in accordance with the terms of
the Sale Agreement.
The Debtors have determined that the $2,850,000 consideration is
reasonable, represents fair market value, and is equal to or
greater than what would otherwise be obtained through a public
sale or auction of the Property.
The Debtors believe that a public auction is unnecessary and would
only entail delay and attendant expense with no corresponding
benefit to their estates.
Brokerage Fee
Pursuant to the Sale Agreement, the Debtors are responsible for
the payment at closing of a brokerage fee due CPL in the amount of
6% of the gross sales price. The Debtors believe that the amount
of the brokerage fee is reasonable, and seek the Court's authority
to pay the brokerage fee to CPL.
Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on
June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J.
Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the
Debtors in their restructuring efforts. (WestPoint Bankruptcy
News, Issue No. 48; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
WILLBROS GROUP: Filing Delay Prompts Whitebox's Notice of Default
-----------------------------------------------------------------
Willbros Group Inc. received a notice of default from Whitebox
Advisor, Inc., after the Company delayed the filing of its annual
report with the Securities and Exchange Commission.
Whitebox Advisor claims to hold approximately 25.1% or $17,595,000
of the Company's 2.75% convertible senior notes due 2024.
"The company does not believe it has failed to perform its
obligations under the indenture," Warren L. Williams, Senior Vice-
President of Willbros Group, said. "The provisions of the
indentures only require the company to furnish copies to the
trustee of its annual and quarterly reports within 15 days of its
filing with the SEC. The provision does not require that the
company file the reports within the deadlines set by the SEC."
2.75% Convertible Senior Notes
Pursuant to the Indenture dated as of March 12, 2004, between the
Company, as issuer, and JPMorgan Chase Bank, as trustee with
respect to the Company's $70.0 million of 2.75% Convertible Senior
Notes due 2024, the Company is required to provide the trustee
with copies of all annual and quarterly reports which it is
required to file with the SEC pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, within 15
calendar days after it files such annual and quarterly reports.
The Indenture provides that a failure by the Company to comply
with this requirement is not an "event of default" until either:
(i) the trustee notifies the Company, or
(ii) the holders of at least 25% in aggregate principal amount
of the Notes outstanding
notify both the Company and the trustee, in each case by certified
mail, of the failure to perform, and the Company does not observe
or perform the covenant for a period of 60 days after written
notice of such failure is given in accordance with the Indenture.
If an event of default were to occur, the trustee or the holders
of at least 25% in aggregate principal amount of the Notes then
outstanding could declare all unpaid principal and accrued
interest on the Notes then outstanding to be immediately due and
payable. Moreover, any failure by the Company to perform or
observe any covenant under the Indenture which would entitle the
noteholders or the trustee to accelerate the Notes, would also
constitute an event of default under the Company's senior credit
facility.
Audit Committee Investigation
As reported in the Troubled Company Reporter on May 23, 2005,
the Company disclosed that its Audit Committee has substantially
completed its investigation. The Company and its external
auditors are reviewing and analyzing the results of the Audit
Committee's investigation in order to finalize the Company's
financial statements.
As previously reported in January 2005, the Company's Audit
Committee, with the assistance of independent counsel, has been
carrying out an investigation into the activities of James K.
Tillery, the former President of Willbros International, Inc., and
other employees and consultants of WII and its subsidiaries. WII
and its wholly owned subsidiaries operate internationally outside
the United States and Canada. WII is a wholly owned subsidiary of
Willbros Group, Inc.
Mr. Tillery resigned without severance benefits from Willbros
International, Inc. on January 6, 2005, as a direct result of
senior management's preliminary investigation into a tax matter
in Bolivia. After Mr. Tillery's resignation, the Company
discovered numerous documents and encrypted computer files
indicating that Mr. Tillery may have been concealing other
improper activities. Senior management promptly brought this
information to the attention of the Audit Committee, which then
launched its own independent investigation.
The investigation conducted by the Audit Committee confirmed
that Mr. Tillery and others who directly or indirectly reported
to him violated Company policies and possibly the laws of
several countries, including the United States. Based on the
Audit Committee's independent investigation and on information
obtained by senior management, the Company has determined the
following:
-- Mr. Tillery and other Willbros International employees or
consultants owned interests in enterprises with whom
Willbros International did business, and may have usurped
corporate opportunities, received payments and other
improper benefits from consultants, suppliers or
competitors. Mr. Tillery and these others appear to have
benefited personally as a result of such transactions.
Their failure to disclose such activities may constitute a
violation of United States law, or the laws of other
countries.
