/raid1/www/Hosts/bankrupt/TCR_Public/050729.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, July 29, 2005, Vol. 9, No. 178
Headlines
ADELPHIA COMMS: Keys Gate & M&H File Breach of Contract Lawsuit
AEROGEN INC: June 30 Balance Sheet Upside-Down by $1.7 Million
AES CORP: Restates Financials to Alter Deferred Tax Accounting
AIR CANADA: Cuts Charlottetown Services After P. Edward Island Row
AMERICAN TOWER: S&P Lifts Corporate Credit Rating to BB
AMHERST TECHNOLOGIES: Look for Bankruptcy Schedules on Sept. 7
AMR CORP: June 30 Balance Sheet Upside-Down by $615 Million
ANY MOUNTAIN: Specialty Sports Acquires Assets
BANC OF AMERICA: Fitch Raises Rating on $21.9 Mil. Certs. to BBB-
BORGER ENERGY: Steam Volume Reduction Prompts S&P to Cut Rating
BRASOTA MORTGAGE: Trustee Wants Lawyers to Return Retainers
CARAUSTAR INDUSTRIES: Earns $100,000 of Net Income in 2nd Quarter
CATHOLIC CHURCH: Spokane Tort Panel Balks at Southwell Retention
CENTRAL VERMONT: Reports $2.1 Million Earnings for Second Quarter
CENTURY/ML: Gets Court Approval to Employ PwC as Accountant
CHI-CHI'S: Wants to Sell Assets to WI QSL for $1.75 Million
CHI-CHI'S: Wants to Pay $1,975,000 to One Hepatitis A Victim
CIMAREX ENERGY: Amends Cash Tender Offer for Magnum's Senior Notes
CIRCUIT RESEARCH: Net Losses Spur Going Concern Doubt
CNH GLOBAL: Earns $114 Million of Net Income in Second Quarter
CULLODEN TIMBER: Case Summary & 19 Largest Unsecured Creditors
D&G INVESTMENTS: Section 341(a) Meeting Slated for Aug. 25
DELTA AIR: Employees Thank Lawmakers Supporting Pension Reform
DLJ COMMERCIAL: Fitch Holds Low-B Ratings on 6 Certificate Classes
DLJ COMMERCIAL: Fitch Junks Rating on $12.4 Mil. Mortgage Certs.
ENRON CORP: Court Okays Settlement Pact Under Trigen Contracts
ENRON CORP: Royal Bank Inks $49 Million MegaClaims Settlement
ENRON CORP: Wants Smurfit Entities to Return $1.9 Mil. to Estate
EXIDE TECH: Appoints Rich Cockrell as Senior Director
EXIDE TECH: Closes Senior Secured & Convertible Note Offerings
FEDERAL-MOGUL: Inks Environmental Settlement Pact with Michigan
FIRST UNION: Fitch Affirms Low-B Ratings on 6 Certificate Classes
FRANK'S NURSERY: Exits Chapter 11 as FNC Realty Corp.
GMAC COMMERCIAL: Fitch Affirms Low-B Rating on Six Cert. Classes
G-STAR 2003-3: Fitch Holds BB Rating on $24 Mil. Preferred Shares
HEALTHEAST: Fitch Puts BB+ Rating on $195 Mil. Series 2005 Bonds
HPL TECHNOLOGIES: Recurring Losses Prompt Going Concern Doubt
HPL TECHNOLOGIES: Secures $3M Bridge Loan from Silicon Valley Bank
IMPROVENET INC: Stockholders to Vote on Merger at Aug. 9 Meeting
INTERCELL INTERNATIONAL: Court Sets August 5 as Claims Bar Date
INTERSTATE BAKERIES: Can Walk Away from 18 Real Estate Leases
INTERSTATE BAKERIES: Court Okays $2.3MM 363 Sale to R.W. Van Auker
INTERSTATE BAKERIES: Court Okays $14 Million San Pedro Asset Sale
IPC ACQUISITION: Extends Tender Offer for 11.5% Notes Until Aug. 5
JILLIAN'S ENT: Court Turns Down Proposed Asset Sale
KAISER ALUMINUM: Court Authorizes Sherwin Alumina to Amend Claim
KAISER ALUMINUM: Wants USWA Experts' Fees Paid Under Revised Pact
LAIDLAW INT'L: Earns $29.4 Million of Net Income in Third Quarter
LAUREL VALLEY: Chapter 11 Involuntary Case Summary
MEGA-C: Axion Files Declaratory Judgment Against Ch. 11 Trustee
MERIDIAN AUTOMOTIVE: Wants Exclusive Period Stretched to Dec. 22
MERIDIAN AUTOMOTIVE: Wants Stay Lifted to Settle Grievance Claims
MERITAGE HOMES: Earns $59.2 Million of Net Income in 2nd Quarter
METALFORMING TECH: Court Approves Auction on September 26
MIRANT CORP: PBGC Agrees Not to Vote Its $146 Million Claims
MIRANT CORP: Wants Avoidance Actions & Claim Objections Stayed
MITCHELL EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors
NATIONAL ENERGY: Wants Court to Compel $1.4MM Columbia Gas Payment
NRG ENERGY: Submits Bid for New York Power Plant Contract
OEM SALES: Case Summary & 20 Largest Unsecured Creditors
ORBIMAGE HOLDINGS: S&P Lifts Rating on $250 Mil. Sr. Notes to B-
OWENS CORNING: Asks Court to Approve Aircraft Sale Procedures
PHILLIP NEIDLINGER: Case Summary & 9 Largest Unsecured Creditors
PHOENIX CDO: Fitch Holds Junk Ratings on Three Note Classes
PILLOWTEX CORP: Inks Confidentiality Pact with Former Employees
PITTSBURGH COATINGS: Voluntary Chapter 11 Case Summary
PLYMOUTH RUBBER: Hires Focus Management Group as Financial Advisor
PROXIM CORP: Terabeam Wireless Completes Acquisition of All Assets
RCN CORP: Will Pay $4.9 Mil. to Resolve Kemper & Broadspire Claims
RELIANCE GROUP: Foxmeyer Trustee Sells RIC Claim to Goldman Sachs
RELIANCE GROUP: Liquidator Can Repurchase & Sell 3-Acre Property
RHODES INC: Will Auction Stores on August 8
ROUGE INDUSTRIES: Tinkers with Development Specialists' Fees
ROUGE INDUSTRIES: Expands Scope of Clifford Chance's Engagement
ROBERT ADAMS: Voluntary Chapter 11 Case Summary
SBA COMMUNICATIONS: S&P Lifts Rating on $400 Million Loan to BB
SFBC INTERNATIONAL: Reports Second Quarter 2005 Financial Results
SHAW GROUP: Debt Reduction Cues S&P to Lift Credit Rating to BB
SOLUTIA INC: Paying $5 Million to Alabama PCB Claimants on Aug. 26
SPECTRASITE INC: S&P Lifts Corporate Credit Rating to BB+
SPIEGEL INC: Commerzbank Holds Allowed $40,546,444 Claim
STELCO INC: CEO Urges Union to Go Back to Negotiating Table
SUNRISE CDO: Fitch Cuts Rating on $45 Million Notes 4 Notches to B
TIAA REAL: Fitch Affirms BB Rating on $12 Mil. Fixed-Rate Notes
TIAA REAL: Fitch Holds BB- Rating on $25 Mil. Preferred Equity
TORCH OFFSHORE: Asks Court to Allow Set-Off Deal with Helis Oil
TULLY'S COFFEE: Apr. 3 Balance Sheet Upside-Down by $10.7 Million
US AIRWAYS: Valuation Analysis Under Ch. 11 Plan of Reorganization
USG CORP: Selling U.S. Gypsum's Natural Gas Assets for $2 Million
USGEN NEW ENGLAND: Inks Settlement Pact with Mohawk River Funding
VINTAGE WINE: Voluntary Chapter 11 Case Summary
WESTPOINT: Beal Bank Will Bring Asset Sale Conflict to Dist. Court
WORLD CLASS: Case Summary & 4 Largest Unsecured Creditors
XYBERNAUT CORP: Wants to Hire McGuireWoods as Bankruptcy Counsel
* Alvarez & Marsal and Saint Joseph's Univ. Launch New Forum
* Derek Pierce Joins Alvarez & Marsal's Healthcare Industry Group
* Lauren Sheridan Joins Alvarez & Marsal as Senior Director
* Shannon Gracey Adds Partners in New Austin & Houston Offices
* Senate Approves Pension Relief for Airlines
* BOOK REVIEW: Taking America: How We Got from the First
Hostile Takeover to Megamergers, Corporate
Raiding, and Scandal
*********
ADELPHIA COMMS: Keys Gate & M&H File Breach of Contract Lawsuit
---------------------------------------------------------------
Keys Gate Community Association, Inc., a not-for-profit
corporation, manages a residential complex in Homestead Florida
commonly known as Keys Gate. M&H Homestead, Ltd., is the
developer of Keys Gate.
