/raid1/www/Hosts/bankrupt/TCR_Public/050725.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, July 25, 2005, Vol. 9, No. 174
Headlines
1301 CP AUSTIN: Strasburger & Price Approved as Bankr. Counsel
1301 CP AUSTIN: Wants Asset Plus to Continue Managing Property
AAIPHARMA INC: Court OKs Pharmaceuticals Division Sale to Xanodyne
ABLE LABORATORIES: Hires Arnold & Porter as Special Counsel
ABLE LABORATORIES: Look for Schedules & Statements on Oct. 17
ACCLAIM ENTERTAINMENT: Central Investment Offers $100,000 for Name
AERWAV INTEGRATION: Case Summary & 60 Largest Unsecured Creditors
ALASKA AIRLINES: Requests Equal Access to Boeing Field
ALLEGHENY ENERGY: Refinances Term Loan & Plans to Redeem Sr. Notes
AMERICAN TOWER: Completes Partial Redemption of 9-3/8% Sr. Notes
ATA AIRLINES: Gets Okay to Hire Jefferies & Skyworks as Advisors
ATA AIRLINES: Inks Fifth Amendment to Southwest Credit Pact
AVETA HOLDINGS: S&P Rates Proposed $420 Mil. Senior Loans at B-
BLOUNT INC: Improved Credit Profile Prompts S&P to Lift Ratings
BRANTLEY CAPITAL: CFO Tab Keplinger Leaving Post on August 1
BUTLER INT'L: GECC Waives Technical Default
CAITHNESS COSO: Fitch Expects to Rate Proposed Bonds at BB-
CARDIAC SERVICES: Wants to Hire Kraft & Co. as Accountants
CATHOLIC CHURCH: St. George's Makes First Payment to Creditors
CATHOLIC CHURCH: Tucson Wants Aicco Financing Agreement Okayed
CATHOLIC CHURCH: Tucson Wants St. Paul Settlement Pact Approved
CHARTER COMMS: SEC Declares Resale Registration Effective
COLLINS & AIKMAN: GE Capital Corp. Asks Court to Lift Stay
COLLINS & AIKMAN: JPMorgan Backs Price Increase Pact
COLLINS & AIKMAN: Wants to Assume Ernst & Young Contract
CWMBS INC: Decreasing Credit Support Prompt Fitch's Downgrade
CYCLELOGIC INC: Wants Another Delay in Entry of Final Decree
DAYTON POWER: Moody's Upgrades Preferred Stock Rating to Ba1
DELTA AIR: Posts $382 Million Net Loss in Second Quarter 2005
DELTA AIR: Realigns Executive & Senior Leadership Teams
DOMINICK CARUSO: Voluntary Chapter 11 Case Summary
DPL CAPITAL: Moody's Upgrades Trust Preferred Secs. Rating to Ba2
DPL INC: Moody's Lifts Sr. Unsecured Debt Rating to Ba1 from Ba2
DS WATERS: Moody's Junks $480 Million Sr. Secured Credit Facility
DYNAMIC OIL: Selling Assets to Sequoia Via Plan of Arrangement
EASTMAN KODAK: Moody's Downgrades Corporate Family Rating to Ba2
EASTMAN KODAK: Liquidity Concerns Prompt S&P to Pare Ratings
EASTMAN KODAK: Fitch Lowers Rating on $2.4 Billion Debt to BB
EPIC DESIGN: Case Summary & 20 Largest Unsecured Creditors
GARDEN RIDGE: Sues Insurers for Breach of Contract & Warranty
HUNTSMAN INT'L: Moody's Rates New $2.6 Billion Facilities at Ba3
IAP WORLDWIDE: Moody's Rates $435 Million Facilities at Low-Bs
INDUSTRIAL ENTERPRISES: Closes $5 Million Round of New Financing
INTEGRATED HEALTH: Wants to Reserve Amounts for 13 Disputed Claims
IT'S CHRISTMAS: Case Summary & 20 Largest Unsecured Creditors
JERNBERG INDUSTRIES: U.S. Trustee Picks 7-Member Creditor Panel
JERNBERG INDUSTRIES: Panel Taps Sugar Friedberg as Counsel
JVC CONTRACTING: Case Summary & 20 Largest Unsecured Creditors
MCLEODUSA INC: Lenders Extend Forbearance Agreement to Sept. 9
NEVADA POWER: Moody's Reviews B1 Senior Unsecured Debt Rating
NORTH MERIDIAN: Voluntary Chapter 11 Case Summary
NORTHWEST AIRLINES: CEO Urges DOT to OK Int'l. Anti-Trust Immunity
NOVA CHEMICALS: Renegotiated Loan Increases Facility to $375-Mil
NVP CAPITAL: Moody's Reviews B3 Trust Preferred Securities Rating
OWENS-ILLINOIS: Declares Dividend on $2.375 Convert. Pref. Stock
PENINSULA HOLDING: Creditors' Proofs of Claim Due by July 29
PEP BOYS: Poor Performance Prompts S&P to Downgrade Ratings
PORT TOWNSEND: Refinances Revolving Loan with $35MM CIT Financing
PROVIDENT PACIFIC: Charles Oewel Approved as Responsible Person
QUEEN'S SEAPORT: Long Beach Objects to Professionals' Fees
QUIGLEY COMPANY: Asks Court for Solicitation Period Extension
RECYCLED PAPERBOARD: Will Auction Property on July 27
SAINT VINCENTS: RCG Wants Clarification on Status of Liens
SAINT VINCENTS: Proposes Uniform Reclamation Claim Procedures
SAINT VINCENTS: Wants to Reject Wilner and Cavaliere Leases
SEGA GAMEWORKS: Court Ends 365(d)(4) Lease-Decision Period
SEGA GAMEWORKS: Gets Court Nod to Expand Scope of KPMG's Work
SIERRA PACIFIC: Moody's Reviews B2 Senior Unsecured Debt Rating
SMITH'S LINCOLN: Case Summary & Largest Unsecured Creditor
SORIN REAL: Fitch Places $4MM Fixed-Rate Subordinated Notes at BB
STRUCTURED ASSET: Fitch Holds Junk Rating on Class 2B5 Certs.
UNITED FLEET: Case Summary & 10 Largest Unsecured Creditors
UPC HOLDING: S&P Junks EUR300 Million Senior Secured Notes
US AIRWAYS: ATSB Approves Planned Merger with America West
UTGR INC: S&P Rates $370 Million Senior Loan at B+
VARTEC TELECOM: Court Approves USAC Compromise Agreement
WASHINGTON GROUP: Deutsche Bank Helps Monetize Class 7 Warrants
WHX CORP: Bankruptcy Court Confirms Chapter 11 Reorganization Plan
WILLIAMS SCOTSMAN: Noteholders Agree to Amend Sr. & Secured Notes
WILLIAMS SCOTSMAN: Posts $2.7 Million Net Loss in Second Quarter
* BOND PRICING: For the week of July 18 - July 22, 2005
*********
1301 CP AUSTIN: Strasburger & Price Approved as Bankr. Counsel
--------------------------------------------------------------
The Honorable Frank R. Monroe approved the retention of
Strasburger & Price, LLP, as 1301 CP Austin, Ltd.'s counsel during
its restructuring.
As previously reported, Strasburger will:
a) assist and advise the Debtor of its duties and obligations
as a debtor-in-possession in the continued operation and
management of its business and property;
b) assist and advise the Debtor with its efforts to reorganize
its business affairs and restructure its debts under chapter
11; and
c) provide all other legal services that are necessary and
appropriate in the Debtor's bankruptcy case.
Stephen A. Roberts, Esq., and Duane Brescia, Esq., are the lead
attorneys from Strasburger & Price performing services for the
Debtor. Mr. Roberts charges $415 per hour and Mr. Brescia charges
$250 per hour.
The current hourly billing rates of Strasburger & Price's
professionals are:
Designation Hourly Rate
------------ -----------
Counsel $150 - $525
Legal Assistants $75 - $185
Strasburger & Price assured the Court that it does not represent
any interest materially adverse to the Debtor or its estate.
Headquartered in West Palm Beach, Florida, 1301 CP Austin, Ltd.
-- http://www.thecrossingplace.com/-- owns and operates several
apartments located in Texas and Michigan. The Company filed for
chapter 11 protection on May 12, 2005 (Bankr. W.D. Tex. Case No.
05-12719). When the Debtor filed for protection from its
creditors, it estimated assets and debts of $10 million to
$50 million.
1301 CP AUSTIN: Wants Asset Plus to Continue Managing Property
--------------------------------------------------------------
1301 CP Austin, Ltd., asks the U.S. Bankruptcy Court for the
Western District of Texas, Austin Division, for permission to
employ Asset Plus Corporation as its property management company.
Asset Plus has been providing property management services to the
Debtor since February 27, 2004, under a Management Agreement. The
Debtor tells the Court it wants to assume the management agreement
with Asset Plus.
A full-text copy of the services Asset Plus will perform for the
Debtor is available for free at:
http://bankrupt.com/misc/1301CP_Asset_Plus.pdf
The Debtor will pay Asset Plus 2.4% of the gross monthly
collections.
Mike McGrath at Asset Plus assures the Court of the Firm's
disinterestedness as that term is defined in Section 101(14) of
the Bankruptcy Code.
Headquartered in West Palm Beach, Florida, 1301 CP Austin, Ltd.
-- http://www.thecrossingplace.com/-- owns and operates several
apartments located in Texas and Michigan. The Company filed for
chapter 11 protection on May 12, 2005 (Bankr. W.D. Tex. Case No.
05-12719). Stephen A. Roberts, Esq., and Duane Brescia, Esq., at
Strasburger & Price, LLP, represent the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated assets and debts of $10 million to
$50 million.
AAIPHARMA INC: Court OKs Pharmaceuticals Division Sale to Xanodyne
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
the bid of Xanodyne Pharmaceuticals, Inc., to acquire
substantially all of the assets of aaiPharma Inc.'s (PINK
SHEETS:AAIIQ) Pharmaceuticals Division.
Xanodyne's bid provides for a cash purchase price of
$209.25 million, which is approximately $40 million higher than
Xanodyne's original "stalking horse" offer that aaiPharma had
announced as part of its chapter 11 bankruptcy filing on May 10,
2005. In addition, and as part of its bid, Xanodyne committed to
purchase up to $30 million of services to be provided by
aaiPharma's Development Services division over the next three
years, subject to certain conditions.
Xanodyne, a private company financed by an equity syndicate led by
MPM Capital, and co-led by Apax Partners, headquartered in Greater
Cincinnati, is dedicated to providing patient care in women's
health and pain management. Other new investors included Perseus-
Soros BioPharmaceutical Fund and affiliates of AIG Global
Investment Group, while Silver Point Finance provided Xanodyne a
term debt and revolver facility. The new investors were also
joined in the financing by existing investors, Healthcare
Ventures, Essex Woodlands, Blue Chip Venture Company and Coleman
Swenson Hoffman Booth. Xanodyne was a logical buyer of the
aaiPharma portfolio and through this acquisition is strengthening
its offering of high quality, effective pain management
pharmaceuticals to physicians and their patients.
This acquisition will bring a number of currently marketed pain
management agents into the Xanodyne portfolio, including Darvon(R)
and Darvocet(R), two drugs with a strong heritage in pain
management. The purchase also includes three pain products that
are presently in clinical development and one other early-stage
development product. The combined business will have pro-forma
2005 revenues of approximately $100 million, and will create a new
force in the specialty pharmaceuticals sector.
"We have believed for some time that the two businesses fit very
well together," said William Nuerge, chief executive officer of
Xanodyne. "Xanodyne brings a pipeline of women's healthcare
products and a strong commercial capability and infrastructure for
both women's healthcare and pain management products, while
aaiPharma has a broad range of currently marketed and pipeline
pain products. With this acquisition, Xanodyne has a
comprehensive portfolio of pain management and women's health
products, including six key development compounds - three in each
of its main therapeutic areas of focus - as well as the ability to
develop and commercialize its assets. I am not aware of any
evolving specialty pharmaceutical company with the combination of
people, products, performance, pipeline and potential that we now
have at Xanodyne."
A new Board of Directors has been established to guide the
organization:
-- James Cavanaugh, Ph.D. (Healthcare Ventures),
-- James Currie (Essex Woodlands), and
-- William Nuerge (Xanodyne CEO)
remain on the Board and will be joined by:
-- Ansbert Gadicke, M.D. (MPM),
-- Steven St. Peter, M.D. (MPM),
-- Adele Oliva (Apax Partners), and
-- Dennis Purcell (Perseus-Soros).
Dr. Cavanaugh continues as chairman of the board.
Xanodyne was advised by Bear, Stearns & Co., Inc. and Dinsmore &
Shohl LLP; the equity sponsors were advised by Lazard and Weil,
Gotshal & Manges (bankruptcy counsel) and Palmer & Dodge
(corporate counsel).
Headquartered in Wilmington, North Carolina, aaiPharma Inc. --
http://aaipharma.com/-- provides product development services to
the pharmaceutical industry and sells pharmaceutical products
which primarily target pain management. AAI operates two
divisions: AAI Development Services and Pharmaceuticals Division.
The Company and eight of its debtor-affiliates filed for chapter
11 protection on May 10, 2005 (Bankr. Del. Case Nos. 05-11341 to
05-11350). Karen McKinley, Esq. and Mark D. Collins, Esq. at
Richards, Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L.
Kaplan, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and
the firm of Robinson, Bradshaw & Hinson, P.A., represent the
Debtors in their restructuring efforts. When the Debtors filed
for bankruptcy, the reported consolidated assets amounting to
$323,323,000 and consolidated debts totaling $446,693,000.
ABLE LABORATORIES: Hires Arnold & Porter as Special Counsel
-----------------------------------------------------------
Able Laboratories, Inc., dba DynaGen, Inc., asks the U.S.
Bankruptcy Court for the District of New Jersey for permission to
employ Arnold & Porter LLP as its special regulatory and law
enforcement counsel.
The Debtor has selected Arnold & Porter because of the Firm's
experience and knowledge of government regulatory and law
enforcement proceedings, its experience in representing the Debtor
before filing for chapter 11 protection, and its ability to
quickly respond to all issues that may arise in the Debtor's case.
The Debtor develops, manufactures and sells generic drugs.
Because generic drugs are the chemical and therapeutic equivalents
of brand-name drugs, they must meet the same governmental quality
standards, including the prescribed applicable United States Food
and Drug Administration regulations, as the brand name drugs for
which they substitute.
On May 23, 2005, the Debtor had suspended manufacturing operations
and had recalled its product line due to concerns about laboratory
practices and compliance with standard operating procedures.
Deborah Piazza, Esq., at Cadwalader, Wickersham & Taft LLP in
New York, tells the Court that the ongoing disruption in the
Debtor's operations caused by its product recall and the
suspension of manufacturing activities has had a material adverse
effect on the Debtor's operational results and financial position.
The Debtor intends to continue to work cooperatively with the FDA
to achieve resolution of the outstanding regulatory issues. The
Debtor says it will be able to resolve the regulatory issues with
the FDA and resume manufacturing operations.
Arnold & Porter is expected to:
(a) represent the Debtor with respect to the federal regulatory
and enforcement issues; and
(b) perform all other necessary legal services.
William W. Vodra, Esq., a partner at Arnold & Porter LLP,
disclosed that his Firm received a $528,000 retainer. The current
hourly rates of professionals who will work in the engagement are:
Professional Designation Hourly Rate
------------ ----------- -----------
William W. Vodra, Esq. Partner $705
Robert S. Lift, Esq. Partner $635
Stewart D. Aaron, Esq. Partner $595
Sidney A. Rosenzweig, Esq. Associate $435
Benjamin S. Martin, Esq. Associate $380
Joshua M. Glasser, Esq. Associate $280
Virginia P. Martin Legal Assistant $140
The Debtor believe that Arnold & Porter LLP is disinterested as
that term is defined in Section 101(14) of the U.S. Bankruptcy
Code.
Headquartered in Cranbury, New Jersey, Able Laboratories, Inc. --
http://www.ablelabs.com/-- develops and manufactures generic
pharmaceutical products in tablet, capsule, liquid and suppository
dosage forms. Generic drugs are the chemical and therapeutic
equivalents of brand name drugs. The Company filed for chapter 11
protection on July 18, 2005 (Bankr. N.J. Case No. 05-33129).
Deborah Piazza, Esq., and Mark C. Ellenberg, Esq., at Cadwalader,
Wickersham & Taft LLP and Kenneth A. Rosen, Esq. and Sharon L.
Levine, Esq., at Lowenstein Sandler PC represent the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $59.5 million in total assets and $9.5
million in total debts.
ABLE LABORATORIES: Look for Schedules & Statements on Oct. 17
-------------------------------------------------------------
Able Laboratories, Inc., dba DynaGen, Inc., asks the U.S.
Bankruptcy Court for the District of New Jersey to extend the
deadline to Oct. 17, 2005, to file its:
-- schedules of assets and liabilities,
-- statement of financial affairs,
-- list of executory contracts and unexpired leases, and
-- schedules of current income and expenditures.
Deborah Piazza, Esq., at Cadwalader, Wickersham & Taft LLP in
New York tells the Court that the Debtor has approximately 320
prepetition creditors. The Debtor has not received all
prepetition invoices nor entered them in into its financial
accounting systems.
The Debtor has also reduced its workforce so it did not have the
opportunity to gather the necessary information to prepare and
file those schedules and statements.
The Debtor also want to ask the Court's permission to file a
consolidated list of the Debtor's equity security holders in
electronic format in lieu of the required matrix.
The Debtor is a public company listed in the NASDAQ stock market
with approximately 10,000 shareholders. Converting the Debtor's
data into the required matrix format is burdensome and will
increase the risk of error in transferring the data.
Headquartered in Cranbury, New Jersey, Able Laboratories, Inc. --
http://www.ablelabs.com/-- develops and manufactures generic
pharmaceutical products in tablet, capsule, liquid and suppository
dosage forms. Generic drugs are the chemical and therapeutic
equivalents of brand name drugs. The Company filed for chapter 11
protection on July 18, 2005 (Bankr. N.J. Case No. 05-33129).
Deborah Piazza, Esq., and Mark C. Ellenberg, Esq., at Cadwalader,
Wickersham & Taft LLP and Kenneth A. Rosen, Esq. and Sharon L.
Levine, Esq., at Lowenstein Sandler PC represent the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $59.5 million in total assets and $9.5
million in total debts.
ACCLAIM ENTERTAINMENT: Central Investment Offers $100,000 for Name
------------------------------------------------------------------
Newsday, citing court filings in the U.S. Bankruptcy Court for the
Eastern District of New York, reports that Central Investment
Holdings LLC has offered to buy all rights to Acclaim
Entertainment's name for $100,000. It is not clear what it plans
to do with the name. The chapter 7 trustee overseeing Acclaim's
liquidation doesn't care.
Newsday attempted to reach Howard Marks at Central Investment
Holdings to confirm if he is the same Howard Marks who used to be
connected to video game maker Activision and now head of
California-based eMind, a software provider to financial services
companies. Newsday's call to Mr. Marks at eMind was not returned.
The trustee also has a "tentative deal" with California-based game
maker Crave Entertainment for the rights to the Dave Mirra
Freestyle BMX series and the ATV Quad Power Racing 2 game. That
deal is valued at $120,000. According to Newsday, these deals
"will stand if there are no higher bids for each asset in the next
few weeks."
Acclaim has sold many of its assets, including its $8.75 million
New York headquarters, rights to four unfinished projects for
$250,000, and comic book characters for $750,000. THQ bought
Acclaims copyright and other interests in its Juiced game for
$10.5 million. The chapter 7 trustee is pursuing avoidance
actions to bring additional funds into Acclaim's estate.
Headquartered in Glen Cove, New York, Acclaim Entertainment was a
worldwide developer, publisher and mass marketer of software for
use with interactive entertainment game consoles including those
manufactured by Nintendo, Sony Computer Entertainment and
Microsoft Corporation as well as personal computer hardware
systems. The Company filed a chapter 7 petition on Sept. 1, 2004
(Bankr. E.D.N.Y. Case No. 04-85595). Jeff J. Friedman, Esq., at
Katten Muchin Zavis Rosenman represents the Debtor. Allan B.
Mendelsohn, Esq., serves as the chapter 7 Trustee. Salvatore
LaMonica, Esq., at La Monica Herbst & Maniscalo, LLP, represents
the chapter 7 trustee. When Acclaim filed for bankruptcy, it
listed $47,338,000 in total assets and $145,321,000 in total
debts. In its bankruptcy petition, Acclaim listed GMAC Commercial
Finance as its primary creditor, owed $18 million.
AERWAV INTEGRATION: Case Summary & 60 Largest Unsecured Creditors
-----------------------------------------------------------------
Lead Debtor: Aerwav Integration Group, Inc.
fka ArmorGroup Integrated Systems
dba Aerwav Integration Services
26 Chapin Road, Suite 1112
Pine Brook, New Jersey 07058
Bankruptcy Case No.: 05-33791
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Aerwav Integration Services, Inc. 05-33792
Hi-Rise Safety Systems, Inc. 05-33793
Aerwav Holdings, LLC 05-33794
Type of Business: The Debtors create, install, monitor and
customize integrated electronic safety and
security systems.
See http://www.aerwavintegration.com
Chapter 11 Petition Date: July 22, 2005
Court: District of New Jersey (Newark)
Judge: Novalyn L. Winfield
Debtors' Counsel: Gerald H. Gline, Esq.
Warren A. Usatine, Esq.
Cole, Schotz, Meisel, Forman & Leonard, P.A.
25 Main Street
Hackensack, New Jersey 07601
Tel: (201) 489-3000
Fax: (201) 489-1536
Debtors'
Financial
Advisors: Weiser LLP
Estimated Assets Estimated Debts
---------------- ---------------
Aerwav Integration $0 to $50,000 $1 Million to
Group, Inc. $10 Million
Aerwav Integration $0 to $50,000 $1 Million to
Services, Inc. $10 Million
Hi-Rise Safety $0 to $50,000 $100,000 to
Systems, Inc. $500,000
Aerwav Holdings, LLC $0 to $50,000 $1 Million to
$10 Million
Aerwav Integration Group, Inc.'s 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Alliance Group, Inc. $575,000
1971 East Belt Line Avenue NE, Suite 216
Grand Rapids, MI 49525
A.D.I. $235,640
P.O. Box 409863
Atlanta, GA 30384
Notifier $119,474
12 Clintonville Road
Northford, CT 06472
Comprehensive Fire $88,317
108 Liberty Street
Metuchen, NJ 08840
Vicon Industries, Inc. $85,051
1301 Solutions
Chicago, IL 60677
Signal Electric Corp. $77,800
RAMS $68,129
Annabelle Limited Partnership $63,738
Protection Systems Technologies $59,350
American Express $52,144
QAL Security Corporation $47,260
Hughes Supply Inc. $37,707
International Fiber $37,122
Kistler Obrien Fire $32,483
Emchar Security $26,584
GE Security $25,836
First Industrial LP $25,297
Connecticut Corporation $23,935
Psa Security Network $22,780
Seabreeze Security $21,999
Aerwav Integration Services, Inc. 's 18 Largest Unsecured
Creditors:
Entity Claim Amount
------ ------------
Alliance Group, Inc. $575,000
1971 East Belt Line Avenue NE, Suite 216
Grand Rapids, MI 49525
Robert J. Shiver $300,000
915 Broadway, 18th Floor
New York, NY 10010
Office of the County Administrator $261,770
Hillsborough County Florida
601 East Kennedy Boulevard, 27th Floor
P.O. Box 1110
Tampa, FL 33601
Premium Financing Specialists, Inc. $155,499
P.O. Box 419090
Kansas City, MO 641416090
Annabelle Limited Partnership $49,505
Broadway 21st Associates
Resources Acquisition Management Services $40,167
Robert J. Shiver $17,500
Mid South Fire Protection, Inc. $16,664
Mark Cardaci $7,292
Fire Equipment, Inc. $5,375
Commercial Fire & Communications $4,282
Jaimie Kelly $3,807
American Time & Signal Co. $1,276
Abdul Nabi Mostatabi $1,075
Armor Holdings, Inc. Unknown
Kerry Ann Ash Unknown
Denholtz Associates Unknown
Protection Systems Technologies, Inc. Unknown
Hi-Rise Safety Systems, Inc.'s 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Notifier $75,133
P.O. Box 98534
Chicago, IL 60693
A.D.I. $32,319
P.O. Box 409863
Atlanta, GA 30384
Florida Department of $30,749
6302 E. Dr. Martin
Tampa, FL 32399
Express Personnel $14,830
GE Capital Fleet $12,595
Staffing Now, Inc. $9,590
Fleet Fueling $8,213
American Alarm $7,804
Gentex Corporation $4,499
Security Search & $4,170
Signs USA $4,053
Shell Oil Company $4,010
Alberto Lofts $3,575
Assoc. Recv. Fund. Of Emertech(C/Oa/R) $3,172
Shawn Lasher $3,102
Neville Hylton $3,070
U.S. Bancorp Office $3,038
Davie Tire Outlet $2,556
Richard Mayer $2,546
Richard Mayer $2,500
Aerwav Holdings, LLC's 2 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Alliance Group, Inc. Unknown
1971 East Belt Line Avenue NE, Suite 216
Grand Rapids, MI 49525
Armor Holdings, Inc. Unknown
c/o Kane Kessler PC
1350 Avenue of the Americas
New York, NY 100196319
ALASKA AIRLINES: Requests Equal Access to Boeing Field
------------------------------------------------------
Alaska Airlines and Horizon Air notified the King County Council
of their request for equal access to Boeing Field, formally known
as King County International Airport, with the intent of operating
as many as 100 departures a day from the county-owned facility.
"We share the same concerns as many in our community about
expanding commercial passenger service at Boeing Field," said Bill
Ayer, chairman and CEO of Alaska Air Group, the holding company of
Alaska and Horizon. "However, if a direct competitor moves their
operations to Boeing Field, we're left with no choice but to
request equal access.
"Maintaining competitive operating costs and schedules is
necessary to continue offering the superior service and low fares
our customers expect from us," Mr. Ayer said. "We also need to
protect the 14,000 Alaska and Horizon employees, many of whom are
based in the Seattle area, whose livelihoods would be threatened
if we allowed ourselves to operate at a competitive disadvantage."
Alaska and Horizon currently operate 147 and 134 departures from
Seattle-Tacoma International Airport, respectively, which combined
account for about half the airport's traffic and make Alaska Air
Group the Port of Seattle's largest airline customer. Alaska and
Horizon plan to retain operations at Sea-Tac, while moving certain
flights to Boeing Field.
"For Horizon, a regrettable potential outcome of splitting our
Seattle operations might be a decline in service frequency to some
of the Pacific Northwest communities that depend on our Sea-Tac
flights for connections to other domestic and international
routes," said Jeff Pinneo, president and CEO of Horizon Air.
The start of Alaska and Horizon operations out of Boeing Field is
largely dependent on when facilities at Boeing Field could be
built to handle such a dramatic surge in flight activity and the
accompanying passenger traffic it would generate. Today, the
airport lacks sufficient ticket counter, gate, ramp and baggage
facilities, as well as parking, access roads and connecting ramps
from Interstate-5, to accommodate substantially more airport
traffic. How such improvements and additional security and air
traffic control would be funded is another unknown, since Alaska
believes the county is obligated to accommodate, on a reasonable
and nondiscriminatory basis, its application and those of other
airlines to operate from Boeing Field.
"The cost of infrastructure improvements is just one of many
reasons we'd rather not pursue commercial service at Boeing Field
if we don't have to," Mr. Ayer said. "Just as important are the
environmental issues that will have to be addressed. With the
planned capacity improvements at Sea-Tac that this community has
funded, which will accommodate increasing regional air traffic
well into the next decade, we don't see a compelling case for the
kind of public impacts that an expansion of Boeing Field would
create."
Alaska Airlines and its sister carrier, Horizon Air, together
serve more than 80 cities in Alaska, the Lower 48, Canada and
Mexico.
Seattle-based Alaska Air Group is the parent company of Alaska
Airlines and Horizon Air Industries. The company and its sister
carrier, Horizon Air, together serve 80 cities in Alaska, the
Lower 48, Canada and Mexico.
* * *
As reported in the Troubled Company Reporter on Apr. 25, 2005,
Standard & Poor's Ratings Services lowered its ratings on Alaska
Airlines Inc.'s 9.5% equipment trust certificates due April 12,
2012, to 'B+' from 'BB', as part of an industry wide review of
aircraft-backed debt. All other ratings on Alaska Airlines and
parent Alaska Air Group Inc., including the 'BB-' corporate credit
ratings on both, are affirmed. The outlook remains negative.
"The lower rating on the ETCs reflects Standard & Poor's concern
that repayment prospects for holders of aircraft-backed debt could
suffer in a potential scenario of multiple, further bankruptcies
of large U.S. airlines weakened by high fuel prices and intense
price competition," said Standard & Poor's credit analyst Betsy
Snyder. "Downgrades of aircraft-backed debt securities were
focused on debt instruments that would be hurt in such a scenario,
particularly debt backed by aircraft that are concentrated heavily
with large U.S. airlines that would be at greater risk in
negotiated restructurings or sale of repossessed collateral," the
analyst continued.
ALLEGHENY ENERGY: Refinances Term Loan & Plans to Redeem Sr. Notes
------------------------------------------------------------------
Allegheny Energy, Inc. (NYSE:AYE) disclosed its subsidiary,
Allegheny Energy Supply Company, LLC, has obtained a new
$1.07 billion term loan.
The new loan matures in 2011 and has an initial interest rate
equal to the London Interbank Offered Rate plus 175 basis points.
The interest rate will improve to LIBOR plus 150 basis points if
the company's credit ratings improve from current levels.
Proceeds from the new loan were used in part to refinance
Allegheny Energy Supply's existing $738 million term loan and will
be used to redeem its 10.25% Senior Notes due 2007, which have a
principal amount of $331 million.
Additionally, Allegheny Energy Supply will use cash on hand and
may also borrow under the Allegheny Energy, Inc., revolving credit
facility to redeem its 13% Senior Notes due 2007 ($35 million
principal) and pay associated costs. Allegheny Energy Supply
issued a Notice of Redemption to the holders of record of the
10.25% and 13% Senior Notes, outlining the terms and conditions of
the anticipated redemption, which is expected to occur on Aug. 22,
2005. The company expects to take a charge of approximately
$34 million in the third quarter of 2005 to reflect the premium
paid and associated costs.
"Refinancing higher-cost debt through these transactions is
expected to reduce our annual interest expense by approximately
$23 million, further improving our profitability," said Allegheny
Energy Chairman, President and Chief Executive Officer Paul J.
Evanson.
Citigroup Global Markets Inc. is the lead arranger, and Bank of
America LLC and Credit Suisse First Boston are joint bookrunners
for the new loan.
Headquartered in Greensburg, Pa., Allegheny Energy --
http://www.alleghenyenergy.com/-- is an investor-owned utility
consisting of two major businesses. Allegheny Energy Supply owns
and operates electric generating facilities, and Allegheny Power
delivers low-cost, reliable electric service to customers in
Pennsylvania, West Virginia, Maryland, Virginia and Ohio.
* * *
As reported in the Troubled Company Reporter on June 15, 2005,
Moody's Investors Service assigned a Senior Implied rating of Ba1
to Allegheny Energy, Inc. and also assigned a Speculative Grade
Liquidity Rating of SGL-2. This is the first time that Moody's
has assigned both such ratings to AYE. The company's other
ratings, including the Ba2 senior unsecured rating, remain
unaffected.
The Ba1 Senior Implied rating reflects the credit profile of the
AYE corporate family of companies, which includes investment grade
utility operating subsidiaries as well as a holding company whose
Ba2 senior unsecured rating reflects its still high balance
leverage. The Ba1 Senior Implied rating also reflects the
company's improved financial performance and the expectation that
AYE's credit profile will continue to improve over the next 2 to 3
years, with further debt reduction and substantial improvement in
cash flow, and that there will be a reasonably supportive
regulatory response to rate filings to recover increased costs and
outlays for environmental spending.