-- Mr. Tillery and other Willbros International employees or
consultants may have directly and indirectly promised to
make, made, caused to be made, or approved payments to
government officials in Bolivia, Nigeria and Ecuador, and
possibly to client personnel in one or more of those
countries. Mr. Tillery may have also acquiesced in, or
approved, a prior commitment by another to make an improper
future payment in Mexico. These activities and, in some
cases, their possible mischaracterization on Willbros
International's financial records, may constitute violations
of the United States Foreign Corrupt Practices Act, other
laws of the United States, or the laws of other countries.
-- Under the direction of Mr. Tillery and other Willbros
International employees or consultants, certain subsidiaries
of WII filed false tax returns, failed to file required tax
returns, and failed to pay certain taxes in locations
outside the United States.
-- Mr. Tillery and other Willbros International employees or
consultants may have engaged in discussions with competitors
and others regarding bids for projects outside the United
States. These discussions may have been in violation of
United States law or the laws of other countries.
-- Following Mr. Tillery's resignation, Willbros International
employees and former consultants may have contravened
Company directives and continued to carry out some of the
activities described above.
The process and results of the Audit Committee's investigation
have been voluntarily reported to both the United States
Securities and Exchange Commission and the United States
Department of Justice, which are currently investigating these
matters. The Company is cooperating fully with these governmental
authorities.
Expected Financial Restatement
The previously announced financial restatements for the years
ended December 31, 2002, and 2003, and the first three quarters of
2004 will incorporate the results of the Audit Committee's
investigation, and a review of the Company's financial records.
The estimated financial impact of those restatements on the
referenced periods are expected to be as follows:
For the year ended December 31, 2002, reductions in net income
ranging from $4.3 to $5.0 million and consisting of:
-- $3.1 to $3.3 million related to Bolivian taxes, penalties
and interest; and
-- $1.2 to $1.7 million related to underpayment of Nigerian
payroll taxes and other accounting adjustments.
For the year ended December 31, 2003, reductions in net income
ranging from $1.5 to $2.1 million and consisting of:
-- $1.0 to $1.3 million related to Bolivian taxes, penalties
and interest; and
-- $0.5 to $0.8 million related to underpayment of Nigerian
payroll taxes and other accounting adjustments.
For the three quarters ended September 30, 2004, reductions in
net income ranging from $1.4 to $2.1 million and consisting of:
-- $1.0 to $1.4 million related to Bolivian taxes, penalties
and interest; and
-- $0.4 to $0.7 million related to underpayment of Nigerian
payroll taxes and other accounting adjustments.
The total financial statement impact of the restatements for the
periods discussed above is currently estimated to be a reduction
in net income ranging from $7.2 to $9.2 million. During this same
timeframe the Company recorded net income before restatements of
approximately $20.8 million.
About the Company
Willbros Group, Inc. -- http://www.willbros.com/-- is an
independent contractor serving the oil, gas and power industries,
providing engineering and construction, and facilities development
and operations services to industry and government entities
worldwide.
WORLDCOM INC: Settles Dispute Over Travelers Casualty's Claims
--------------------------------------------------------------
From time to time before WorldCom, Inc. and its debtor-affiliates
filed for bankruptcy, Travelers Casualty and Surety Company of
America and Travelers Casualty and Surety Company, as
Administrator for Reliance Surety Company, issued various surety
bonds on the Debtors' behalf.
The surety bonds assured the Debtors' performance of various
obligations to third parties.
In conjunction with the issuance of the Bonds, the Debtors
executed various continuing indemnity agreements, wherein the
Debtors are obligated to indemnify Travelers Casualty in full in
the event Travelers Casualty is required to make payment under any
of the Bonds.
Travelers Casualty timely filed proofs of claim, asserting various
claims and rights with respect to the Debtors' obligations under
the Bonds and the Indemnity Agreements. Although largely
contingent, some of the obligations under the Bonds have become
liquidated as a result of payment of claims and the incurrence of
fees and expenses. Furthermore, various pending claims and other
disputes present the potential for further liability under the
Bonds.
In their 28th omnibus objection to claims, the Debtors objected to
16 Travelers claims -- Claim Nos. 29351, 29342, 29345, 29346,
29347, 29348, 29344, 29350, 29343, 29352, 29353, 29354, 29355,
29356, 29357 and 29349 -- as claims against multiple debtors to be
consolidated with Claim No. 29358 for purposes of distribution.
The Debtors further objected to Travelers' Coverage Claim Nos.
3317 and 3318, and Bond Claim Nos. 29358 and 29341.