The Association & M&H Homestead seek a declaration and
enforcement of their rights pursuant to the Federal
Communications Commission regulations concerning the disposition
of cable television wiring upon termination of service by ACOM.
Cable Agreement
W. James MacNaughton, Esq., in Woodbridge, New Jersey, relates
that on June 18, 1987, the Association, Homestead Properties and
ACOM entered into an agreement pursuant to which ACOM agreed to
install and maintain the facilities necessary to provide cable
television service to the Keys Gate residents and provide those
services on a "bulk" basis. Subsequently, Homestead Properties
assigned all of its right, title and interest arising out of the
Agreement to M&H Homestead.
The Agreement provides an initial term of 10 years, which would
automatically renew for successive one-year periods unless one
party gives the other notice of non-renewal at least 90 days
before the expiration of the then current period. In the event
of breach, the injured party "will be entitled to injunctive
relief in a court of competent jurisdiction.
Upon breach by ACOM, the Agreement gives M&H Homestead the right
to purchase the Facilities, excluding converter boxes, based on
an appraised value. As agreed, ACOM would also:
-- install "pre-wiring" in each unit constructed at Keys Gate;
-- provide a performance bond for the benefit of the
Association and M&H Homestead;
-- be solely responsible for the payment of franchise fees in
connection with the provision of cable service at Keys
Gate;
-- limit annual rate increases to the lesser of 6% or the
increase in the Consumer Price Index;
-- provide, without additional charge, a "community channel";
and
-- provide, without additional charge, basic cable service to
common area outlets in Keys Gate as designated by the
Association.
The prevailing party in any litigation is entitled to recover
attorneys' fees and other related costs.
ACOM's Breach
According to Mr. MacNaughton, the Agreement, by its terms,
automatically renewed for a one-year term starting June 18, 2004,
as neither party had given the other any notice of non-renewal.
On August 20, 2004, ACOM advised the Association and M&H
Homestead that a notice of non-renewal that the Association
received in March 2004, in fact, terminated the Agreement.
The purported non-renewal notice, Mr. MacNaughton says, was not
timely sent to or received by the Association and M&H Homestead
The notice also was not sent in accordance with the requirement
of the Agreement that any non-renewal notice be sent by certified
or registered mail, return receipt requested, with postage
prepaid, at the applicable address.
On August 20, 2004, ACOM repudiated the Agreement and threatened
to immediately terminate the bulk service. On September 16,
2004, the Association advised ACOM of its breach of the
Agreement.
On December 1, 2004, ACOM again repudiated the Agreement and
again threatened to immediately terminate the bulk service. The
following day, the Association and M&H Homestead notified ACOM
that they have elected to exercise the option to purchase the
Facilities at the appraised value. On December 16, 2004, the
Association sent a notice to ACOM pursuant to the FCC Inside Wire
Rules, which required ACOM to make certain elections concerning
the disposition of "cable home wiring" and "home run wiring" on
the termination of ACOM's service at Keys Gate.
ACOM did not timely respond to the Wiring Notice and therefore
abandoned any ownership interest it may have in "cable home
wiring" and "home run wiring" at Keys Gate -- the Drops.
On February 7, 2005, the Association and M&H Homestead notified
ACOM that they had obtained an appraised value of $94,304 for the
Facilities. ACOM refuses to sell the Facilities to Homestead
Partners at an appraised value as required by the Agreement.
Mr. MacNaughton contends that ACOM's failure to perform its
obligation under the Agreement, which constitutes breach,
includes:
* repudiating its obligations arising out of the Agreement;
* failing to install "pre-wiring" in each unit constructed at
Keys Gate;
* failing to provide a performance bond;
* passing the cost of franchise fees for cable service along
to the Association and Keys Gate residents in their monthly
bills;
* imposing excessive rate increases;
* failing to provide, without additional charge, a "community
channel;
* failing to provide, without additional charge, basic cable
service to common area outlets in Keys Gate as designated by
the Association;
* refusing to participate in the process to establish an
appraised value for the Facilities; and
* failing to transfer title to the Facilities to M&H Homestead
at their appraised value.
ACOM insists that it has the right to continue to own, operate
and maintain the Facilities at Keys Gate notwithstanding any
termination or breach of the Agreement.
Mr. MacNaughton tells the Court that the Association is trying to
get cable television service at Keys Gate from a multi-channel
video programming distributor other than ACOM. However, ACOM has
willfully and deliberately interfered with and disrupted that
process and created uncertainty by:
-- making frivolous claims to own the Facilities and Drops;
-- making frivolous claims to the right to occupy Keys Gate
and provide service after the termination or breach of the
Agreement; and
-- exercising dominion and control over the abandoned Drops.
The Association and M&H Homestead ask the Court to:
a. direct ACOM to continue providing bulk services to the
Keys Gate residents at the current rate;
b. direct ACOM to sell the Facilities to M&H Homestead at the
$94,305 appraised value;
c. direct ACOM to cooperate with the transition of service
from ACOM to a new programming distributor at Keys Gate;
d. direct ACOM to use its best efforts to ensure an
uninterrupted transition of service to a new programming
distributor at Keys Gate; and
e. enjoin ACOM from using any control it exercises over the
Facilities or Drops to interfere with the transition of
service to a new programming distributor;
f. enjoin ACOM from continuing to use or occupy any part of
Keys Gate after the transition to a new programming
distributor is concluded;
g. award them damages in an amount to be determined but at
least $75,000;
h. declare that the Drops have been abandoned;
i. declare that ACOM has the obligation to sell the Facilities
to M&H Homestead at the appraised value;
j. declare that ACOM has no right to use or occupy Keys Gate
after a new programming distributor commences service; and
k. award them attorney's fees, costs and disbursements.
ACOM Responds
ACOM asks Judge Gerber to dismiss the Complaint because:
a. The Association and M&H Homestead's complaint fails to
state a claim on which relief can be granted;
b. The Association and M&H Homestead have waived any right to
assert or are equitably estopped from asserting each of the
purported causes of action in the Complaint;
c. To the extent the Association and M&H Homestead have any
claim against ACOM, it is a prepetition claim that must be
addressed in the claims allowance process, not by adversary
proceeding;
d. The Association and M&H Homestead's claims are time-barred,
inasmuch as they failed to timely file a claim on or prior
to the Bar Date in ACOM's Chapter 11 case;
e. Claims for breach of ACOM's alleged default is barred by
the doctrine of laches; and
f. Enforcement of ACOM's alleged obligation to sell the
Facilities to the Association and M&H Homestead would
constitute an inequitable forfeiture of the Debtor's
property.