AMERICAN TOWER: Completes Partial Redemption of 9-3/8% Sr. Notes
----------------------------------------------------------------
American Tower Corporation (NYSE: AMT) completed its previously
announced redemption of $75.0 million principal amount of its
9-3/8% senior notes due 2009. The Company redeemed the notes
pursuant to their terms at 104.688% of the principal amount plus
unpaid and accrued interest up to July 21, 2005. The total
aggregate redemption price was approximately $81.8 million,
including approximately $3.3 million in accrued interest.
The Company financed the redemption through a combination of
internally generated funds and borrowings under the revolving loan
of its credit facility. Upon completion of this partial
redemption, approximately $67.0 million principal amount of the
9-3/8% notes remained outstanding.
As a result of this partial redemption, the Company expects to
record in the third quarter of 2005 an aggregate pre-tax loss on
retirement of long-term obligations of approximately $4.7 million,
consisting of approximately $3.5 million related to amounts paid
in excess of carrying value and approximately $1.2 million in the
write-off of related deferred financing fees. The Company expects
this partial redemption to result in savings of approximately
$5 million in annualized net interest expense.
American Tower Corp. -- http://www.americantower.com/-- is the
leading independent owner, operator and developer of broadcast and
wireless communications sites in North America. American Tower
operates over 14,800 sites in the United States, Mexico, and
Brazil, including approximately 300 broadcast tower sites.
* * *
As reported in the Troubled Company Reporter on May 17, 2005,
Standard & Ratings Services raised its ratings on Boston, Mass.-
based wireless tower operator American Tower Corp. and related
entities, including the corporate credit rating, which was
upgraded to 'B' from 'B-'. The ratings remain on CreditWatch,
with positive implications, where they were placed on Jan. 14,
2005.
"The upgrade reflects the ongoing increase in revenues and
operating cash flows from the companies' U.S. tower portfolio,
which represent the vast majority of the company's 15,000 total
owned and/or operated towers," said Standard & Poor's credit
analyst Catherine Cosentino.
ATA AIRLINES: Gets Okay to Hire Jefferies & Skyworks as Advisors
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana
approved the request of ATA Holdings Corp. and ATA Airlines, Inc.,
to employ Jefferies & Company, Inc., SkyWorks Capital, LLC, and
SkyWorks Securities, LLC, to assist them in procuring the
necessary capital to reorganize successfully.
As reported in the Troubled Company Reporter on June 29, 2005,
ATA selected Jefferies and SkyWorks because of their extensive
experience in the financing of companies in the airline industry,
including the reorganization and restructuring of troubled
companies, both out-of-court and in Chapter 11 proceedings. The
Investment Bankers have provided a broad range of corporate
advisory services to their clients including services pertaining
to:
-- general financial advice;
-- mergers, acquisitions and divestitures;
-- special committee assignments;
-- capital raising; and
-- corporate restructurings.
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. 29; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ATA AIRLINES: Inks Fifth Amendment to Southwest Credit Pact
-----------------------------------------------------------
As reported in the Troubled Company Reporter on December 29, 2005,
Southwest Airlines Co. committed to provide ATA Airlines, Inc.,
with up to $47,000,000 in postpetition financing pursuant to a
Secured Debtor-in-Possession Credit and Security Agreement.
Southwest Airlines agrees to provide up to $40,000,000 in cash
plus a guaranty of up to $7,000,000 for amounts outstanding under
two separate loans made to ATA Airlines by the City of Chicago to
fund a jet bridge extension at Midway.
On a final basis, Judge Lorch authorized the Debtors to borrow up
to $47,000,000 from Southwest Airlines Co. pursuant to the terms
of the DIP Credit Agreement and pay all requisite fees and
expenses payable to or on behalf of Southwest Airlines.
* * *
In a regulatory filing with the Securities and Exchange
Commission, Brian T. Hunt, senior vice president and general
counsel of ATA Holdings Corp., discloses that ATA Holdings Corp.
and Southwest Airlines Co. have agreed to further amend the
December 23, 2004 Southwest Bid Proposal.
On July 12, 2005, the parties entered into a Sixth Amendment to
the Credit Agreement. The parties agree to extend the effective
date of the Minimum Consolidated EBITDARR and Minimum Adjusted
EBITDARR financial covenants from May 1, 2005, to July 1, 2005.
The Air Transportation and Stabilization Board and Unofficial
Committee of Unsecured Creditors approved the Amendment.
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. 29; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AVETA HOLDINGS: S&P Rates Proposed $420 Mil. Senior Loans at B-
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' counterparty
credit rating to Aveta Holdings LLC, which is a new holding
company formed to consolidate the managed care operations of two
affiliated holding companies. The outlook is stable.
At the same time, Standard & Poor's assigned its 'B-' senior
secured debt ratings to Aveta's proposed $420 million senior
secured credit facilities consisting of a six-year, $400 million
term loan due 2011 and a five-year, $20 million revolver due 2010.
"Aveta's capital structure is expected to be very debt intensive
and its assets mostly intangibles," explained Standard & Poor's
credit analyst Joseph Marinucci. "We consider this to be a
material qualitative constraint on the rating assignment as debt
to capital is expected to be 115%-125% and intangibles are
expected to constitute more than 70% of the company's asset base
at year-end 2005." Another constraint to the rating is the
prospective underlying statutory capitalization of the
consolidated operating companies, which is expected to be weak per
Standard & Poor's capital adequacy model. This is reflective of
Aveta's intent to use prospective earnings to repay debt rather
than build statutory surplus.
Partially offsetting these negative factors are:
* the company's good earnings profile underscored by
historically strong ROR,
* its established competitive niche market positions in a key
market public sector market with good organic growth
prospects, and
* its focused operational skill sets.
Standard & Poor's believes that Aveta's specialty niche focus has
enabled it to develop its brand, build scale, and establish itself
as a meaningful player, particularly in Puerto Rico where the
company's concentration is expected to persist over the near to
intermediate term.
Standard & Poor's believes that Aveta is reasonably well
positioned to sustain and build on its existing market profile
(albeit more slowly) because S&P considers its core Managed
Medicare markets to be under penetrated. S&P also believes that
recently enacted legislation is likely to provide sufficient
funding for the program over the intermediate term, and the
existing operating company has had sufficient time to develop an
infrastructure capable of supporting cost-effective care-
coordination initiatives. Standard & Poor's considers this
particularly important because the rate structure has shifted and
will continue to shift more toward the inclusion of health risk
adjusters and be less influenced by demographic variables.
Standard & Poor's expects Aveta to achieve strong organic
enrollment growth over the near term (one year) and more moderate
growth over the intermediate term (five-years). By year-end 2005,
Standard & Poor's expects Aveta's total Medicare membership to
grow by about 30% to 125,000-135,000 members but for commercial
membership to be flat at about 220,000 members. If Aveta achieves
Standard & Poor's earnings expectations for 2005, including its
new credit facilities, debt leverage, debt to EBITDA, and interest
coverage metrics would be 105%-115%, 3.0x-3.2x, and 6x-7x,
respectively, which are conservative for the rating assignment.
Aveta conducts nearly all of its business in Puerto Rico and
Southern California by operating in the Managed Medicare and
employer group marketplaces.
BLOUNT INC: Improved Credit Profile Prompts S&P to Lift Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Blount Inc. to 'BB-' from 'B+'. At the same time,
Standard & Poor's raised its subordinated debt rating on the
company to 'B' from 'B-'. The rating on Blount's $4.9 million
first-lien Canadian term B loan was raised to 'BB+' from 'BB', and
its '1' recovery rating was affirmed. In addition, Standard &
Poor's raised the ratings on Blount's $100 million revolving
credit facility and its $315 million term loan B to 'BB-' from
'B+' and affirmed our '3' recovery ratings on those issues. The
outlook on Blount is now stable.
Portland, Oregon-based Blount is a leading manufacturer of cutting
chain and guide bars, timber harvesting equipment, tractors and
loaders, rotational bearings, and zero-turn riding lawnmowers. At
March 31, 2005, the company had about $497 million in total debt
outstanding.
"The rating actions reflect both the improvement to date in
Blount's credit profile, as well as our expectation of continued
further improvement," said Standard & Poor's credit analyst Joel
Levington. "This improvement is a result of good organic growth,
expected solid free cash flow generation, and the company's
somewhat less aggressive financial strategy."
One measure of financial leverage, total debt to EBITDA, had
declined to 3.6x as of March 31, 2005 from 4.9x on June 30, 2004,
and S&P expects this ratio to trend toward 3x by year-end. Over
the business cycle, we now expect total debt to EBITDA to average
about 3.5x, EBITDA to interest coverage to range between 3x and
3.5x, and funds flow to total debt to be in the 15% area.
The speculative-grade ratings reflect Blount Inc.'s:
* improving, albeit aggressively leveraged, financial profile
and its fair business risk profile, characterized by its
significant share of replacement product sales,
* its solid market-share positions, and
* its diversified customer base within highly cyclical end
markets.
Blount operates within three business segments that manufacture a
variety of products mainly serving the forest products,
construction, landscaping, building materials, and utility
sectors. The near-term industry outlook is relatively favorable,
as there is solid demand in most key end markets. However,
markets are cyclical and business units have a fair amount of
operating leverage, leading to earnings variability over the
business cycle. Blount's competitive strengths include its
leading market shares and brand image, which enables the company
to garner a high share of the market for replacement parts, as
well as its good customer mix and fair geographic diversity.
Blount's strategy entails building on existing marketing
agreements as well as making small, complementary acquisitions,
which add some integration risk to the business assessment.
BRANTLEY CAPITAL: CFO Tab Keplinger Leaving Post on August 1
------------------------------------------------------------
Brantley Capital Corporation (Nasdaq: BBDCE) disclosed the
resignation of Tab A. Keplinger as Chief Financial Officer,
effective Aug. 1, 2005.
The Company has appointed Curtis Witchey as Controller and acting
Chief Financial Officer on July 18, 2005. Before joining Brantley
Capital, Mr. Witchey was an independent financial consultant for
Five Star Technologies. Mr. Witchey was also the corporate
controller for Glastic Corporation in 2004 and the controller for
ComparisonMarket, Inc., a startup firm, from 2001 to 2003.
Two Directors Leave Board
On July 13, 2005, the Company disclosed that Peter Saltz and James
P. Oliver have resigned from the Board of Directors. Giving
effect to their resignations, the Company's Board of Directors
will consist of five members, three of whom are not "interested
persons" within the definition set forth in the Investment Company
Act of 1940, as amended. As a result of these resignations, the
Company believes that it has corrected its previously disclosed
non-compliance with the requirement of the Investment Company Act
that a majority of the members of its board of directors not be
interested persons.
Portfolio Companies
In addition, the Company disclosed a number of recent developments
relating to its portfolio companies:
Flight Options LLC
On June 27, 2005, Flight Options International Inc., the entity
through which the Company has invested in Flight Options LLC,
filed a complaint in Delaware Chancery Court seeking to
preliminarily enjoin the consummation of the proposed transaction
pursuant to which Raytheon Air Travel Company would invest
$50,000,000 in Flight Options LLC in return for 5,000,000,000
common units. Flight Options LLC would use the proceeds of this
investment to repay amounts it owes to Raytheon Aircraft Credit
Corporation under a floor plan financing and security agreement.
If this transaction is consummated in accordance with its terms,
it will be substantially dilutive to the ownership of Flight
Options International, Inc. in Flight Options LLC and would result
in the reduction of the Company's fully-diluted equity interest in
Flight Options LLC to approximately 1% and the consequent loss of
substantially all of the value of the Company's investment in
Flight Options
On July 11, 2005, the court issued a preliminary injunction,
subject to the posting of a bond, effective until Aug. 10, 2005,
to allow Flight Options International the opportunity to seek
continuing interim relief through arbitration. Flight Options
International, Inc. intends to vigorously protect its legal rights
as a minority equity holder in Flight Options LLC. The Company
has commissioned an outside third party valuation firm to value
the Company's investment in Flight Options and management believes
that the Company's investment still has significant value.
However, the Company cannot make any assurance that any such legal
proceedings will be successful in postponing, preventing or
modifying the pending Raytheon transaction.
Prime Office Products, Inc
The Company holds 800,000 shares of Class A 8% Convertible
Preferred Stock of Prime Office Products, Inc., a distributor of
office products. On June 28, 2005, Prime Office Products entered
into a letter of intent in respect of a sale of the company which
the Company expects will provide a significant gain on its
investment. The Company anticipates that this transaction will
close in the third quarter of 2005, although it remains subject to
the negotiation of definitive documentation and the satisfaction
of customary closing conditions.
The Holland Group, Inc. and TherEx, Inc.
The boards of directors of each of The Holland Group, Inc. (a
provider of temporary staffing and human resource management
services) and TherEx, Inc. (a provider of rehabilitation
management services) have retained investment banking firms to
explore potential sales of those companies. Although neither
company is as yet party to a binding agreement, the Company
believes, based on initial indications of interest, that a sale of
each company has the prospect of providing the Company with a
positive return on its investment.
Filing Delay
The Company previously disclosed its inability to timely file its
Annual Report on Form 10-K for the year ended Dec. 31, 2004, and
its Form 10-Q for the quarter ended March 31, 2005, and the
pending suspension of its listing on the Nasdaq National Market.
The Company is resolving concerns regarding the valuation of its
portfolio securities, including its investment in Flight Options
International, Inc.
Commencement of Informal SEC Inquiry
The Securities and Exchange Commission is conducting an informal
inquiry into these issues, including certain transactions
involving its Chairman, Robert Pinkas, and Flight Options
International.
The Company's board of directors has formed a special committee,
consisting of Messrs. Bales, Goldstein, and Hellerman, to gather
information and assist in the response to any issues raised by the
inquiry, and the special committee has retained independent
counsel in connection with its activities. The special committee
has retained Huron Consulting Group to:
-- provide a valuation analysis of the Company's investment in
Flight Options International, Inc., as of Dec. 31, 2004,
March 31, 2005, and June 30, 2005; and
-- perform an appraisal review of the board's valuation
analyses of the Company's other individually-significant
investments.
In addition, Flight Options International has retained the
financial advisory firm of Duff & Phelps LLC to provide it with a
valuation analysis of its ownership interest in Flight Options
LLC.
Possible Restatements
As a result of the uncertainty caused by the filing delay, and the
potential balance sheet effects of the related party compliance
issues, unaudited financial statements for the year ended
Dec. 31, 2004, filed under Form 8-K dated June 27, 2005, may be
amended or restated, depending on the outcome of the valuation
analyses and the resolution of related party issues.
Brantley Capital Corporation -- http://www.BrantleyCapital.com/--
is a publicly traded business development company primarily
providing equity and long-term debt financing to small and medium-
sized private companies throughout the United States. The
Company's investment objective is to achieve long-term capital
appreciation in the value of its investments and to provide
current income primarily from interest, dividends and fees paid by
its portfolio companies.
BUTLER INT'L: GECC Waives Technical Default
-------------------------------------------
Butler International, Inc. (NasdaqSC:BUTLE) executed a waiver of
technical default by General Electric Capital Corporation under
the Company's credit facility.
The technical default arose due to the failure of the Company to
timely file with the Securities and Exchange Commission its Form
10-K for the year ended Dec. 31, 2004 and Form 10-Q for the
quarter ended March 31, 2005.
The amendment provides that the year-end financial information
must be provided by July 26, 2005, and the first quarter financial
information must be provided by Aug. 17, 2005. Butler expects to
provide the year-end financial information and file its Form 10-K
by July 26, 2005. In addition, the amendment provides that the
indebtedness of Chief Executive Group must not exceed
$10.6 million through Dec. 31, 2005, and $10.4 million thereafter.
Full-text copies of the original Credit Agreement and the ten
amendments to date are available at no charge at:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of
September 28, 2001, among BUTLER SERVICE GROUP, INC., as
Borrower, BUTLER TELECOM, INC., BLUESTORM, INC., BUTLER
SERVICES, INC., BUTLER UTILITY SERVICE, INC., BUTLER
SERVICE GROUP, INC., as Credit Parties, and GENERAL
ELECTRIC CAPITAL CORPORATION, as Agent and Lender
-- http://ResearchArchives.com/t/s?80
FIRST AMENDMENT TO CREDIT AGREEMENT dated as of
February 27, 2002
-- http://ResearchArchives.com/t/s?81
SECOND AMENDMENT AND WAIVER TO CREDIT AGREEMENT dated as
of November 14, 2002
-- http://ResearchArchives.com/t/s?82
THIRD AMENDMENT AND WAIVER TO CREDIT AGREEMENT dated as
of March 27, 2003
-- http://ResearchArchives.com/t/s?83
FOURTH AMENDMENT AND WAIVER TO CREDIT AGREEMENT dated
as of May 14, 2003
-- http://ResearchArchives.com/t/s?84
FIFTH AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT
dated as of November 14, 2003
-- http://ResearchArchives.com/t/s?85
SIXTH AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT
dated as of March 31, 2004
-- http://ResearchArchives.com/t/s?86
SEVENTH AMENDMENT TO CREDIT AGREEMENT dated as of
July 1, 2004
-- http://ResearchArchives.com/t/s?87
EIGHTH AMENDMENT TO CREDIT AGREEMENT dated as of
November 10, 2004
-- http://ResearchArchives.com/t/s?88
NINTH AMENDMENT TO CREDIT AGREEMENT dated as of
March 25, 2005
-- http://ResearchArchives.com/t/s?89
TENTH AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT
dated as of July 19, 2005
-- http://ResearchArchives.com/t/s?8a
The Company also disclosed that it has not filed its Form 11-K
which was due to be filed, pursuant to a Rule 12b-25 extension, on
July 14, 2005. The Company expects to file the Form 11-K shortly
after the filing of the Form 10-K.
Butler International -- http://www.butler.com/-- is a leading
provider of TechOutsourcing services, helping customers worldwide
increase performance and savings. Butler's global services model
provides clients with onsite, offsite, or offshore services
delivery options customized appropriately to their unique
objectives. During its 59-year history of providing services,
Butler has served many prestigious companies in industries
including aircraft, aerospace, defense, telecommunications,
financial services, heavy equipment, manufacturing, and more.
CAITHNESS COSO: Fitch Expects to Rate Proposed Bonds at BB-
-----------------------------------------------------------
Fitch Ratings expects to assign ratings of 'BBB-' and 'BB-' to
Caithness Coso Funding Corp.'s proposed issuance of $375 million
senior secured bonds due 2019 and $90 million subordinated secured
notes due 2014, respectively. The primary purpose of the proposed
financing is to repay existing indebtedness and provide a
distribution to the sponsors.
Coso is a special-purpose company formed to issue debt on behalf
of the Coso partnerships, the owners of the Coso projects and the
guarantors of the proposed issuance. The Coso projects consist of
three interlinked 80MW geothermal power plants and their
transmission lines, steam gathering systems, and other related
facilities located at the Navy Weapons Center in Inyo County, CA.
Electric energy and capacity are sold to Southern California
Edison under separate Standard Offer No. 4 contracts expiring in
2010, 2011, and 2019. Coso provides royalty payments to the U.S.
Navy and the Bureau of Land Management for use of the geothermal
resource.
The SO4 contracts provide Coso with fixed-price capacity payments
and energy payments indexed monthly to the price of natural gas.
After expiry of the SO4 contracts, Coso expects to continue
selling its output to SCE under SO1 contracts. The price
structure of SO4 and SO1 contracts is similar, although capacity
payments are substantially lower in SO1.
Fitch has evaluated Coso's credit quality on a stand-alone basis,
independent of the credit quality of its owners. The expected
ratings reflect Coso's credit quality from 2007-2011, when debt
service obligations peak and projected debt service coverage
ratios reach their lowest point. Fitch believes that Coso's long-
term credit fundamentals are stronger than typical for the rating
category.
Fitch views the subordinated notes as deeply subordinated to the
senior bonds. Fitch's policy for deeply subordinated debt
requires a three-notch differential between the ratings of the
senior and subordinate debt unless other circumstances suggest
greater notching. The financial results and protections provided
to the senior bondholders support the minimum three-notch
differential. Note that even though the subordinated notes mature
before the senior bonds, the term of the subordinated notes
overlaps with the period of Coso's weakest financial performance
due to the substantial debt service due on the senior bonds. The
subordinated notes benefit from the presence of a separate debt
service reserve established for the exclusive benefit of the
subordinated noteholders.
SCE's counterparty rating is considered a constraint on the
ratings of Coso, which relies on SCE as its sole source of
contractual revenue. This constraint is not currently active, as
the expected ratings reflect Coso's financial performance on a
stand-alone basis. In the event that SCE's credit quality falls
below Coso's stand-alone credit quality, it is likely that Coso's
ratings would be downgraded accordingly. It is important to note
that SCE's credit quality may not be a constraint in the long
term, as Coso's reliance on SCE will diminish as the PPAs expire.
Fitch rates SCE's senior unsecured debt 'BBB' with a Stable
Outlook.
Primary credit strengths include:
-- History of strong operational performance;
-- Stable geothermal resource;
-- Competitive cost structure;
-- Low volumetric risk;
-- Experienced and committed sponsor.
Primary credit concerns include:
-- Exposure to market price volatility;
-- Potential revision of the short-run avoided cost
calculation;
-- Reliance on Hay Ranch augmentation program.
The Fitch base case employs Fitch's natural gas pricing
assumptions in the calculation of SRAC prices. Senior DSCRs are
projected to average 1.6 times (x) from 2007-2009 with a minimum
of 1.5x in 2008. Senior DSCRs increase to approximately 2.5x by
2012 and remain above that level until maturity in 2019.
Consolidated DSCRs average 1.3x through 2011 with a minimum of
1.2x in 2008. Consolidated DSCRs increase to approximately 1.9x
between 2012 and the maturity of the subordinated debt in 2014.
The pattern in coverage is largely due to the rate of principal
amortization rather than the expectation of increasing cash flow.
To assess Coso's vulnerability to market conditions, Fitch
considered several scenarios, which could result in different
energy prices:
The low gas scenario reflects SRAC prices that would occur if
natural gas prices fall to $3.35/MMBtu (in 2005, escalating at
2.5%) at the Malin trading hub, the index currently used in SRAC
calculations. Senior DSCRs fall to a minimum of 1.35x in 2007 and
2008 and are generally greater than 2.50x from 2012 onward.
Consolidated DSCRs average 1.1x from 2007 to 2011 and 1.5x between
2012 and the maturity of the subordinate debt.
The market energy scenario assumes that after the expiry of the
SO4 contracts, the output is sold into the wholesale energy market
at prevailing market prices, rather than to SCE under SO1
contracts at SRAC prices. Senior and consolidated DSCRs from 2011
onward are approximately 0.1x to 0.2x lower than in the Fitch base
case.
The breakeven scenarios reflect the energy prices that result in
coverage ratios of 1.0x on the senior debt and total debt in each
year. SRAC prices would need to fall to approximately $38/MWh for
a payment default on the subordinate debt and $30/MWh on the
senior debt.
To assess the importance of the Hay Ranch supplemental injection
program, Fitch considered a scenario that assumes the Hay Ranch
program proves ineffective. Senior DSCRs fall to 1.25x in 2008,
gradually increase to 1.8x in 2012, and then gradually decline to
1.5x at maturity. Consolidated DSCRs are at breakeven levels
until 2011 and approximately 1.3x thereafter.
Fitch has published a presale report with a detailed discussion of
the transaction and rating rationale. The presale report Caithness
Coso Funding Corp. is available on the Fitch Ratings web site at
http://www.fitchratings.com/under 'Project Finance' and
'Corporate Finance' or by contacting the ratings desk at +1-800-
893-4824.
CARDIAC SERVICES: Wants to Hire Kraft & Co. as Accountants
----------------------------------------------------------
Cardiac Services, Inc., asks the U.S. Bankruptcy Court for the
Middle District of Tennessee for permission to employ Kraft &
Company as its accountant to assist in the development of its
chapter 11 plan.
The Debtor selected Kraft because of its extensive experience and
knowledge in the field of accountancy, business valuations, and
bankruptcy matters.
The Firm's current professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Kenneth Kraft Partner $260
Mike Sullivan Partner $235
Ellen Hill Manager CPA $150
Joy Bray Senior CPA $120
Rachel Johnson Senior CPA $120
Jane Opatrny Administration $60
Kenneth K. Kraft, Esq., a Cunningham & Associates partner, assures
the Court that his Firm is disinterested as that term is defined
in Section 101(14) of the Bankruptcy Code.
Headquartered in Nashville, Tennessee, Cardiac Services, Inc.,
provides surgical services, mobile catherization and peripheral
vascular labs, and associated equipment. The Company filed for
chapter 11 protection on March 8, 2005 (Bankr. M.D. Tenn. Case No.
05-02813). Paul E. Jennings, Esq., at Paul E. Jennings Law
Offices, P.C., represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it
estimated assets and debts of $10 million to $50 million.
CATHOLIC CHURCH: St. George's Makes First Payment to Creditors
--------------------------------------------------------------
Ernst & Young Inc., on behalf of the Roman Catholic Episcopal
Corporation of St. George's and in its capacity as trustee, paid
$1.9 million to creditors of the bankrupt Corporation.
On July 5, 2005, the Supreme Court of Newfoundland and Labrador
approved the Corporation's proposal that the creditors of the
Roman Catholic Episcopal Corporation of St. George's had approved
overwhelmingly on May 25, 2005. Total payments under the
settlement agreement will amount to in excess of $13.1 million.
In 1990 Kevin Bennett, then a priest of the Diocese of St.
George's, was sentenced for the sexual abuse of 36 young men over
a period of almost 20 years and served four years in prison.
Since that time a number of victims launched civil suits at a
total claimed value in excess of $50 million. In March 2004 the
Supreme Court of Canada found the Corporation directly and
vicariously liable.
On March 8, 2005, the Corporation filed a Notice of Intention to
file a proposal pursuant to the Bankruptcy and Insolvency Act,
which effected a "stay of proceedings" in civil actions against
the Corporation. The intent of the filing was to provide the
Corporation with adequate time to develop a proposal to its
creditors offering a better compensation plan than would be
available if the Corporation were forced to declare bankruptcy.
"{Fri]day's payment is a tangible sign of our commitment to the
victims," said the Most Rev. Douglas Crosby, OMI, Bishop of St.
George's Diocese who today issued a personal letter of apology on
behalf of St. George's Diocese to each of the victims of sexual
abuse. "All cash reserves from the Episcopal Corporation and the
parishes of St. George's were used to cover this payment. We are
now cash poor but we have properties that we can and we will sell
in order to meet our full commitment."
Over the coming weeks and months the Corporation will pursue the
sale of all of its properties. The terms of the settlement
agreement require the Corporation to pay the full amount over two
and half years at six-month intervals.
"We may be cash poor but we are rich in spirit," said Bishop
Crosby. "The people and priests of St. George's have shown great
generosity of spirit by accepting our collective responsibility to
act justly."
In addition to the sale of properties by the Corporation, St.
George's Diocese will be making a formal appeal to other dioceses
in Canada and the United States and to individuals who may be
willing to help contribute funds to make the agreed payment
installments.
The Diocese of St. George's -- http://www.rcchurch.com/--
established in 1904, is located in Western Newfoundland. It
serves a Catholic population of 32,060 found in 20 parishes under
the pastoral care of 18 priests. St. George's is one of four
Catholic dioceses in the province. The Diocesan Centre is located
in Corner Brook.
CATHOLIC CHURCH: Tucson Wants Aicco Financing Agreement Okayed
--------------------------------------------------------------
The Diocese of Tucson is responsible for financing its property,
liability and auto insurance premiums. Maintaining insurance is
essential to the Diocese's operations and to the Diocese's
obligations under the Bankruptcy Code. To maintain continuity of
insurance, Kasey C. Nye, Esq., at Quarles & Brady Streich Lang
LLP, in Tucson, Arizona, asserts that the Diocese must enter into
a premium finance agreement prior to the effective date of the
confirmed Plan of Reorganization.
By this motion, the Diocese seeks authority from the U.S.
Bankruptcy Court for the District of Arizona to enter into a
premium financing agreement with A.I. Credit Corp. or its
subsidiary AICCO, Inc. Mr. Nye says the Agreement will finance
the payment of premiums on the Diocese's insurance policies.
To secure payment, the Diocese seeks permission to grant AICCO a
security interest in the financed policies, including:
-- money payable as a result of a loss that reduces the
unearned premiums;
-- any return in premium; and
-- any dividend that may become due under the policies.
No other parties have a security interest in the financed
policies.
"The proposed finance agreement represents the best financing
terms available to the Diocese," Mr. Nye asserts. The Diocese
also believes that it could not obtain another loan on similar or
more favorable terms.
Entering into the Agreement will not prejudice the Reorganization
Case in any way whatsoever because with just a 5% annual
percentage rate and modest security interest provisions, the
Agreement's terms are eminently reasonable, Mr. Nye says.
A full-text copy of the Agreement with AICCO is available for free
at http://bankrupt.com/misc/aicco_premuim_finance_agreement.pdf
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. 35;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
CATHOLIC CHURCH: Tucson Wants St. Paul Settlement Pact Approved
---------------------------------------------------------------
Before the Petition Date, St. Paul Fire and Marine Insurance
Company issued or allegedly issued to or for the Diocese of
Tucson's benefit and certain other parties, six insurance
policies:
Policy Number Policy Period
------------- -------------
589JD5817 04/07/82 - 07/01/83
589XB3620 07/01/83 - 07/01/84
599XB3620 07/01/84 - 07/01/85
589JE1203 10/01/84 - 10/01/85
589XB2819 10/01/84 - 10/01/85
SU05500507 07/01/86 - 07/01/87
Susan G. Boswell, Esq., at Quarles & Brady Streich Lang LLP, in
Tucson, Arizona, relates that numerous individuals have asserted
claims against the Diocese for injuries allegedly suffered due to
sexual abuse by priests hired, supervised, or maintained by the
Diocese.
Certain disputes between the Diocese and St. Paul have arisen and
would likely to arise in the future concerning St. Paul's position
regarding the nature and scope of its responsibilities, if any, to
provide coverage to the Diocese and the Other Releasing Parties
under the Policies for the Tort Claims. This includes the
sufficiency of the evidence of the existence and terms of the
Policies:
-- whether policy terms or exclusions provide or preclude
coverage for the Tort Claims;
-- whether the Diocese has complied with certain condition
precedent to coverage contained in the Policies; and
-- whether and to what extent the costs incurred in connection
with the Tort Claims are allocable to the Policies.
The Diocese has determined that it is in the best interest of the
Estate and its creditors to reach an expedited resolution of all
the disputes with other parties and St. Paul to avoid:
(a) the significant costs to the Chapter 11 estate to litigate
its coverage claims against St. Paul either through an
adversary proceeding or on a piecemeal basis;
(b) the risks of the outcome of the litigation and the time
to obtain a final determination;
(c) the possibility that coverage under the Policies may not
be implicated; and
(d) the desire to obtain maximum value from its insurers under
the Policies for the purpose of making payments to the
holders of the Tort Claims.
Accordingly, the Diocese asks the U.S. Bankruptcy Court for the
District of Arizona to approve it settlement and insurance policy
repurchase agreement and release with St. Paul.
The salient terms of the Agreement are:
(1) St. Paul will purchase the Policies for $1 million to be
paid to the Estate;
(2) The Diocese and Other Releasing Parties will provide a
full release to St. Paul with respect to and in connection
with the St. Paul policies that includes any other unknown
insurance policies issued by St. Paul, under which the
bankruptcy estate may have insurance coverage. The
release represents fair consideration for the purchase
price paid by St. Paul to buy back the Policies in view of
the various disputes between the parties, and in no way
constitutes an annulment of the Policies within the
meaning of A.R.S. Section 20-1123; and
(3) St. Paul will provide full releases to the Diocese and the
Other Releasing Parties with respect to and in connection
with any claims in connection with the Policies.