After extensive negotiations, the parties stipulate and agree
that:
(a) Travelers Casualty will withdraw its limited response to
the Debtors' 28th claims objection;
(b) Travelers Casualty will withdraw its objection to the
Debtors' 53rd omnibus claims objection and consent to the
disallowance of Claim Nos. 31059 and 31060 originally
filed by Martell Construction and Martell Construction
Co., Inc.;
(c) Travelers Casualty will be granted an allowed general
unsecured claim for $1,758,742;
(c) The Debtors' 28th claims objection is sustained as to the
Multiple Claims. Claim No. 29341 will be considered as
one of the Multiple Claims and will be disallowed;
(d) Travelers Casualty waives the right to assert any claim
based on the assignment by JP Morgan Chase Bank, N.A., to
Travelers Casualty of Claim No. 36018 for $2,200,000; and
(e) Travelers Casualty will be authorized to assert any and
all claims against all principals and the Debtors on all
bases of recoveries set in the Multiple Claims only in the
context of Claim No. 29358.
Judge Gonzalez approves the parties' Stipulation.
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. 93; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WORLDCOM INC: CoreComm Asks Court to Reconsider Claim Disallowance
------------------------------------------------------------------
CoreComm-ATX, Inc., filed Claim Nos. 26209 through 26216 in the
chapter 11 cases of WorldCom, Inc., and its debtor-affiliates.
Each Claim was filed against a different Debtor and sought more
than $10 million. Although each of the claim forms indicated that
the CoreComm Claims are entitled to be treated as secured claims
based on CoreComm's setoff and recoupment rights, the value of the
secured portion of each claim was not set forth.
In October 2004, the Debtors objected to certain claims, including
the CoreComm Claims, on the grounds that no set-off or recoupment
right existed. The Debtors asserted that the Set-Off Claims were
not entitled to treatment as secured claims.
On December 14, 2004, the U.S. Bankruptcy Court for the Southern
District of New York disallowed certain Set-Off Claims, including
the CoreComm Claims on the grounds that CoreComm failed to
respond.
CoreComm asks the Court to:
(a) reconsider the Claims Order solely as to the CoreComm
Claims; and
(b) permit it a reasonable period of time in which it may
respond prior to a hearing on the Debtors' Objection.
Paul V. Shalhoub, Esq., at Willkie Far & Gallagher LLP, in New
York, argues that the Debtors did not properly notify
CoreComm or CoreComm's attorney of the Objection. Although the
Debtors attempted service on CoreComm itself, the Objection was
sent to CoreComm's old headquarters address, previously vacated in
late January 2004.
At a minimum, the Debtors had constructive knowledge of Willkie
Farr's retention as bankruptcy counsel for CoreComm but failed to
serve Willkie Farr with a copy of the Objection, Mr. Shalhoub
asserts. On January 15, 2004, CoreComm and its affiliates filed
Chapter 11 petitions in the United States Bankruptcy Court for the
Southern District of New York.
The Debtors were also on constructive notice of CoreComm's new
headquarters address as early as January 2004, Mr. Shalhoub notes.
On January 22, 2004, CoreComm served Weil Gotshal & Manges LLP,
the Debtors' primary bankruptcy counsel, the Utilities Order,
which provides that "[a]fter January 23, 2004, all notices,
requests and other correspondence being sent to the Debtors should
be addressed to 2100 Renaissance Blvd., King of Prussia, PA
19406."
Mr. Shalhoub contends that the Debtors' failure to proceed by
adversary proceeding and to seek automatic stay relief in the
CoreComm bankruptcy case constitute cause to reconsider the
Claims Order. To challenge the validity of CoreComm's set-off
right, the Debtors were required to commence an adversary
proceeding pursuant to Rule 7001(2) of the Federal Rules of
Bankruptcy Procedure.
The CoreComm Claims represent more than $10 million. Mr.
Shalhoub tells Judge Gonzalez that to lose those assets without
prior notice and an opportunity to respond constitutes an extreme
and undue hardship on the CoreComm Debtors, particularly when the
WorldCom Debtors have alleged in excess of $13 million of claims
in the CoreComm estate. Granting reinstatement of the CoreComm
Claims would not cause unfair prejudice to the Debtors, as the
Debtors will still have the opportunity to oppose the claims on
their merits.
In the alternative, CoreComm asks the Court to make a finding that
cause exists to reconsider the Claims Order based on
CoreComm's excusable neglect.
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. 93; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
YUKOS OIL: Moscow Court Rejects Complaint on Enforcement Fee
------------------------------------------------------------
The Federal Arbitration Court of the Moscow District on Wednesday
rejected YUKOS Oil Company's complaint against the court bailiff
service's decision to collect 2.7 billion rubles from the company
in an execution enforcement fee for penalties dating back to 2001.