ACOM also asks the Court to:
a. enforce the automatic stay and enjoin the Association and
M&H Homestead from:
-- interfering with ACOM's ability to continue providing
cable services to the Keys Gate residents;
-- asserting ownership over the ACOM Debtors' equipment;
-- interfering with the ACOM Debtors' subscriber
accounts with Keys Gate residents; and
-- terminating the ACOM Debtors' services at Keys Gate;
b. declaring the Association's letters purporting to (i)
terminate ACOM's right to provide bulk services and (ii)
exercise the Association's right to purchase the Facilities
at the appraised value null and void; and
c. imposing sanctions on the Association and M&H Homestead in
an amount not less than the ACOM Debtors' attorneys' fees
and costs related to responding to the Complaint.
Plaintiffs Want Counterclaims Dismissed
The Association and M&H Homestead ask the Court to dismiss, with
prejudice, ACOM's Counterclaims.
Mr. MacNaughton argues that the Counterclaims fail to state a
claim for which relief can be granted. Furthermore, the
equipment ACOM installed, operated and maintained at Keys Gate is
a fixture and does not belong to the Debtor. ACOM also has no
legally cognizable right to occupy any privately-owned land at
Keys Gate after June 18, 2005.
The violations of the automatic stay, if any, were not willful
nor did they cause any damages to or attorneys' fees recoverable
by ACOM, Mr. MacNaughton asserts.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than 200
affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No.
100; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AEROGEN INC: June 30 Balance Sheet Upside-Down by $1.7 Million
--------------------------------------------------------------
Aerogen, Inc. (Pink Sheets: AEGN.PK) reported financial results
for the three and six months ended June 30, 2005. The net loss
attributable to common stockholders for the three months ended
June 30, 2005 was $900,000, compared with a net loss of $9.8
million, for the same period in 2004. The net loss attributable
to common stockholders for the six months ended June 30, 2005 was
$1.6 million, compared with a net loss of $21.7 million, for the
same period in 2004.
The results for the three months ended June 30, 2004 included a
charge of $5.2 million, reflecting a deemed dividend imputed from
the difference between the allocated proceeds and the conversion
value of the Company's Series A-1 Convertible Preferred Stock that
was issued during the first half of 2004. There were no deemed
dividends in the three and six months ended June 30, 2005. During
the six months ended June 30, 2004, the total charge for deemed
dividends relating to the two closings of the Series A-1
Convertible Preferred Stock financing was $11.7 million.
Series A-1 Stock
The terms of the Series A-1 Convertible Preferred Stock provide
for a dividend, at the rate of 6% per year, to be paid quarterly
in cash or Aerogen common stock, at the Company's election, to
each holder of Series A-1 Convertible Preferred Stock. The
resulting charges related to ordinary dividends for the three
months ended June 30, 2005 and 2004 were $400,000 in each period,
and $800,000 for the six month period ending June 30, 2005 and
$400,000 for the six month period ending June 30, 2004.
The gain from the decline in the fair market value of the
liability associated with outstanding warrants was $3.6 million
for the three months ended June 30, 2005, as compared to a loss of
$400,000 for the same period in 2004. The gain from the decline
in the fair market value of the liability associated with
outstanding warrants was $7.6 million for the six months ended
June 30, 2005, as compared to a gain of $1.4 million for the same
period in 2004.
On May 24, 2005, the A-1 Financing Registration Rights Agreement
was amended such that the related warrants no longer represent a
liability on the Company's balance sheet. The $7.6 million gain
recognized in 2005 was due to the reduction of the warrant
liability associated with the decline in the market value of the
Company's common stock through May 24, 2005. The remaining
warrant liability balance of $2.7 million on May 24, 2005 was
classified as equity.
Aerogen's cash balance as of June 30, 2005 was $8.9 million.
Based on current expectations of sales and royalty levels and
operating costs, existing capital resources will not enable the
Company to maintain current and planned operations beyond the
first quarter of 2006; however, if the Company does not receive
certain expected product sales and royalties, its cash balance may
not sustain planned operations beyond the end of 2005.
The Company are pursuing a number of alternatives to maximize
stockholder value, including:
* the sale of all or part of the Company,
* collaborative partnerships and the licensing or sale of
certain of its intellectual property, and
* have retained financial advisors to assist the Company in
such pursuits.
If these efforts are not successful, the Company will need to
raise additional capital before the end of 2005 in order to
continue normal operations. A preferred stockholder has, however,
publicly stated in March 2005 that it would exercise its veto
right to prevent the Company from raising any equity capital.
Licensing or collaborative arrangements, if necessary to raise
additional funds, may require the Company to relinquish rights to
certain of its products or technologies, or desirable marketing
territories, or all of these, and would also most likely require
the approval of the same preferred stockholder.
Revenues for the three months ended June 30, 2005 were $1.9
million, compared with $1.7 million for the same period in 2004.
The 13% increase in revenues for the three-month period ending
June 30, 2005, as compared with the same period in 2004, primarily
resulted from an increase in product sales of the Aeroneb(R)
Professional Nebulizer System and royalties associated with a
large consumer products company's sales of an air freshener
incorporating our aerosol generator technology. The increase in
Aeroneb Pro sales was slightly offset by a decrease in the sales
of our OnQ(R) Aerosol Generators to Evo Medical Solutions
(formerly Medical Industries America) in the three months ended
June 30, 2005, as compared to the same period in 2004.
Revenues for the six months ended June 30, 2005 were $3.6 million,
compared with $2.8 million for the same period in 2004. The 27%
increase in revenues for the six month period ending June 30,
2005, as compared with the same period in 2004, primarily resulted
from similar trends as the three month periods ended June 30,
2005. There were no shipments to Evo during January or February
2005, but shipments resumed in March 2005, after design and
manufacturing changes were implemented.
Cost of products sold for the three months ended June 30, 2005 and
2004 was $1.3 million in each period. Cost of products sold for
the six months ended June 30, 2005 was $2.3 million, compared with
$2.0 million for the same period in 2004. Cost of products sold
decreased as a percentage of product sales for the three and six
months ended June 30, 2005 as compared to the same period in 2004,
primarily as a result of decreased sales of a lower-margin product
component
Research and development expenses for the three months ended June
30, 2005 and 2004 were $2.5 million in each period. Research and
development expenses for the six months ended June 30, 2005 were
$5.6 million as compared to $4.1 million for the same period in
2004. The increase in research and development expenses in the
six month period ended June 30, 2005, as compared with the same
period of 2004, was primarily due to spending related to
initiation of a Phase 2 clinical trial for our aerosolized
amikacin product, offset by a decrease in facilities related
expenses due to the lease restructuring in 2004.
Selling, general and administrative expenses for the three months
ended June 30, 2005 were $2.0 million, as compared with $1.6
million for the same period in 2004. The increase in selling,
general and administrative expenses for the three month period
ended June 30, 2005, as compared with the same period in 2004, was
primarily due to an increase in market research spending related
to our aerosolized antibiotic product, and recruiting costs
related to the search for a new CEO initiated during the first
quarter of 2005. Selling, general and administrative expenses for
the six months ended June 30, 2005 were $3.8 million, as compared
with $4.0 million for the same period in 2004. The decrease in
selling, general and administrative spending in the six-month
period ended June 30, 2005, as compared with the same period of
2004, was primarily due to unusually high legal expenses related
to the lease restructuring and financing activities during the
first quarter of 2004.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 27, 2005,
PricewaterhouseCoopers LLP raised substantial doubt about
Aerogen, Inc.'s ability to continue as a going concern after it
audited the Company's 2004 financial statements, included in the
Company's Annual Report on Form 10-K/A filed on April 19, 2005.