Ms. Boswell says the Diocese's decision to sell the Policies is
based on sound business judgment. The Diocese seeks to reorganize
its financial affairs so that it may justly and equitably
compensate the holders of the Tort Claims while allowing the
Diocese to continue its ministry and mission in the communities of
Tucson. The Policies constitute some of the remaining assets of
the Estate, and their sale will help to provide some recovery for
the claimants, including those with Tort Claims, in a reasonable
timeframe.
A full-text copy of the Agreement with St. Paul is available for
free at http://bankrupt.com/misc/st.paul_settlement.pdf
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. 35;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
CHARTER COMMS: SEC Declares Resale Registration Effective
---------------------------------------------------------
The Securities and Exchange Commission has declared effective
Charter Communications, Inc.'s (Nasdaq:CHTR) registration
statement on Form S-1, which registers the resale by the holders
of Charter's 5.875% Convertible Senior Notes due 2009 and the
Class A common stock issuable upon conversion of the Notes.
The Notes have an annual interest rate of 5.875%, payable semi-
annually, and are currently convertible (subject to certain
adjustments) into 413.2231 shares of Charter's Class A common
stock per $1,000 original purchase amount of Notes, which
represents a conversion price of approximately $2.42 per share.
The Notes were originally sold in a private placement on Nov. 22,
2004, to qualified institutional buyers in reliance on Rule 144A.
Pursuant to the registration statement, the resale of the Notes
and the Class A common stock issuable upon conversion of the Notes
has now been registered under the Securities Act of 1933, as
amended.
Charter Communications, Inc. -- http://www.charter.com/-- a
broadband communications company, provides a full range of
advanced broadband services to the home, including cable
television on an advanced digital video programming platform via
Charter Digital(TM) and Charter High-Speed(TM) Internet service.
Charter also provides business-to-business video, data and
Internet protocol (IP) solutions through Charter Business(TM).
Advertising sales and production services are sold under the
Charter Media(R) brand.
At Mar. 31, 2005, Charter Communications' balance sheet showed a
$4.8 billion stockholders' deficit, compared to a $4.4 billion
deficit at Dec. 31, 2004.
COLLINS & AIKMAN: GE Capital Corp. Asks Court to Lift Stay
----------------------------------------------------------
General Electric Capital Corporation asks the U.S. Bankruptcy
Court for the Eastern District of Michigan to lift the automatic
stay so that it may exercise its rights and remedies pursuant to
an Amended and Restated Receivables Purchase Agreement and a
Receivables Transfer Agreement between Collins & Aikman
Corporation and Carcorp, Inc.
GE asks the Court for:
(a) the right to replace the Debtors as collection agent;
(b) the right to enter the Debtors' premises and take
possession of the Prepetition Receivables and Facility
Interests; and
(c) the right to send notices to account debtors directing
them to pay Receivables directly to GE, regardless of
whether any of the Debtors have any interest therein.
Pursuant to the Purchase Agreement, the Debtors sold and assigned
to Carcorp , all of their interest in certain receivables, related
security, collections and proceeds. Furthermore, pursuant to a
Receivables Agreement, Carcorp transferred to GE the Prepetition
Receivables Facility Interests.
Judy A. O'Neill, Esq., at Foley & Lardner LLP, in Detroit,
Michigan, tells Judge Rhodes that the Debtors act as collection
agent for GE pursuant to the Transfer Agreement. As a fiduciary
for GE, the Debtors has various duties including causing all
collections to be deposited directly in a lockbox bank. As of
June 17, 2005, GE was owed at least $78 million under the
Transfer Agreement.
Shortly after the Petition Date, GE became concerned that the
Debtors might not be keeping accurate timely records of the
Receivables and Collections, or worse, that the Debtors might be
violating its fiduciary and contractual duties to GE by utilizing
the Collections to fund their postpetition operations. GE sent
letters to the Debtors requesting that they provide it with an
accounting.
Although GE had been provided virtually no information by the
Debtors, GE provided a rough analysis of Collections during the
weeks ended June 10 and June 17. The analysis showed that the
Debtors had received and apparently converted to their own use
about $19 million of Collections. GE shared the analysis with
Scott Argersinger, the Debtors' assistant treasurer. Mr.
Argersinger reviewed GE's analysis and acknowledge that it was
"in the ball park." In addition, Mr. Argersinger indicated that
he had performed his own analysis that supported GE's conclusion
and offered to share his calculations. However, Mr. Argersinger
was stopped by Bill Murphy of Kroll Zolfo Cooper, financial
advisors to the Debtors. Mr. Murphy expressed surprise at the
$19 million figure and said that if it was correct, cash was
tight and he did not know whether the Debtors would be able to
return the funds to GE.
Stipulation
Pursuant to a Court-approved Stipulation, on June 28, 2005, the
Debtors delivered to GE a chart listing all of the categories of
information it requested and giving the status of production of
that information and a reasonable date by which it will be
produced. Subject to appropriate confidentiality requirements,
the Debtors will make all documentation provided to GE available
to the Official Committee of Unsecured Creditors, JP Morgan Chase
Bank, NA, and the lenders under the DIP Credit Agreement.
The Debtors will also inform GE of any demands for payment made
by tooling vendors out of the ordinary course of business and of
any payments by any third parties to the tooling vendors on
behalf of the Debtors.
Furthermore, the parties agree that the Debtors will deposit
$5 million in a segregated deposit account free and clear of all
liens, with those liens to attach only to the rights of the
Debtors to excess funds in the GE Deposit. GE will have a
superpriority claim against the entire GE Deposit with priority
over all other claims until return of any excess to the Debtors,
at which time GE will no longer have a superpriority claim
against the excess.
Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). When the Debtors filed for protection from their
creditors, they listed $3,196,700,000 in total assets and
$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,
Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: JPMorgan Backs Price Increase Pact
----------------------------------------------------
Collins & Aikman Corporation and its customers -- DaimlerChrysler
AG, Ford Motor Company, General Motors Corporation, Honda Motor
Company, Inc., Nissan Motor Company Unlimited, and Toyota SA --
have been discussing a framework to bridge more permanent
financing, a strategic business plan, and contract price
negotiations.
JPMorgan Chase Bank, NA, as administrative agent for the senior
secured lenders under the DIP Credit Agreement, believes that the
Price Increase Agreement will allow the Debtors to:
-- maintain and stabilize their operations;
-- receive immediate relief in the form of substantial price
concessions from the Customers;
-- preserve the critically important business relationships
between the Customers and the Debtors;
-- provide a framework for further price relief;
-- provide funds for capital expenditures; and
-- provide working capital for new product launches costs and
tooling costs.
As major constituents in the Debtors' Chapter 11 cases, JPMorgan
and the Prepetition Lenders assert that the hard-fought Price
Increase Agreement represents the first step in the development
of a plan that will allow all constituents to see whether there
is a business plan that can be ultimately turned into a plan of
reorganization. Without this opportunity, the Prepetition
Lenders believe that the business relationships with the
Customers will be substantially destroyed, that the Customers
will begin to resource business, and that the result will be an
enormous loss of value that will be devastating to all creditors.
Accordingly, JPMorgan urges the Court to grant the Motion.
Committee Objects
"This financing package will not save the [Debtors'] estates. To
the contrary, it will ensure the Debtors' slow demise," Paula A.
Osborne, Esq., at Butzel Long PC, in Bloomfield Hills, Michigan,
asserts.
Ms. Osborne tells Judge Rhodes that the proposed financing
package is nothing more than the second chapter of a three-part
plan by the Customers to ensure the continued delivery of their
products under contracts burdensome to the Debtors while at the
same time remaining completely unencumbered in their ability to
locate alternative suppliers and phasing the Debtors out of
existence.
According to Ms. Osborne, a closer look at the Price Increase
Agreement reveals the true harm that will result if it is
approved. Ms. Osborne contends that:
a. The Agreement gives the Customers undue leverage to control
the Debtors' failure. The Agreement provides that the
parties will use the first 60 days of the Agreement period
to negotiate permanent price adjustments under the Debtors'
contracts with their customers. However, this "benefit"
does nothing more than give the Customers the right to
reject the Debtors' proposed price increases without a
guarantee of future business on terms profitable to the
Debtors' estates -- the playing field will be far from
level;
b. The Agreement prevents the Debtors from obtaining further
pricing concessions or rejecting unprofitable contracts
with the Customers during the 90-day Term. This will
result to continued cash burn by the Debtors' estates of
tens of millions of dollars and the guaranteed demise of
the Debtors' European operations. The pricing concessions
needed by the Debtors' European affiliates may be just as
drastic as those which are required domestically;
c. The Agreement gives the Customers liens on the Debtors'
assets up to $82.5 million at a time when the Debtors have
the leverage to require the Customers to advance all
funding needed through pricing concessions or face the shut
down of the Customers' own manufacturing facilities, which
would cost the Customers tens of billions of dollars --
something that the Customers would not allow to happen;
d. The Agreement provides no guarantee that the Customers will
not be preparing to re-source the goods and services
provided by the Debtors to other third party suppliers upon
the termination of the Term;
e. The Agreement gives the Customers the right to access and
take control over the Debtors' facilities for the
Customers' sole benefit:
* upon the occurrence of a Default;
* in accordance with the terms of an Access Agreement,
which have not been disclosed;
* without regard to the best interests of the Debtors'
estates and their continued viability; and
* in contravention of Sections 1106, 1107, and 1108 of the
Bankruptcy Code and the fiduciary obligations of a
debtor-in-possession to its creditors;
f. The Agreement inappropriately compels the Debtors to
commence a process to sell their assets at a time when:
* the Debtors are party to burdensome, unprofitable
contracts;
* all of the Debtors' efforts should be directed toward
obtaining profitable contracts with the customers and
closing underperforming, unprofitable manufacturing and
operating facilities; and
* values are at an all time low;
g. The Agreement contains terms that are undefined or subject
to additional negotiation. The inclusion of undefined or
incomplete provisions prevents parties-in-interest from
knowing the true terms of the transaction and the extent of
leverage that the Customers have over the Debtors' estates;
h. The Agreement permits the Customers to obtain title to
tooling free and clear of liens, claims and encumbrances in
favor of certain of the Debtors' vendors, which could
result in the inappropriate release of lines held by the
Debtors' tooling vendors and tooling vendors' refusal to
continue to transact business with the Debtors; and
i. The Agreement provides that in the event of a Default, the
automatic stay will be automatically lifted in favor of the
Prepetition Lenders, which should not be so under any
circumstances.
In this regard, the Committee asks the Court to determine that
any funding arrangement for the Debtors' estates should be based
solely on:
(a) retroactive and forward-looking price increases;
(b) advance payments for tooling, launch costs and capital
expenditures;
(c) a prohibition on the ability of the Customers to continue
the process of preparing to re-source the products
provided by the Debtors to other suppliers; and
(d) providing the Debtors the right to immediately effectuate
the rejection of burdensome contracts with the Customers.
"These types of accommodations are truly the only way to ensure a
level playing field and appropriately entice the Lending
Customers to engage in good-faith negotiations with the Debtors
over the terms of newly negotiated contracts that are fair and
equitable to both the Debtors and the Lending Customers," Ms.
Osborne says.
Headquartered in Troy, Michigan, Collins & Aikman Corporation --
http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). When the Debtors filed for protection from their
creditors, they listed $3,196,700,000 in total assets and
$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,
Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: Wants to Assume Ernst & Young Contract
--------------------------------------------------------
On March 17, 2005, Collins & Aikman Corporation publicly announced
that during the course of finalizing its financial statements for
fiscal year ended December 31, 2004, it had identified certain
accounting for supplier rebates that led to premature or
inappropriate revenue recognition or that was inconsistent with
relevant accounting standards and the Debtors' policies and
practices. Collins & Aikman further announced that it had
initiated an internal review of these matters and that it expected
that certain restatements of its financial results would be
required.
As part of that announcement, Collins & Aikman stated that it
would not be able to file its Annual Report on Form 10-K
containing fiscal 2004 audited financial statements with the
United States Securities and Exchange Commission on time. Collins
& Aikman stated that it required additional time to complete the
review of the accounting issues, its financial reporting process,
and its controls over financial reporting. On March 24, 2005, the
company publicly disclosed that an Audit Committee had determined
to conduct an independent investigation into these matters.
The Audit Committee retained Davis Polk & Wardwell as independent
counsel. In turn, Davis Polk retained Ernst & Young LLP, a
nationally recognized accounting and auditing firm, to provide
forensic accounting services in connection with the Rebate
Investigation. Although Davis Polk represented the Audit
Committee and the certain non-management directors, not Collins &
Aikman as a whole, Davis Polk's fees and expenses as well as those
of E&Y were paid by the company.
On May 12, 2005, Collins & Aikman announced that the scope of the
Rebate Investigation would include its forecasts for the first
quarter 2005 as well as other matters that have arisen in the
course of the Rebate Investigation.
Joseph M. Fischer, Esq., at Carson Fischer, P.L.C., in
Birmingham, Michigan, relates that Davis Polk is seeking to
determine the facts surrounding, the extent, and cause of any
accounting or other financial irregularities within the scope of
the Rebate Investigation. The ultimate goal of Davis Polk is to
provide its findings to the Audit Committee, the Independent
Directors, Collins & Aikman's auditors and certain government
regulators. David Polk's findings will enable the company to
generate accurate financial information to support business
decisions and to obtain financial statements certified by an
independent auditor. The findings of the Rebate Investigation
are also likely to serve as the basis for the implementation of
remedial measures and preventive practices and procedures.
In representing the Audit Committee and the Independent Directors
Davis Polk attorneys worked over 2,580 hours and, according to
E&Y, directed 2,400 hours of work by the E&Y forensic team. Mr.
Fischer reports that E&Y has become deeply involved in the Rebate
Investigation in terms of both breadth and depth.
Although Davis Polk and E&Y have worked diligently together up to
the Petition Date, the Rebate Investigation has not yet been
completed. A significant amount of work remains to complete the
Rebate Investigation. Until the Rebate Investigation has been
concluded, Collins & Aikman believes that it will be extremely
difficult for it to obtain audited financial statements.
Letter Agreement
Pursuant to a Letter Agreement with E&Y, the Debtors will pay
E&Y's fees at these standard hourly rates:
Partner $685 to $730
Senior Manager $580
Manager $460
Senior $300 to $330
Staff $250 to $290
The Debtors will also reimburse E&Y for allocated and direct
expenses incurred.
As of the Petition Date, E&Y has performed Services costing
$743,480, which the Debtors had not yet paid. The Debtors would
be required to pay this in full upon assumption of the Letter
Agreement. After negotiations, Mr. Fischer discloses that E&Y
has agreed to a $150,000 reduction of the prepetition amount
owed.
By this motion, the Debtors seek the Court's authority to assume
the Letter Agreement and to pay $593,480 Cure Amount.
Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). When the Debtors filed for protection from their
creditors, they listed $3,196,700,000 in total assets and
$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,
Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CWMBS INC: Decreasing Credit Support Prompt Fitch's Downgrade
-------------------------------------------------------------
Fitch has upgraded 7, affirmed 14, and downgraded 3 classes from
these CWMBS, Inc. residential mortgage-backed securitizations:
CWMBS (Countrywide Home Loans, Inc.), mortgage pass-through
certificates, series 1998-12 (Alt 1998-4)
-- Class A affirmed at 'AAA';
-- Class M affirmed at 'AAA';
-- Class B1 affirmed at 'AAA';
-- Class B2 affirmed at 'A';
-- Class B3 affirmed at 'BB';
-- Class B4 downgraded to 'C' from 'CCC'.
CWMBS (Countrywide Home Loans, Inc.), mortgage pass-through
certificates, series 2002-11 (Alt 2002-7)
-- Class A affirmed at 'AAA';
-- Class M upgraded to 'AAA' from 'AA';
-- Class B1 upgraded to 'A+' from 'A';
-- Class B2 affirmed at 'BBB';
-- Class B3 downgraded to 'B-' from 'B';
-- Class B4 downgraded to 'C' from 'CC.'
CWMBS (Countrywide Home Loans, Inc.) mortgage pass-through
certificates, series 2003-10
-- Class A affirmed at 'AAA';
-- Class M upgraded to 'AA+' from 'AA';
-- Class B1 upgraded to 'A+' from 'A';
-- Class B2 upgraded to 'BBB+' from 'BBB';
-- Class B3 upgraded to 'BB+' from 'BB';
-- Class B4 upgraded to 'B+' from 'B.'
CWMBS (Countrywide Home Loans, Inc.) mortgage pass-through
certificates, series 2004-3
-- Class A affirmed at 'AAA';
-- Class M affirmed at 'AA';
-- Class B1 affirmed at 'A';
-- Class B2 affirmed at 'BBB';
-- Class B3 affirmed at 'BB';
-- Class B4 affirmed at 'B.'
The affirmations reflect asset performance and credit enhancement
consistent with expectations and affect approximately $560 million
of outstanding certificates.
The upgrades reflect an increase in credit enhancement relative to
future loss expectations and affect $26.1 million of outstanding
certificates.
The negative rating actions were taken due to the losses incurred
to the pools and the delinquencies in relation to decreasing
credit support and affect $8.1 million of outstanding
certificates. As of June 25, 2005 distribution, series 1998-12
(Alt 1998-4) has $1,772 remaining in the B5 class (not rated by
Fitch), providing .01% of credit support to the B4 class.
Currently 4.4% of the pool resides in the 90-plus delinquency
bucket, cumulative losses to date are $1.3 million, and 92% of the
collateral has paid down. Class B-5 (not rated by Fitch) of
series 2002-11 (Alt 2002-7 ) has depleted and class B-4 is now
absorbing any realized losses to the pool. Class B-4 has an
approximate remaining balance of $1.9 million and as of the June
25 distribution there is 8.09% of the current pool in 90-plus
delinquency. Cumulative losses to date are approximately $4
million and 84% of the collateral has paid down.
Fitch will continue to continue to closely monitor these deals.
CYCLELOGIC INC: Wants Another Delay in Entry of Final Decree
------------------------------------------------------------
Ana Maria Lozano-Stickley, the Liquidation Trustee overseeing the
liquidation trust established for CycleLogic, Inc.'s estate, asks
the U.S. Bankruptcy Court for the District of Delaware to delay
the automatic entry of a final decree closing the Debtor's chapter
11 case to September 23, 2005.
Ms. Lozano-Stickley also asks the Court to extend the deadline for
the filing of a final report and accounting to September 8, 2005.
The Court had previously extended the entry of a Final Decree to
August 9, 2005.
The Liquidating Trustee says she needs more time to prosecute or
resolve pending claim objections, avoidance actions and other
matters before she can give a final report. She adds that a final
report and accounting will not be accurate until the claims
administration process is concluded and all pending avoidance
actions are resolved.
The Honorable Peter J. Walsh will convene a hearing to discuss the
proposed extension at 4:00 p.m. on August 11, 2005, in Wilmington,
Delaware.
Headquartered in Miami, Florida, CycleLogic, Inc., was an Internet
media company and wireless software provider. The Company filed
for chapter 11 protection on December 23, 2003 (Bankr. Del. Case
No. 03-13881). Joseph A. Malfitano, Esq., at Young, Conaway,
Stargatt & Taylor represents the Debtor. When the Company filed
for protection from its creditors, it listed assets of more than
$100 million and debts of over $10 million.
DAYTON POWER: Moody's Upgrades Preferred Stock Rating to Ba1
------------------------------------------------------------
Moody's Investors Service upgraded DPL Inc.'s senior unsecured
debt to Ba1 from Ba2, and upgraded The Dayton Power and Light
Company's:
* senior secured debt to Baa1 from Baa2;
* senior unsecured debt and Issuer Rating to Baa2 from Baa3;
* preferred stock to Ba1 from Ba2; and
* short term rating for commercial paper to Prime-2
from Prime-3.
Moody's also upgraded the trust preferred securities issued by DPL
Capital Trust II to Ba2 from Ba3.
The rating outlook is positive for DPL, DP&L, and DPL Capital
Trust II.
The upgrades are prompted by the:
1) The successful and quickly executed sale of DPL's private
equity portfolio for net cash proceeds of approximately $816
million, which has reduced the company's business risk;
2) Management's stated intention to use $500 million of these
proceeds for debt reduction at the parent company;
3) DPL's renewed focus on its core utility business, with
additional energy investments to be limited to those that
are expected to assure regulatory recovery;
4) Resolution of The Public Utilities Commission of Ohio
investigation into the financial condition of DP&L, and the
PUCO's return to its standard regulatory oversight process
for the utility;
5) The utility's recent renewal and extension of its $100
million bank revolving credit facility for a five year
period, and the removal of the material adverse change
clause for new borrowings;
6) Continued progress by management in resolving internal
control and corporate governance issues that had been raised
both by DPL's controller and external auditor last year.
The rating of DP&L also reflects:
* its close relationship with DPL;
* the parent's reliance on utility cash flow to pay debt
service and dividends;
* high anticipated capital expenditures for environmental
compliance;
* the company's plan to fund a portion of these capital
expenditures with debt; and
* management's stated intention to target a debt to equity
ratio of 55% at the utility.
It also considers:
* the lack of a fuel adjustment clause at the utility;
* its limited ability to recover higher fuel and environmental
costs through 2008, which cannot exceed 11% of generation
revenue; and
* uncertainty with respect to the Ohio regulatory framework
following the expiration of DP&L's rate stabilization plan
in 2008.
The rating outlook is positive for DPL and DP&L. The positive
outlook reflects Moody's expectation that there will be further
significant improvement in the consolidated financial profile of
DPL, with execution of the debt reduction plan in a timely manner,
higher funds from operations in 2005 and 2006, and expectations
that there will not be any highly negative outcome from several
government investigations.
The rating could be upgraded if:
* financial performance improves strongly, such as would be
evidenced by a sustainable ratio of funds from operations to
consolidated debt in excess of 15%; and
* if there is decreased concern about the various
investigations.
DPL is subject to pending investigations by:
* the Securities and Exchange Commission,
* the Department of Justice,
* the Federal Bureau of Investigation,
* the Internal Revenue Service, and
* the Federal Energy Regulatory Commission.
Some of these investigations relate to alleged improper activities
by former senior management. There is also pending litigation
between DPL and its former management team.
Ratings upgraded include:
DPL Inc.:
* senior unsecured debt, to Ba1 from Ba2;
* senior secured debt, to Baa1 from Baa2;
* senior unsecured debt and Issuer Rating, to Baa2 from Baa3;
* preferred stock, to Ba1 from Ba2; and
* short term rating for commercial paper, to Prime-2 from
Prime-3.
DPL Capital Trust II:
* trust preferred securities rating to Ba2 from Ba3.
DPL Inc., headquartered in Dayton, Ohio, is a diversified regional
energy company operating in Ohio through its subsidiaries:
* The Dayton Power and Light Company;
* DPL Energy, LLC; and
* MVE, Inc.
DELTA AIR: Posts $382 Million Net Loss in Second Quarter 2005
-------------------------------------------------------------
Delta Air Lines (NYSE: DAL) reported results for the quarter ended
June 30, 2005. Delta reported a net loss for the June 2005
quarter of $382 million, compared to a net loss of $2.0 billion in
the prior year quarter. Delta's operating loss for the June 2005
quarter was $129 million.
"Delta's second quarter results reflect both the solid progress we
are making in implementation of our transformation plan, and the
substantial challenges we are facing," said Gerald Grinstein,
Delta's chief executive officer. "As part of our company wide
focus on reducing costs and increasing revenue, we have pursued a
wide range of initiatives, including fuel conservation measures,
debt-for-equity exchanges, implementation of a new revenue
management system, surcharges on many of our trans-Atlantic
flights and additional significant fare initiatives, among many
others. Improvements in unit costs, passenger revenue and revenue
per available seat mile are proof that these efforts are working.
"At the same time, however, record-high fuel prices and other
factors out of our control during the quarter outpaced our
transformation initiatives and masked our progress. Our
management team recognizes that further change is essential - and
it must be implemented with even greater speed - if we are to
achieve our goals in the increasingly competitive aviation
marketplace. I am confident everyone at Delta will rise to the
challenge as we strive to improve our competitive and financial
positions, while continuing to provide the travel experience our
customers expect," Mr. Grinstein concluded.
Operating revenues for the June 2005 quarter increased 5.7
percent, while passenger unit revenues increased 1.2 percent
compared to the prior year quarter. The load factor for the June
2005 quarter was 78.2 percent, a 1.6 point increase compared to
the prior year quarter. System capacity rose 4.8 percent and
mainline capacity increased 4.5 percent.
Due to sharply higher fuel costs, operating expenses for the June
2005 quarter increased 2.7 percent from the prior year quarter,
although consolidated system unit costs decreased 2.0 percent and
mainline unit costs decreased 3.9 percent compared to the prior
year period.
Fuel expense increased 57.5 percent, or $385 million, over the
prior year period with approximately 95 percent of the increase
resulting from higher fuel prices. Average fuel price per gallon
for the June 2005 quarter was $1.60, a 53.3 percent increase over
the prior year period. Based on Delta's expected fuel consumption
for 2005, every one cent increase in the average annual cost per
gallon of jet fuel results in approximately $25 million in
additional mainline fuel expense per year.
Liquidity and Financial Transactions
At June 30, 2005, Delta had $2 billion in cash and cash
equivalents and short-term investments, of which $1.7 billion was
unrestricted. Cash flows used in operations were $122 million in
the June 2005 quarter. Capital expenditures for the quarter were
approximately $240 million, including approximately $150 million
for regional jet aircraft delivered under seller financing.
During the June 2005 quarter, Delta paid approximately $95 million
of required contributions to its defined benefit and defined
contribution pension plans. Debt maturities paid during the
quarter totaled approximately $80 million.
Covenant Changes
During the June 2005 quarter, two financial covenants under
Delta's financing agreements with General Electric Capital
Corporation and American Express were amended. The changes:
-- lowered the level of EBITDAR that Delta must achieve for
certain specified periods; and
-- increased the unrestricted funds Delta is required to
maintain to not less than $1 billion until December 2007.
Debt-for-Equity Swap
Additionally, during the June 2005 quarter, Delta completed three
separate transactions in which the holders of $45 million
principal amount of the company's 7.7% Notes due 2005 exchanged
those unsecured notes for a total of 11.3 million shares of
Delta's common stock.
During the quarter, Delta also completed the sale of one MD-11
aircraft, resulting in proceeds of $26 million.
In addition, Delta deferred delivery of eight Boeing 737-800
aircraft from 2006 to 2008. As a result of these deferrals, Delta
has no mainline aircraft deliveries scheduled in 2006.
Transformation Plan
In late 2004, Delta disclosed its comprehensive transformation
plan, with the goal of delivering approximately $5 billion in
annual benefits by the end of 2006 (as compared to 2002) while
also improving the service Delta provides to its customers. As of
June 30, 2005, Delta has implemented initiatives intended to
achieve approximately 85 percent of the targets of the
transformation plan, and believes it is on track to deliver the
full $5 billion in benefits by the end of 2006. Due largely to
successful implementation of these initiatives, Delta's operating
expenses, excluding fuel, were down significantly in the June 2005
quarter, compared to the prior year period, despite an increase in
capacity.
SimpliFares(TM)
On July 14, 2005, Delta disclosed that, largely as a result of
unprecedented increases in fuel prices, it raised the top fares
under its domestic SimpliFares(TM) program by $100 each way.
SimpliFares continues to offer very competitive fares in the
industry and the program retains its other popular features such
as no Saturday-night stay requirement; reducing most special
service fees to $50; and 1,000 bonus miles and no direct ticketing
fees for tickets purchased through http://www.delta.com/
2005 Guidance
Delta expects that 2005 capacity for the consolidated system will
increase 5-6 percent over 2004, including a 6-7 percent year-over-
year increase in the September 2005 quarter and a 5-6 percent
year-over-year increase in the December 2005 quarter. These
increases are slightly lower than previous guidance as a result of
Delta's plans to trim overall capacity in the fall and winter
months to adjust for seasonal demand and the planned removal from
service of up to 14 mainline aircraft during the September and
December 2005 quarters.
Capital expenditures for the September 2005 quarter are estimated
to be approximately $200 million, including approximately
$60 million for aircraft. Capital expenditures for 2005 are
estimated to be approximately $800 million, including
approximately $360 million for aircraft. Delta has agreements in
place for the financing of its regional jet aircraft deliveries in
2005. The final mainline aircraft delivered in 2005 was
immediately sold to a third party upon delivery from the
manufacturer in July, pursuant to a previously announced
agreement.
Delta Air Lines -- http://delta.com/-- is the world's second-
largest airline in terms of passengers carried and the leading
U.S. carrier across the Atlantic, offering daily flights to 490
destinations in 85 countries on Delta, Song, Delta Shuttle, the
Delta Connection carriers and its worldwide partners. Delta's
marketing alliances allow customers to earn and redeem frequent
flier miles on more than 14,000 flights offered by SkyTeam and
other partners. Delta is a founding member of SkyTeam, a global
airline alliance that provides customers with extensive worldwide
destinations, flights and services.
At March 31, 2005, Delta Air's balance sheet showed a $6.6 billion
stockholders' deficit, compared to a $5.8 billion deficit at
Dec. 31, 2004.
* * *
As reported in the Troubled Company Reporter on June 29, 2005,
Moody's Investors Service commented that the recent amendments to
the liquidity facilities that provide credit support to the Series
2000-1 (Class A-1, A-2, B and C) and Series 2002-1 (Class G-1, G-2
and C) Enhanced Equipment Trust Certificates of Delta Air Lines,
Inc. would not affect the current ratings assigned to these
Certificates:
Series 2000-1:
* Ba1 for Class A-1 and A-2;
* B3 for Class B; and
* Caa2 for Class C;
Series 2002-1:
* Aaa for Class G-1 and G-2; and
* B3 for Class C.
The Aaa ratings for the Series 2002-1 Class G-1 and G-2 is based
upon the financial guaranty insurance policy issued by MBIA
Insurance Corporation to support the timely payment of interest
when due and the ultimate payment of principal on the Class G
Certificates.
DELTA AIR: Realigns Executive & Senior Leadership Teams
-------------------------------------------------------
In addition to the resignation of Delta Air Lines' (NYSE: DAL)
Chief Financial Officer Michael J. Palumbo, CEO Jerry Grinstein
disclosed other changes in the Company's leadership team as the
Company continues to execute its transformation plan and intensify
its efforts to improve its financial and operational performance
in the face of spiking fuel costs and other external forces.
"Thanks to the hard work and sacrifice of everyone at Delta, our
airline has made significant progress since the launch of our
transformation plan last year," Mr. Grinstein said. "Persistently
high fuel prices and increased competitive pressures have added
new urgency to our efforts. Today our airline must be prepared
not only to deliver more, but to deliver it more quickly."
Executive Team
To ensure the executive team is organized for maximum
effectiveness and delivery on the company's strategic goals, Mr.
Grinstein disclosed these changes:
-- Jim Whitehurst, currently Senior Vice President and Chief
Network and Planning Officer, is promoted to Chief Operating
Officer. He will assume oversight for Operations, Customer
Service, Network and Revenue Management and Corporate
Strategy. In his new role, Mr. Whitehurst will help provide
the fast, seamless coordination between strategy and
execution that will be essential in the critical period
ahead.
-- Joe Kolshak, currently Senior Vice President and Chief of
Operations, is promoted to Executive Vice President and
Chief of Operations, with new responsibilities for
Government Affairs.
-- Lee Macenczak, currently Senior Vice President and Chief of
Customer Service, is promoted to Executive Vice President
and Chief of Customer Service, with added responsibilities
for Public Affairs.