YUKOS believes that the court bailiff service's decision was in
breach of the execution enforcement law.
Earlier, the Tax Ministry had charged YUKOS with tax violations
and initiated legal action against the company in Moscow'
Arbitration Court, seeking to make it pay penalties for 2001.
On October 11, 2004, Moscow's Arbitration Court ordered to company
to pay 39.1 billion rubles in penalties.
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. On
Feb. 24, 2005, Judge Letitia Z. Clark dismissed the Chapter 11
case. (Yukos Bankruptcy News, Issue No. 22; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
* Venable Expands NY Market with Heard & O'Toole LLP Combination
----------------------------------------------------------------
Washington-based Venable LLP is entering the New York market
with the addition of litigation firm Heard & O'Toole LLP. The
12-attorney Heard & O'Toole, with an outsized caseload in complex
civil and white-collar litigation and arbitration, will combine
with Venable on June 30, 2005.
The combination brings seven new partners, four associates and one
of counsel to Venable, giving the DC-based firm nearly 460
attorneys in seven U.S. offices. The opening of a New York office
represents a further step in Venable's strategy to expand its
geographic reach coast-to-coast.
Heard & O'Toole has developed a formidable niche in big-ticket
defense work through its two principal partners, C. Stephen Heard,
Jr. and Edmund M. O'Toole. The firm is heavily involved in
complex securities, product liability, insurance, environmental
and other civil litigation, including substantial cross-border
matters for major Japanese and Canadian clients. Heard & O'Toole
also handles extensive white-collar criminal defense work and
investigations. The firm currently represents clients in four
separate investigations by the New York State Attorney General's
office.
Venable, an American Lawyer top 100 firm, was founded more than a
century ago and is chaired by former U.S. Attorney General
Benjamin R. Civiletti, one of only a few former U.S. Attorneys
General in private practice. The firm has nationally recognized
practices in a number of areas, including government contracts,
homeland security, regulatory and legislative affairs, advertising
and marketing, environmental, employment/labor, intellectual
property, litigation and investigations, telecommunications, and
real estate, among others.
According to Venable managing partner James L. Shea, "Given the
size of our practice and the national scope of our clients,
including many clients in the New York metropolitan area, we've
been looking for the right opportunity to establish a presence in
New York." He adds, "Once we met the attorneys of Heard &
O'Toole, we quickly realized we'd found the right partner to build
our New York office." Venable represents some significant clients
in the region, including Viacom and Verizon. According to Mr.
Shea, "This combination will be successful because of the clear
match between our practices and our many clients in consumer
products, pharmaceuticals, media and entertainment, as well as
other sectors."
"Heard & O'Toole has first-rate corporate, class action and white
collar defense practices, handling complex matters for leading
institutional and corporate clients," Mr. Shea noted. "Their
litigation sweet spot complements many of our practices, and their
attorneys mesh extremely well with ours."
According to Mr. Heard, "There is a great fit between our
respective litigation caseloads. For a corporate defense and
investigations practice like ours, what more can you say than
being able to team with a firm led by former U.S. Attorney General
Ben Civiletti?" Mr. Civiletti's comments indicate the respect is
mutual. "Over the course of his illustrious career, Steve Heard
has built a tremendous practice. We're pleased to be teaming with
someone of his caliber," said Mr. Civiletti.
Going forward, Venable has strong growth plans for New York. Mr.
Shea adds, "Litigation and corporate investigations are just the
first point of combined strength. Over the next 18 to 24 months,
we intend to build other practice capabilities in New York that
complement our current national practices, including bankruptcy,
marketing and advertising, IP, and others." Venable represents
clients such as Marriott International and Yahoo!
"We realize the incomparable value of joining a prominent firm,
well established in Washington, with senior attorneys who have
worked in all phases of government and who are keenly grounded in
investigative and enforcement matters" observed Mr. O'Toole. Mr.
O'Toole focuses his practice on corporate and commercial
litigation, as well as investigative labor and employment matters.
According to Mr. Heard, the combination with Venable fulfills his
firm's strategic vision, too. "The attorneys in our firm all
earned their stripes in the major New York law firms. We decided
to form our own firm several years ago. Our ultimate vision was
to be the New York office of a well regarded firm with a national
or even international platform - one which would enable us to
serve our clients with a broad range of capabilities and talented
attorneys. We were looking for a partner firm that would
complement our practice and our culture. We found that match with
Venable."