As stated in the report, the Company has suffered recurring losses
and negative cash flows from operations that triggered the going
concern opinion.
Aerogen, Inc. -- http://www.aerogen.com/-- a specialty
pharmaceutical company, develops products based on its OnQ(R)
Aerosol Generator technology to improve the treatment of
respiratory disorders in the acute care setting.
Aerogen also has development collaborations with pharmaceutical
and biotechnology companies for use of its technology in the
delivery of novel compounds that treat respiratory and other
disorders. Aerogen is headquartered in Mountain View, California,
with a campus in Galway, Ireland.
AES CORP: Restates Financials to Alter Deferred Tax Accounting
--------------------------------------------------------------
As a result of the continuing evaluation of AES Corporation's
(NYSE:AES) deferred income tax accounting and reconciliation
controls process disclosed in the company's 2004 Form 10-K, AES
will restate its 2002, 2003, 2004 and first quarter 2005 financial
statements. The adjustments requiring restatement primarily
relate to the accounting treatment for deferred taxes associated
with certain acquisitions completed prior to 2001. The
restatement is not expected to impact revenues, operating expenses
(other than as mentioned below) or net cash from operating
activities of the company or its subsidiaries for these periods.
Material Weakness
As part of the company's remediation plan associated with the
material weakness in internal control over financial reporting
related to deferred taxes, AES retained an independent registered
public accounting firm to assist the company with its review of
its controls and processes. This review will be completed as
expeditiously as possible. As previously noted, adjustments
identified primarily relate to the accounting for deferred taxes
upon original acquisition of certain foreign subsidiaries prior to
2001. These adjustments primarily impact deferred tax balances,
fixed assets and the other comprehensive income portion of
stockholder's equity as well as income tax expense, depreciation
expense and foreign currency gains and losses on the remeasurement
of deferred taxes.
As a result of the detailed review, deferred tax adjustments for
certain subsidiaries were identified, largely stemming from:
-- Purchase accounting deferred tax adjustments associated
with foreign acquisitions, including the effects of the
local tax basis generated in countries where indexing of
fixed asset deductions due to inflation is allowable for
local tax purposes.
-- Foreign currency re-measurement of deferred tax balances in
certain subsidiaries where the U.S. dollar is the
functional currency.
-- Amounts associated with the reconciliation of income tax
returns to deferred tax balances.
In addition, accounting calculation errors were identified related
to our subsidiary in Cameroon resulting in adjustments that
primarily will impact the balance sheet fixed asset and currency
translation accounts.
Based on management's review, it believes that all errors were
inadvertent and unintentional. The company has not completed its
analysis and has not yet determined the final amount and nature of
the adjustments.
The previously issued financial statements and report of the
company's independent registered public accounting firm, Deloitte
& Touche L.L.P., should no longer be relied upon. The company
will file an amended 2004 Form 10-K and an amended first quarter
2005 Form 10-Q reflecting the restated amounts as soon as
practicable. The decision to restate prior financial statements
was made on July 26, 2005 by the Audit Committee of AES's Board of
Directors, upon the recommendation of management and has been
discussed with Deloitte & Touche L.L.P.
The restatement is not expected to affect the company's 2005 cash
flow-related financial guidance previously disclosed on Feb. 3,
2005, but could affect income statement elements related to
depreciation expense, foreign currency gains and losses, and tax
expense in 2005.
AES expects to reschedule the release of its second quarter 2005
financial results and conference call that was previously
scheduled to be held on August 9, and will announce a new date at
a future time.
AES Corporation -- http://www.aes.com/-- is a leading global
power company, with 2004 revenues of $9.5 billion. AES operates
in 27 countries, generating 44,000 megawatts of electricity
through 124 power facilities and delivers electricity through 15
distribution companies. AES Corp.'s 30,000 people are committed
to operational excellence and meeting the world's growing power
needs.
* * *
As reported in the Troubled Company Reporter on June 23, 2005,
Fitch Ratings has upgraded and removed the ratings of AES
Corporation from Rating Watch Positive, where it was initially
placed on Jan. 18, 2005 pending review of the company's year-end
financial results. Fitch said the Rating Outlook is Stable.
Following the completion of its review, Fitch's upgrade reflects
the significant progress AES had made in retiring parent company
recourse debt and improving liquidity. In addition, AES has
refinanced several near term debt maturities and extended the
company's debt maturity profile. The company has successfully
accessed both the debt and equity markets in 2004 and 2003.
AIR CANADA: Cuts Charlottetown Services After P. Edward Island Row
------------------------------------------------------------------
Air Canada cancelled its Toronto-Charlottetown fall and winter
flights after a falling out with the Government of Prince Edward
Island.
PEI announced in April 2005 that WestJet Airlines Ltd. would
start servicing flights between Charlottetown, PEI, and Toronto
by the end of June. PEI agreed to provide a partial revenue
guarantee to WestJet for the summer service up to a maximum of
CN$300,000.
The Tourism PEI also pledged marketing support to create
awareness of the new service with full-page advertising in
WestJet's inflight magazine, Internet advertising on travel-
related Web sites in Toronto, Ottawa, Calgary and Vancouver, and
elevator advertising in Toronto and Calgary. The Tourism PEI
would also conduct a four-week newspaper advertising campaign in
Toronto and Vancouver.
The marketing support is expected to cost CN$175,000.
This did not sit well with Air Canada.
In letter dated April 21, 2005, to the Honorable Patrick Binns,
Premier of the Government of Prince Edward Island, Air Canada
objected to PEI's decision to support WestJet.
Lyse Charette, senior director of corporate affairs at Air
Canada, noted that Air Canada and Air Canada Jazz have been
providing year-round service and additional summer from PEI to
various destinations for many years.
"Rather than choosing to serve your province only during the most
profitable summer months as many carriers have done -- including
the one you are subsidizing -- Islanders and visitors have been
able to count on Air Canada's safe, competitively priced and
reliable passenger and cargo services year-round despite seasonal
fluctuations in demand and economic conditions," Ms. Charette
pointed out.
Carriers like Air Canada usually apply the returns generated
during the peak summer season, given the increased passenger
traffic and stronger seasonal demand, to make up for the marginal
performance of services during the balance of the year and to
justify maintenance of service during the leaner months.
"Your government's subsidies of close to one half million dollars
significantly distort the marketplace and now force Air Canada to
review the continuance of our services, including the Toronto-
Charlottetown service, beyond the 2005 summer peak season, Ms.
Charette said.
In a letter dated July 6 to Peter McQuaid, the Premier's chief of
staff, Ms. Charette said the subsidization of WestJet and another
carrier, Northwest Airlines Corp., will cost Air Canada
CN$725,000 in 2005.
Northwest flies Detroit, Michigan, to Charlottetown.
PEI Disappointed
P.E.I. Provincial Government and the Charlottetown Airport
Authority are very disappointed with Air Canada's announcement to
cancel its Toronto-Charlottetown fall and winter flights. Air
Canada took this decision after the Provincial Government refused
to comply with negotiation items which restricted competition and
the ability to effectively service Prince Edward Island.
Since 1999, the Province and the Airport Authority have worked
with Air Canada to continue and to improve air access
according to demand. Unfortunately, Air Canada's decision in
February of 2005 to utilize Jazz carriers resulted in a downsize
of carrier size with insufficient capacity for passengers and
cargo. At that time, Government lobbied Air Canada for increased
service to the Island and, when Air Canada did not respond, began
negotiations with other willing airlines. Even in light of the
collapse of JetsGo, Air Canada continued to use smaller planes
and it was only after the announcement of WestJet as an
additional carrier that Air Canada began to respond to earlier
requests to the Provincial Government.