-- Paul Matsen, currently Senior Vice President and Chief
Marketing Officer, is promoted to Executive Vice President
and Chief Marketing Officer, with new responsibilities for
Delta Technology and Corporate Communications.
Senior Leadership Team
Aside from the return of Edward H. Bastian, a six-year Delta
veteran, to the Company to become Executive Vice President and
Chief Financial Officer, effective immediately, Mr. Grinstein
disclosed another addition to the Company's senior management
team.
Glen W. Hauenstein, a 20-year veteran of the airline industry, is
joining Delta as Executive Vice President and Chief of Network and
Revenue Management beginning Aug. 1. Mr. Hauenstein was most
recently Vice General Director for Alitalia, serving in the dual
role of Chief Commercial Officer as well as Chief Operating
Officer.
"These changes further strengthen an already battle-tested
leadership team whose members have proven their ability to develop
and execute an aggressive, innovative strategy in the most
challenging of times," said Mr. Grinstein.
Delta Air Lines -- http://delta.com/-- is the world's second-
largest airline in terms of passengers carried and the leading
U.S. carrier across the Atlantic, offering daily flights to 490
destinations in 85 countries on Delta, Song, Delta Shuttle, the
Delta Connection carriers and its worldwide partners. Delta's
marketing alliances allow customers to earn and redeem frequent
flier miles on more than 14,000 flights offered by SkyTeam and
other partners. Delta is a founding member of SkyTeam, a global
airline alliance that provides customers with extensive worldwide
destinations, flights and services.
At March 31, 2005, Delta Air's balance sheet showed a $6.6 billion
stockholders' deficit, compared to a $5.8 billion deficit at
Dec. 31, 2004.
* * *
As reported in the Troubled Company Reporter on June 29, 2005,
Moody's Investors Service commented that the recent amendments to
the liquidity facilities that provide credit support to the Series
2000-1 (Class A-1, A-2, B and C) and Series 2002-1 (Class G-1, G-2
and C) Enhanced Equipment Trust Certificates of Delta Air Lines,
Inc. would not affect the current ratings assigned to these
Certificates:
Series 2000-1:
* Ba1 for Class A-1 and A-2;
* B3 for Class B; and
* Caa2 for Class C;
Series 2002-1:
* Aaa for Class G-1 and G-2; and
* B3 for Class C.
The Aaa ratings for the Series 2002-1 Class G-1 and G-2 is based
upon the financial guaranty insurance policy issued by MBIA
Insurance Corporation to support the timely payment of interest
when due and the ultimate payment of principal on the Class G
Certificates.
DOMINICK CARUSO: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Dominick Caruso, III
23 Totten Drive
Bridgewater, New Jersey 08807
Bankruptcy Case No.: 05-33762
Chapter 11 Petition Date: July 22, 2005
Court: District of New Jersey (Trenton)
Debtor's Counsel: John C. Feggeler, Jr., Esq.
Pieper & Feggeler
177 Main Street
P.O. Box 157
Matawan, New Jersey 07747
Tel: (732) 566-3002
Fax: (732) 566-4312
Total Assets: $692,675
Total Debts: $6,641,722
The Debtor has no unsecured creditors who are not insiders.
DPL CAPITAL: Moody's Upgrades Trust Preferred Secs. Rating to Ba2
-----------------------------------------------------------------
Moody's Investors Service upgraded DPL Inc.'s senior unsecured
debt to Ba1 from Ba2, and upgraded The Dayton Power and Light
Company's:
* senior secured debt to Baa1 from Baa2;
* senior unsecured debt and Issuer Rating to Baa2 from Baa3;
* preferred stock to Ba1 from Ba2; and
* short term rating for commercial paper to Prime-2
from Prime-3.
Moody's also upgraded the trust preferred securities issued by DPL
Capital Trust II to Ba2 from Ba3.
The rating outlook is positive for DPL, DP&L, and DPL Capital
Trust II.
The upgrades are prompted by the:
1) The successful and quickly executed sale of DPL's private
equity portfolio for net cash proceeds of approximately $816
million, which has reduced the company's business risk;
2) Management's stated intention to use $500 million of these
proceeds for debt reduction at the parent company;
3) DPL's renewed focus on its core utility business, with
additional energy investments to be limited to those that
are expected to assure regulatory recovery;
4) Resolution of The Public Utilities Commission of Ohio
investigation into the financial condition of DP&L, and the
PUCO's return to its standard regulatory oversight process
for the utility;
5) The utility's recent renewal and extension of its $100
million bank revolving credit facility for a five year
period, and the removal of the material adverse change
clause for new borrowings;
6) Continued progress by management in resolving internal
control and corporate governance issues that had been raised
both by DPL's controller and external auditor last year.
The rating of DP&L also reflects:
* its close relationship with DPL;
* the parent's reliance on utility cash flow to pay debt
service and dividends;
* high anticipated capital expenditures for environmental
compliance;
* the company's plan to fund a portion of these capital
expenditures with debt; and
* management's stated intention to target a debt to equity
ratio of 55% at the utility.
It also considers:
* the lack of a fuel adjustment clause at the utility;
* its limited ability to recover higher fuel and environmental
costs through 2008, which cannot exceed 11% of generation
revenue; and
* uncertainty with respect to the Ohio regulatory framework
following the expiration of DP&L's rate stabilization plan
in 2008.
The rating outlook is positive for DPL and DP&L. The positive
outlook reflects Moody's expectation that there will be further
significant improvement in the consolidated financial profile of
DPL, with execution of the debt reduction plan in a timely manner,
higher funds from operations in 2005 and 2006, and expectations
that there will not be any highly negative outcome from several
government investigations.
The rating could be upgraded if:
* financial performance improves strongly, such as would be
evidenced by a sustainable ratio of funds from operations to
consolidated debt in excess of 15%; and
* if there is decreased concern about the various
investigations.
DPL is subject to pending investigations by:
* the Securities and Exchange Commission,
* the Department of Justice,
* the Federal Bureau of Investigation,
* the Internal Revenue Service, and
* the Federal Energy Regulatory Commission.
Some of these investigations relate to alleged improper activities
by former senior management. There is also pending litigation
between DPL and its former management team.
Ratings upgraded include:
DPL Inc.:
* senior unsecured debt, to Ba1 from Ba2;
* senior secured debt, to Baa1 from Baa2;
* senior unsecured debt and Issuer Rating, to Baa2 from Baa3;
* preferred stock, to Ba1 from Ba2; and
* short term rating for commercial paper, to Prime-2 from
Prime-3.
DPL Capital Trust II:
* trust preferred securities rating to Ba2 from Ba3.
DPL Inc., headquartered in Dayton, Ohio, is a diversified regional
energy company operating in Ohio through its subsidiaries:
* The Dayton Power and Light Company;
* DPL Energy, LLC; and
* MVE, Inc.
DPL INC: Moody's Lifts Sr. Unsecured Debt Rating to Ba1 from Ba2
----------------------------------------------------------------
Moody's Investors Service upgraded DPL Inc.'s senior unsecured
debt to Ba1 from Ba2, and upgraded The Dayton Power and Light
Company's:
* senior secured debt to Baa1 from Baa2;
* senior unsecured debt and Issuer Rating to Baa2 from Baa3;
* preferred stock to Ba1 from Ba2; and
* short term rating for commercial paper to Prime-2
from Prime-3.
Moody's also upgraded the trust preferred securities issued by DPL
Capital Trust II to Ba2 from Ba3. The rating outlook is positive
for DPL, DP&L, and DPL Capital Trust II.
The upgrades are prompted by the:
1) The successful and quickly executed sale of DPL's private
equity portfolio for net cash proceeds of approximately $816
million, which has reduced the company's business risk;
2) Management's stated intention to use $500 million of these
proceeds for debt reduction at the parent company;
3) DPL's renewed focus on its core utility business, with
additional energy investments to be limited to those that
are expected to assure regulatory recovery;
4) Resolution of The Public Utilities Commission of Ohio
investigation into the financial condition of DP&L, and the
PUCO's return to its standard regulatory oversight process
for the utility;
5) The utility's recent renewal and extension of its $100
million bank revolving credit facility for a five year
period, and the removal of the material adverse change
clause for new borrowings;
6) Continued progress by management in resolving internal
control and corporate governance issues that had been raised
both by DPL's controller and external auditor last year.
The rating of DP&L also reflects:
* its close relationship with DPL;
* the parent's reliance on utility cash flow to pay debt
service and dividends;
* high anticipated capital expenditures for environmental
compliance;
* the company's plan to fund a portion of these capital
expenditures with debt; and
* management's stated intention to target a debt to equity
ratio of 55% at the utility.
It also considers:
* the lack of a fuel adjustment clause at the utility;
* its limited ability to recover higher fuel and environmental
costs through 2008, which cannot exceed 11% of generation
revenue; and
* uncertainty with respect to the Ohio regulatory framework
following the expiration of DP&L's rate stabilization plan
in 2008.
The rating outlook is positive for DPL and DP&L. The positive
outlook reflects Moody's expectation that there will be further
significant improvement in the consolidated financial profile of
DPL, with execution of the debt reduction plan in a timely manner,
higher funds from operations in 2005 and 2006, and expectations
that there will not be any highly negative outcome from several
government investigations.
The rating could be upgraded if:
* financial performance improves strongly, such as would be
evidenced by a sustainable ratio of funds from operations to
consolidated debt in excess of 15%; and
* if there is decreased concern about the various
investigations.
DPL is subject to pending investigations by:
* the Securities and Exchange Commission,
* the Department of Justice,
* the Federal Bureau of Investigation,
* the Internal Revenue Service, and
* the Federal Energy Regulatory Commission.
Some of these investigations relate to alleged improper activities
by former senior management. There is also pending litigation
between DPL and its former management team.
Ratings upgraded include:
DPL Inc.:
* senior unsecured debt, to Ba1 from Ba2;
* senior secured debt, to Baa1 from Baa2;
* senior unsecured debt and Issuer Rating, to Baa2 from Baa3;
* preferred stock, to Ba1 from Ba2; and
* short term rating for commercial paper, to Prime-2 from
Prime-3.
DPL Capital Trust II:
* trust preferred securities rating to Ba2 from Ba3.
DPL Inc., headquartered in Dayton, Ohio, is a diversified regional
energy company operating in Ohio through its subsidiaries:
* The Dayton Power and Light Company;
* DPL Energy, LLC; and
* MVE, Inc.
DS WATERS: Moody's Junks $480 Million Sr. Secured Credit Facility
-----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of DS Waters
Enterprises, LP to reflect:
* the continued deterioration in the company's financial
performance (negative to break-even EBIT expected during the
near term);
* its very high financial leverage;
* weak debt protection measures;
* reduced recovery rates for debt holders under a distressed
scenario; and
* the absence of transparency with regards to the company's
near term strategic and financial plan.
The rating actions also incorporate the July 20, 2005 announcement
by Groupe Danone to sell off its entire stake in DS Waters.
Despite DS Waters having been in compliance with its minimum
EBITDA covenant as of the quarter ended April 1, 2005, it is
Moody's opinion that compliance with this covenant over the near
term is tenuous, at best. As disclosed in the company's
financials, DS Waters has cautioned that it may not comply with
the original amended covenants that will become effective again in
the period ending December 31, 2005.
The ratings outlook remains negative given the continuation of
adverse trends in DS Waters' core business - home office delivery
of water bottles and services - and the absence of cushion under
credit statistics to absorb further deterioration at the revised
rating level.
Today's ratings actions were:
-- Lowered to Caa2 from B3, $480 million senior secured credit
facility consisting of a $100 million revolver (reduced from
$150 million), due 2008, and approximately $380 million term
loans outstanding (net of $20 million in repayments),
due 2009
-- Lowered to Caa2 from B3, Corporate Family Rating (formerly
known as the Senior Implied Rating)
The ratings outlook remains negative.
While acknowledging management's ongoing identification of issues
and their articulation of a defensive strategy (e.g. pricing
initiatives, introduction of new services, and a cooler purchase
program to offset rentals), DS Waters' performance continues to be
negatively impacted from competitive pressures in its HOD
business, as customers continue to move away from the company's
offerings and toward lower priced coolers and replacement bottles
being offered at retail stores. The ratings reflect:
* the reduction in higher margin cooler rentals (representing a
large portion of total EBITDA with approximately half of that
being the hard hit residential rentals); and
* the need to execute a proven plan to consistently increase
pricing of non-cooler related products so as to off-set the
erosion in the higher margin business.
The downgrade of the ratings also reflects the sustained weakness
in DS Waters' balance sheet with negative tangible equity and high
financial leverage (debt-to-EBITDA exceeded 5 times at LTM
April 1, 2005 and is expected to be higher throughout the near
term). When debt is adjusted to include leases, underfunded
pension contributions, and $325 million of preferred stock,
financial leverage increases to over 11 times.
Lowering the rating of the secured credit facility to Caa2 from B3
reflects Moody's opinion of the severity of enterprise value
erosion and expresses Moody's view that there is an increased
probability of default and likely some shortfall in collateral
coverage in the event of default.
The negative outlook reflects the ongoing risk of further
deterioration in the company's performance if management is unable
to execute its strategy, exacerbated by the absence of financial
flexibility to absorb further material erosion in EBIT and free
cash flow. Continued deterioration in operating performance,
financial metrics, collateral coverage or liquidity would result
in further ratings downgrades.
Conversely, to stabilize the rating outlook, the company must
prove successful in executing its business plan, including
increasing prices and reducing customer churn, and must stabilize
its financial performance and maintain adequate liquidity.
Formed by the combination of HOD businesses of Groupe Danone and
Suntory Limited, DS Waters Enterprises, LP is a leading provider
of a range of water products including:
-- 5 gallon and 3 gallon returnable bottles;
-- 2.5 gallon and 1 gallon high density polyethylene bottles;
-- individual serving or polyethylene terephthalate bottles;
-- water dispensers;
-- filtration products; and
-- other ancillary items such as:
* coffee,
* food products,
* cups, and
* stirrers.
DYNAMIC OIL: Selling Assets to Sequoia Via Plan of Arrangement
--------------------------------------------------------------
Dynamic Oil & Gas, Inc. (TSX:DOL)(NASDAQ:DYOLF) has entered into
agreements whereby Sequoia Oil & Gas Trust (TSX:SQE.UN) will
acquire all of Dynamic's Alberta oil and natural gas assets, and
whereby Dynamic will reorganize all of its British Columbia and
Saskatchewan oil and natural gas assets into a new exploration
company. The Transaction will be completed by way of Plan of
Arrangement.
Under the Plan, Dynamic will establish Shellbridge Oil & Gas,
Inc., as a new exploration-focused, Canadian publicly-traded
subsidiary, and will transfer into Shellbridge effective May 1,
2005, all of the benefits and obligations of Dynamic's producing
assets and undeveloped land located in the provinces of British
Columbia and Saskatchewan. Dynamic will retain all of its Alberta
properties. Sequoia will purchase all of the outstanding shares
of common stock of Dynamic for a cash payment to Dynamic's
shareholders of C$72.9 million less approximately C$28.9 million
in certain benefits, liabilities and obligations that are being
assumed by Sequoia. As a result of the Plan, each Dynamic
shareholder of record at closing, will receive C$1.71 in cash and
one share of Shellbridge for each share they hold of Dynamic
common stock. Shellbridge will be managed by Dynamic's current
management team and Board of Directors.
Consummation of the Plan is subject to certain closing conditions
including, without limitation, Dynamic shareholder approval,
judicial determination of fairness, regulatory approval and the
conditional listing of Shellbridge shares for trading on the
Toronto Stock Exchange or the TSX Venture Exchange.
"This transaction represents an excellent opportunity to realize
value for Dynamic shareholders," Wayne Babcock, President and CEO
of Dynamic, said. "In addition to receiving a cash payment,
Dynamic shareholders will receive shares in a new, focused junior
oil and natural gas producer with a balanced portfolio that
includes a blend of heavy oil development in Saskatchewan and
exploration upside potential for new natural gas discoveries in
British Columbia."
The Plan has the unanimous support of the boards of directors of
both Dynamic and Sequoia. The Plan includes a break fee of
C$2.16 million payable by either party if the transaction is not
completed under certain circumstances.
An Information Circular detailing the Plan is anticipated to be
mailed to Dynamic shareholders in August 2005 and Dynamic's
shareholders will be asked to approve the Plan at a special
meeting expected to be held in September 2005, with closing to
follow shortly thereafter.
Impact of Transaction on
Dynamic Shareholders
Dynamic's management and board of directors believe that the
transaction will enhance value for their shareholders by providing
these strategic and financial benefits:
-- A cash payment to shareholders of C$1.71 per share; and
-- For each Dynamic share held at closing, shareholders will
receive one share of Shellbridge, a newly-formed company
with existing assets and upside exploration potential.
Attributes of Shellbridge:
-- Experienced and motivated management team;
-- Initial net asset value (NAV) of $30.9 million;
-- Total proved plus probable reserves estimate of 2.4 mmboe;
-- Established initial production base of 900 boe/d;
-- Initial commodity mix - 80% heavy crude oil, 20% natural
gas;
-- Large land position (190,716 gross acres; 92,515 net) - 90%
undeveloped, 71% in northeastern B.C.
-- High working interest on operated properties;
-- Large inventory of drilling opportunities - 15 in
Saskatchewan and 10 in British Columbia; and
-- Large 3D seismic database.
Shellbridge's management will consist of key senior members of the
current Dynamic management team, led by Wayne Babcock. Mr.
Babcock, who founded Dynamic and who has spearheaded Dynamic's
growth over the past 25 years, will assume the role of President
and CEO of Shellbridge. The other senior executive roles will be
assumed by Don Umbach, Vice President and COO, Mike Bardell, CFO,
and David Grohs, Vice President, Production. The Board of
Directors of Shellbridge will be comprised of five members of the
current Dynamic board, including three independent directors and
two directors from management.
Shellbridge will operate 80% of its production base and own an
average working interest of 54% in 127,184 gross acres in three
core properties at Cypress and Orion, British Columbia and
Mantario East, Saskatchewan. The balance of Shellbridge's acreage
is located in the Fraser Valley, British Columbia and southwestern
Saskatchewan.
At Cypress and Orion, Shellbridge will own a significant seismic
database from which an inventory of ten exploration and
development drilling locations has already been identified.
Target formations, all of which are natural gas, are Baldonnel,
Halfway and Charlie Lake at Cypress, and Jean Marie, Bluesky and
Slave Point at Orion. At Mantario East, Shellbridge will have an
inventory of 15 development drilling locations targeting Basal
Manville heavy crude oil. In addition, Shellbridge expects to
complete a facilities upgrade at Mantario, engineered to handle up
to 2,500 barrels of heavy oil per day.
Daily average production of Shellbridge at closing is expected to
be approximately 1.0 mmcf/d of natural gas from the
Cypress/Chowade area and 750 bbls/d of heavy crude oil from the
Mantario East area, for a total of 900 boe/d. Independent reserve
estimates by Sproule attribute proved plus probable reserves of
4.1 billion cubic feet of natural gas and 1,700 mbbls of heavy
crude oil (a total of 2,400 mboe). The pre-tax net present value
discounted 10% of these reserves, accompanied by land, seismic and
working capital is estimated to be at C$30.9 million.
Shellbridge is expected to have working capital in excess of C$6.0
million after completion of a planned private placement of C$4.0
million, which is expected to close concurrently with completion
of the Plan. The 10% net asset value of Shellbridge at closing
will be approximately C$1.20 per share. After giving effect to the
planned private placement and the Plan, it is estimated that
Shellbridge will have approximately 29 million shares outstanding
and no bank debt.
Orion Securities Inc. is acting as financial advisor to Dynamic.
Peters & Co. Limited has provided the Board of Directors of
Dynamic with a fairness opinion stating, subject to review of the
final form of the documents giving effect to the Transaction, that
the consideration to be received by the shareholders of Dynamic
pursuant to the Transaction is fair, from a financial point of
view, to the shareholders of Dynamic.
Sequoia is a growth-orientated oil and natural gas trust with a
high quality, diversified asset base. Sequoia's units commenced
trading on the Toronto Stock Exchange under the symbol "SQE.UN" on
April 26, 2005.
Dynamic Oil & Gas, Inc. is a Canadian based energy company engaged
in the production and exploration of Western Canada's natural gas
and oil reserves. Dynamic's common shares trade on the Toronto
Stock Exchange under the symbol "DOL" and on the NASDAQ under the
symbol "DYOLF".
EASTMAN KODAK: Moody's Downgrades Corporate Family Rating to Ba2
----------------------------------------------------------------
Moody's Investors Service has downgraded Eastman Kodak Company's
corporate family rating to Ba2 from Ba1 and its senior unsecured
rating to Ba3 from Ba1 and has placed both ratings on review for
further possible downgrade.
The downgrades reflect:
* the company's announcement of a sizable restructuring plan;
* an accelerated pace of decline of consumer film sales
(including the beginnings of a decline in certain key
emerging markets such as China);
* disappointing consumer and health group digital sales in the
first half of fiscal 2005 compared to Moody's expectations;
and
* a wide gap of mid year cash flow to the company's full year
expectations.
The two notch downgrade of the senior unsecured notes rating
reflects the likelihood that secured debt will be inserted into
the company's capital structure, thereby effectively subordinating
the existing senior unsecured notes.
On July 20, 2005, the company announced an additional
restructuring action, the charges and employee reductions for
which are expected to be approximately double the company's then
three year restructuring plan announced in January 2004. The
company's cash outflows related to restructuring are now
anticipated to amount to $600 million to $650 million in 2005, up
from $480 million in 2004. The company expects full year 2005
cash flow from operating activities less capital expenditures,
dividends, and net of distributions and investments in
unconsolidated affiliates and asset sales to approximate 2004
levels.
For six months ended June 30, 2005, this cash flow amounted to
negative $555 million, down sizably from negative $179 million
year over year. In its press release dated April 29, Moody's
stated that Kodak's rating could be downgraded if the decline of
the traditional business exceeds expectation or if the company
failed to achieve lower cash restructuring spending.
The continuing review will focus:
* on the performance of the company's digital and traditional
businesses in the latter half of the year;
* its flexibility to manage its traditional cost structure and
exposure to further restructuring;
* its evolving capital structure; and
* liquidity profile.
The company expects its $1.225 billion existing revolving credit
facility will be refinanced with a new secured revolving facility
of between $1 billion and $1.3 billion by this the end of this
summer. Currently, the company has approximately $100 million
available under its existing revolver due to the company's $1
billion drawdown to fund its acquisition of Creo, Inc on June 15,
2005, which the company expects to term out in the near future.
Ratings on review for possible downgrade:
* Corporate Family Rating (formerly senior implied rating)
at Ba2
* Senior Unsecured Rating at Ba3
Based in Rochester, New York, Eastman Kodak Company is a worldwide
vendor of imaging products and services.
EASTMAN KODAK: Liquidity Concerns Prompt S&P to Pare Ratings
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Eastman Kodak Co. to 'BB'
from 'BB+', and placed the ratings on CreditWatch with negative
implications. The Rochester, New York-based imaging company had
$3.7 billion in debt as of June 30, 2005.
"The rating actions are based on significant concerns about
Kodak's current liquidity, and about its profit and cash flow
prospects as traditional consumer imaging sales continue to fall
faster than expected," said Standard & Poor's credit analyst Steve
Wilkinson.
Kodak's current liquidity is, in Standard & Poor's view,
inadequate given its:
* limited committed back up credit facilities,
* moderate cash balances of $553 million at June 30, 2005,
* uncertain cash flow prospects, and
* near-term debt maturities.
Kodak's $1 billion, 364-day revolving credit facility expired on
July 8, 2005; and its $1.225 billion, five-year revolving
facility, which matures in July 2006, had only about $90 million
available at June 30, 2005, after accounting for borrowings and
letters of credit. Also, Kodak's undrawn $200 million credit
facility may no longer be a viable form of backup liquidity
because the facility can be canceled or called into default 30
days after today's lowering of the credit ratings.
Kodak's discretionary cash flow in the first half of 2005 was
poor, with a deficit of $640 million compared with a $180 million
deficit in the same period last year, and is only modestly
positive on a trailing 12 months' basis, at $70 million or about
5% of EBITDA.
Kodak hopes to generate about $1 billion in cash in the second
half of the year through:
* more significant traditional inventory reductions,
* lower capital spending, and
* some asset sales.
While Kodak's cash flow is typically strong in the second half,
Standard & Poor's is uncertain if Kodak can reach this target
given its business challenges, and notes that inventory
liquidations and asset sales are not recurring.
Kodak plans to improve its backup liquidity by refinancing about
$1 billion in revolving credit borrowings and extending its five-
year revolving credit facility. This is critical, given its
limited backup liquidity and significant debt maturities over the
next year. Bonds totaling $100 million are due in November 2005,
a $130 million Kodak Polychrome Graphics LLC revolving credit
facility matures in December 2005, $500 million in bonds come due
June 15, 2006, $100 million in bank debt in China matures over the
next year, and the company's remaining credit facilities are
scheduled to mature next year. It will also be important that any
new financing does not include any ratings triggers or overly
restrictive covenants that might preclude borrowing access or
trigger a covenant default.
The rating actions also reflect:
* increased concern about Kodak's profitability and cash flow
resulting from the accelerating decline of traditional
consumer imaging sales,
* an increased reliance on unproven digital businesses,
* persistent integration and restructuring risks from the
transition of its businesses to digital technologies, and
* elevated debt levels.
These risks are only partially offset by:
* the company's leading position in the conventional markets
for consumer and entertainment imaging,
* its profitable position in conventional and digital health
imaging, and
* progress in establishing solid positions in certain emerging
digital imaging markets for consumers and graphics
communications firms.
Ratings are vulnerable to further downgrade:
* if Kodak's securitization facility is called in default,
* if the potential rating trigger is not removed from this
facility within 30 days, or
* if the company does not maintain at least $750 million in
readily available liquidity at all times.
EASTMAN KODAK: Fitch Lowers Rating on $2.4 Billion Debt to BB
-------------------------------------------------------------
Fitch Ratings has downgraded Eastman Kodak Company's senior
unsecured debt to 'BB' from 'BB+'. The Rating Outlook remains
Negative. Approximately $2.4 billion of debt is affected by
Fitch's action.
The rating downgrade reflects the company's lower financial
flexibility and liquidity, the increased erosion for the
traditional film business, causing further restructuring efforts,
increasing volatility for the company's financial and operating
performance, and Fitch believes Kodak remains susceptible to
execution risks related to its recent acquisitions and continued
pricing pressure.
Also factored into the downgrade is Fitch's expectation that Kodak
will establish a new bank credit agreement and possibly issue long
term debt, both of which could be secured by receivables and
inventories or other assets, subordinating the current senior
unsecured bondholders. The Negative Outlook continues to reflect
the timing and uncertainty regarding the stability of earnings and
digital profitability and the financial impact that will result
from restructuring costs.
Kodak's liquidity and financial flexibility continues to be
pressured with cash declining to $553 million as of June 30, 2005,
compared with $1.3 billion at the end of fiscal 2004; however,
Kodak has historically experienced seasonality for cash flow and
is expected to generate cash in the second half of the fiscal
year.
Minimal capacity remains on the company's $1.225 billion revolving
bank credit facility maturing in July 2006 as the company utilized
$1 billion to complete the acquisition of Creo Inc. on June 15,
2005. Kodak opted not to renew its $1 billion 364-day program,
which expired earlier in July 2005. Kodak has stated that it
expects to refinance the bank facility (in the $1.0 billion-$1.3
billion range) and issue term debt in the near term, both of which
will likely be secured. Importantly, the existing senior
unsecured bond indentures state that Kodak is prohibited, except
in certain specific circumstances, such as assuming existing
mortgages from an acquired company, from issuing debt secured by
any principal property of Kodak, which is defined as any
manufacturing plant or facility owned by Kodak that is located
within the continental U.S. and is materially important to Kodak,
without ratably securing existing outstanding debt securities.
However, Kodak is permitted to issue secured debt without ratably
securing existing outstanding unsecured debt if the aggregate
amount of all secured debt issued does not exceed 10% of
consolidated net tangible assets. Based on Fitch's estimates,
consolidated net tangible assets as defined totaled $8.3 billion
as of year-end 2004, implying $830 million of secured debt could
be issued without ratably securing the existing senior unsecured
debt. However, the amount of secured debt issued by Kodak may
exceed $830 million if it is secured by the company's substantial
manufacturing facilities outside the continental U.S. or other
assets, such as inventories and accounts receivables, which
totaled $4.5 billion, as of June 30, 2005.
Annual free cash flow after dividends for the first half of fiscal
2005, ending June 30, 2005, was a negative $640 million, compared
with a negative $145 million in the first half of 2004. Kodak
also has an undrawn $200 million accounts receivable
securitization program, which expires in March 2006. The
securitization program contains a rating trigger that would make
all of the program's secured borrowings immediately due and
payable if Kodak's long-term rating falls below the 'BB' level for
a period of 30 days.
Additionally, the company may be required to increase the dollar
amount of its letter of credits or other financial support up to
an additional $100 million if Kodak's long-term credit rating
falls below 'BBB-'. Despite the decline in Kodak's rating below
'BBB-', the company has not yet been requested to materially
increase its letters of credit or other financial support, as of
March 31, 2005.
For the traditional consumer film business, management now expects
worldwide annual consumer film industry volume declines between
23%-27% in 2005 as a result of faster-than-expected digital
substitution in emerging markets, compared with a previously
expected decline of 20%, while a 30% reduction is still expected
in the U.S. Fitch still believes that there is a high probability
that film volumes could decline more significantly in 2005,
resulting in lower profitability from the traditional business,
challenging the company to achieve its operating targets.
As a result of its further reduction in projected worldwide
consumer film volumes for 2005, Kodak announced more aggressive
restructuring efforts, which extends the scope and duration of
Kodak's three-year program announced in January 2004. Kodak's
revised restructuring plan includes additional headcount
reductions of up to 10,000 and accelerated facilities closures
designed to reduce traditional manufacturing infrastructure to $1
billion from $2.9 billion as of January 2004.
The restructuring program is now expected to be completed in mid-
2007 versus the end of 2006. The total charges under the program
will increase to a range of $2.7 billion to $3.0 billion, up from
$1.3 billion to $1.7 billion previously. Total charges through
June 30, 2005 under the program totaled $1.4 billion, with $1.3
billion to $1.6 billion in restructuring charges over the next two
years. Incremental cash charges and cost savings associated with
the six-month program extension are expected to total $470 million
and $800 million, respectively. Total cash payments in 2005 for
restructuring range from $600 million to $650 million in 2005,
compared with previous expectations of $400 million to $500
million and an actual cash outlay of $480 million in 2004. Kodak
has implemented several significant restructuring programs over
the past three years, closing certain photo-finishing operations
in the U.S. and internationally, and reducing both manufacturing
capacity and administrative costs in its photographic operations
and other areas of its business.
Fitch believes credit metrics will be strained for the second half
of 2005 due to a combination of higher debt levels from Kodak's
debt-financed acquisitions of Kodak Polychrome Graphics and Creo,
and pressured operating earnings and free cash flow. Leverage, as
defined by total debt to EBITDA, increased to approximately 2
times (x) for the latest 12 months ended June 30, 2005, from 1.2x
at year-end 2004. Interest coverage remains solid at greater than
10x, but Fitch expects this metric will worsen as the company is
expected to have higher interest expense from any new secured debt
financings. The company's debt maturity schedule is manageable,
with approximately $469 million of debt coming due in 2005 and
$509 million in June 2006.
EPIC DESIGN: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Epic Design & Construction Company, Inc.
1078 Taft Street
Rockville, Maryland 20850
Bankruptcy Case No.: 05-26489
Type of Business: The Debtor is a Purofirst franchisee.
Chapter 11 Petition Date: July 21, 2005
Court: District of Maryland (Greenbelt)
Judge: Paul Mannes
Debtor's Counsel: Alan S. Kerxton, Esq.