Venable has grown steadily in recent years, with prominent hires
from other major law firms as well as from top-level staff and
executive positions at the Securities and Exchange Commission, the
Federal Communications Commission, the Federal Trade Commission,
the U.S. Patent & Trademark Office, the Office of the Comptroller
of the Currency, and the Departments of Homeland Security,
Transportation, Agriculture, Treasury, Justice, and Health & Human
Services. The firm's partnership includes former high-ranking
U.S. Congressmen and Senators.
According to Mr. Shea, Venable is also looking to expand into
California. "Given the size and national scope of our clients,
we've been looking to expand our geographic presence so that we
can better serve our clients in these key regions of the country."
Mr. Shea said that the New York market has been in the firm's
sights for some time. "We have a national and international
practice, with substantial business ties in the New York region.
We felt it was important to be able to serve new and existing
clients with added capabilities in New York. With Heard &
O'Toole, we're off to a great start."
As one of America's top 100 law firms, Venable LLP --
http://www.venable.com/-- has lawyers practicing in all areas of
corporate and business law, complex litigation, intellectual
property and government affairs. Venable serves corporate,
institutional, governmental, nonprofit and individual clients
throughout the U.S. and around the world from its base of
operations in and around Washington, DC.
* BOND PRICING: For the week of June 13 - June 17, 2005
-------------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
AAIPharma Inc. 11.000% 04/01/10 46
ABC Rail Product 10.500% 01/15/04 0
ABC Rail Product 10.500% 12/31/04 0
Adelphia Comm. 3.250% 05/01/21 5
Adelphia Comm. 6.000% 02/15/06 5
Aetna Industries 11.875% 10/01/06 7
Allegiance Tel. 11.750% 02/15/08 28
Allegiance Tel. 12.875% 05/15/08 1
Allied Holdings 8.625% 10/01/07 38
Amer. Color Graph. 10.000% 06/15/10 72
Amer. Restaurant 11.500% 11/01/06 66
Amer. Tissue Inc. 12.500% 07/15/06 2
American Airline 7.377% 05/23/19 73
American Airline 7.379% 05/23/16 68
American Airline 8.839% 01/02/17 74
American Airline 8.800% 09/16/15 74
American Airline 10.180% 01/02/13 72
American Airline 10.600% 03/04/09 66
American Airline 10.680% 03/04/13 65
AMR Corp. 9.200% 01/30/12 70
AMR Corp. 9.750% 08/15/21 65
AMR Corp. 9.800% 10/01/21 66
AMR Corp. 9.880% 06/15/20 70
AMR Corp. 10.000% 04/15/21 74
AMR Corp. 10.125% 06/01/21 68
AMR Corp. 10.150% 05/15/20 60
AMR Corp. 10.200% 03/15/20 66
AMR Corp. 10.400% 03/15/11 62
AMR Corp. 10.450% 11/15/11 63
Anvil Knotwear 10.875% 03/15/07 58
Apple South Inc. 9.750% 06/01/06 10
Archibald Candy 10.000% 11/01/07 2
AT Home Corp. 0.525% 12/28/18 7
AT Home Corp. 4.750% 12/15/06 34
ATA Holdings 12.125% 06/15/10 38
ATA Holdings 13.000% 02/01/09 39
Atlantic Coast 6.000% 02/15/34 16
Atlas Air Inc. 8.770% 01/02/11 29
Autocam Corp. 10.875% 06/15/14 54
B&G Foods Holding 12.000% 10/30/16 8
Bank New England 8.750% 04/01/99 10
Bank New England 9.500% 02/15/96 9
BBN Corp. 6.000% 04/01/12 0