"We could not stand by and negotiate with just one airline
that has continued to downgrade service and did not recognize the
market demands," said the Premier. "Travelers deserve better."
Local news stories have noted the on-going problems with the
down-sized carrier presently used by Air Canada which has
insufficient cargo space. To have travelers arrive without their
luggage, golf clubs or sporting equipment reflects on the quality
of their vacation and their overall impression of Prince Edward
Island.
Air Canada will maintain their lucrative Montreal-Charlottetown
and Halifax-Charlottetown flights. The Premier noted, "Air Canada
has always enjoyed a strong market for the Montreal and Halifax
connections and they have not indicated that there will be a
change in either of these flights."
The Premier, along with the Charlottetown Airport Authority, has
worked for years to secure service that would allow business
travelers, tourists, and the general traveling public to travel
to and from Prince Edward Island in an efficient and economical
manner. This is still the case. The decision to attract
additional service was developed in concert with the Airport
Authority in conjunction with the business and tourism groups on
P.E.I.
Short-term guarantee offers provided to both WestJet and Northwest
Airlines are not uncommon and, in fact, Air Canada was provided a
similar offer in 2002 for their Montreal-Charlottetown flight. As
it stands today, both WestJet and Northwest Airlines are
performing strongly and, if the trend continues, revenue
guarantees are not expected to be paid out to either company.
Air traffic in Charlottetown is growing and the Government is
confident that year-round demand for air travel from our Province
will ensure that the market will continue to be well served by the
airline companies.
Air Canada filed for CCAA protection on April 1, 2003 (Ontario
Superior Court of Justice, Case No. 03-4932) and filed a Section
304 petition in the U.S. Bankruptcy Court for the Southern
District of New York (Case No. 03-11971). Mr. Justice Farley
sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004.
Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman
Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier.
Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie
Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the
Debtors filed for protection from their creditors, they listed
C$7,816,000,000 in assets and C$9,704,000,000 in liabilities.
On September 30, 2004, Air Canada successfully completed its
restructuring process and implemented its Plan of Arrangement.
The airline exited from CCAA protection raising $1.1 billion of
new equity capital.
As of December 31, 2004, Air Canada's shareholders' deficit
narrowed to CDN$203 million compared to a $4.155 billion deficit
at December 31, 2003.
AMERICAN TOWER: S&P Lifts Corporate Credit Rating to BB
-------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on Boston,
Massachusetts-based wireless tower operator American Tower Corp.,
including its corporate credit rating, which was raised to 'BB'
from 'B'. At the same time, the rating on American Tower's
$1.1 billion of secured bank facilities was raised to 'BBB-' from
'B+'. The recovery rating for these facilities remains at '1',
indicating the expectation of 100% recovery in the event of
payment default.
"The ratings remain on CreditWatch with positive implications;
upon completion of the merger of American Tower with SpectraSite
Communications Inc., the corporate credit rating on American Tower
will be raised to 'BB+', and other ratings will be raised by one
notch," said Standard & Poor's credit analyst Catherine Cosentino.
Outstanding debt was about $3.1 billion at March 31, 2005.
The ratings on American Tower had been placed on CreditWatch with
positive implications on Jan. 14, 2005, because of ongoing
improved operating performance, and the corporate credit rating
was raised to 'B' on May 13, 2005, but remained on CreditWatch.
The ratings of four other wireless tower operators -- SpectraSite,
AAT Communications, Crown Castle, and SBA Communications -- were
placed on CreditWatch with positive implications on April 21,
2005, when Standard & Poor's initiated its reassessment of the
wireless tower leasing business. (The CreditWatch on AAT was
resolved on July 7, 2005, and the rating is now BB-/Stable/--; the
ratings on Crown Castle were withdrawn on June 22, 2005.) As a
result of this reassessment, which included discussions with
wireless tower companies and with their customers -- the wireless
carriers -- S&P now views the wireless tower industry as having
favorable characteristics consistent with a low investment grade
business profile.
AMHERST TECHNOLOGIES: Look for Bankruptcy Schedules on Sept. 7
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Hampshire gave
Amherst Technologies, LLC, and its debtor-affiliates more time to
file their Schedules of Assets and Liabilities, Statements of
Financial Affairs, Schedules of Current Income and Expenditures
and Statements of Executory Contracts and Unexpired Leases. The
Debtors have until Sept. 7, 2005, to file those documents.
The Debtors gave the Court four reasons in support of the
extension:
a) the size and scope of their businesses, consisting of
hundreds of corporate customer accounts, more than 200 full-
time employees and several hundred potential creditors
b) the complexity of their financial affairs and the limited
staffing available to perform the required internal review
of their accounts and affairs;
c) the press of business incident to the commencement of their
chapter 11 cases; and
d) the need and desire to devote the necessary resources to
maintaining their operations while simultaneously preparing
and compiling the Schedules and Statements.
Headquartered in Merrimack, New Hampshire, Amherst Technologies,
LLC -- http://www.amherst1.com/-- offers enterprise class
solutions including wired and wireless networking, server and
storage optimization implementations, document management
solutions, IT lifecycle solutions, Microsoft solutions, physical
security and surveillance and complex configured systems. The
Company and its debtor-affiliates filed for chapter 11 protection
on July 20, 2005 (Bankr. D.N.H. Case No. 05-12831). Daniel W.
Sklar, Esq., at Nixon Peabody LLP represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they estimated assets and debts of $10 million to
$50 million.
AMR CORP: June 30 Balance Sheet Upside-Down by $615 Million
-----------------------------------------------------------
AMR Corporation (NYSE: AMR), the parent company of American
Airlines, Inc., reported a net profit of $58 million for the
second quarter, compared to a net profit of $6 million (which
included a $31 million benefit from special items) in the second
quarter last year. The second quarter was the company's first
profitable quarter, without the benefit of special items, since
the fourth quarter of 2000.
"The fact that we were able to earn a small profit despite record
high fuel prices and a difficult industry environment speaks
volumes about our people, who continue to meet our many challenges
with determination and ingenuity," said AMR Chairman and CEO
Gerard Arpey.
"Working together, we have made significant progress in all
aspects of the Turnaround Plan that we launched several years
ago," Mr. Arpey said. "That progress has become even more
crucial, given record high fuel prices that continue to afflict
the industry."
During the second quarter, the Company paid $434 million more for
fuel than it would have paid with last year's fuel prices.
"The high price of fuel remains one of the biggest clouds hanging
over our company and our industry," Mr. Arpey said, "and
unfortunately, there doesn't seem to be any relief in sight -- oil
prices in the second half of the year are currently projected to
be higher than during the second quarter. As a result, we have no
choice but to redouble our efforts to wring cost and inefficiency
out of everything we do."
American's mainline cost per available seat mile in the quarter
was up 5.6 percent year over year. However, excluding fuel and
last year's special items, the airline's unit cost was down 4.3
percent year over year. "This is a reflection of the many cost-
saving initiatives we continue to find," Mr. Arpey said. "In
addition to the $700 million in annual savings we built into our
2005 budget, our employees have identified -- since the beginning
of this year -- another $65 million in expected annual savings on
a steady-state basis."
American's revenue performance was buoyed by a combination of
capacity restraint, network and aircraft changes, and record high
traffic levels. During the second quarter, revenue passenger
miles were up 7.4 percent year over year, while available seat
miles grew 2.3 percent overall, and decreased 1.6 percent
domestically. American's systemwide load factor -- or the
percentage of total seats filled -- hit a record of 79.5 percent.
Yield, which represents average fares, increased 1.9 percent year
over year -- the company's first quarterly yield increase since
the fourth quarter of 2003.