Stein, Sperling, Bennett, De Jong,
Driscoll & Greenfeig, P.C.
25 West Middle Lane
Rockville, Maryland 20850
Tel: (301) 838-3213
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Robert & Nina Schattner Loan dated 3/20/03 $1,803,431
7024 Endicott Court
Bethesda, MD 20817
Robert & Nina Schattner Payment to Greater $1,000,000
7024 Endicott Court Atlantic Bank on
Bethesda, MD 20817 guarantee
Elsie G. Schattner 9/16/04 Lien on all $500,000
Trustee assets
[Address not provided]
PuroSystems Franchise fees $300,879
P.O. Box 534192
Atlanta, GA 30353
Home Depot-Proxy Trade debt $78,714
R.C.C.& Partners, Inc. Trade debt $70,896
Lowes Trade debt $56,850
Reico Kitchen & Bath Trade debt $49,186
Coastal Coverings, Inc. Trade debt $47,564
Limbach Service Division Trade debt $40,342
Floor U, Inc. Trade debt $38,054
Smith, Lease & Goldstein, Legal fees $31,192
LLC
Atlantic Duct Cleaning, Inc. Trade debt $29,795
Stand By Carpet Cleaning, Trade debt $29,514
Inc.
Rollin Supply Trade debt $25,488
H & W Contracting, Inc. Trade debt; $25,000
Judgment 5/11/05
Investors Taft Steel Ltd. Real property lease $20,746
Partnership
Watkins Meegan Drury & Co. Accounting fees $20,709
Nextel Communications Trade debt $20,278
PuroSystem Products Trade debt $20,227
GARDEN RIDGE: Sues Insurers for Breach of Contract & Warranty
-------------------------------------------------------------
Garden Ridge Corporation and its debtor-affiliates filed a
complaint in the U.S. Bankruptcy Court for the District of
Delaware against Employers Insurance of Wausau A Mutual Company
and Wausau Insurance Companies. The Debtors accuse the insurers
with breach of contract and of warranty pursuant to Section 5-110
of the Uniform Commercial Code. The Debtors want the Court to
disallow Wausau's claims or have them estimated at a much lower
figure.
Nature of Conflict
Between 1994 and 2002, Wausau provided insurance for workers'
compensation claims asserted against the Debtors. Under the
policies, Wausau bears the risk of loss for all covered workers
compensation claims. The insurance also called for Wausau to
adjust, review and negotiate claims, and pay medical bills
associated with the claims.
While the insurers bear most of the risks involved under the
policies, the Debtors were also required to reimburse a portion of
the expenditures based on per occurrence limits and various
aggregate stop loss limits. The cap for every worker was from
$150,000 to $250,000. The cap for all workers was from $500,000
to $2,750,000.
The Debtors' obligations under the policies were secured by a
$1.4 million letter of credit with the Bank of America.
Two months after the Debtors' bankruptcy filing, Wausau drew the
entire $1.4 million Letter of Credit from the Bank. The Debtors
contend that Wausau knew or should have known that it was not
entitled to the entire amount of the L/C.
On March 30, 2004, Wausau filed an unsecured $5,833,513 claim
against the Debtors. Garden Ridge asserts that the insurers
aren't owed anything. In fact, the Debtors say, Wausau is
wrongfully holding the estates' assets.
Debtors' Estimation of
Obligations Under the Policies
The Debtors tell the Court that there are currently 23 open
workers compensation claims under the policies. They estimated
that the aggregate future reimbursement obligation to Wausau
doesn't exceed $122,288. Aside from this, the Debtors disclose
that between December 2003 and May 2005, they owe Wausau $491,290.
The Debtors believe their obligations under the policies total
$613,578.
Headquartered in Houston, Texas, Garden Ridge Corporation --
http://www.gardenridge.com/-- is a megastore home decor retailer
that offers decorating accessories like baskets, candles, crafts,
home accents, housewares, party supplies, pictures and frames,
pottery, seasonal items, and silk and dried flowers. The Company
and its debtor-affiliates filed for chapter 11 protection on
February 2, 2004 (Bankr. D. Del. Case No. 04-10324). Joseph M.
Barry, Esq., at Young Conaway Stargatt & Taylor LLP, represents
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed estimated
debts and assets of over $100 million.
HUNTSMAN INT'L: Moody's Rates New $2.6 Billion Facilities at Ba3
----------------------------------------------------------------
Moody's Investors Service assigned Ba3 ratings to Huntsman
International LLC's (HI) $2.6 billion proposed guaranteed senior
secured credit facilities. The company's outlook is positive.
Huntsman Corp. recently proposed to effect an all-stock merger of
two of its wholly owned subsidiaries, Huntsman LLC (HLLC) and HI
in which it is contemplated that HLLC would merge with and into
HI, with HI being the surviving entity and holding the combined
assets and liabilities of HI and HLLC. Proceeds of the financing
will be used to consolidate the currently outstanding bank
facilities at HI and HLLC. The new HI credit facilities along
with the recently announced proposed merger of HI will improve
HI's financial flexibility by providing additional room under the
financial covenants.
The proposed term loan B also provides HI with the ability to
increase the size of the facility, subject to certain conditions,
by $500 million for permitted acquisitions, capital investments
and refinancing, and $300 million to accommodate a merger or other
transaction as a result of which Huntsman Advanced Materials LLC
is merged into or becomes a subsidiary of HI. The assigned
ratings are subject to a review of the final documentation for the
proposed bank agreements. Upon the completion of the merger and
the proposed bank facility the currently existing secured debt due
2010 at Huntsman LLC would likely be raised to Ba3 from B1 and the
existing bank facility ratings at HI and HLLC will be withdrawn.
Ratings Assigned:
Huntsman International LLC:
* Proposed guaranteed senior secured revolving credit facility,
$600 million due 2010 -- Ba3
* Proposed guaranteed senior secured term loan B, $2.0 billion
due 2012 -- Ba3
Following the merger, HI will be the direct obligor of all of HI
and HLLC existing debt securities and the proposed credit
facilities. HI's subsidiaries that currently guarantee HI's
existing credit facilities and debt securities will provide
guarantees to the new HI proposed credit facility on a ranking
equal to the guarantees provided today, and HLLC's subsidiaries
that currently guarantee HLLC's existing credit facilities and
debt securities will provide guarantees to the new HI proposed
credit facility on a ranking equal to the guarantees provided
today.
The proposed credit facility will be secured on a first priority
basis by substantially all of the collateral that currently
secures each of the HI credit facility and the HLLC term and
revolving credit facilities and will be guaranteed by each of the
subsidiaries of the Company that are currently guarantors under
the credit facilities of HI or HLLC. The proposed credit
facilities will also be secured by first priority liens on all
material existing and after-acquired real property fee and
leasehold interests of HI.
The notching of the senior secured credit facilities to Ba3 is
based on Moody's assessment of the value of the assets relative to
the amount of secured debt, as well as the limited amount of debt
at the company's international operating subsidiaries that are
non-guarantors.
Huntsman International LLC is a global manufacturer of
differentiated and commodity chemical products. Huntsman's
products are used in a wide range of applications. HI's business
is organized around four segments:
* Polyurethanes,
* Performance Products,
* Pigments, and
* Base Chemicals.
HI had revenues for the year ended December 31, 2004 of $6.5
billion.
IAP WORLDWIDE: Moody's Rates $435 Million Facilities at Low-Bs
--------------------------------------------------------------
Moody's Investors Service assigned these ratings to IAP
Worldwide Services, Incorporated's existing $435 million senior
secured credit facilities:
-- $75 million senior secured revolver due 2010, rated B1
-- $255 million first lien term loan, rated B1
-- $105 million second lien term loan, rated B2
-- Corporate Family rating, B1
The outlook is stable.
IAP Worldwide Services, Inc. utilized the $255 million first lien
term loan and the $105 million second lien term loan to fund the
March 2005 acquisition of Johnson Controls World Services, Inc.
for an aggregate purchase price of $260 million.
In addition, funds were allocated to:
* repayment of IAP seller notes ($8 million);
* a distribution to shareholders ($29 million);
* funding of an escrow account ($50 million); and
* payment of $13 million in fees and expenses.
The funds in escrow are to be released to the financial sponsor
upon certain conditions (including assignment of these ratings).
The $75 million revolver was, and remains, undrawn.
The ratings are constrained by:
* IAP's modest free cash flow;
* significant leverage; and
* risk associated with significant revenue generation from
politically unstable regions of the world.
The company also derives substantially all of its revenues from
the US government, and about 31% of revenues from one contract
with the US Air Force (albeit with multiple task orders), and is
therefore subject to potential changes in government spending
policies and programs. Free cash flow to debt is expected to be
in the 5%-10% range during the intermediate term. Financial
leverage is significant, with total debt to EBITDA of about 4.3x
for the twelve months ended May 31, 2005. The ratings also
reflect the execution risk involved with IAP's acquisition of the
substantially larger JCWS.
The ratings benefit from IAP's position as a leading provider of
support services to the US government, with over $1 billion
revenue and operating margins that are expected to be on the order
of 9% or better through the intermediate term. Fixed price
contracts account for about 48% of revenues and generally allow
for greater profitability than either cost-plus contracts (41%),
or time & materials contracts (11%). IAP's operations are
characterized by a significant component of variable cost, which
should enable the firm to adjust its cost base down in the event
of contract cancellations (which are not anticipated). IAP has
generally exhibited a very strong win rate on rebid contracts, and
has continued to expand its backlog from $1.3 billion at year-end
2004 to a current level of about $1.8 billion.
The ratings also benefit from:
* IAP's diverse base of government clients;
* broad service offering; and
* ability to serve customers both domestically and
internationally.
IAP derives about:
* 31% from of its revenues from the US Army;
* 31% from the Air Force;
* 13% from the Navy; and
* 19% from civilian agencies.
In 2004, pro forma for the combination with JCWS, IAP operated
under 47 contracts and over 2,400 task orders.
By geography, about:
* 48% of revenues are derived from the United States;
* 41% from Kuwait, Iraq, and Afghanistan; and
* 11% from other regions.
At the time of the acquisition, IAP exhibited annual revenue of
about $265 million that was substantially all related to supplying
contingency services to the US government. The acquisition of
JCWS ($774 million in annual revenue) nearly quadrupled IAP's
revenue base and expanded the product offering to include
facilities management and technical services, which are
characterized by relatively stable business profiles compared with
contingency support. Contingency support operations include
supplying services to military forces in Iraq, Afghanistan,
Bosnia, and other locations.
Facilities Management (29% of revenue) includes managing
operations and providing maintenance services to US military bases
and other government facilities. Contingency support (about 58%
of revenues) provides rapid response support of US military
deployments, as well as disaster relief in conjunction with
civilian agencies. Technical services include supplying temporary
staffing to government agencies, and involve paralegal, general
clerical, and materials handling personnel.
The stable ratings outlook reflects the expected continued growth
in demand for outsourced services by the federal government and
the belief that IAP is competitively positioned to benefit from
this growth. Moody's expects IAP to grow its revenues, improve
operating margins, and utilize free cash flows to reduce
borrowings under its secured credit facilities.
The ratings or outlook could be raised, if the company experiences
stronger than expected revenue growth and improved margins and
free cash flow to debt moves up to a range above 10%, while total
debt to EBITDA moves down to about 3.0x.
The ratings or outlook could be negatively impacted, if:
* IAP deviates from its path of leverage reduction;
* or performance otherwise suffers due to loss of contracts;
* or inability to recompete on existing contracts.
The dominance of the first lien debt in the capital structure
precludes notching of the first lien debt above the B1 corporate
family rating. The B2 rating on the second lien term loan
reflects the effective subordination of the second lien loan and
its lower expected recovery rate, as well as the overall good
enterprise value coverage of the secured debt in a distressed
scenario.
The senior credit facilities are unconditionally guaranteed on a
senior secured basis by all of the company's subsidiaries. The
$75 million revolver and $255 million first lien term loan are
secured by a first priority lien on substantially all of the
assets, while the $105 million second lien term loan is secured by
a second priority lien on substantially all of the assets.
IAP Worldwide Services, Inc., headquartered in Irmo, South
Carolina, is a leading provider of facilities management,
contingency support, and technical services to U.S. military and
government agencies.
IAP is owned by:
* Cerberus Capital Management LP (74%);
* the original founders of IAP Worldwide (25%); and
* others (1%).
Cerberus Capital Management acquired its ownership interest in IAP
in May 2004. IAP's annual pro forma revenue in 2004 amounted to
over $1 billion.
INDUSTRIAL ENTERPRISES: Closes $5 Million Round of New Financing
----------------------------------------------------------------
Industrial Enterprises of America, Inc. (Pink Sheets: ILNP)
successfully closed a significant round of financing, yielding
gross proceeds to the Company of approximately $5 Million over the
last 120 days. The capital raise consisted of equity and
convertible debentures to accredited investors and institutions,
and was substantially over-subscribed. ILNP intends to use the
acquired capital to fund the acquisition of Unifide, and to
reinvest in its existing operations to stimulate further organic
growth.
Industrial Enterprises of America CEO, Crawford Shaw, stated,
"[Thurs]day's announcement provides ILNP with the balance sheet
strength and working capital necessary for the Company to pursue
its aggressive business plan. It also provides the Company with
the cash needed to repay debt related to our previously announced
acquisition of Unifide Industries. We are pleased with the
enthusiasm and support with which this private placement was
received by institutional investors.
"We enter the fiscal year strongly capitalized with significant
cash on our balance sheet," Mr. Shaw continued. "This should
allow us to significantly increase the sales volume at our
Lakewood, New Jersey facility by installing an additional
packaging line as well as afford us the flexibility to be
opportunistic should the right acquisition come along."
Industrial Enterprises of America, Inc. --
http://www.TheOtherGas.com/-- "ILNP" specializes in converting
hydroflurocarbon gases, R134a and R152a, into branded and private
label refrigerant and propellant products. Headquartered in
Houston, Texas, with manufacturing and packaging facilities in New
Jersey, ILNP's products serve a variety of industries.
* * *
Going Concern Doubt
In its Form 10-Q for the quarterly period ended March 31, 2005,
the Company has suffered recurring losses from operations and its
total liabilities exceed its total assets. This raises
substantial doubt about the Company's ability to continue as a
going concern.
At March 31, 2005, Industrial Enterprises' total liabilities
exceed its total assets by $1,681,900.
INTEGRATED HEALTH: Wants to Reserve Amounts for 13 Disputed Claims
------------------------------------------------------------------
IHS Liquidating LLC asks the U.S. Bankruptcy Court for the
District of Delaware to establish reserve amounts for 13 disputed
claims.
Matthew Marcos, Executive Director of Eureka Management LLC, the
Liquidating Manager of IHS Liquidating, relates that the IHS
Debtors' Plan of Reorganization contemplates that the Court may
either estimate disputed claims or establish appropriate reserves
on account of those claims in the event resolution of the disputed
claims would unduly delay distributions to other creditors.
Mr. Marcos informs the Court that it is unclear when the Disputed
Claims will become fully liquidated. IHS Liquidating intends to
commence initial distribution to holders of Allowed General
Unsecured Claims and, in the absence of an agreement with the
claimants as to an appropriate reserve amount or a Court order,
IHS Liquidating will not be able to calculate pro rata
distributions to the holders of Allowed General Unsecured Claims.
Majority of the Disputed Claims are predicated on wrongful death,
personal injury and other tort lawsuits, most of which were
asserted by the estate of deceased persons who at one time had
received care at long-term facilities that were owned, leased or
operated by the Debtors. Under the Plan, Tort Claims for which
proofs of claim have been filed are deemed to constitute Disputed
Claims until they are liquidated. Liquidation of Tort Claims may
occur in any court or tribunal of competent jurisdiction. Once
liquidated, Tort Claims are to be satisfied by any available
insurance. To the extent insurance is not available, the claimant
is entitled to a General Unsecured Claim in the amount of the
unpaid portion of the Tort Claim.
Each of the Tort Claims is subject to a pending lawsuit for which
insurance coverage exists to satisfy any adverse judgment. His
Liquidating believes that no reserves for the claims are
necessary.
However, assuming that the available insurance proceeds are
depleted before the claims are adjudicated, IHS Liquidating
believes that a $250,000 reserve for each Tort Claim is an
equitable interim resolution.
The Tort Claims are:
Claim No. Claimant Asserted Amount
--------- -------- ---------------
13410 Anthony, William unliquidated
3432 Attaway, Georgia unliquidated
13304 Bennett, Gary unliquidated
13692 Bray, Naomi at least $2,000,000
14004 Cooper, Charles Sr. unliquidated
7435 Evans, Sarah unliquidated
5359 Estate of Jose Maes unliquidated
10852 Mazerole, Levina unliquidated
3869 Pissanos, Mildred unliquidated
1009 Reed, Kareem at least $50,000
IHS Liquidating proposes to reserve $26,715,261 for Claim No.
2316 filed by the Internal Revenue Service. The IRS asserted a
general unsecured claim, which is the subject of a pending
objection and a lawsuit in another jurisdiction. The IRS
informally stated that its Claim is entitled to priority status.
Mr. Marcos says the Debtors' claims agent has no record of an
amendment to the Claim and the IRS has not produced any evidence
of an amendment. Given that the face amount of the Claim exceeds
$26,000,000, Mr. Marcos notes that any obligation of the estate to
reserve for the Claim as a priority claim entitled to payment in
full would effectively prevent IHS Liquidating from making any
distributions to unsecured creditors until after the Disputed
Claim is either expunged or reduced to judgment.
Claim No. 8897 filed by James Hough is the subject of a pending
objection. The Claim contains a liquidated component for
$1,361,264, and an unliquidated and unsubstantiated component for
attorney's fees. Unless Mr. Hough comes forth with a
quantification of the unliquidated portion, IHS Liquidating finds
it appropriate to treat the entire claim as a disputed general
unsecured claim for $1,361,264.
IHS Liquidating expects Claim No. 12610 filed by Kenneth Bachman
to be ultimately dismissed on appeal. However, while the appeal
is pending, IHS Liquidating suggests that the Tort Claim be
treated as a disputed general unsecured claim for $500,000.
U.S. Government Objects
On behalf of the IRS, Richard G. Andrews, Esq., Acting United
States Attorney, tells the Court that Claim No. 2316 was
originally filed as a general unsecured claim that was amended and
replaced by a priority claim dated June 20, 2002, for the same
liabilities and amounts.
Accordingly, the United States asks the Court to treat the
Amended Claim as a Disputed Priority Claim for the purpose of
setting up a reserve.
Integrated Health Services, Inc. -- http://www.ihs-inc.com/--
operated local and regional networks that provide post-acute care
from 1,500 locations in 47 states. The Company and its
437 debtor-affiliates filed for chapter 11 protection on
February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical
Corporation and its direct and indirect debtor-subsidiaries broke
away from IHS and emerged under their own plan of reorganization
on March 26, 2002. Abe Briarwood Corp. bought substantially all
of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan
on May 12, 2003, and that plan took effect September 9, 2003.
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP,
represent the IHS Debtors. On September 30, 1999, the Debtors
listed $3,595,614,000 in consolidated assets and $4,123,876,000 in
consolidated debts. (Integrated Health Bankruptcy News, Issue
No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000)
IT'S CHRISTMAS: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: It's Christmas Morning
5450 Trabuco Road
Irvine, California 92620
Bankruptcy Case No.: 05-15024
Chapter 11 Petition Date: July 20, 2005
Court: Central District of California (Santa Ana)
Judge: John E. Ryan
Debtor's Counsel: Mark Bradshaw, Esq.
Marshack Shulman Hodges & Bastian LLP
26632 Towne Centre Drive, Suite 300
Foothill Ranch, California 92610-2808
Tel: (949) 340-3400
Total Assets: $7,627,100
Total Debts: $21,758
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Reish Luftman Reicher & Legal $2,000
Cohen
11755 Wilshire Boulevard
10th Floor
Los Angeles, CA 90025
Farmers Insurance Insurance $1,500
c/o John Colby
3529 Old Conejo Road,
Suite 111
Newbury Park, CA 91320
Los Angeles Dept. of Water Utility $300
& Power
P.O. Box 30808
Los Angeles, CA 90030
South Coast Water District Utility $200
Southern California Edison Utility $150
Co.
Zoran Vujie Lawsuit pending in Unknown
Los Angeles County
Superior Court:
Estate of Alberta
Patricia McNamara
Case No. BP088773
Debra A. Barker Lawsuit pending in Unknown
Los Angeles County
Superior Court:
Debbie Barker vs.
It's Christmas Morning
et al. Case No.
YC048242
Trevor Brazier/Kristen Bird Lawsuit pending in the Unknown
Los Angeles County
Superior Court:
It's Christmas Morning,
et al vs. Trevor Brazier
et al. Case No. BC308966
Norman Anderson Lawsuit pending in the Unknown
San Diego County
Superior Court:
Norman Anderson vs.
It's Christmas Morning,
et al. Case No.
GN035189
Arthur Cole Lawsuit pending in the Unknown
Los Angeles County
Superior Court: Cutter,
et al. vs. Cole et al.
Case No. BC304544
JERNBERG INDUSTRIES: U.S. Trustee Picks 7-Member Creditor Panel
---------------------------------------------------------------
The United States Trustee for Region 11 appointed seven creditors
to serve on the Official Committee of Unsecured Creditors in
Jernberg Industries, Inc., and its debtor-affiliates' chapter 11
cases:
1. Republic Engineered Products, Inc.
Attn: George E. Strickler
3770 Embassy Parkway
Akron, Ohio 44333
2. Fuji Machine
Attn: Rein Krammer, Gary Santella & Masuda Funai et al.
171 Corporate Woods Parkway
Vernon Hills, Illinois 60061
3. Mac Steel
Attn: Stefan J. Prociv
One Jackson Square
Jackson, Michigan 49201
4. Intermet Decatur Foundry C/O Intermet Corporation
Attn: Gregory Wahowiak
5445 Corporate Drive, Suite 200
Troy, Michigan 48098
5. DoALL Company
Attn: Charles M. Thomson
254 N Laurel Avenue
Des Plaines, Illinois 60016
6. Wisconsin Steel & Tube Corp.
Attn: Michael F. Poehlmann
1555 N Mayfair Road
Milwaukee, Wisconsin 53226
7. A. Finkl & Sons Co.
Attn: Harry M. Kenney
2011 N Southport
Chicago, Illinois 60614
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Chicago, Illinois, Jernberg Industries, Inc., --
http://www.jernberg.com/-- is a press forging company that
manufactures formed and machined products. The Company and its
debtor-affiliates filed for chapter 11 protection on June 29, 2005
(Bankr. N.D. Ill. Case No. 05-25909). Jerry L. Switzer, Jr.,
Esq., at Jenner & Block LLP represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they estimated assets and debts of $50 million to
$100 million.
JERNBERG INDUSTRIES: Panel Taps Sugar Friedberg as Counsel
----------------------------------------------------------
The Official Committee of Unsecured Creditors of Jernberg
Industries, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Northern District of Illinois for
permission to employ Sugar Friedberg & Felsenthal, LLP as its
counsel.
Sugar Friedberg will:
a) consult with the Debtors' professionals or representatives
concerning the administration of their chapter 11 cases and
prepare and review pleadings, motions and correspondence;
b) appear at and be involved in proceedings held before the
Bankruptcy Court and examine and investigate claims asserted
against the Debtors;
c) provide legal counsel to the Committee in its investigation
of the acts, conduct, assets, liabilities and financial
condition of the Debtors, the operation of the Debtors'
businesses, and any other matters relevant to these cases:
d) confer and negotiate with Debtors, other parties in
interest, and their respective attorneys and other
professionals concerning the Debtors' businesses and
properties, a proposed chapter 11 plan, claims, liens and
other aspects of their chapter 11 cases;
e) confer and assist the Debtors in the sale of their assets,
negotiate with the Debtors, and other parties-in-interest
involved in the sale of their assets, the allocations of the
purchase price for that sale, and the deposition of the
proceeds from that sale;
f) examine and prosecute preference claims, fraudulent
conveyance claims and other claims under Sections 544
through 550 of the Bankruptcy Code; and
g) provide all other legal services as the Committee may
request from time to time.
Paula K. Jacobi, Esq., and Andrew J. Abrams, Esq., are the lead
attorneys for the Committee. Ms. Jacobi charges $375 per hour for
her services, while Mr. Abrams charges $250 per hour.
Ms. Jacobi reports Sugar Friedberg's professionals bill:
Designation Hourly Rate
----------- -----------
Partners $315 - $460
Associates $220 - $245
Paralegals $125 - $135
Sugar Friedberg assures the Court that it does not represent any
interest materially adverse to the Committee, the Debtors or their
estates.
Headquartered in Chicago, Illinois, Jernberg Industries, Inc., --
http://www.jernberg.com/-- is a press forging company that
manufactures formed and machined products. The Company and its
debtor-affiliates filed for chapter 11 protection on June 29, 2005
(Bankr. N.D. Ill. Case No. 05-25909). Jerry L. Switzer, Jr.,
Esq., at Jenner & Block LLP represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they estimated assets and debts of $50 million to
$100 million.
JVC CONTRACTING: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: JVC Contracting, Inc.
601 Clovermill Road
Exton, Pennsylvania 19341
Bankruptcy Case No.: 05-19954
Type of Business: The Debtor is a paving contractor.
Chapter 11 Petition Date: July 22, 2005
Court: Eastern District of Pennsylvania (Philadelphia)
Debtor's Counsel: Allen B. Dubroff, Esq.
Jaffe, Friedman, Schuman, Nemeroff,
Applebaum & McCaffery, P.C.
7848 Old York Road, Suite 200
Elkins Park, Pennsylvania 19027
Tel: (215) 635-7200
Total Assets: $5,405,000
Total Debts: $2,900,000
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
St. Paul/Travelers Surety $715,000
111 Schilling Road
Hunt Valley, MD 21031
Pa Heavy & Highway Gem Group $466,000
1200 Three Gateway Center
Pittsburgh, PA 15222
Liberty Mutual Surety $206,850
450 Plymouth Road
Plymouth Meeting, PA 19462
Chuck Powell $72,000
PA Unemployment Compensation $67,005
Liberty Mutual Surety $61,302
Elan Financial $54,000
PA Department of Revenue $46,441
Sanatoga Blacktop $42,000
Interstate Safety Systems $35,000
Powell Trachtman Logan Carrle & Lombardo $30,000
Highland Orchards $21,000
American Express $18,000
CGU Insurance $17,000
Rock Canyon $16,000
Shepherd Agency $13,000
Giles & Ransome-Parts $13,000
Evans Mette $10,000
Atlanta Equipment $9,295
McNees, Wallace $7,500
MCLEODUSA INC: Lenders Extend Forbearance Agreement to Sept. 9
--------------------------------------------------------------
McLeodUSA Incorporated, one of the nation's largest independent,
competitive telecommunications services providers, disclosed that
the Company and its lenders have agreed to extend until Sept. 9,
2005, the forbearance agreement initially entered into on
March 16, 2005, and previously extended to July 21, 2005.
Under the terms of the forbearance agreement, the lenders continue
to agree not to take any action as a result of non-payment by the
Company of certain principal and interest payments due on or
before Sept. 9, 2005, or any related events of default that occur
through Sept. 9, 2005.
At June 21, 2005, McLeodUSA's secured lenders are:
* JPMORGAN CHASE BANK, N.A., as Administrative Agent
* Banc of America Strategic Solutions, Inc.
* Bayerische Hypo-und Vereinsbank
* Fidelity Management & Research Co., on behalf of
* Jefferies & Co., Inc.
* JPMorgan Chase Bank NA
* Wayzata Recovery Fund, LLC
* Sapphire Special Opportunities Fund, LLC
* Wayland Distressed Opportunities Fund I-A, LLC
* Wayland Distressed Opportunities Fund I-B, LLC
* Wayland Distressed Opportunities Fund I-C, LLC
* Wayland Recovery Fund, LLC
* Millennium Partners, L.P.
As previously announced, the Company has been exploring a capital
restructuring with its lenders while also attempting to identify a
potential strategic partner or buyer. At this time, the Company
has concluded that there is not an acceptable strategic partner or
buyer and is proceeding to work with its lenders to complete a
capital restructuring where its lenders would convert a
substantial portion of their debt to equity and become the
majority stockholders of the Company. The parties agreed to
extend the forbearance agreement through Sept. 9, 2005 to further
prepare for the capital restructuring. There can be no assurances
that the Company will be able to reach an agreement with its
lenders regarding a capital restructuring on terms and conditions
acceptable to the Company prior to the end of the forbearance
period.
While the Company continues to explore with its lenders a capital
restructuring, none of the alternatives presented to date have
suggested that there will be any recovery for the Company's
current preferred stock or common stockholders. Accordingly, the
Company does not expect its preferred stock or common stock to
receive any recovery in a capital restructuring.
The Company believes that by not making principal and interest
payments on the credit facilities, cash on hand together with cash
flows from operations are sufficient to maintain operations in the
ordinary course without disruption of services. The Company does
not expect the exploration of the capital restructuring to
negatively impact its customers or suppliers. The Company remains
committed to continuing to provide the highest level of service to
its customers and to maintaining its strong supplier
relationships.
Headquartered in Cedar Rapids, Iowa, McLeodUSA Incorporated
provide integrated communications services, including local
services, in 25 Midwest, Southwest, Northwest and Rocky Mountain
states. The Company filed for chapter 11 protection on Jan. 30,
2002 (Bankr. D. Del. Case No. 02-10288). Eric M. Davis, Esq., and
Matthew P. Ward, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
represent the Debtor. When the Debtor filed for chapter 11
protection, it listed total assets of $4,792,600,000 and total
debts of $4,566,200,000. The Court confirmed the Debtor's chapter
11 plan on April 5, 2002, and the Plan took effect on April 16,
2002. The Court formally closed the case on May 20, 2005.
At Mar. 31, 2005, McLeodUSA Incorporated's balance sheet showed a
$127,600,000 stockholders' deficit, compared to a $46,800,000
deficit at Dec. 31, 2004.
NEVADA POWER: Moody's Reviews B1 Senior Unsecured Debt Rating
-------------------------------------------------------------
Moody's Investors Service placed the ratings of Sierra Pacific
Resources (SPR; B2 senior unsecured) under review for possible
upgrade. Moody's also placed the ratings of SPR's utility
subsidiaries Nevada Power Company (NPC; Ba2 senior secured) and
Sierra Pacific Power Company (SPPC; Ba2 senior secured) under
review for possible upgrade.
In addition, Moody's placed the (P)Caa1 shelf registration rating
for trust preferred securities of Sierra Pacific Resources Capital
Trust I and II and the B3 rating on trust preferred securities of
NVP Capital I and III under review for possible upgrade. A list
of the ratings placed under review appears towards the end of this
press release.
In conjunction with initiating the review of the current ratings
for SPR and its utility subsidiaries, Moody's assigned a B1
Corporate Family Rating (f/k/a: Senior Implied Rating) and a
Speculative Grade Liquidity rating of SGL-3 for SPR. Concurrent
with assigning the Corporate Family Rating, Moody's placed that
rating under review for possible upgrade. The SGL-3 liquidity
rating is not part of the review.
The assignment of a B1 Corporate Family Rating currently reflects
SPR's significant debt leverage and Moody's expectation that SPR's
consolidated operating cash flow generation will represent about
10% to 12% of adjusted debt over the next two years. SPR's
significant leverage, which is characterized by its 70% adjusted
debt to adjusted capitalization ratio as of March 31, 2005, has
prevailed at close to that level since 2002 when the Public
Utilities Commission of Nevada disallowed recovery of almost $500
million of utility-related deferred energy costs, requiring
substantial write-offs and compromising SPR's liquidity at the
time.