Broadband Tech. 5.000% 05/15/01 0
Burlington Northern 3.200% 01/01/45 62
Burlington Inds. 7.250% 08/01/27 4
Calpine Corp. 4.750% 11/15/23 70
Calpine Corp. 7.750% 04/15/09 69
Calpine Corp. 7.875% 04/01/08 66
Calpine Corp. 8.500% 02/15/11 67
Calpine Corp. 8.625% 08/15/10 68
Calpine Corp. 8.750% 07/15/13 75
Charter Comm Hld. 8.625% 04/01/09 73
Charter Comm Hld. 9.625% 11/15/09 73
Charter Comm Hld. 10.000% 05/15/11 72
Charter Comm Hld. 10.250% 01/15/10 73
Charter Comm Hld. 11.125% 01/15/11 73
Charter Comm Inc. 5.875% 11/16/09 60
Ciphergen 4.500% 09/01/08 72
Coeur D'Alene 1.250% 01/15/24 73
Collins & Aikman 10.750% 12/31/11 42
Color Tile Inc. 10.750% 12/15/01 0
Comcast Corp. 2.000% 10/15/29 43
Comdisco Inc. 7.230% 08/16/01 0
Comprehens Care 7.500% 04/15/10 0
Continental Airlines 7.461% 04/01/13 74
Covad Communication 3.000% 03/15/24 68
Covanta Energy 7.500% 03/15/12 69
Cray Research 6.125% 02/01/11 42
Curagen Corp. 4.000% 02/15/11 64
Curagen Corp. 4.000% 02/15/11 66
Delta Air Lines 2.875% 02/18/24 31
Delta Air Lines 7.299% 09/18/06 56
Delta Air Lines 7.711% 09/18/11 50
Delta Air Lines 7.779% 01/02/12 57
Delta Air Lines 7.900% 12/15/09 36
Delta Air Lines 7.920% 11/18/10 50
Delta Air Lines 8.000% 06/03/23 35
Delta Air Lines 8.300% 12/15/29 26
Delta Air Lines 8.540% 01/02/07 60
Delta Air Lines 8.540% 01/02/07 33
Delta Air Lines 8.540% 01/02/07 45
Delta Air Lines 9.000% 05/15/16 29
Delta Air Lines 9.200% 09/23/14 31
Delta Air Lines 9.250% 03/15/22 26
Delta Air Lines 9.300% 01/02/11 32
Delta Air Lines 9.320% 01/02/09 42
Delta Air Lines 9.480% 06/05/06 66
Delta Air Lines 9.750% 05/15/21 27
Delta Air Lines 9.875% 04/30/08 60
Delta Air Lines 10.000% 08/15/08 39
Delta Air Lines 10.000% 06/18/13 50
Delta Air Lines 10.000% 12/05/14 35
Delta Air Lines 10.060% 01/02/16 50
Delta Air Lines 10.125% 05/15/10 31
Delta Air Lines 10.140% 08/26/12 47
Delta Air Lines 10.375% 02/01/11 38
Delta Air Lines 10.375% 12/15/22 30
Delta Air Lines 10.430% 01/02/11 53
Delta Air Lines 10.500% 04/30/16 43
Delta Air Lines 10.790% 09/26/13 37
Delta Air Lines 10.790% 09/26/13 36
Delta Air Lines 10.790% 03/26/14 30
Delphi Auto System 7.125% 05/01/29 75
Delphi Trust II 6.197% 11/15/33 55
Diva Systems 12.625% 03/01/08 0
Dura Operating 9.000% 05/01/09 69
Dura Operating 9.000% 05/01/09 71
DVI Inc. 9.875% 02/01/04 8
Dyersburg Corp. 9.750% 09/01/07 0
Eagle-Picher Inc. 9.750% 09/01/13 69
Eagle Food Center 11.000% 04/15/05 0
Emergent Group 10.750% 09/15/04 0
Empire Gas Corp. 9.000% 12/31/07 4
Epix Medical Inc. 3.000% 06/15/24 67
Evergreen Intl. Avi. 12.000% 05/15/10 69
Exodus Comm. Inc. 5.250% 02/15/08 0
Exodus Comm. Inc. 11.625% 07/15/10 0
Falcon Products 11.375% 06/15/09 42
Fedders North Am. 9.875% 03/01/14 60
Federal-Mogul Co. 7.375% 01/15/06 23
Federal-Mogul Co. 7.500% 01/15/09 23
Federal-Mogul Co. 8.120% 03/06/03 28
Federal-Mogul Co. 8.160% 03/06/03 20
Federal-Mogul Co. 8.250% 03/03/05 28
Federal-Mogul Co. 8.370% 11/15/01 20
Federal-Mogul Co. 8.370% 11/15/01 28
Federal-Mogul Co. 8.460% 10/27/02 28
Federal-Mogul Co. 8.800% 04/15/07 25
Fibermark Inc. 10.750% 04/15/11 65
Finisar Corp. 2.500% 10/15/10 72
Finisar Corp. 5.250% 10/15/08 72