"The improvement we have seen on the revenue side of the ledger
has only been possible as a result of our people's ability to
efficiently and courteously handle an enormous number of
customers," Mr. Arpey said. "At the same time, we are reaping the
benefits of the many changes we have made to our network and
product during the past several years. Our load factor is strong,
and fares -- while still far too low to provide adequate returns -
- have improved somewhat in recent months."
Mr. Arpey noted that after 17 quarters of losses, excluding
special items, it feels good to report even a modest profit.
"I hope our people take pride in what we have accomplished
together," Mr. Arpey said. "However, we need to be honest about
the fact that -- given the losses of the past four years -- we are
digging our way out of a very deep hole. What's more, given the
strength of the economy and the public's current appetite for air
travel, our second quarter results should be much better."
"High fuel prices are not an excuse," he said, "but they are a
constant reminder that our industry is changing and we must change
with it to ensure our future. Our competitors continue to lower
their costs either in or outside of the bankruptcy court, and the
currently improving fare levels are still low by historical
standards."
Mr. Arpey pointed out that in addition to earning a modest profit,
AMR was able to contribute $75 million to its various defined
benefit pension plans in the second quarter, bringing its total
contributions to the plans this year to $213 million. AMR also
was able to grow its cash balance, ending the period with
$3.9 billion in cash and short-term investments, including a
restricted balance of $492 million.
Based in Fort Worth, Texas, AMR Corporation --
http://www.amrcorp.com/-- is the parent company of American
Airlines and American Eagle Airlines. The company's stock is
listed on the New York Stock Exchange under the trading symbol
AMR.
American Airlines is the world's largest carrier. American,
American Eagle and the AmericanConnection regional carriers serve
more than 250 cities in over 40 countries with more than 3,900
daily flights. The combined network fleet numbers more than 1,000
aircraft. American's award-winning Web site -- http://www.AA.com/
-- provides users with easy access to check and book fares, plus
personalized news, information and travel offers. American
Airlines is a founding member of the oneworld Alliance.
At June 30, 2005, AMR Corp.'s balance sheet showed a $615 million
stockholders' deficit, compared to a $581 million deficit at
Dec. 31, 2004.
* * *
As reported in the Troubled Company Reporter on Apr. 25, 2005,
Standard & Poor's Ratings Services lowered its ratings on selected
equipment trust certificates and enhanced equipment trust
certificates of AMR Corp. (B-/Stable/B-3) unit American Airlines
Inc. (B-/Stable/--) as part of an industry-wide review of
aircraft-backed debt. The ratings were removed from CreditWatch
with negative implications, where they were placed on Feb. 24,
2005.
"The rating actions reflect 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 Philip
Baggaley. "Downgrades of ETCs and EETCs 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 and junior classes that would be at greater risk in
negotiated restructurings or sale of repossessed collateral," the
credit analyst continued.
ANY MOUNTAIN: Specialty Sports Acquires Assets
----------------------------------------------
Any Mountain Ltd. sold its six outdoor sports gear chain to
Specialty Sports Ventures LLC for an undisclosed amount.
Specialty Sports is a Denver-based ski and outdoor sports chain
with 120 stores all over the United States.
Ken Gart, Specialty Sports' President, told Jim Welte at the Marin
Independent Journal, that the company intends to keep the stores
open and all of Any Mountain's 75 employees will be asked to
reapply.
The U.S. Bankruptcy Court for the Northern District of California
approved the deal last week. The sale is expected to close by the
end of August.
Headquartered in Corte Madera, California, Any Mountain Ltd,
operates ten specialty outdoor stores throughout the San Francisco
Bay Area. The Company filed for chapter 11 protection on Dec. 23,
2004 (Bankr. N.D. Calif. Case No. 04-12989). David N. Chandler,
Esq., of Santa Rosa, California represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed below $50,000 in assets and more than $10
million in debts.
BANC OF AMERICA: Fitch Raises Rating on $21.9 Mil. Certs. to BBB-
-----------------------------------------------------------------
Fitch Ratings upgrades Banc of America Securities LLC's commercial
mortgage pass-through certificates, series 2003-1:
-- $34.9 million class B to 'AAA' from 'AA';
-- $12.9 million class C to 'AA+' from 'AA-';
-- $24.5 million class D to 'A+' from 'A';
-- $11.6 million class E to 'A' from 'A-';
-- $11.6 million class F to 'A-' from 'BBB+';
-- $11.6 million class G to 'BBB+' from 'BBB';
-- $10.3 million class H to 'BBB' from 'BBB-';
-- $21.9 million class J to 'BBB-' from 'BB+';
-- $7.7 million class K to 'BB+' from 'BB';
-- $6.5 million class L to 'BB' from 'BB-';
-- $6.5 million class M to 'BB-' from 'B+';
-- $5.2 million class N to 'B+' from 'B';
-- $3.9 million class O to 'B' from 'B-'.
-- $1.3 million class SB-A to 'AAA' from 'BBB+';
-- $4.9 million class SB-B to 'AAA' from 'BBB';
-- $11.1 million class SB-C to 'AAA' from 'BBB-';
-- $3.4 million class SB-D to 'AAA' from 'BB+';
-- $7.5 million class SB-E to 'AAA' from 'BB'.
In addition, Fitch affirms these classes:
-- $313.1 million class A-1 'AAA';
-- $506.2 million class A-2 'AAA';
-- Interest-only class XC 'AAA';
-- Interest-only class XP-1 'AAA';
-- Interest-only class XP-2 'AAA';
-- $5.9 million class ES-A 'AA';
-- $4.3 million class ES-B 'AA-';
-- $4.6 million class ES-C 'A+';
-- $4.9 million class ES-D 'A';
-- $3.4 million class ES-E 'A-';
-- $3.4 million class ES-F 'BBB+';
-- $3.4 million class ES-G 'BBB';
-- $10.2 million class ES-H 'BBB-'.
Fitch does not rate the $18.1 million class P, $16.9 million class
WB-A, $8.6 million class WB-B, $1.9 million class WB-C, or $1.9
million class WB-D certificates.
The rating upgrades reflect the defeasance of the largest loan in
the pool, Sotheby's Building (11.85%). The pool has experienced
stable loan performance and limited paydown since issuance. As of
the July 2005 distribution date, the pool's aggregate certificate
balance has decreased 2.54% to $1,006.5 million from $1,032.7
million. There are no specially serviced or delinquent loans in
the pool and no loans have paid off.
Fitch reviewed the credit assessments of the Emerald Square Mall
(9.5%) and the Wellbridge Portfolio (2.3%) loans, the two
remaining credit assessed loans in the pool. Each credit assessed
loan is divided into an A and a B note. The A notes, which have
been contributed to the pooled proceeds, remain investment grade.
The B-notes, which were structured as stand-alone rake classes,
are affirmed for the Emerald Square. Fitch does not rate the rake
classes for the Wellbridge Portfolio. The Fitch-stressed DSCRs
are based on a stressed refinance constant using both the current
pooled balance (A), and the current whole loan (A plus B).
The Emerald Square Mall is the largest loan in the pool. As of
year-end 2004, the Fitch-stressed debt service coverage ratio for
the A-note has increased to 1.81 times (x) from 1.69x at issuance.
The Fitch-stressed DSCR for the whole loan has increased to 1.27x
from 1.21x at issuance. Occupancy at YE 2004 was 97%.
The Wellbridge portfolio is secured by 15 high-end health and
fitness clubs in Minnesota and New Mexico totaling 1,649,751 sf.