Approximately $3.3 billion of SPR's reported consolidated debt
represents obligations of its regulated utility subsidiaries and
about $2.6 billion or 78% of the utility debt is secured under the
first mortgage and general and refunding mortgage bond indentures
of either NPC or SPPC. Moody's expects that NPC and SPPC will
generate funds from operations sufficient to cover their interest
expense and debt by at least 2x and 12%, respectively, over the
next couple of years, while also sending dividends to SPR to fully
cover the parent's standalone interest expense.
Moody's review of the aforementioned ratings for possible upgrade
reflects significantly reduced regulatory risk following a series
of supportive decisions by the PUCN in deferred energy and general
rate cases filed by NPC and SPPC. These decisions included
settlements of the most recent deferred energy rate cases for both
utilities earlier this year, approving recovery of virtually all
the deferred energy costs covered by the filings and adjusting the
base tariff energy rates going forward. The review also considers
the good progress by the utilities to become less dependent upon
outside sources of power and takes into account about $1.8 billion
of refinancing activity completed over the past 18 months to
reduce the amount of interest expense and significantly extend the
debt maturity profile throughout the corporate family.
Moody's review will consider the likelihood that the PUCN will
continue to be supportive of NPC and SPPC in future rate
proceedings and the degree to which a combination of the
previously mentioned factors results in higher and more
predictable cash flow from operations for the utilities on a
sustainable basis. Moody's review will also assess the adequacy
of the utilities' future cash flow generating capability relative
to its expected future consolidated debt levels given the need to
fund a portion of the company's sizable capital programs over the
next several years.
Furthermore, the rating review will revisit circumstances
surrounding SPR's protracted litigation with Enron Power
Marketing, Inc. pertaining to liquidated damage claims for
terminated power supply agreements with NPC and SPPC. Our current
view is that the case is unlikely to be resolved in the near term
and therefore should not pose a funding risk over that time frame.
The speculative grade liquidity rating of SGL-3 reflects SPR's
overall adequate liquidity profile. The adequate liquidity
profile is characterized by adequate internal and external sources
of liquidity, a good amount of headroom under covenants in SPR's
debt indentures, a manageable debt maturity profile, and no
meaningful back-door supplement to existing liquidity through
asset sales because virtually all of SPR's operating assets are
encumbered under the respective first mortgage and general and
refunding mortgage bond indentures of the utilities.
Although SPR does not have its own separate bank credit facility,
it currently holds cash in escrow, which is dedicated to pay a
portion of interest due through August 14, 2005. In addition,
given Moody's expectations for future cash flow generation at NPC
and SPPC, the rating agency believes that the utility subsidiaries
will have ample financial flexibility under their respective
dividend limitations to send up sufficient funds in aggregate to
meet all of SPR's standalone obligations over the next twelve
months.
The SGL-3 rating also takes into consideration that both NPC and
SPPC have their own revolving credit facility, currently sized at
$350 million and $75 million, respectively. Both subsidiaries
have ample headroom under covenants governing those facilities
Both facilities, which had no direct borrowings outstanding as of
March 31, 2005, expire in October 2007.
SPR's next material debt maturities relate to a $240 million
short-term variable-rate note due November 16, 2005 and
approximately $140 million of notes due 2007. The short-term note
is earmarked to be repaid with proceeds from settlement of $240
million of common equity under forward contracts related to SPR's
"old" and "new" premium income equity securities. The $140
million of notes relate to the underlying debt component of "old"
PIES that are scheduled to be re-marketed in August 2005 as part
of the process leading to eventual settlement of forward contracts
to bring in additional common equity on November 15, 2005.
Meanwhile, the utility subsidiaries do not face any material debt
maturities in the next 12 months.
Sierra Pacific Resources ratings placed under review for possible
upgrade include:
* B1 corporate family rating
* B2 senior unsecured debt and issuer rating
* (P)B2 shelf registration rating for senior unsecured debt
* (P)Caa1 shelf registration rating for junior subordinated
debt
* (P)Caa1 shelf registration rating for trust preferred
securities of Sierra Pacific Resources Capital Trust I and
Sierra Pacific Resources Capital Trust II
Nevada Power Company ratings placed under review for possible
upgrade include:
* Ba2 senior secured debt
* Ba2 senior secured bank facility
* B1 senior unsecured debt and Issuer rating
* B3 trust preferred securities of NVP Capital I and NVP
Capital III
Sierra Pacific Power Company ratings placed under review for
possible upgrade include:
* Ba2 senior secured debt
* Ba2 senior secured bank facility
* B1 Issuer Rating
* Caa1 preferred stock
Sierra Pacific Resources is a holding company, whose principal
subsidiaries, Nevada Power Company and Sierra Pacific Power
Company, are electric and electric and gas utilities,
respectively. Sierra Pacific Resources also holds relatively
modest non-utility investments through other subsidiaries. Sierra
Pacific Resources' headquarters are in Las Vegas, Nevada.
NORTH MERIDIAN: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: North Meridian Place LLC
P.O. Box 1689
Milton, Washington 98354-1689
Bankruptcy Case No.: 05-46622
Chapter 11 Petition Date: July 21, 2005
Court: Western District of Washington (Tacoma)
Judge: Philip H. Brandt
Debtor's Counsel: Noel P. Shillito, Esq.
Shillito & Giske, P.S.
1919 North Pearl Street, Suite C2
Tacoma, Washington 98406
Tel: (253) 572-4388
Fax: (253) 572-4497
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.
NORTHWEST AIRLINES: CEO Urges DOT to OK Int'l. Anti-Trust Immunity
------------------------------------------------------------------
Northwest Airlines president and chief executive officer Doug
Steenland urged the United States Department of Transportation to
approve the application of a group of airlines in the SkyTeam
alliance for international anti-trust immunity.
In a speech Tuesday before the International Aviation Club in
Washington D.C., Mr. Steenland said approval of the application
involving Air France, Alitalia, CSA Czech Airlines, Delta Air
Lines, KLM Royal Dutch Airlines and Northwest Airlines is
necessary to both preserve and expand the many benefits that the
alliance offers consumers, communities and the carriers involved.
"The Air France-KLM merger is the genesis for our pending
application with DOT", Mr. Steenland explained. The application
"brings together two successful and first-rate alliances
(Northwest/KLM and SkyTeam) with proven consumer-friendly track
records."
"In order to fully preserve the efficiencies and consumer benefits
of the existing alliances, it is necessary to bridge the
immunities held by Northwest/KLM and SkyTeam," continued Mr.
Steenland. "Linking the Northwest/KLM and SkyTeam alliance
networks will generate substantial new benefits including:
-- new and expanded trans-Atlantic nonstop service;
-- new online connecting service in almost 9,000 markets not
currently served by either of the alliances;
-- increased pathway options benefiting 16,280 city pairs that
account for almost 80 percent of trans-Atlantic travel;
-- greater discount opportunities by allowing passengers to
choose from numerous itineraries;
-- improved time of day coverage; and reduced travel time in
over 4,000 markets, representing 18 percent of the
transatlantic traffic."
Northwest and KLM operate a highly integrated joint venture which
was granted anti-trust immunity by the U.S. Department of
Transportation in January, 1993. Air France operates an alliance
with Delta, Alitalia and Czech (members of SkyTeam) under anti-
trust immunity granted by DOT in January 2002. Air France and KLM
received merger approval in early 2004. In September 2004,
Northwest joined the SkyTeam alliance of airlines as a marketing
member. SkyTeam includes Aeromexico, Air France-KLM, Alitalia,
CSA Czech, Delta and Korean Air. The pending application with DOT
seeks to bridge the existing anti-trust immunity of Northwest/KLM
and the SkyTeam carriers Air France, Alitalia, CSA Czech and Delta
Air Lines.
SkyTeam Receives Broad Support
Northwest's application has received an unprecedented array of
support from a diverse group of parties including communities,
corporate customers and consumers who today are already benefiting
from immunized alliances among SkyTeam partners. The Air Line
Pilots Association (ALPA) and the Business Travel Coalition have
also filed with the DOT in support of the application.
The Wayne County Airport Authority, which manages Detroit
Metropolitan Airport, has seen its nonstop service between Detroit
and Amsterdam grow from zero daily flights to five daily flights
this summer as a result of Northwest's immunized alliance with
KLM. According to a news release from the Wayne County Airport
Authority, Northwest service from Detroit could well be enhanced
and upgraded if the DOT approves and immunizes the agreements as
requested by Northwest and SkyTeam.
At Northwest's Twin Cities hub, the airport, the cities of
Bloomington, Burnsville, Eagan, Minneapolis and St. Paul, as well
as many local organizations, also expressed their support.
As an example of the benefits that anti-trust immunity can bring
to a region, Jeff Hamiel, executive director of the Metropolitan
Airports Commission, which operates Minneapolis-St. Paul
International Airport pointed out in a news release that before
Northwest and KLM received anti-trust immunity, there were no
nonstop flights between Minneapolis-St. Paul International Airport
and Amsterdam. This summer, the Northwest/KLM joint venture
offers three daily non-stops, totaling 807 seats.
Additionally, Twin Cities' leaders argued that, with anti-trust
immunity, Northwest Airlines would be in a position to provide
additional European nonstop services to the community and to
continue to generate economic value and jobs.
Memphis, which recently celebrated the 10th anniversary of nonstop
service to Amsterdam, said in a strongly worded filing to the DOT
that the Northwest hub continues to be critical to the economic
health of Memphis and the entire region. As a major contributor
to the success of the community, Northwest also is essential to
Memphis' entry into the global economic market.
The Business Travel Coalition, which seeks to lower the long-term
cost structure of business travel, believes the proposal, which
seeks anti-trust immunity and codesharing authority, is in the
best interest of large buyers of commercial aviation services.
Over ninety members of the Coalition have signed a letter to DOT
in support of the application.
According to the Coalition, the SkyTeam proposal eliminates
unnecessary and costly restrictions and addresses current
competitive imbalances which limit service options. For example,
the SkyTeam proposal will establish additional pathways to
international destinations for travelers by directly linking U.S.
and European hubs. As a result, travel times and costs for many
trips will drop.
Additionally, Northwest has received support from the Air Line
Pilots Association as well as substantial corporate customer
support from highly esteemed companies nationwide who conduct
business in the international arena including FedEx, Ford Motor
Company, General Mills, General Motors and Medtronic, to name a
few.
As General Motors said in its letter of support, "The Sky Team
Alliance partners and other airline partnerships are a critical
support to General Motors' international travel demands. If
Northwest/KLM and the Sky Team applicants are allowed to operate
international service with global anti-trust immunity and code-
sharing, we believe the opportunity for convenient, cost-
effective air transportation should be increased, and could result
in advantages that should include improved flight schedules,
reduced travel times, new nonstop service, and additional low fare
choices."
General Motors states in its filing that, "The importance of
increased international travel opportunities to our country, our
communities and airports, and to those of us who have business
dealings with customers and suppliers throughout the world cannot
be understated."
In its filing to the DOT in support of anti-trust immunity and
speaking specifically of Northwest and Delta Air Lines, ALPA says
that, "it is concerned that the denial of the joint application
could have a severe negative effect on at least one of these two
carriers, and thus on the livelihood of that carrier's pilots."
ALPA continues that the "loss of these [international] services,
would have in addition to the negative consequences identified by
the airports and communities in their answers, obvious critical
adverse consequences for the carriers and their employees as
well."
Northwest Airlines Corp. is the world's fifth largest airline with
hubs in Detroit, Minneapolis/St. Paul, Memphis, Tokyo and
Amsterdam, and approximately 1,600 daily departures. Northwest is
a member of SkyTeam, an airline alliance that offers customers one
of the world's most extensive global networks. Northwest and its
travel partners serve more than 900 cities in excess of 160
countries on six continents.
* * *
As reported in the Troubled Company Reporter on June 23, 2005,
Moody's Investors Service downgraded the debt ratings of Northwest
Airlines Corporation and its primary operating subsidiary,
Northwest Airlines, Inc. The Corporate Family Rating (previously
called the Senior Implied rating) was lowered to Caa1 from B2, and
the Senior Unsecured rating was downgraded to Caa3 from Caa1.
Ratings assigned to Enhanced Equipment Trust Certificates were
downgraded.
In addition, the company's Speculative Grade Liquidity Rating was
downgraded to SGL-3 from SGL-2. The rating actions complete a
review of Northwest's ratings initiated April 8, 2005. Moody's
said the outlook is negative.
NOVA CHEMICALS: Renegotiated Loan Increases Facility to $375-Mil
----------------------------------------------------------------
NOVA Chemicals Corporation (NYSE:NCX)(TSX:NCX) disclosed that it
has successfully renegotiated its revolving credit facility during
the second quarter.
During the second quarter, NOVA Chemicals successfully re-
negotiated its revolving credit facility. The facility was
increased from $300 million to $375 million and the maturity was
extended from March 2007 to June 2010. In addition, certain
covenants were amended:
Covenant Previous Requirements Current Requirements
_________________ _______________________ __________________________
Interest Coverage 2X 2X
when debt to cap ratio
greater than 40%
_________________ _______________________ __________________________
Equity Minimum $1 billion plus Minimum $1.25 billion plus
50% of positive earnings 50% of positive earnings
_________________ _______________________ __________________________
Net Debt to Maximum 55% Maximum 55%
Capitalization
_________________ _______________________ __________________________
Distribution test Debt to cap less than 50% Eliminated
_________________ _______________________ __________________________
NOVA Chemicals continues to comply with all financial covenants
under the facility.
Additionally, NOVA Chemicals was successful in extending the
maturity on its accounts receivable securitization program to June
2010. As of June 30, 2005, $243 million was sold under this
program compared to $280 million as of Mar. 31, 2005. As of
July 15, 2005, the Company utilized $52 million of the revolving
credit facility in the form of operating letters of credit.
In September 2005, $100 million of 7%, 10-year notes will mature.
In May 2006, $300 million of 7% medium-term notes will also
mature.
NOVA Chemicals Corporation -- http://www.novachemicals.com/--
produces ethylene, polyethylene, styrene monomer and styrenic
polymers, which are used in a wide range of consumer and
industrial goods. NOVA Chemicals manufactures its products at 18
operating facilities located in the United States, Canada, France,
the Netherlands and the United Kingdom. The company also has five
technology centers that support research and development
initiatives. NOVA Chemicals Corporation shares trade on the
Toronto and New York stock exchanges under the trading symbol NCX.
* * *
As reported in the Troubled Company Reporter on Jan. 27, 2005,
Moody's Investors Service affirmed the Ba2 senior unsecured
ratings of NOVA Chemicals Corporation, and revised its ratings
outlook to stable from negative.
Moody's also changed the company's speculative grade liquidity
rating to SGL-1 from SGL-2. The outlook revision was prompted by
NOVA's announcement that it expects to receive a cash payment of
approximately $110 million stemming from its resolution of a tax
dispute with U.S. Internal Revenue Service. This is in addition
to the $80 million received in the fourth quarter of 2004 from the
sale of its ethane gathering system. The ratings affirmations
reflects Moody's view that the combination of the cyclical upturn
in petrochemicals, and these one-time cash inflows, will enable
the company to maintain a robust cash balance despite anticipated
share repurchases and the pending maturity of $100 million of
debentures in September 2005.
As reported in the Troubled Company Reporter on Dec. 23, 2004,
Standard & Poor's Ratings Services revised its outlook on
petrochemicals producer Nova Chemicals Corp. to stable from
negative. At the same time, Standard & Poor's affirmed the 'BB+'
long-term corporate credit and senior unsecured debt ratings on
Nova.
NVP CAPITAL: Moody's Reviews B3 Trust Preferred Securities Rating
-----------------------------------------------------------------
Moody's Investors Service placed the ratings of Sierra Pacific
Resources (SPR; B2 senior unsecured) under review for possible
upgrade. Moody's also placed the ratings of SPR's utility
subsidiaries Nevada Power Company (NPC; Ba2 senior secured) and
Sierra Pacific Power Company (SPPC; Ba2 senior secured) under
review for possible upgrade.
In addition, Moody's placed the (P)Caa1 shelf registration rating
for trust preferred securities of Sierra Pacific Resources Capital
Trust I and II and the B3 rating on trust preferred securities of
NVP Capital I and III under review for possible upgrade.
A list of the ratings placed under review appears towards the end
of this press release.
In conjunction with initiating the review of the current ratings
for SPR and its utility subsidiaries, Moody's assigned a B1
Corporate Family Rating (f/k/a: Senior Implied Rating) and a
Speculative Grade Liquidity rating of SGL-3 for SPR. Concurrent
with assigning the Corporate Family Rating, Moody's placed that
rating under review for possible upgrade. The SGL-3 liquidity
rating is not part of the review.
The assignment of a B1 Corporate Family Rating currently reflects
SPR's significant debt leverage and Moody's expectation that SPR's
consolidated operating cash flow generation will represent about
10% to 12% of adjusted debt over the next two years. SPR's
significant leverage, which is characterized by its 70% adjusted
debt to adjusted capitalization ratio as of March 31, 2005, has
prevailed at close to that level since 2002 when the Public
Utilities Commission of Nevada disallowed recovery of almost $500
million of utility-related deferred energy costs, requiring
substantial write-offs and compromising SPR's liquidity at the
time.
Approximately $3.3 billion of SPR's reported consolidated debt
represents obligations of its regulated utility subsidiaries and
about $2.6 billion or 78% of the utility debt is secured under the
first mortgage and general and refunding mortgage bond indentures
of either NPC or SPPC. Moody's expects that NPC and SPPC will
generate funds from operations sufficient to cover their interest
expense and debt by at least 2x and 12%, respectively, over the
next couple of years, while also sending dividends to SPR to fully
cover the parent's standalone interest expense.
Moody's review of the aforementioned ratings for possible upgrade
reflects significantly reduced regulatory risk following a series
of supportive decisions by the PUCN in deferred energy and general
rate cases filed by NPC and SPPC. These decisions included
settlements of the most recent deferred energy rate cases for both
utilities earlier this year, approving recovery of virtually all
the deferred energy costs covered by the filings and adjusting the
base tariff energy rates going forward. The review also considers
the good progress by the utilities to become less dependent upon
outside sources of power and takes into account about $1.8 billion
of refinancing activity completed over the past 18 months to
reduce the amount of interest expense and significantly extend the
debt maturity profile throughout the corporate family.
Moody's review will consider the likelihood that the PUCN will
continue to be supportive of NPC and SPPC in future rate
proceedings and the degree to which a combination of the
previously mentioned factors results in higher and more
predictable cash flow from operations for the utilities on a
sustainable basis. Moody's review will also assess the adequacy
of the utilities' future cash flow generating capability relative
to its expected future consolidated debt levels given the need to
fund a portion of the company's sizable capital programs over the
next several years.
Furthermore, the rating review will revisit circumstances
surrounding SPR's protracted litigation with Enron Power
Marketing, Inc. pertaining to liquidated damage claims for
terminated power supply agreements with NPC and SPPC. Our current
view is that the case is unlikely to be resolved in the near term
and therefore should not pose a funding risk over that time frame.
The speculative grade liquidity rating of SGL-3 reflects SPR's
overall adequate liquidity profile. The adequate liquidity
profile is characterized by adequate internal and external sources
of liquidity, a good amount of headroom under covenants in SPR's
debt indentures, a manageable debt maturity profile, and no
meaningful back-door supplement to existing liquidity through
asset sales because virtually all of SPR's operating assets are
encumbered under the respective first mortgage and general and
refunding mortgage bond indentures of the utilities.
Although SPR does not have its own separate bank credit facility,
it currently holds cash in escrow, which is dedicated to pay a
portion of interest due through August 14, 2005. In addition,
given Moody's expectations for future cash flow generation at NPC
and SPPC, the rating agency believes that the utility subsidiaries
will have ample financial flexibility under their respective
dividend limitations to send up sufficient funds in aggregate to
meet all of SPR's standalone obligations over the next twelve
months.
The SGL-3 rating also takes into consideration that both NPC and
SPPC have their own revolving credit facility, currently sized at
$350 million and $75 million, respectively. Both subsidiaries
have ample headroom under covenants governing those facilities
Both facilities, which had no direct borrowings outstanding as of
March 31, 2005, expire in October 2007.
SPR's next material debt maturities relate to a $240 million
short-term variable-rate note due November 16, 2005 and
approximately $140 million of notes due 2007. The short-term note
is earmarked to be repaid with proceeds from settlement of $240
million of common equity under forward contracts related to SPR's
"old" and "new" premium income equity securities. The $140
million of notes relate to the underlying debt component of "old"
PIES that are scheduled to be re-marketed in August 2005 as part
of the process leading to eventual settlement of forward contracts
to bring in additional common equity on November 15, 2005.
Meanwhile, the utility subsidiaries do not face any material debt
maturities in the next 12 months.
Sierra Pacific Resources ratings placed under review for possible
upgrade include:
* B1 corporate family rating
* B2 senior unsecured debt and issuer rating
* (P)B2 shelf registration rating for senior unsecured debt
* (P)Caa1 shelf registration rating for junior subordinated
debt
* (P)Caa1 shelf registration rating for trust preferred
securities of Sierra Pacific Resources Capital Trust I and
Sierra Pacific Resources Capital Trust II
Nevada Power Company ratings placed under review for possible
upgrade include:
* Ba2 senior secured debt
* Ba2 senior secured bank facility
* B1 senior unsecured debt and Issuer rating
* B3 trust preferred securities of NVP Capital I and NVP
Capital III
Sierra Pacific Power Company ratings placed under review for
possible upgrade include:
* Ba2 senior secured debt
* Ba2 senior secured bank facility
* B1 Issuer Rating
* Caa1 preferred stock
Sierra Pacific Resources is a holding company, whose principal
subsidiaries, Nevada Power Company and Sierra Pacific Power
Company, are electric and electric and gas utilities,
respectively. Sierra Pacific Resources also holds relatively
modest non-utility investments through other subsidiaries. Sierra
Pacific Resources' headquarters are in Las Vegas, Nevada.
OWENS-ILLINOIS: Declares Dividend on $2.375 Convert. Pref. Stock
----------------------------------------------------------------
Owens-Illinois, Inc.'s (NYSE: OI) board of directors has declared
the quarterly dividend of $0.59375 on each share of the company's
$2.375 Convertible Preferred Stock, payable on Aug. 15 to holders
of record as of Aug. 1.
Owens-Illinois -- http://www.o-i.com/-- is the largest
manufacturer of glass containers in the world, with leading
positions in Europe, North America, Asia Pacific and Latin
America. O-I is also a leading manufacturer of healthcare
packaging and specialty closure systems.
* * *
As reported in the Troubled Company Reporter on March 2, 2005,
Fitch Ratings has affirmed the ratings for Owens-Illinois
(NYSE: OI) and revised the Rating Outlook to Positive from Stable.
Current ratings are:
-- Senior Secured Credit Facilities 'B+';
-- Senior Secured Notes 'B';
-- Senior Unsecured Notes 'CCC+';
-- Convertible Preferred Stock 'CCC'.
At the same time, Fitch assigned a 'CCC' rating to OI's senior
subordinated notes. OI assumed BSN's senior subordinated
debentures, 10.25% due 2009 and 9.25% due 2009, at the time of the
BSN acquisition. During the fourth quarter of 2004, OI's wholly
owned subsidiary Owens-Brockway issued 6.75% senior unsecured
notes due 2014 to refinance a large portion of BSN's subordinated
notes and to repurchase a substantial portion of OI's 7.15% notes
due 2005.
The ratings affect approximately $5.8 billion of debt and
preferred securities.
PENINSULA HOLDING: Creditors' Proofs of Claim Due by July 29
------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Washington
in Seattle, set July 29, 2005, as the deadline for all creditors
owed money on account of claims arising prior to May 19, 2005,
against Peninsula Holding Company LLC to file proofs of claim.
Creditors must file written proofs of claim that comply with
Official Form No. 10. Blank claim forms are available at no
charge at http://www.uscourts.gov/bkforms/
All proofs of claim must be filed with:
The Clerk of Court
U.S. Bankruptcy Court
Western District of Washington, Seattle Division
United States Courthouse
700 Stewart Street, Room 6301
Seattle, Washington
Headquartered in Seattle, Washington, Peninsula Holding Company
LLC, develops raw land projects in Shelton, Washington. The
Company filed for chapter 11 protection on May 19, 2005 (Bankr.
W.D. Wash. Case No. 05-16571). Charles A. Johnson, Jr., Esq., at
the Law Offices of Charlie Johnson, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed total assets of $42,900,000 and total
debts of $31,432,554.
PEP BOYS: Poor Performance Prompts S&P to Downgrade Ratings
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit,
senior secured, and senior unsecured debt ratings on Pep Boys-
Manny, Moe & Jack to 'B+' from 'BB-'. The rating on the senior
secured credit facility was lowered to 'BB-' from BB, with a
recovery rating of '1'. The subordinated debt rating was cut to
'B-' from 'B'.
All ratings were removed from CreditWatch, where they were listed
with negative implications on May 13, 2005. The outlook is
negative.
"The downgrade is due to the company's deteriorating operating
performance and diminished cash flow protection," said Standard &
Poor's credit analyst Diane Shand. Sales and profits have
declined for the past four quarters primarily due to Pep Boys'
struggling service business. The past two quarters have been
particularly difficult because of many changes to the business
model.
Pep Boys is in the process of a large-scale store refurbishing
program. It has made major changes in field management and
supervision of service and retail managers; increased spending on
training and advertising. At the same time, consumers have
responded poorly to its branded tire program.
The ratings on Philadelphia-based Pep Boys reflect:
* the risks of operating in the highly competitive and
consolidating auto parts retail sector,
* the challenges of expanding the company's service segment,
* the need for capital investment in the store base, and
* a significant debt burden.
Pep Boys is still trying to realign its business and improve
profitability. The company has been focusing on its sales mix,
shifting away from the do-it-yourself market in favor of the do-
it-for-me market. Standard & Poor's believes Pep Boys will
continue to be challenged in promoting and smoothing out its
services operations, and that it needs to complete important
initiatives, such as refurbishing and re-merchandising its stores.
PORT TOWNSEND: Refinances Revolving Loan with $35MM CIT Financing
-----------------------------------------------------------------
Port Townsend Paper Corporation, has closed on a five-year,
$35 million revolving credit agreement with The CIT Group/Business
Credit Inc. and CIT Business Credit Canada Inc. The new facility
replaces and extinguishes the Company's former $30 million
revolving credit facility.
"This new facility will provide us with additional liquidity,
which may be needed to fund future operations given the recent
trend of price decreases across our industry," said Timothy P.
Leybold, Chief Financial Officer. "In addition to the added
liquidity, the CIT facility will reduce the costs associated with
our working capital borrowings." As previously disclosed, terms
of the new facility provide the Company with the additional time
needed to complete its 2004 financial statement audit, which the
Company currently expects will be at the end of July.
The Port Townsend Paper family of companies employs approximately
850 people and annually produces more than 325,000 tons of
unbleached Kraft pulp, paper and linerboard at its mill in Port
Townsend, Washington. The Company also operates three Crown
Packaging Plants, two BoxMaster Plants, and the Crown Creative
Group, located in British Columbia and Alberta.
* * *
As reported in the Troubled Company Reporter on April 20, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Port Townsend Paper Corp. to 'B-' from 'B'. At the same
time, Standard & Poor's lowered its rating on Port Townsend's 11%
senior secured notes due April 15, 2011, to 'B-' from 'B'. The
outlook is negative.
"The downgrade reflects our concerns regarding the company's
liquidity position in light of continued upward pressure on energy
and fiber costs and the possibility that price increases announced
by several industry participants may not be fully realized," said
Standard & Poor's credit analyst Dominick D'Ascoli. Liquidity was
$14 million on Dec. 31, 2004.
Standard & Poor's estimates liquidity has declined substantially
since Dec. 31, 2004, as cost pressures have continued and a
$7 million interest payment on the company's 11% senior secured
notes was made on April 15, 2005. With continued cost pressures
and thin liquidity, the Port Townsend, Washington-based company is
very vulnerable to any sort of operating disruption or the failure
of announced price increases to be fully realized.
The ratings on Port Townsend reflect:
(1) a modest scope of operations in the highly cyclical,
commodity-like paper-based packaging market,
(2) rising cost pressures,
(3) very aggressive debt leverage,
(4) thin liquidity, and
(5) delays in filing 2004 audited financial statements.
Data available from Bloomberg identifies:
* US Bank, N.A.
* Wells Fargo Bank, N.A. and
* Deutsche Bank
as the current syndicated loan participants.
PROVIDENT PACIFIC: Charles Oewel Approved as Responsible Person
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of California
approved Provident Pacific Corporation's request to appoint
Charles Oewel as the natural person responsible for its duties and
obligations as a debtor and debtor-in-possession pursuant to Local
Rule 4002-1.
Mr. Oewel is the Vice-President of Provident Pacific. The Debtor
filed its request with the Court on June 30, 2005, and the Court
approved the Debtors' request on the same day.
The Court concludes that Mr. Oewel's appointment as the natural
person responsible for the corporate Debtor is in the best
interest of its estate and will not prejudice its creditors and
other parties in interest.
Mr. Oewel can be contacted at:
Provident Pacific Corporation
1606 Juanita Lane, Suite A
Belvedere, California 94920
Phone: 415-780-0161
Headquartered in Belvedere, California, Provident Pacific
Corporation, filed for chapter 11 protection on June 8, 2005
(Bankr. N.D. Calif. Case No. 05-11435). Michael H. Lewis, Esq.,
at Law Offices of Michael H. Lewis, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed total assets of $39,545,023 and total
liabilities of $28,495,982.
QUEEN'S SEAPORT: Long Beach Objects to Professionals' Fees
----------------------------------------------------------
To the extent the three law Firms retained by Queen's Seaport
Development, Inc., in its chapter 11 case want to collect more
than $75,000, the City of Long Beach, California, objects to the
first interim fee applications filed by:
--- the Law Offices of Ira Benjamin Katz,
--- Jeffer, Mangels, Butler & Marmaro LLP, and
--- Wismann, Wolff, Bergman, Coleman & Evall LLP.
The City reminds the U.S. Bankruptcy Court for the Central
District of California that it entered an order on April 26, 2005,
authorizing the Debtor's Use of Putative Cash Collateral. That
Cash Collateral Order imposes a $75,000 limit on legal fees for
the period between March 20, 2005, and July 3, 2005, for these
three Firms.
The three Firms are requesting $238,289.57, for the period between
March 20, 2005 and July 3, 2005.
In support of its objection, The City of Long Beach tells the
Court that:
1) the fees and costs the Firms are requesting in their Interim
Fee Applications exceeds the $75,000 required by the Court's
Cash Collateral Order, which could threaten the Debtor's
cash flow;
2) there is no prospect of a viable plan of reorganization for
the Debtor in the short-term because it has a pending
adversary action with Bandero, LLC, which could affect
funding for that plan;
3) the Debtor has not made any progress in resolving the rental
payments dispute that the City claims is owed by the Debtor
to it; and
4) it believes that unless the issues related to the adversary
action with Bandero, LLC, and the rental payments dispute
with the City is resolved, the Debtor will be unable to
present a viable and confirmable chapter 11 plan.
The City asks the Court that any payments for the three Firm's
Interim Fee Applications be limited to $75,000, pursuant to its
Cash Collateral Order.
The Court will convene a hearing at 1:30 p.m., on July 28, 2005,
to consider the City of Long Beach's objection.
Headquartered in Long Beach, California, Queen's Seaport
Development, Inc., -- http://www.queenmary.com/-- operates the
Queen Mary ocean liner, various attractions and a hotel. The
Company filed for chapter 11 protection on March 15, 2005 (Bankr.
C.D. Calif. Case No. 05-15175). Joseph A. Eisenberg, Esq., at
Jeffer Mangles Butler & Marmaro LLP represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed estimated assets and debts of $10 million
to $50 million.
QUIGLEY COMPANY: Asks Court for Solicitation Period Extension
-------------------------------------------------------------
Quigley Company, Inc., asks the U.S. Bankruptcy Court for the
Southern District of New York to extend, until November 30, 2005,
its exclusive period to solicit acceptances of its Plan or
Reorganization.