Finova Group 7.500% 11/15/09 43
Firstworld Comm 13.000% 04/15/08 0
Foamex L.P. 9.875% 06/15/07 58
GMAC 5.850% 06/15/13 71
GMAC 5.900% 01/15/19 73
GMAC 5.900% 02/15/19 72
GMAC 5.900% 10/15/19 75
GMAC 6.000% 03/15/19 74
GMAC 6.000% 03/15/19 73
GMAC 6.000% 03/15/19 72
GMAC 6.000% 03/15/19 73
GMAC 6.000% 03/15/19 72
GMAC 6.000% 09/15/19 73
GMAC 6.050% 08/15/19 74
GMAC 6.125% 10/15/19 74
GMAC 6.150% 10/15/19 73
GMAC 6.250% 12/15/18 74
GMAC 6.250% 05/15/19 74
GMAC 6.400% 11/15/19 74
GMAC 6.500% 02/15/20 72
Golden Books Pub 10.750% 12/31/04 0
Graftech Int'l 1.625% 01/15/24 66
Graftech Int'l 1.625% 01/15/24 66
GST Network Funding 10.500% 05/01/08 0
Gulf States STL 13.500% 04/15/03 0
HNG Internorth. 9.625% 03/15/06 31
Holley Perf. Prod. 12.250% 09/15/07 74
Home Interiors 10.125% 06/01/08 67
Icos Corp. 2.000% 07/01/23 72
Idine Rewards 3.250% 10/15/23 74
Imperial Credit 9.875% 01/15/07 0
Impsat Fiber 6.000% 03/15/11 64
Inland Fiber 9.625% 11/15/07 39
Integrated Elec. Sv 9.375% 02/01/09 75
Integrated Elec. Sv 9.375% 02/01/09 74
Intermet Corp. 9.750% 06/15/09 47
Intermune Inc. 0.250% 03/01/11 70
Iridium LLC/CAP 10.875% 07/15/05 14
Iridium LLC/CAP 11.250% 07/15/05 15
Iridium LLC/CAP 13.000% 07/15/05 15
Iridium LLC/CAP 14.000% 07/15/05 15
Jordan Industries 10.375% 08/01/07 50
Kaiser Aluminum & Chem. 12.750% 02/01/03 11
Kellstorm Inds 5.750% 10/15/02 0
Key Plastics 10.250% 03/15/07 1
Kmart Corp. 6.000% 01/01/08 12
Kmart Corp. 8.990% 07/05/10 71
Kmart Corp. 9.350% 01/02/20 26
Kmart Corp. 9.780% 01/05/20 75
Kulicke & Soffa 0.500% 11/30/08 71
Level 3 Comm. Inc. 2.875% 07/15/10 53
Level 3 Comm. Inc. 6.000% 09/15/09 54
Level 3 Comm. Inc. 6.000% 03/15/10 56
Liberty Media 3.750% 02/15/30 59
Liberty Media 4.000% 11/15/29 62
Lukens Inc. 7.625% 08/01/04 0
LTV Corp. 8.200% 09/15/07 0
Metaldyne Corp. 11.000% 06/15/12 72
Mississippi Chem. 7.250% 11/15/17 4
Molten Metal Tec 5.500% 05/01/06 0
Motels of Amer. 12.000% 04/15/04 35
Muzak LLC 9.875% 03/15/09 48
MSX Intl. Inc. 11.375% 01/15/08 61
Natl Steel Corp. 8.375% 08/01/06 1
New World Pasta 9.250% 02/15/09 10
North Atl Trading 9.250% 03/01/12 75
Northern Pacific Railway 3.000% 01/01/47 60
Northwest Airlines 7.248% 01/02/12 60
Northwest Airlines 7.360% 02/01/20 55
Northwest Airlines 7.626% 04/01/10 70
Northwest Airlines 7.691% 04/01/17 71
Northwest Airlines 7.875% 03/15/08 51
Northwest Airlines 8.070% 01/02/15 52
Northwest Airlines 8.130% 02/01/14 50
Northwest Airlines 8.700% 03/15/07 57
Northwest Airlines 8.970% 01/02/15 62
Northwest Airlines 9.875% 03/15/07 61
Northwest Airlines 10.000% 02/01/09 53
Northwest Airlines 10.500% 04/01/09 50
Northwest Steel & Wir. 9.500% 06/15/01 0
Nutritional Src. 10.125% 08/01/09 70
NWA Trust 9.360% 03/10/06 75
NWA Trust 11.300% 12/21/12 67
Oakwood Homes 7.875% 03/01/04 17
Oakwood Homes 8.125% 03/01/09 24
Oscient Pharm 3.500% 04/15/11 74
O'Sullivan Ind. 13.375% 10/15/09 40
Orion Network 11.250% 01/15/07 54
Orion Network 12.500% 01/15/07 54
Outboard Marine 9.125% 04/15/17 0
Pegasus Satellite 9.625% 10/15/05 58
Pegasus Satellite 9.750% 12/01/06 60
Pegasus Satellite 12.375% 08/01/06 54
Pegasus Satellite 12.500% 08/01/07 54
Pegasus Satellite 13.500% 03/01/07 0