As of YE 2003, the Fitch-stressed DSCR for the A-note has
increased to 2.89x from 2.81x at issuance. The Fitch-stressed
DSCR for the whole loan has increased to 1.87x from 1.86x at
issuance. The properties are fully leased to Wellbridge. The A-
note of this credit assessment has been divided into two pari
passu notes A-1 ($25.5 million), A-2 ($10 million), and A-3 ($22.9
million). Although the Fitch stressed DSCR is calculated using
the whole A-note balance ($58.4 million), only the A-1 note is
held in the trust.
The upgrades to the Sotheby's Building rake classes are the result
of the substitution of collateral with the U.S. Treasuries.
BORGER ENERGY: Steam Volume Reduction Prompts S&P to Cut Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered the 'BB+' rating on
Borger Energy Associates L.P./Borger Funding Corp. to 'B+'. The
outlook was also revised to developing from negative.
The rating action is the result of a recent 15% reduction in steam
volumes by the project's steam host, ConocoPhillips, which will
reduce debt service coverage ratios to below 1x in 2005 and 2006.
Current steam volumes are below levels that were expected by
Standard & Poor's in April 2005 when the project was removed from
CreditWatch with negative implications.
"Standard & Poor's expects that the project will have sufficient
funds to meet debt service obligations through the end of 2006,"
said Standard & Poor's credit analyst Michael Messer. "However,
over the next 18 months, Standard & Poor's forecasts that Borger
will not fully fund major maintenance reserves and may use up to
50% of the $5.5 million debt service reserve fund to make debt
service payments," he continued.
The developing outlook reflects uncertainties regarding steam
offtake levels in 2007 and beyond, as well as the project's
operational problems. Ratings will be lowered if debt service and
major maintenance funds are depleted and not likely to be
replenished through internal cash flow or operational problems are
not fixed. The outlook could be revised to stable or the rating
raised when there is greater certainty that steam offtake levels
will increase in 2007 to pre-2005 levels, the project can meet
debt service obligations with internally generated cash flow, and
demonstrate consistent operating performance with its new
generator.
BRASOTA MORTGAGE: Trustee Wants Lawyers to Return Retainers
-----------------------------------------------------------
Gerard A. McHale, Jr., the chapter 11 Trustee appointed in Brasota
Mortgage Co. Inc., discovered that some of the estate's money was
used to pay various law firms representing certain insiders in
their personal lawsuits.
Mr. McHale demanded the return of retainers paid to:
* E. Jon Weiffenbach, Jr., Esq., at Weiffenbach and Kaklis
* The Byrd Law Firm;
* Edward Mulock, Esq., of Bradenton, Florida; and
* Trombley & Hanes, P.A.
Former Senior Vice President Carolyn Thibodeau paid The Byrd Law
Firm a $35,000 retainer for a criminal suit defense.
Mr. Weiffenbach was paid a $35,000 criminal defense retainer by
Mosalene Hottman, who for years worked as an administrative
assistant at Brasota.
Mr. Mulock was paid $35,000 to represent Vice President Robert
Coey.
Trombley & Hanes has returned the $100,000 retainer it received
from Mrs. Gloria Morrison, Brasota's former President.
The Brasota Insiders retained the attorneys on Feb. 8, 2005, the
same day Brasota and two related entities were placed into a
receivership.
The Court will hold a hearing on November 7 to consider the
Trustee's claims.
We Starve While Lawyers Get Rich
In two separate letters addressed to the Honorable K. Rodney May,
Don Stooke and Beverly Comstock -- two of the 1,800 investors who
lost $138 million when Brasota went bankrupt -- express their
sorrows over the lost of their lifetime savings and their
objections to what they call as "outrageous" fees to lawyers.
The investors want the $205,000 for retainers paid to the
insiders' lawyers returned to the estate. They also want the
Debtor's four officers and insiders to be prosecuted criminally.
The investors also object to the $455,000 fee application made by
the "Dream Team" law firm Broad and Cassel -- the Firm that
handled John R. Ray, III's legal affairs as court-appointed
Receiver of Brasota.
Mr. Stooke and Ms. Comstock ask the Court to carefully review all
fee applications before approving them to ensure that the estate
won't become a milking cow for greedy professionals.
Headquartered in Bradenton, Florida, Brasota Mortgage Company Inc.
is a full service mortgage lender. The Company and its affiliates
filed for chapter 11 protection on April 4, 2005 (Bankr. M.D. Fla.
Case No. 05-06215). Heath A. Denoncourt, Esq., at Hinshaw &
Culbertson LLP, represents the Debtors in their restructuring
efforts. Gerard A. McHale, Jr., was appointed as chapter 11
trustee on April 14, 2005. When the Company filed for protection
from its creditors, it estimated more than $100 million in assets
and debts.
CARAUSTAR INDUSTRIES: Earns $100,000 of Net Income in 2nd Quarter
-----------------------------------------------------------------
Caraustar Industries, Inc. (Nasdaq: CSAR) reported sales for the
second quarter ended June 30, 2005 were $269.3 million compared to
sales of $268.5 million for the same quarter in 2004. Net income
for the second quarter of 2005 was $100,000, compared to the
second quarter 2004 net income of $1.7 million. The second
quarter 2005 and 2004 results included restructuring and
impairment costs of approximately $300,000 and $2.4 million pre-
tax, related to various closures. Negatively impacting second
quarter 2005 results were a $1.9 million noncash tax charge to
reduce deferred tax assets resulting from a change in Ohio tax law
and $760 thousand in accelerated depreciation and employee costs
associated with the previously announced closing of the Palmer
Carton Plant in Thorndike, Massachusetts.
Volume in the quarter was up 1,600 tons, or 0.5%, versus the
second quarter 2004 as gains in gypsum facing paper sold by the
company's 50-percent owned unconsolidated Premier Boxboard Limited
LLC (PBL) joint venture more than offset reductions at the 100-
percent owned Sweetwater Paperboard mill resulting from downtime
and inefficiencies associated with an equipment upgrade. Income
from operations before restructuring and impairment costs in the
second quarter 2005 versus the second quarter 2004 was favorably
impacted by $3.9 million from higher pricing and $1.0 million in
lower fiber costs. This was more than offset by the $2.5 million
impact from the decline in consolidated mill volume (primarily
Sweetwater), $1.5 million in increased freight, $2.5 million in
higher fuel and energy costs, $1.6 million of increased selling,
general and administrative costs and $1.3 million in higher
pension and other employee costs. Continued strong performances
by our two joint ventures, PBL and Standard Gypsum, enabled the
company to report a pretax increase in income of approximately
$700 thousand.
For the six-month period ended June 30, 2005, sales were $538.8
million, an increase of 2.5% from sales of $525.6 million in 2004.
An $8.9 million increase in equity in income of unconsolidated
affiliates, combined with lower restructuring charges for the
first half of 2005, drove the $11.6 million improvement in income
(loss) before income taxes and minority interest over the first
half of 2004. Strong pricing and volume growth in the two joint
ventures more than offset volume declines in the company's mill
system and increased freight, energy and selling, general and
administrative costs in the first half of 2005.
Michael J. Keough, president and chief executive officer of
Caraustar, commented, "Our quarterly performance was solid in
spite of increased freight and energy costs. Industry volume was
down approximately 1% compared to the second quarter of 2004 as
the general economy and the paper/paperboard sector remained
sluggish. Year to date, Caraustar volume is up 3.1% in 2005
through June and the industry was down 1.3%. Caraustar mill
operating rates were 93% in the second quarter 2005 versus 96% for
the same period last year.
"Pricing improved in the second quarter 2005 versus the same
period last year, although it was business-specific with varying
degrees of realization. We announced a paperboard price increase
on April 26, 2005 and a price increase for converted tube and core
products was announced on June 10, 2005. Results from the
paperboard price increase are mixed, with greater success in URB
(uncoated recycled boxboard) than CRB (coated recycled boxboard).