As reported in the Troubled Company reporter on May 3, 2005, the
Debtor delivered its Plan of Reorganization and accompanying
Disclosure Statement in March 2005. The primary purpose of the
Plan is to provide a fair, equitable and reasonable treatment of
creditors particularly of asbestos-related claimants. The Plan
proposes to create an Asbestos Personal Injury Trust crafted under
11 U.S.C. Sec. 524(g) to resolve all asbestos-related
claims. Pfizer, Inc., Quigley's sole shareholder, agreed to
contribute $405 million to the Asbestos Settlement Trust over 40
years through a note, contribute approximately $100 million in
insurance, and forgive a $30 million loan to Quigley.
No date has been set for a hearing on the adequacy of the
disclosure statement.
Since the Debtor filed its plan and disclosure statement, it has
continued negotiations and information exchanges with Pfizer, the
Committee and Albert Togut, the representative of holders of
future asbestos personal injury claims against the Debtor,
regarding the more intricate terms of the plan and related
documents.
Lawrence V. Gelber, Esq., at Schulte Roth & Zabel LLLP, explains
that the extension will allow the Debtor to resolve these issues.
Mr. Gelber believes that the extension will provide the Debtor
with sufficient time to complete the solicitation of votes to
accept or reject its plan of reorganization.
Additionally, Quigley has resolved most, if not all, of the
information gaps contained in the filed disclosure statement.
While the parties continue to make progress on outstanding issues,
there are a number of open items that still must be addressed.
The Debtor assures the Court that the requested extension will not
result in a delay of the plan process, but rather will permit the
parties to continue negotiating toward consensus.
Headquartered in Manhattan, Quigley Company is a subsidiary of
Pfizer, Inc., which used to produce and market a broad range of
refractories and related products to customers in the iron, steel,
glass and other industries. The Company filed for chapter 11
protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to
resolve legacy asbestos-related liability. When the Debtor filed
for protection from its creditors, it listed $155,187,000 in total
assets and $141,933,000 in total debts. Michael L. Cook, Esq., at
Schulte Roth & Zabel LLP, represents the Company in its
restructuring efforts. Albert Togut, Esq., at Togut Segal & Segal
serves as the Futures Representative.
RECYCLED PAPERBOARD: Will Auction Property on July 27
-----------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey approved
the auction of Recycle Paperboard Inc.'s 209,975+/- square foot
industrial facility set on 5.54+/- acres located at One Ackerman
Avenue in Clifton, New Jersey.
One Ackerman Associates LLC serves as the stalking horse bidder
with a $3.5 million offer for the property.
The Court set July 20, 2005, as the submission deadline for any
competing bids.
An auction will be held on Wednesday, July 27, 2005, at 12:00 p.m.
at the Offices of Greenbaum, Rowe, Smith & Davis LLP located at
Metro Corporate Campus One in Woodbridge, New Jersey. If no
competing bid will be submitted, One Ackerman Associates LLC will
be deemed as the successful bidder.
Objections to the sale, if any, must be submitted by July 28,
2005, at 4:00 p.m. The Court will convene a sale hearing on July
29, 2005, at 10:00 a.m.
Headquartered in Clifton, New Jersey, Recycled Paperboard Inc.,
manufactures recycled mixed paper and newspaper to make index, tag
& bristol, and blanks. The Company filed for chapter 11
protection on November 29, 2004 (Bankr. D.N.J. Case No. 04-47475).
David L. Bruck, Esq., at Greenbaum, Rowe, Smith & Davis LLP,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed total
assets of $17,800,000 and total debts of $41,316,455.
SAINT VINCENTS: RCG Wants Clarification on Status of Liens
----------------------------------------------------------
As reported in the Troubled Company Reporter on July 11, 2005, the
Honorable Prudence Carter Beatty of the U.S. Bankruptcy Court for
the Southern District of New York gave Saint Vincents Catholic
Medical Centers of New York and its debtor-affiliates authority,
on an emergency basis, to draw up to $15,000,000 under a
Debtor-in-Possession Financing agreement with HFG Healthco-4 LLC,
until the Interim DIP Financing Hearing on July 22, 2005.
RCG Seeks Clarification
RCG Longview II, L.P., a secured creditor, is concerned that the
breadth of the Court's approval of the Debtors' emergency
financing could be interpreted to have resulted in the DIP Lenders
being granted a priming lien on the Properties, which would be
superior to its liens.
As precautionary measure, RCG seeks clarification from the Debtors
that the liens being granted to the DIP Lender are not priming
liens.
Fred B. Ringel, Esq., at Robinson Brog Leinwand Greene Genovese &
Gluck P.C., in New York, informs the Court that the Debtors owe
$16,000,000 plus accrued interest and fees to RCG, pursuant to two
loans:
Date Amount
---- ------
Loan A May 18, 2005 $10,000,000
Loan B June 27, 2005 $6,000,000
Mr. Ringel relates that Loan A is secured by a third-priority
mortgage on the Staff's House Property, the O'Toole Property and
the Martin Payne Property. Loan B is secured by a fourth-
priority mortgage on the Properties. Both Loans constitute
Second Mortgage Liens with respect to the Properties.
The Staff House Property, the O'Toole Property, and the Martin
Payne Property are buildings used primarily as residences for the
staff of Saint Vincent Catholic Medical Centers, medical offices
for outpatient visits and laboratory space.
The Debtors' counsel indicated that it would abide with the RCG's
request that the Schedules to the DIP Agreement be modified to
reflect the indebtedness to RCG. However, as of July 13, 2005, no
revision in favor of RCG has been made.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, represent the Debtors in their restructuring efforts.
As of Apr. 30, 2005, the Debtors listed $972 million in total
assets and $1 billion in total debts. (Saint Vincent Bankruptcy
News, Issue No. 04; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
SAINT VINCENTS: Proposes Uniform Reclamation Claim Procedures
-------------------------------------------------------------
Saint Vincents Catholic Medical Centers of New York and its
debtor-affiliates' operations require the constant availability of
a variety of goods, including over-the-counter and prescription
medicines, medical supplies, equipment, food, and beverage
supplies and sanitary items.
Stephen B. Selbst, Esq., at McDermott Will & Emery LLP, in New
York, notes that the vendors to those goods may assert rights of
reclamation under Section 2-702 of the Uniform Commercial Code
and Section 546(c) of the Bankruptcy Code. The reclamation
claims, if properly asserted, will request that the Debtors
return the identified goods, grant a lien against the goods, or
grant the seller an administrative claim.
In anticipation of numerous reclamation claims in the early
stages of their Chapter 11 cases, the Debtors have established
internal procedures for handling the claims and for bringing them
to the attention of their professionals.
The Debtors will implement these Court-approved procedures in the
settlement and reconciliation of reclamation claims:
(a) The Debtors, on or before October 9, 2005, will file a
statement listing those claims which they believe to have
been correctly asserted according to applicable law, as
well as the amounts and holders of the claims. The
Debtors will file the Statement with the Court and will
serve copies to any official committee appointed by the
U.S. Trustee, their prepetition secured lenders, their
postpetition lenders, all known parties asserting the
claims and the U.S. Trustee;
(b) The claimants will have until October 29, 2005, to notify
counsels to the Committee, Debtors, the U.S. Trustee, the
Postpetition Lenders, the Prepetition Secured lenders of
any dispute regarding Statement in respect of any claim,
including any objection as to the exclusion of a given
claim from those they believe are valid. The Statement
Dispute by the Claimant must specify the factual nature
and legal basis for the dispute;
(c) On receipt of a Statement of Dispute from the Claimant,
the Debtors will have 45 days to:
-- review their business records to determine the validity
of the facts and circumstances alleged in the Statement
of Dispute;
-- inform the holder of their findings; and
-- use their discretion to determine whether the amount of
the Claim should be revised, either upward or downward.
The Notice Parties will be informed of any adjustments;
(d) If a claimant does not agree with the Debtors' Statement
taking into account any adjustments made, the Claimant
will request for judicial resolution of disputed
reclamation claim within 20 days after the expiration of
the Reconciliation Period. Any request for judicial
resolution must specify that the Claim meets all the
requirements for treatment as a valid reclamation claim
pursuant to applicable state law and Section 546(c);
(e) In the event that a claimant does not (i) submit a
Statement of Dispute, or (ii) subsequently request for a
Judicial Resolution prior to the end of the 20-day period
after the expiration of the reconciliation period, then
the holder will be deemed to have waived any objection to
Statement, or exclusion of its Claim from the list of
claims deemed valid by the Debtors;
(f) After the filing a Request of Judicial Resolution, the
Court will establish a hearing date, which will be used to
establish discovery procedures and fix trial dates; and
(g) The failure of a party asserting a reclamation claim to
comply with the procedures will constitute a waiver of
its right to object to the proposed determination of the
Claim, unless the Court orders otherwise.
To the extent of surplus proceeds in goods after satisfaction of
any prior secured claims against the goods, the Debtors will
treat the allowed reclamation claims, at their election:
(a) as administrative expense priority claims payable under
the terms of the Debtors' confirmed plan of reorganization
pursuant to Section 546(c)(2)(A); or
(b) elect to return the goods to the holder on five days
advance written notice to the Committee's counsel, if any,
the Postpetition Lender and the Prepetition Lenders.
Mr. Selbst asserts that the establishment of a clear procedure
for reconciling the reclamation claims will assist in the
consensual resolution of the demands to the benefit of the
Debtors' estates and all of the creditors. In addition, the
Debtors will avoid litigation costs that would necessarily arise
in connection with non-consensual resolution of the claims as
well as those costs associated with a disorganized, unstructured
process for resolving the claims.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, represent the Debtors in their restructuring efforts.
As of Apr. 30, 2005, the Debtors listed $972 million in total
assets and $1 billion in total debts. (Saint Vincent Bankruptcy
News, Issue No. 04; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
SAINT VINCENTS: Wants to Reject Wilner and Cavaliere Leases
-----------------------------------------------------------
Before the Petition Date, Saint Vincent Catholic Medical Centers
contemplated on putting up family health care centers for Mary
Immaculate, Queens, and St. John, Queens. Accordingly, the SVCMC
have been renting building spaces under leases between:
-- Catholic Medical Center of Brooklyn and Queens, Inc., and
Rywa Wilner, dated May 1, 1999; and
-- St. Vincent's Hospital and Medical Center of New York and
Cavaliere Group, as of 1999.
SVCMC leases from Wilner space in the building known as 79-08
Cooper Avenue, in Glendale, New York. SVCMC leases from
Cavaliere space in the building known as 66-17 Grand Avenue, in
Maspeth, New York.
James M. Sullivan, Esq., at McDermott Will & Emery LLP, in
Chicago, Illinois, notes that the Debtors never used the premises
and do not intend to use them in the future. Yet, under the
terms of the Leases, the Debtors are obligated to pay rent at or
above the market rates:
Lease Monthly Rent Expiration Date
----- ------------ ---------------
Wilner $6,965 April 30, 2009
Cavaliere $8,399 July 1, 2009
Section 365(a) of the Bankruptcy Code provides that a debtor may
assume or reject any executory contract or unexpired lease.
Mr. Sullivan avers that the Debtors' liability would be $738,000
if they were to assume the Leases. However, the landlords'
damages would be capped at $184,000 under Section 502(b) of the
Bankruptcy Code if the Leases were rejected.
To preserve their scarce financial resources, the Debtors seek
the Court's authority to reject the Leases effective July 15,
2005.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, represent the Debtors in their restructuring efforts.
As of Apr. 30, 2005, the Debtors listed $972 million in total
assets and $1 billion in total debts. (Saint Vincent Bankruptcy
News, Issue No. 05; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
SEGA GAMEWORKS: Court Ends 365(d)(4) Lease-Decision Period
----------------------------------------------------------
The Honorable Sheri Bluebond of the U.S. Bankruptcy Court for the
Central District of California rejected Sega Gameworks, LLC's
request for more time to decide whether to assume, assume and
assign, or reject unexpired nonresidential real property leases.
Judge Bluebond denied the request after the Debtor failed to make
an appearance at the hearing scheduled to consider the request.
Headquartered in Glendale, California, SEGA Gameworks LLC --
http://www.gameworks.com/-- operates 16 video arcades in 11 US
states, Canada, Guam, and Kuwait. The Company filed for chapter
11 protection on March 9, 2004 (Bankr. C.D. Calif. Case No.
04-15404). Ron Bender, Esq., at Levene Neale Bender Rankin &
Brill represents the Debtor in its restructuring efforts. When
the Company filed for protection from its creditors, it listed
both estimated debts and assets of $50 million.
SEGA GAMEWORKS: Gets Court Nod to Expand Scope of KPMG's Work
-------------------------------------------------------------
SEGA Gameworks LLC sought and obtained permission from the
Honorable Judge Sheri Bluebond of the U.S. Bankruptcy Court for
the Central District of California, Los Angeles Division, to
expand the scope of KPMG LLC's accounting work.
The Court previously approved KPMG's employment to prepare and
file the company's federal and state income tax returns for the
fiscal year 2004.
KPMG will prepare and file the financial statements for federal
and state income tax returns and supporting schedules for the
fiscal year ended March 27, 2005, for:
-- the Debtor,
-- SGW Holding Inc.,
-- SEGA GameWorks Texas, LLC, and
-- SEGA GameWorks II, LLC.
The Debtor is treated as a partnership for income tax purposes.
The individual members separately report and pay taxes on their
respective distributive income.
Dennis A. Ito, a partner at KPMG LLP, disclosed that the Firm will
charge flat fees for its 2005 Tax Return Services:
-- $18,000 for SGW Holding Inc., and
-- $60,000 for the Debtor.
KPMG will require an upfront payment of $40,000 upon Court
approval of its expanded scope of work. The remaining $20,000
will be paid upon the completion of the 2005 tax return services.
The Debtor believes that KPMG LLC is disinterested as that term is
defined in Section 101(14) of the U.S. Bankruptcy Code.
Headquartered in Glendale, California, SEGA Gameworks LLC --
http://www.gameworks.com/-- operates 16 video arcades in 11 US
states, Canada, Guam, and Kuwait. The Company filed for chapter
11 protection on March 9, 2004 (Bankr. C.D. Calif. Case No.
04-15404). Ron Bender, Esq., Monica Y. Kim, Esq., and Susan K.
Seflin, Esq., at Levene Neale Bender Rankin & Brill represents the
Debtor. When the Company filed for protection from its creditors,
it listed estimated assets and debts between $10 million to $50
million.
SIERRA PACIFIC: Moody's Reviews B2 Senior Unsecured Debt Rating
---------------------------------------------------------------
Moody's Investors Service placed the ratings of Sierra Pacific
Resources (SPR; B2 senior unsecured) under review for possible
upgrade. Moody's also placed the ratings of SPR's utility
subsidiaries Nevada Power Company (NPC; Ba2 senior secured) and
Sierra Pacific Power Company (SPPC; Ba2 senior secured) under
review for possible upgrade.
In addition, Moody's placed the (P)Caa1 shelf registration rating
for trust preferred securities of Sierra Pacific Resources Capital
Trust I and II and the B3 rating on trust preferred securities of
NVP Capital I and III under review for possible upgrade. A list
of the ratings placed under review appears towards the end of this
press release.
In conjunction with initiating the review of the current ratings
for SPR and its utility subsidiaries, Moody's assigned a B1
Corporate Family Rating (f/k/a: Senior Implied Rating) and a
Speculative Grade Liquidity rating of SGL-3 for SPR. Concurrent
with assigning the Corporate Family Rating, Moody's placed that
rating under review for possible upgrade. The SGL-3 liquidity
rating is not part of the review.
The assignment of a B1 Corporate Family Rating currently reflects
SPR's significant debt leverage and Moody's expectation that SPR's
consolidated operating cash flow generation will represent about
10% to 12% of adjusted debt over the next two years. SPR's
significant leverage, which is characterized by its 70% adjusted
debt to adjusted capitalization ratio as of March 31, 2005, has
prevailed at close to that level since 2002 when the Public
Utilities Commission of Nevada disallowed recovery of almost $500
million of utility-related deferred energy costs, requiring
substantial write-offs and compromising SPR's liquidity at the
time.
Approximately $3.3 billion of SPR's reported consolidated debt
represents obligations of its regulated utility subsidiaries and
about $2.6 billion or 78% of the utility debt is secured under the
first mortgage and general and refunding mortgage bond indentures
of either NPC or SPPC. Moody's expects that NPC and SPPC will
generate funds from operations sufficient to cover their interest
expense and debt by at least 2x and 12%, respectively, over the
next couple of years, while also sending dividends to SPR to fully
cover the parent's standalone interest expense.
Moody's review of the aforementioned ratings for possible upgrade
reflects significantly reduced regulatory risk following a series
of supportive decisions by the PUCN in deferred energy and general
rate cases filed by NPC and SPPC. These decisions included
settlements of the most recent deferred energy rate cases for both
utilities earlier this year, approving recovery of virtually all
the deferred energy costs covered by the filings and adjusting the
base tariff energy rates going forward. The review also considers
the good progress by the utilities to become less dependent upon
outside sources of power and takes into account about $1.8 billion
of refinancing activity completed over the past 18 months to
reduce the amount of interest expense and significantly extend the
debt maturity profile throughout the corporate family.
Moody's review will consider the likelihood that the PUCN will
continue to be supportive of NPC and SPPC in future rate
proceedings and the degree to which a combination of the
previously mentioned factors results in higher and more
predictable cash flow from operations for the utilities on a
sustainable basis. Moody's review will also assess the adequacy
of the utilities' future cash flow generating capability relative
to its expected future consolidated debt levels given the need to
fund a portion of the company's sizable capital programs over the
next several years.
Furthermore, the rating review will revisit circumstances
surrounding SPR's protracted litigation with Enron Power
Marketing, Inc. pertaining to liquidated damage claims for
terminated power supply agreements with NPC and SPPC. Our current
view is that the case is unlikely to be resolved in the near term
and therefore should not pose a funding risk over that time frame.
The speculative grade liquidity rating of SGL-3 reflects SPR's
overall adequate liquidity profile. The adequate liquidity
profile is characterized by adequate internal and external sources
of liquidity, a good amount of headroom under covenants in SPR's
debt indentures, a manageable debt maturity profile, and no
meaningful back-door supplement to existing liquidity through
asset sales because virtually all of SPR's operating assets are
encumbered under the respective first mortgage and general and
refunding mortgage bond indentures of the utilities.
Although SPR does not have its own separate bank credit facility,
it currently holds cash in escrow, which is dedicated to pay a
portion of interest due through August 14, 2005. In addition,
given Moody's expectations for future cash flow generation at NPC
and SPPC, the rating agency believes that the utility subsidiaries
will have ample financial flexibility under their respective
dividend limitations to send up sufficient funds in aggregate to
meet all of SPR's standalone obligations over the next twelve
months.
The SGL-3 rating also takes into consideration that both NPC and
SPPC have their own revolving credit facility, currently sized at
$350 million and $75 million, respectively. Both subsidiaries
have ample headroom under covenants governing those facilities
Both facilities, which had no direct borrowings outstanding as of
March 31, 2005, expire in October 2007.
SPR's next material debt maturities relate to a $240 million
short-term variable-rate note due November 16, 2005 and
approximately $140 million of notes due 2007. The short-term note
is earmarked to be repaid with proceeds from settlement of $240
million of common equity under forward contracts related to SPR's
"old" and "new" premium income equity securities. The $140
million of notes relate to the underlying debt component of "old"
PIES that are scheduled to be re-marketed in August 2005 as part
of the process leading to eventual settlement of forward contracts
to bring in additional common equity on November 15, 2005.
Meanwhile, the utility subsidiaries do not face any material debt
maturities in the next 12 months.
Sierra Pacific Resources ratings placed under review for possible
upgrade include:
* B1 corporate family rating
* B2 senior unsecured debt and issuer rating
* (P)B2 shelf registration rating for senior unsecured debt
* (P)Caa1 shelf registration rating for junior subordinated
debt
* (P)Caa1 shelf registration rating for trust preferred
securities of Sierra Pacific Resources Capital Trust I and
Sierra Pacific Resources Capital Trust II
Nevada Power Company ratings placed under review for possible
upgrade include:
* Ba2 senior secured debt
* Ba2 senior secured bank facility
* B1 senior unsecured debt and Issuer rating
* B3 trust preferred securities of NVP Capital I and NVP
Capital III
Sierra Pacific Power Company ratings placed under review for
possible upgrade include:
* Ba2 senior secured debt
* Ba2 senior secured bank facility
* B1 Issuer Rating
* Caa1 preferred stock
Sierra Pacific Resources is a holding company, whose principal
subsidiaries, Nevada Power Company and Sierra Pacific Power
Company, are electric and electric and gas utilities,
respectively. Sierra Pacific Resources also holds relatively
modest non-utility investments through other subsidiaries. Sierra
Pacific Resources' headquarters are in Las Vegas, Nevada.
SMITH'S LINCOLN: Case Summary & Largest Unsecured Creditor
----------------------------------------------------------
Debtor: Smith's Lincoln Log Homes, Inc.
P.O. Box 936
Old Fields, West Virginia 26845
Bankruptcy Case No.: 05-03102
Type of Business: The Debtor rents log cabins located near
the banks of the Potomac River in Old
Fields, West Virginia, to vacationers.
See http://ResearchArchives.com/t/s?8f
Chapter 11 Petition Date: July 21, 2005
Court: Northern District of West Virginia (Elkins)
Debtor's Counsel: Thomas E. Ullrich, Esq.
Wharton Aldhizer & Weaver, PLC
100 South Mason Street
P.O. Box 20028
Harrisonburg, Virginia 22801
Tel: (540) 438-5322
Fax: (540) 434-5502
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $500,000 to $1 Million
Debtor's Largest Unsecured Creditor:
Entity Nature of Claim Claim Amount
------ --------------- ------------
MBNA Platinum Trade debt $10,097
Plus for Business
P.O. Box 15469
Wilmington, DE 19086-5469
SORIN REAL: Fitch Places $4MM Fixed-Rate Subordinated Notes at BB
-----------------------------------------------------------------
Fitch Ratings assigns these ratings to Sorin Real Estate CDO I,
Ltd.:
-- $302,000,000 class A1 floating-rate senior notes, due 2040
'AAA';
-- $27,600,000 class A2 floating-rate senior notes, due 2040
'AAA';
-- $20,000,000 class B floating-rate senior notes, due 2040
'AA';
-- $12,100,000 class C floating-rate subordinate notes, due
2040 'A';
-- $14,100,000 class D floating-rate subordinate notes, due
2040 'BBB';
-- $4,000,000 class E floating-rate subordinate notes, due
2040 'BBB-';
-- $4,000,000 class F fixed-rate subordinate notes, due 2040
'BB'.
The ratings of the classes A1, A2, and B notes address the
likelihood that investors will receive full and timely payments of
interest, as per the governing documents, as well as the aggregate
outstanding amount of principal by the stated maturity date. The
ratings of the classes C, D, E, and F notes address the likelihood
that investors will receive ultimate interest and deferred
interest payments, as per the governing documents, as well as the
aggregate outstanding amount of principal by the stated maturity
date. Periodic payments on the notes will be paid quarterly,
starting in December 2005.
The ratings are based upon the capital structure of the
transaction, the credit quality of the collateral, approximately
85% of which will be purchased at close, and the
overcollateralization and interest coverage tests provided for
within the indenture. The collateral portfolio will be managed by
Sorin Capital Management LLC. The transaction has a reinvestment
period for five years beginning from the closing date.
During the reinvestment period, principal payments and sale
proceeds will remain available for purchasing substitute
collateral debt securities, subject to the satisfaction of the
reinvestment criteria. After the reinvestment period, principal
collections must be used to pay down the liabilities. Unscheduled
prepayment proceeds may be reinvested in substitute collateral
debt securities at the discretion of the collateral manager at any
time during the life of the transaction.
Interest payments are made on a sequential basis, beginning with
the class A1 notes. During the reinvestment period, principal
payments are made on a pro rata basis to classes A1, A2, B, C, D,
E, and F. After the reinvestment period has ended, principal
payments are used to pay down the notes sequentially.
The proceeds of the notes will be used to purchase a portfolio of
subprime residential mortgage backed securities, commercial
mortgage backed securities large loans, CMBS credit linked notes,
retail real estate interest trusts, collateralized debt
obligations, and corporates. The collateral has a maximum Fitch
weighted average rating factor of 7.26 ('BBB-'). The trustee will
solicit auction bids for the entire portfolio of securities,
beginning on the September 2013 pay date and continuing each pay
period thereafter until successful, whereby sales proceeds will be
used to pay down the notes.
The issuer is a special-purpose company incorporated under the
laws of the Cayman Islands. The portfolio of collateral will be
selected and managed by Sorin Capital Management LLC, which
manages over $1 billion in assets. Sorin Real Estate CDO I, Ltd.
is the first CDO to be managed by Sorin Capital.
The placement agent for this transaction is Citigroup Global
Markets, Inc.
For additional information on structural and other features of
Sorin, please see the Fitch presale report, 'Sorin Real Estate CDO
I, Ltd.,' dated June 7, 2005, which is available on Fitch's
subscription-based Web site, at http://www.fitchresearch.com/
STRUCTURED ASSET: Fitch Holds Junk Rating on Class 2B5 Certs.
-------------------------------------------------------------
Fitch Ratings affirms these Structured Asset Mortgage Investments,
Inc. issue:
SAMI, series 1999-1 Group 2
-- Class 2A affirmed at 'AAA';
-- Class 2B1 affirmed at 'AAA';
-- Class 2B2 affirmed at 'AA';
-- Class 2B3 affirmed at 'BBB+';
-- Class 2B4 affirmed at 'B';
-- Class 2B5 remains at 'CC'.
The affirmations, affecting approximately $7.5 million outstanding
certificates, are due to credit enhancement levels consistent with
future loss expectation in relation to collateral performance.
The series 1999-1 Group 2 transaction is backed by fixed-rate
mortgage loans. As of the June 25, 2005 distribution date, the
deal has a pool factor (current mortgage loans outstanding as a
percentage of the initial pool) of approximately 7%. There are
178 loans remaining in the pool. The current enhancement levels
for the classes 2A, 2B1, 2B2 and 2B3 have increased more than four
times their original CE levels at closing date (Feb. 26, 1999).
In addition, Group 1 of the above transaction has been paid in
full as of May 2005 distribution.
Further information regarding current delinquency, loss, and
credit enhancement statistics is available on the Fitch Ratings
web site at http://www.fitchratings.com/Fitch will continue to
monitor this deal.
UNITED FLEET: Case Summary & 10 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: United Fleet Maintenance, Inc.
5855 Kelley Street
Houston, Texas 77026
Bankruptcy Case No.: 05-41222
Chapter 11 Petition Date: July 22, 2005
Court: Southern District of Texas (Houston)
Judge: Letitia Z. Clark
Debtor's Counsel: Richard L Fuqua, II, Esq.
Fuqua & Keim
2777 Allen Parkway, Suite 480
Houston, Texas 77019
Tel: (713) 960-0277
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 10 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Shanks Services $21,975
9000 Emmott Road, Suite A
Houston, TX 77040
Westmoreland, Hall P.C. $14,334
Williams Tower, 64th Floor
2800 Post Oak Boulevard
Houston, TX 77056-6125
Seyfarth, Shaw LLP $13,000
700 Louisiana Street, Suite 3700
Houston, TX 77002-2797
Omni Financial $12,874
380 Interlocken Crescent, Suite 800
Broomfield, CO 80021-8036
HMC, LLC $11,426
12147 Burgoyne Drive
Houston, TX 77077
Rentea & Associates $10,000
P.O. Box 684568
Austin, TX 78768-4568
RemX Financial Staffing $2,500
File #92460
Los Angeles, CA 90074-2460
T Micro Solutions $2,002
3408 Hickory Creek Drive
Pearland, TX 77581
Liberty Office Products $1,500
P.O. Box 630729
Houston, TX 77263-0729
Texas Mutual Insurance Co. $0
P.O. Box 841843
Dallas, TX 75284-1843
UPC HOLDING: S&P Junks EUR300 Million Senior Secured Notes
----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' rating to
UPC Holding B.V.'s EUR300 million senior secured notes due 2014.
The notes are being issued under Rule 144A without registration
rights. In addition, a 'B' corporate credit rating was assigned
to this entity.
"These ratings were placed on CreditWatch with positive
implications concurrent with their assignment to reflect the
recently completed merger of UPC Holding's ultimate parent,
UnitedGlobalCom Inc., with Liberty Media International to form
Liberty Global Inc.," said Standard & Poor's credit analyst
Catherine Cosentino. Existing ratings for UGC and related
entities remain on CreditWatch with positive implications.
UPC Holding B.V. is the intermediate holding company for UPC
Broadband Holding B.V. and, in turn, is owned by UGC, a Denver-
based European and Latin American cable operator. The notes are
secured by a pledge of the shares of UPC Holding B.V. held by its
intermediate holding company, UGC Europe Financing B.V., which is
also a guarantor of the issue. Proceeds from the issue will be
used for general corporate purposes. Pro forma for this debt
issue and borrowings under UPC's bank facility that was upsized in
early 2005, UGC's overall debt to EBITDA (on an operating lease-
adjusted basis, including stock-based compensation expense) is
expected to be in the mid- to high-7x area for 2005. The rating
on the notes is two notches below the corporate credit rating
given the substantial concentration of priority obligations in the
capital structure (mainly comprising borrowings under UPC
Broadband Holdings B.V.'s EUR4 billion bank facility, which
totaled about EUR3 billion, pro forma for the recent bank tranche
refinancing).
On Jan. 19, 2005, Standard & Poor's placed its ratings on UGC and
related entities on CreditWatch with positive implications. This
action followed the announced merger agreement between UGC and its
approximate 53% economic owner, LMI. With the recently completed
merger, ratings on UGC need to reflect the ratings of the new
parent, which includes the assets of LMI. The rating on new
parent Liberty Global Inc. may be higher than the current 'B'
corporate credit rating on UGC, given its 45% interest in Japanese
cable TV operator Jupiter Telecommunications Co. Ltd. JCOM
generates substantial EBITDA and has good growth prospects
relative to that of UGC's European cable operations, which have
been viewed by Standard & Poor's as being fairly weak.
On Feb. 18, 2005, JCOM announced an initial public offering of its
common stock in Japan, which caused LMI's casting or tie-breaking
vote with regard to decisions by the management committee of
LMI/Sumisho Supermedia LLC to become effective. As a result, LMI
began to account for JCOM as a consolidated subsidiary effective
Jan. 1, 2005, and could exert effective control in the future. In
resolving the CreditWatch, Standard & Poor's will review the
business strategy for JCOM, and evaluate the combined company's
plans for the significant cash and noncore monetizable investment
balances at Liberty Global Inc., net of the approximate $695
million in cash payments to former UGC shareholders.
US AIRWAYS: ATSB Approves Planned Merger with America West
----------------------------------------------------------
US Airways Group, Inc. (OTC Bulletin Board: UAIRQ) and America
West Holdings Corporation (NYSE: AWA) received approval for their
planned merger from the Air Transportation Stabilization Board.
Both America West Airlines and US Airways hold loans backed by a
federal guarantee from the ATSB. The carriers have been in
negotiations on the treatment of those loans under their proposed
merger. Pending final bankruptcy court and US Airways board
approval and upon close of the merger, the two airlines'
outstanding ATSB loan guarantees will be consolidated with
payments beginning September 2005 through September 2010. Final
terms are still being negotiated.
"We are grateful for the Board's unanimous endorsement of our
proposed merger with US Airways," America West Chairman and CEO
Doug Parker said. "{Fri]day's announcement continues the positive
momentum for our planned merger and brings us one step closer to
building a stable future for our airlines."