Pen Holdings Inc. 9.875% 06/15/08 62
Piedmont Aviat 9.900% 11/08/06 8
Pixelworks Inc. 1.750% 05/15/24 75
Polaroid Corp. 6.750% 01/15/02 1
Polaroid Corp. 7.250% 01/15/07 0
Polaroid Corp. 11.500% 02/15/06 0
Portola Packaging 8.250% 02/01/12 64
Primedex Health 11.500% 06/30/08 48
Primus Telecom 3.750% 09/15/10 26
Primus Telecom 5.750% 02/15/07 36
Primus Telecom 8.000% 01/15/14 54
Primus Telecom 12.750% 10/15/09 48
Psinet Inc 11.500% 11/01/08 0
Railworks Corp. 11.500% 04/15/09 0
Radnor Holdings 11.000% 03/15/10 72
RDM Sports Group 8.000% 08/15/03 0
Read-Rite Corp. 6.500% 09/01/04 56
Reliance Group Holdings 9.000% 11/15/00 24
Reliance Group Holdings 9.750% 11/15/03 2
RJ Tower Corp. 12.000% 06/01/13 64
Salton Inc. 10.750% 12/15/05 50
Salton Inc. 12.250% 04/15/08 42
Scotia Pac Co. 6.550% 01/20/07 64
Scotia Pac Co. 7.110% 01/20/14 68
Scotia Pac Co. 7.710% 01/20/14 67
Specialty Paperb. 9.375% 10/15/06 69
Syratech Corp. 11.000% 04/15/07 24
Tekni-Plex Inc. 12.750% 06/15/10 65
Tops Appliance 6.500% 11/30/03 0
Tower Automotive 5.750% 05/15/24 21
Trans Mfg Oper 11.250% 05/01/09 54
Triton PCS Inc. 8.750% 11/15/11 68
Triton PCS Inc. 9.375% 02/01/11 69
Tropical SportsW 11.000% 06/15/08 40
Twin Labs Inc. 10.250% 05/15/06 14
United Air Lines 6.831% 09/01/08 25
United Air Lines 6.932% 09/01/11 64
United Air Lines 7.270% 01/30/13 43
United Air Lines 7.762% 10/01/05 14
United Air Lines 7.811% 10/01/09 53
United Air Lines 8.030% 07/01/11 30
United Air Lines 8.250% 04/26/08 20
United Air Lines 8.390% 01/21/11 54
United Air Lines 8.700% 10/07/08 50
United Air Lines 9.000% 12/15/03 14
United Air Lines 9.020% 04/19/12 40
United Air Lines 9.060% 09/26/14 45
United Air Lines 9.125% 01/15/12 14
United Air Lines 9.200% 03/22/08 45
United Air Lines 9.210% 01/21/17 53
United Air Lines 9.300% 03/22/08 38
United Air Lines 9.350% 04/07/16 51
United Air Lines 9.560% 10/19/18 39
United Air Lines 9.750% 08/15/21 14
United Air Lines 10.110% 01/05/06 44
United Air Lines 10.110% 02/19/06 44
United Air Lines 10.125% 03/22/15 45
United Air Lines 10.250% 07/15/21 12
United Air Lines 10.360% 11/13/12 54
United Air Lines 10.670% 05/01/04 13
United Air Lines 11.210% 05/01/14 12
Univ. Health Services 0.426% 06/23/20 64
Uromed Corp. 6.000% 10/15/03 0
US Air Inc. 10.250% 01/15/07 4
US Air Inc. 10.610% 06/27/07 0
US Air Inc. 10.610% 06/27/07 0
US Air Inc. 10.680% 06/27/08 6
US Air Inc. 10.900% 01/01/08 2
US Airways Inc. 7.960% 01/20/18 48
Utstarcom 0.875% 03/01/08 67
Venture Hldgs 9.500% 07/01/05 0
Venture Hldgs 11.000% 06/01/07 0
WCI Steel Inc. 10.000% 12/01/04 70
Werner Holdings 10.000% 11/15/07 70
Westpoint Stevens 7.875% 06/15/05 0
Westpoint Stevens 7.875% 06/15/08 0
Wheeling-Pitt St. 5.000% 08/01/11 75
Wheeling-Pitt St. 6.000% 08/01/10 75
Winn-Dixie Store 8.875% 04/01/08 52
Winsloew Furniture 12.750% 08/15/07 28
Winstar Comm 14.000% 10/15/05 1
Winstar Comm Inc. 10.000% 03/15/08 0
World Access Inc. 13.250% 01/15/08 6
Xerox Corp. 0.570% 04/21/18 47
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Pinili,
Jr., and Peter A. Chapman, Editors.
Copyright 2005. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***