"We appreciate the ATSB working closely with us to further our
efforts to restructure US Airways and preserve jobs while
protecting the federal government's interests. Their action will
enable the new US Airways to become a stronger and more viable
airline," said US Airways President and Chief Executive Officer
Bruce R. Lakefield.
In January 2002, America West Airlines, Inc., closed a
$429 million loan backed by a $380 million federal loan guarantee
provided by the ATSB. The current outstanding balance on this
loan is $300 million. US Airways, Inc., received a $900 million
loan guarantee under the Air Transportation Safety and System
Stabilization Act from the ATSB in connection with a $1 billion
term loan financing that was funded on March 31, 2003. The
current outstanding balance of that airline's loan is
$708 million.
America West Holdings Corporation is an aviation and travel
services company. Wholly owned subsidiary America West Airlines
is the nation's second largest low-fare carrier with 14,000
employees serving approximately 60,000 customers a day in more
than 90 destinations in the U.S., Canada, Mexico and Costa Rica.
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.
UTGR INC: S&P Rates $370 Million Senior Loan at B+
--------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' rating and a
recovery rating of '3' to UTGR Inc.'s $370 million senior credit
facility, reflecting Standard & Poor's expectation that the
lenders would realize a meaningful recovery of principal (50%-80%)
following a payment default.
At the same time, Standard & Poor's assigned its 'B-' rating and a
recovery rating of '5' to the company's $125 million seven-year
second-lien term loan, reflecting Standard & Poor's expectation
that the lenders would realize a negligible recovery of principal
(0%-25%) following a payment default.
In addition, Standard & Poor's assigned its 'B+' corporate credit
rating to the company. The outlook is stable. Pro forma for the
transaction, UTGR has $370 million in debt outstanding. The
outlook is stable.
Proceeds from the bank facility will be used primarily to fund
$125 million of construction costs associated with expanding and
renovating Lincoln Park, an existing racetrack with slot machines
(racino). The project will include 1,750 additional video lottery
terminals, bringing the total number of machines to 4,752,
additional restaurants, a parking structure, and various building
upgrades.
The ratings on UTGR reflect:
* high expected peak debt leverage,
* its reliance on a single source of cash flow,
* its burdensome tax structure (not unusual for racinos), and
* construction risks associated with the planned development.
"These factors are somewhat mitigated by Lincoln Park's favorable
location, good demographics in the surrounding areas, and our
expectation that the additional investment will be well received
due to the depth of the market," said Standard & Poor's credit
analyst Peggy Hwan.
VARTEC TELECOM: Court Approves USAC Compromise Agreement
--------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas in
Dallas authorized the Compromise Agreement executed by Vartec
Telecom, Inc., its debtor-affiliates and Universal Service
Administrative Company.
The Compromise Agreement resolves claims and counterclaims between
the Debtors and USAC related to payments made under the Universal
Service Fund. The Agreement avoids costly litigation that would
otherwise distract the Debtors from their restructuring efforts.
The Universal Service Fund
The Universal Service Fund is generated through contributions from
all telecommunications companies in the United States. USAC
administers the Fund under the direction of the Federal
Communications Commission.
USAC uses the Fund to defray the cost of delivering discounted
service to consumers and to provide affordable access to modern
telecommunications services for consumers, rural health care
facilities, schools and libraries.
Under the terms of the Fund, the Debtors are required to
contribute a percentage of the their annual revenues derived from
the rendering of interstate and international end user
telecommunication services.
USAC computes the contributions due from each company by comparing
actual and projected revenue data submitted by the companies and
makes the necessary adjustments for any overpayment or
underpayment made within a period. The adjustment, known as a
True-Up Adjustment, is applied to contributions due in the
succeeding period.
Settlement Terms
The Debtors will remit $173,112 to USAC to settle the balance of
their True-Up Credits. The amount due is computed as follows:
2003 Overpayment $ 6,226,858
2004 Contributions Applied (1,624,530)
---------
2004 Balance 4,602,328
2005 Contributions to be Applied (3,747,785)
2004 Underpayment (1,027,655)
---------
Settlement Balance $ (173,112)
=========
The settlement also releases USAC from claims asserted by the
Debtors on account of preferential transfers, totaling $2,448,867,
made prior to the petition date.
Headquartered in Dallas, Texas, Vartec Telecom Inc.
-- http://www.vartec.com/-- provides local and long distance
service and is considered a pioneer in promoting 10-10 calling
plans. The Company and its affiliates filed for chapter 11
protection on November 1, 2004 (Bankr. N.D. Tex. Case No.
04-81694. Daniel C. Stewart, Esq., William L. Wallander, Esq.,
and Richard H. London, Esq., at Vinson & Elkins, represent the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed more than $100
million in assets and debts.
WASHINGTON GROUP: Deutsche Bank Helps Monetize Class 7 Warrants
---------------------------------------------------------------
Deutsche Bank A.G. New York Branch has agreed to extend a
$76,600,000 loan to the Plan Committee created under the terms of
the Plan of Reorganization of Washington Group International Inc.
acting on behalf of the Washington Group International Inc.
Creditor Trust to monetize in-the-money Class 7 Warrants issued
under the Plan but not yet distributed to creditors.
Sharon Manewitz, a Managing Director at Teachers Insurance and
Annuity Association of America, chairs the Plan Committee.
Patrick A. Murphy, Esq., and Todd J. Dressel, Esq., at Winston &
Strawn LLP in San Francisco, provide legal counsel to the Plan
Committee.
Unless the undistributed Class 7 Warrants the Plan Committee is
holding in reserve are exercised by January 25, 2006, they will
expire by their own terms. Unless the Deutsche Bank loan facility
(or some other arrangement) is approved by the Bankruptcy Court,
the Plan Committee won't have the cash necessary to exercise the
warrants. The Plan Committee proposes to borrow the $76.6 million
from Deutsche Bank, exercise the warrants, sell the shares it
receives, and use the sale proceeds to repay the loan within 90
days.
The Plan Committee agrees to pay Deutsche Bank a 2% Commitment Fee
and a 1.5% Facility Fee, reimburse all expenses and pay interest
at a variable rate from 350 to 650 basis points over LIBOR. The
loan is fully collateralized by all of the Plan Committee's
assets.
A full-text copy of the Commitment Letter and Term Sheet is
available at no charge at:
http://bankrupt.com/misc/DB-WGII-Commitment-Letter.pdf
The Commitment Letter requires approval by the U.S. Bankruptcy
Court for the District of Nevada by August 16, 2005. Deutsche
Bank is entitled to a $2.1 million Break-Up Fee in the event the
Plan Committee gets a better deal elsewhere.
Brent Williams, a Managing Director at Saybrook Capital LLC, says
the Deutsche Bank Commitment Letter and Term Sheet "represent the
most efficient and feasible solution for maintaining the value of
the Warrants for Class 7." Saybrook serves as the financial
advisor to the Plan Committee.
Deutsche Bank is represented in this transaction by:
Anthony Princi, Esq.
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, NY 10103
Telephone (212) 506-5155
Washington Group, an international engineering and construction
firm, offers a full life-cycle of services as a preferred provider
of premier science, engineering, construction, program management,
and development. Washington Group International, Inc., et al.,
filed for chapter 11 protection on May 14, 2001 (Bankr. D. Nev.
Case No. 01-31627), filed their Plan of Reorganization, as
subsequently amended and modified, on July 24, 2001, and that Plan
took effect on January 25, 2002. Timothy R. Pohl, Esq., Gregg M.
Galardi, Esq., and Eric M. Davis, Esq., at SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP, guided the company through its successful
restructuring.
WHX CORP: Bankruptcy Court Confirms Chapter 11 Reorganization Plan
------------------------------------------------------------------
The U.S. Bankruptcy Court confirmed WHX Corporation's (Symbol:
WHXCQ) Chapter 11 plan of reorganization on July 21, 2005, paving
the way for the Company's prompt emergence from bankruptcy after
it first filed for Chapter 11 relief on March 7, 2005. Final
consummation of the Plan is expected to occur next week.
Upon the effective date of the Plan, the reorganized Debtor, which
will be a newly formed Delaware corporation, will be owned by the
Company's unsecured creditors and preferred shareholders.
Creditors will receive 92% of the new Company's common stock. The
Company's preferred shareholders will own the remaining 8% (and
will also receive warrants for the purchase of an additional 7%)
of the new Company's common stock. Upon emergence, there will be
a single class of common stock.
The initial Board of Directors of the new Company will be
comprised of five individuals designated by creditors, Messrs.
Warren Lichtenstein, Jack Howard, Joshua Schechter, Glen Kassan,
and John Quicke.
"Consummation of the Plan marks the culmination of the Company's
efforts to reduce debt and simplify its capital structure which
positions the Company to be able to take advantage of future
growth and value opportunities," the Company's Chief Executive
Officer, Neale X. Trangucci, said.
Mr. Trangucci added, "We are extremely pleased that the Company
navigated its way through Chapter 11 in less than 5 months.
Moreover, we are pleased that Handy & Harman's business operated
uninterrupted during the Chapter 11 proceeding."
WHX is a holding company that has been structured to invest in
and/or manage a diverse group of businesses. WHX's primary
business is Handy & Harman, a diversified manufacturing company
with activities in precious metals fabrication, specialty tubing
and engineered materials.
Headquartered in New York City, New York, WHX Corporation
-- http://www.whxcorp.com/-- is a holding company structured to
acquire and operate a diverse group of businesses on a
decentralized basis. WHX's primary business is Handy & Harman, a
diversified industrial manufacturing company servicing the
electronic materials, specialty wire and tubing, specialty
fasteners and fittings, and precious metals fabrication markets.
The Company filed for chapter 11 protection on March 7, 2005
(Bankr. S.D.N.Y. Case No. 05-11444). When the Debtor filed for
protection from its creditors, it reported total assets of
$406,875,000 and total debts of $352,852,000.
WILLIAMS SCOTSMAN: Noteholders Agree to Amend Sr. & Secured Notes
-----------------------------------------------------------------
Williams Scotsman, Inc., received requisite consents to eliminate
substantially all of the restrictive covenants for the indentures
governing:
(i) any and all of its outstanding 9-7/8% Senior Notes due
2007; and
(ii) any and all of its outstanding 10% Senior Secured Notes
due 2008.
As a result of obtaining the requisite consents, Williams Scotsman
executed and delivered supplemental indentures setting forth the
amendments to the indentures governing the Notes. The
supplemental indentures provide that the amendments to the
indentures will only become operative when validly tendered Notes
are accepted for purchase pursuant to the tender offers. Notes
tendered may not be withdrawn and consents delivered may not be
revoked except that the holders of the tendered Notes have the
right to withdraw the tendered Notes effective after Aug. 29,
2005, if the company extends the expiration date of the tender
offer and consent solicitation beyond Aug. 29, 2005.
The tender offers will expire at 5:00 P.M., New York City Time, on
Aug. 24, 2005, unless extended. Closing of the tender offers is
subject to:
(i) the company having available funds sufficient to pay the
total consideration with respect to all Notes tendered
from the proceeds of the initial public offering of the
common stock of Williams Scotsman International, Inc.,
the parent of the company, a new notes offering of the
company and/or the borrowings under its credit facility;
(ii) the tender of a majority in principal amount of each
class of Notes by the holders; and
(iii) certain other customary conditions.
This news release is neither an offer to purchase nor a
solicitation of an offer to sell the Notes. The offer is being
made only by reference to the Offer to Purchase and Consent
Solicitation Statement dated June 23, 2005, and as amended on
July 5, 2005 and related applicable Consent and Letter of
Transmittal. Copies of documents may be obtained from MacKenzie
Partners, Inc., the Information Agent, at (212) 929-5500 or toll-
free at (800) 322-2885.
Williams Scotsman, Inc., headquartered in Baltimore, Maryland, is
a provider of modular space solutions for the construction,
education, commercial and industrial, and government markets. The
company serves over 25,000 customers, operating a fleet of
approximately 97,000 modular space and portable storage units that
are leased through a network of 85 branches. Williams Scotsman
provides delivery, installation, and other services to its leasing
customers, and sells new and used modular space products and
services.
* * *
As reported in the Troubled Company Reporter on May 19, 2005,
Standard & Poor's Ratings Services assigned its 'B+' bank loan
rating and a recovery rating of '1' to Williams Scotsman Inc.'s
proposed five-year, $650 million secured bank facility, based on
preliminary terms and conditions. This senior secured rating is
also placed on CreditWatch with positive implications. When the
terms of the bank facility are finalized and the existing facility
is redeemed, Standard & Poor's will withdraw its ratings on the
company's existing credit facility.
Standard & Poor's ratings on the Baltimore, Maryland-based mobile
storage and modular building lessor, including the 'B' corporate
credit rating, remain on CreditWatch with positive implications,
where they were placed on May 2, 2005. The CreditWatch placement
followed the S-1 filing by parent company Scotsman Holdings Inc.
for an IPO of up to $250 million. The proceeds from the IPO,
along with a new unsecured debt offering and $650 million bank
facility, is expected to be used to redeem the company's
outstanding notes and borrowings under its existing bank
agreement. At March 31, 2005, the company had approximately $1.0
billion in lease-adjusted debt outstanding.
"Ratings on Williams Scotsman Inc. reflect its weak financial
profile, substantial debt burden, and concerns regarding potential
covenant violations on the existing credit facility," said
Standard & Poor's credit analyst Kenneth L. Farer. Positive
credit factors include the company's large (approximately 25%)
market share of the modular space leasing market and fairly stable
cash flow despite weak earnings.
WILLIAMS SCOTSMAN: Posts $2.7 Million Net Loss in Second Quarter
----------------------------------------------------------------
Williams Scotsman, Inc., reported revenues for the quarter ended
June 30, 2005 of $135.0 million, which represents an 8.7% increase
from $124.2 million in the comparable period of 2004. Gross
profit was $52.2 million and $46.1 million for the quarters ended
June 30, 2005 and 2004, respectively. EBITDA was $42.3 million
for the quarter ended June 30, 2005, which was up 11.2% from
$38 million in the comparable period of 2004.
Net loss for the quarter ended June 30, 2005 was $2.7 million, an
increase of $2.4 million from ($0.3) million in the comparable
period of 2004. During the second quarter of 2005, the Company
recorded a loss on the early extinguishment of debt of
$5.2 million. Cash flow from operating activities was $4.8
million for the quarter ended June 30, 2005, a decrease of
approximately $2.2 million from $7.0 million in the comparable
period of 2004. Cash flow used in investing activities was
$38.4 million for the quarter ended June 30, 2005, an increase of
approximately $24.5 million from $13.9 million in the comparable
period of 2004. Cash flow from financing activities was
$32.2 million for the quarter ended June 30, 2005, an increase of
approximately $25.8 million from $6.4 million in the comparable
period of 2004.
Revenues for the six months ended June 30, 2005 were
$261.1 million, which represents a 13% increase from $231.1
million in the comparable period of 2004. Gross profit was
$102 million and $90.0 million for the six months ended June 30,
2005 and 2004, respectively. EBITDA was $81.6 million for the six
months ended June 30, 2005, which was up 12.0% from $72.9 million
in the comparable period of 2004.
Net loss for the six months ended June 30, 2005 was $3.5 million,
an increase of $1.4 million from $2.1 million in the comparable
period of 2004. For the six months ended 2005, the Company
recorded a loss on the early extinguishment of debt of
$5.2 million. Cash flow from operating activities was
$19.6 million for the six months ended June 30, 2005, a decrease
of approximately $8.3 million from $27.9 million in the comparable
period of 2004. Cash flow used in investing activities was
$59.7 million for the six months ended June 30, 2005, a decrease
of approximately $6.4 million from $66.1 million in the comparable
period of 2004. Cash flow from financing activities was
$40 million for the six months ended June 30, 2005, an increase of
approximately $1.6 million from $38.4 million in the comparable
period of 2004.
Cash Flow Results for the Quarter and
Six Months Ended June 30, 2005
The $2.2 million decrease in cash flow from operating activities
for the quarter ended June 30, 2005 was primarily the result of
increased interest paid as a result of additional borrowings under
the Company's credit facility and increased accounts receivable,
partially offset by increased accounts payable and accrued
expenses in comparison with the same period of 2004.
The increase in accounts receivable was primarily associated with
the increase in revenues for the period while the increase in
accounts payable and other accrued expenses resulted primarily
from the timing of related payments. The $8.4 million decrease in
cash flow from operating activities for the six months ended
June 30, 2005 was primarily the result of increased interest paid
as a result of additional borrowings and decreases in accounts
payable balances primarily related to timing of payments.
Sales of new units and rental equipment, as well as increased
leasing gross profit, positively impacted cash flow from operating
activities during the quarter and six months ended June 30, 2005.
The Company's leverage ratio at June 30, 2005 was 6.35x, up from
6.26x at March 31, 2005. The increase is due to higher seasonal
debt levels as a result of the $27.2 million semi-annual coupon
payment on our 9-7/8 notes on June 1, as well as $8.3 million in
fees paid in June 2005 in connection with the amended and restated
credit agreement, partially offset by an increase in our trailing
four quarters Consolidated EBITDA (as defined herein). Excluding
the credit facility fees, the leverage ratio would have been
6.30:1 at June 30, 2005. The leverage ratio is calculated by
dividing total debt by trailing twelve months Consolidated EBITDA.
If cash flow from operating activities, the most directly
comparable GAAP measure to Consolidated EBITDA were used in these
calculations instead of Consolidated EBITDA, our leverage ratio
would have been 21.80:1.
Williams Scotsman, Inc., headquartered in Baltimore, Maryland, is
a provider of modular space solutions for the construction,
education, commercial and industrial, and government markets. The
company serves over 25,000 customers, operating a fleet of
approximately 97,000 modular space and portable storage units that
are leased through a network of 85 branches. Williams Scotsman
provides delivery, installation, and other services to its leasing
customers, and sells new and used modular space products and
services.
* * *
As reported in the Troubled Company Reporter on May 19, 2005,
Standard & Poor's Ratings Services assigned its 'B+' bank loan
rating and a recovery rating of '1' to Williams Scotsman Inc.'s
proposed five-year, $650 million secured bank facility, based on
preliminary terms and conditions. This senior secured rating is
also placed on CreditWatch with positive implications. When the
terms of the bank facility are finalized and the existing facility
is redeemed, Standard & Poor's will withdraw its ratings on the
company's existing credit facility.
Standard & Poor's ratings on the Baltimore, Maryland-based mobile
storage and modular building lessor, including the 'B' corporate
credit rating, remain on CreditWatch with positive implications,
where they were placed on May 2, 2005. The CreditWatch placement
followed the S-1 filing by parent company Scotsman Holdings Inc.
for an IPO of up to $250 million. The proceeds from the IPO,
along with a new unsecured debt offering and $650 million bank
facility, is expected to be used to redeem the company's
outstanding notes and borrowings under its existing bank
agreement. At March 31, 2005, the company had approximately $1.0
billion in lease-adjusted debt outstanding.
"Ratings on Williams Scotsman Inc. reflect its weak financial
profile, substantial debt burden, and concerns regarding potential
covenant violations on the existing credit facility," said
Standard & Poor's credit analyst Kenneth L. Farer. Positive
credit factors include the company's large (approximately 25%)
market share of the modular space leasing market and fairly stable
cash flow despite weak earnings.
* BOND PRICING: For the week of July 18 - July 22, 2005
-------------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
ABC Rail Product 10.500% 01/15/04 0
Adelphia Comm. 3.250% 05/01/21 5
Adelphia Comm. 6.000% 02/15/06 5
Allegiance Tel. 11.750% 02/15/08 30
Allegiance Tel. 12.875% 05/15/08 1
Allied Holdings 8.625% 10/01/07 51
Amer. Color Graph. 10.000% 06/15/10 71
Amer. Plumbing 11.625% 10/15/08 16
Amer. Restaurant 11.500% 11/01/06 64
American Airline 7.377% 05/23/19 73
American Airline 7.379% 05/23/16 72
American Airline 10.180% 01/02/13 72
American Airline 10.680% 03/04/13 65
American Airline 11.000% 05/06/15 69
AMR Corp. 9.200% 01/30/12 70
AMR Corp. 9.750% 08/15/21 64
AMR Corp. 9.800% 10/01/21 66
AMR Corp. 9.820% 10/25/11 73
AMR Corp. 9.880% 06/15/20 61
AMR Corp. 10.000% 04/15/21 72
AMR Corp. 10.200% 03/15/20 67
AMR Corp. 10.400% 03/15/11 62
AMR Corp. 10.550% 03/12/21 72
Anchor Glass 11.000% 02/15/13 65
Antigenics 5.250% 02/01/25 60
Anvil Knitwear 10.875% 03/15/07 58
AP Holdings Inc. 11.250% 03/15/08 15
Apple South Inc. 9.750% 06/01/06 5
Archibald Candy 10.000% 11/01/07 2
Armstrong World 6.500% 08/15/05 75
Asarco Inc. 7.875% 04/15/13 70
Asarco Inc. 8.500% 05/01/25 65
AT Home Corp. 0.525% 12/28/18 7
AT Home Corp. 4.750% 12/15/06 32
ATA Holdings 12.125% 06/15/10 20
ATA Holdings 13.000% 02/01/09 20
Atlantic Coast 6.000% 02/15/34 15
Atlas Air Inc. 8.770% 01/02/11 57
Atlas Air Inc. 9.702% 01/02/08 58
Autocam Corp. 10.875% 06/15/14 64
B&G Foods Hldg. 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
Burlington North 3.200% 01/01/45 62
Calpine Corp. 4.750% 11/15/23 71
Calpine Corp. 7.750% 04/15/09 65
Calpine Corp. 7.875% 04/01/08 66
Calpine Corp. 8.500% 07/15/10 75
Calpine Corp. 8.500% 02/15/11 67
Calpine Corp. 8.625% 08/15/10 66
Calpine Corp. 8.750% 07/15/13 74
Cendant Corp. 4.890% 08/17/06 50
Charter Comm Inc. 5.875% 11/16/09 69
Charter Comm Inc. 5.875% 11/16/09 73
Ciphergen 4.500% 09/01/08 72
Coeur D'Alene 1.250% 01/15/24 74
Collins & Aikman 10.750% 12/31/11 28
Color Tile Inc. 10.750% 12/15/01 0
Comcast Corp. 2.000% 10/15/29 43
Comprehens Care 7.500% 04/15/10 23
Cons Container 10.125% 07/15/09 73
Covad Communication 3.000% 03/15/24 68
Covant-Call 07/05 7.500% 03/15/12 69
Cray Inc. 3.000% 12/01/24 53
Cray Research 6.125% 02/01/11 43
Delta Air Lines 2.875% 02/18/24 33
Delta Air Lines 7.299% 09/18/06 60
Delta Air Lines 7.711% 09/18/11 57
Delta Air Lines 7.779% 01/02/12 50
Delta Air Lines 7.900% 12/15/09 36
Delta Air Lines 7.920% 11/18/10 57
Delta Air Lines 8.000% 06/03/23 37
Delta Air Lines 8.300% 12/15/29 28
Delta Air Lines 8.540% 01/02/07 63
Delta Air Lines 8.540% 01/02/07 44
Delta Air Lines 8.540% 01/02/07 61
Delta Air Lines 9.000% 05/15/16 30
Delta Air Lines 9.200% 09/23/14 31
Delta Air Lines 9.250% 03/15/22 28
Delta Air Lines 9.375% 09/11/07 56
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 69
Delta Air Lines 10.000% 08/15/08 39
Delta Air Lines 10.000% 12/05/14 35
Delta Air Lines 10.125% 05/15/10 38
Delta Air Lines 10.140% 08/26/12 47
Delta Air Lines 10.375% 02/01/11 37
Delta Air Lines 10.375% 12/15/22 29
Delta Air Lines 10.500% 04/30/16 45
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 24
Delphi Auto System 7.125% 05/01/29 73
Delphi Trust II 6.197% 11/15/33 55
Dura Operating 9.000% 05/01/09 70
DVI Inc. 9.875% 02/01/04 8
Dyersburg Corp. 9.750% 09/01/07 0
Eagle-Picher Inc. 9.750% 09/01/13 74
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 3
Exodus Comm. Inc. 5.250% 02/15/08 0
Fedders North Am. 9.875% 03/01/14 72
Federal-Mogul Co. 7.375% 01/15/06 27
Federal-Mogul Co. 7.500% 01/15/09 27
Federal-Mogul Co. 8.160% 03/06/03 24
Federal-Mogul Co. 8.370% 11/15/01 24
Federal-Mogul Co. 8.800% 04/15/07 27
Fibermark Inc. 10.750% 04/15/11 61
Finisar Corp. 5.250% 10/15/08 74
Finova Group 7.500% 11/15/09 28
Firstworld Comm 13.000% 04/15/08 0
Foamex L.P. 9.875% 06/15/07 36
Foamex L.P. 13.500% 08/15/05 46
GMAC 5.900% 01/15/19 75
GMAC 5.900% 10/15/19 73
GMAC 6.000% 03/15/19 75
GMAC 6.000% 03/15/19 74
GMAC 6.900% 07/15/18 72
Golden Books Pub 10.750% 12/31/04 0
Graftech Int'l 1.625% 01/15/24 64
Graftech Int'l 1.625% 01/15/24 69
Gulf States STL 13.500% 04/15/03 0
HNG Internorth 9.625% 03/15/06 37
Home Interiors 10.125% 06/01/08 57
Holt Group 9.750% 01/15/06 0
Impsat Fiber 6.000% 03/15/11 70
Inland Fiber 9.625% 11/15/07 43
Integrated Elec. Sv 9.375% 02/01/09 73
Integrated Elec. Sv 9.375% 02/01/09 73
Interep Natl. Rad 10.000% 07/01/08 75
Intermet Corp. 9.750% 06/15/09 45
Iridium LLC/CAP 10.875% 07/15/05 16
Iridium LLC/CAP 11.250% 07/15/05 17
Iridium LLC/CAP 13.000% 07/15/05 18
Iridium LLC/CAP 14.000% 07/15/05 18
Kaiser Aluminum & Chem. 12.750% 02/01/03 6
Kellstorm Inds 5.750% 10/15/02 0
Kmart Corp. 8.990% 07/05/10 62
Kmart Corp. 9.350% 01/02/20 26
Level 3 Comm. Inc. 2.875% 07/15/10 52
Level 3 Comm. Inc. 5.250% 12/15/11 72
Level 3 Comm. Inc. 6.000% 09/15/09 55
Level 3 Comm. Inc. 6.000% 03/15/10 58
Liberty Media 3.250% 03/15/31 75
Liberty Media 3.750% 02/15/30 58
Liberty Media 4.000% 11/15/29 62
Lukens Inc. 7.625% 08/01/04 0
Metaldyne Corp. 11.000% 06/15/12 72
Motels of Amer. 12.000% 04/15/04 35
Muzak LLC 9.875% 03/15/09 46
MSX Intl. Inc. 11.375% 01/15/08 64
Natl Steel Corp. 8.375% 08/01/06 3
Natl Steel Corp. 9.875% 03/01/09 1
New World Pasta 9.250% 02/15/09 8
Nexprise Inc. 6.000% 04/01/07 0
North Atl. Trading 9.250% 03/01/12 73
Northern Pacific Railway 3.000% 01/01/47 60
Northwest Airlines 7.248% 01/02/12 51
Northwest Airlines 7.360% 02/01/20 55
Northwest Airlines 7.626% 04/01/10 72
Northwest Airlines 7.691% 04/01/17 71
Northwest Airlines 7.875% 03/15/08 40
Northwest Airlines 8.070% 01/02/15 46
Northwest Airlines 8.130% 02/01/14 50
Northwest Airlines 8.700% 03/15/07 45
Northwest Airlines 8.875% 06/01/06 64
Northwest Airlines 9.875% 03/15/07 47
Northwest Airlines 10.000% 02/01/09 42
Northwest Airlines 10.500% 04/01/09 50
Nutritional Src. 10.125% 08/01/09 72
NWA Trust 9.360% 03/10/06 75
Oakwood Homes 7.875% 03/01/04 16
Oakwood Homes 8.125% 03/01/09 20
O'Sullivan Ind. 13.375% 10/15/09 5
Orion Network 11.250% 01/15/07 54
Outboard Marine 7.000% 07/01/02 0
Outboard Marine 9.125% 04/15/17 0
Owens Corning 7.000% 03/15/09 74
Owens Corning 7.500% 05/01/05 75
Owens Corning 7.500% 08/01/18 74
Owens Corning 7.700% 05/01/08 70
Owens-Crng Fiber 8.875% 06/01/02 71
Pegasus Satellite 9.750% 12/01/06 54
Pegasus Satellite 12.375% 08/01/06 54
Pegasus Satellite 12.500% 08/01/07 54
Pen Holdings Inc. 9.875% 06/15/08 61
Polaroid Corp. 6.750% 01/15/02 0
Polaroid Corp. 7.250% 01/15/07 0
Polaroid Corp. 11.500% 02/15/06 0
Primedex Health 11.500% 06/30/08 65
Primus Telecom 3.750% 09/15/10 24
Primus Telecom 5.750% 02/15/07 32
Primus Telecom 8.000% 01/15/14 50
Primus Telecom 12.750% 10/15/09 37
Radnor Holdings 11.000% 03/15/10 67
Raintree Resorts 13.000% 12/01/04 13
RDM Sports Group 8.000% 08/15/03 0
Realco Inc. 9.500% 12/15/07 45
Reliance Group Holdings 9.000% 11/15/00 25
Reliance Group Holdings 9.750% 11/15/03 2
RJ Tower Corp. 12.000% 06/01/13 71
Salton Inc. 12.250% 04/15/08 54
Silicon Graphics 6.500% 06/01/09 61
Solectron Corp. 0.500% 02/15/34 70
Specialty Paperb. 9.375% 10/15/06 69
Tekni-Plex Inc. 12.750% 06/15/10 72
Teligent Inc. 11.500% 03/01/08 1
Tom's Foods Inc. 10.500% 11/01/04 68
Tower Automotive 5.750% 05/15/24 21
Trans Mfg Oper 11.250% 05/01/09 58
Triton PCS Inc. 8.750% 11/15/11 74
Triton PCS Inc. 9.375% 02/01/11 75
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 44
United Air Lines 6.932% 09/01/11 73
United Air Lines 7.270% 01/30/13 43
United Air Lines 7.762% 10/01/05 28
United Air Lines 7.811% 10/01/09 60
United Air Lines 8.030% 07/01/11 40
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 41
United Air Lines 9.060% 09/26/14 45
United Air Lines 9.125% 01/15/12 15
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 35
United Air Lines 9.350% 04/07/16 51
United Air Lines 9.560% 10/19/18 41
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 47
United Air Lines 10.250% 07/15/21 15
United Air Lines 10.670% 05/01/04 15
United Air Lines 11.210% 05/01/14 14
Univ. Health Services 0.426% 06/23/20 66
US Air Inc. 10.250% 01/15/07 2
US Air Inc. 10.250% 01/15/07 4
US Air Inc. 10.300% 01/15/08 15
US Air Inc. 10.300% 07/15/08 15
US Air Inc. 10.610% 06/27/07 0
US Air Inc. 10.610% 06/27/07 2
US Air Inc. 10.900% 01/01/08 2
US Airways Pass 6.820% 01/30/14 44
Venture Hldgs 9.500% 07/01/05 0
Venture Hldgs 11.000% 06/01/07 0
WCI Steel Inc. 10.000% 12/01/04 66
Werner Holdings 10.000% 11/15/07 70
Westpoint Steven 7.875% 06/15/08 0
Wheeling-Pitt St. 5.000% 08/01/11 65
Wheeling-Pitt St. 6.000% 08/01/10 65
Winn-Dixie Store 8.875% 04/01/08 71
Winsloew Furniture 12.750% 08/15/07 28
World Access Inc. 13.250% 01/15/08 6
Xerox Corp. 0.570% 04/21/18 30
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M.
Pinili, and Peter A. Chapman, Editors.
Copyright 2005. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***