It is too early to gauge the impact of the converted tube and core
products price increase.
"Selling, general and administrative costs in the second quarter
2005 were lower by $1.0 million from first quarter 2005, but up
$1.6 million versus the same period last year. Included in the
second quarter 2005 was a $1.0 million reserve related to a recall
by our specialty packaging division. We expect continued
decreases in selling, general and administrative costs through
aggressive cost management, which will be offset to some extent by
our investment in new information technology systems and other
infrastructure costs."
Joint Ventures
Caraustar's 50-percent interest in the PBL mill and the two
Standard Gypsum wallboard manufacturing facilities contributed
$17.9 million of equity in income of unconsolidated affiliates for
the six-month period ended June 30, 2005, almost double the prior-
year amount. Cash distributions were $16.5 million for the six-
month period ended June 30, 2005 versus $5.0 million for the same
period in 2004. Both joint ventures benefited significantly from
a strong housing and construction market. PBL mill volume was up
over 10 percent, with 65 percent of its product mix in gypsum
facing paper.
Liquidity
The company ended the second quarter of 2005 with a cash balance
of $86.7 million. For the six-month period ended June 30, 2005,
Caraustar generated $9.1 million of cash from operating
activities, compared to a use of $1.0 million the previous year.
Capital expenditures increased year-over-year from $8.9 million to
$11.6 million in 2005. The company repurchased $2.5 million of
its 9.875% Senior Subordinated Notes during the second quarter of
2005. As of June 30, 2005 the company had no borrowings
outstanding under its $75.0 million revolving credit facility but
does have $37.9 million of letters of credit outstanding that
reduce availability.
Caraustar Indutries Inc., -- http://www.caraustar.com/-- a
recycled packaging company, is one of the world's largest
integrated manufacturers of converted recycled paperboard.
Caraustar has developed its leadership position in the industry
through diversification and integration from raw materials to
finished products. Caraustar serves the four principal recycled
boxboard product end-use markets: tubes, cores and composite cans;
folding cartons; gypsum facing paper and specialty paperboard
products.
* * *
As reported in the Troubled Company Reporter on May 11, 2005,
Standard & Poor's Ratings Services lowered its ratings on recycled
paperboard producer, Caraustar Industries Inc., including its
corporate credit rating, to 'B+' from 'BB-', and its senior
secured bank loan rating, to 'BB-' from 'BB'. S&P says the
outlook is stable.
The downgrade reflects Austell, Georgia-based Caraustar's
persistent subpar credit metrics because of weak earnings and its
aggressive capital structure. Total debt, including capitalized
operating leases, at March 31, 2005, was $550 million, with debt
to EBITDA of 9x.
CATHOLIC CHURCH: Spokane Tort Panel Balks at Southwell Retention
----------------------------------------------------------------
As previously reported, Immaculate Heart Retreat Center needs
representation in the Diocese of Spokane's Chapter 11 case and in
the adversary proceeding captioned Committee Tort Litigants v.
Catholic Bishop of Spokane, et al. (Adv. Pro. No. 05-80038).
For this reason, Immaculate Heart sought authority from the U.S.
Bankruptcy Court for the Eastern District of Washington to retain
Southwell & O'Rourke, P.S., as its attorneys, nun pro tunc, to
May 2, 2005.
Committees Object
On behalf of the Committee of Tort Litigants, James Stang, Esq.,
at Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC, in Los
Angeles, California, argues that Immaculate Heart Retreat
Center's application is merely a veiled request for a "comfort
order" as it does not currently represent a debtor, or any
cognizable constituency in the Chapter 11 case.
Mr. Stang says the proposed retention of Southwell & O'Rourke,
P.S., to represent Immaculate Heart in the event that the U.S.
Bankruptcy Court for the Eastern District of Washington finds that
Immaculate Heart is property of the Diocese of Spokane's estate
would constitute an unnecessary duplication of services of those
being performed by the Diocese's present counsel and other
professionals.
"The proposed services are neither likely to benefit the
Diocese's estate nor are they necessary to the administration of
the Chapter 11 case," Mr. Stang continues.
The Court should not grant conditional approval of Southwell's
employment, nunc pro tunc to May 2, 2005, nor compensation to
Southwell or reimbursement of its expenses for services rendered
to Immaculate Heart during that period.
The Tort Claimants Committee supports the Tort Litigants
objection.
The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts. (Catholic Church Bankruptcy News,
Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CENTRAL VERMONT: Reports $2.1 Million Earnings for Second Quarter
-----------------------------------------------------------------
Central Vermont Public Service (NYSE: CV) reported consolidated
second quarter earnings of $2.1 million. This compares to second
quarter 2004 earnings of $3.5 million.
For the first six months of 2005, CV reported a consolidated loss
of $2.5 million. This compares to first six months 2004 earnings
of $13.9 million. CV's 2005 results include a $21.8 million pre-
tax ($11.2 million after-tax) charge to earnings related to a
March 29, 2005 Rate Order.
President Bob Young said the company is focused on maintaining a
high level of customer service while returning to a stable
financial position. Budget cuts, including capital and operating
and maintenance reductions that will not negatively affect
customer service, have been made for 2005 and 2006, and the
company has appealed the Rate Order to the Vermont Supreme Court.
Management continues to examine other steps to improve cash flow
and earnings.
"We are committed to returning the company to a position that
carefully balances the needs of our customers and our
shareholders," Young said.
Rate Order
On March 29, 2005, the Vermont Public Service Board issued its
Order on the rate investigation and CV's request for a rate
increase. For accounting purposes, the Rate Order resulted in a
$21.8 million pre-tax, or $11.2 million after-tax, unfavorable
effect on utility earnings in March 2005.
2004 Asset Sale
In the first six months of 2004, discontinued operations
contributed $12.3 million to consolidated earnings, reflecting the
after-tax gain resulting from the January 1, 2004 sale of the
assets of CVEC. There are no remaining significant business
activities related to CVEC.
Catamount Bridge Loan
After the issuance of the Rate Order, CV decided not to make
additional equity investments in Catamount in 2005. However, to
ensure Catamount can achieve its development goals, in April 2005,
CV extended a bridge loan up to $14.8 million to continue
construction of the 135-megawatt Sweetwater 3 project in Texas.
In July 2005, Catamount secured a credit facility and repaid the
loan.
For the last several years, Catamount has pursued a strategy of
selling off its least attractive projects and redeploying the
capital in new wind projects. In addition, Catamount is seeking
an equity partner to pursue growth opportunities in the future.
Catamount's long-term wind development plan, including the
Sweetwater projects and other U.S. and U.K. development, is
proceeding according to schedule.
Central Vermont Public Service is Vermont's largest electric
utility, serving about 150,000 customers statewide. The Company's
two non-regulated subsidiaries include Catamount Energy
Corporation and Eversant Corporation. Catamount invests in non-
regulated energy generation projects in the United States and
United Kingdom with a focus on developing, owning and operating
wind energy projects. Eversant sells and rents electric water
heaters through a subsidiary, SmartEnergy Water Heating Services.
* * *
As reported in the Troubled Company Reporter on June 20, 2005,
Fitch Ratings has downgraded the ratings of Central Vermont Public
Service's as follows:
-- Senior secured debt to 'BBB' from 'BBB+';
-- Preferred stock to 'BB+' from 'BBB-'.
The Rating Outlook is Stable.
CENTURY/ML: Gets Court Approval to Employ PwC as Accountant
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave Century/ML Cable Venture permission to employ
PricewaterhouseCoopers LLP as its independent accountant, nunc pro
tunc to Jan. 1, 2005, to perform necessary auditing services in
connection with the Sale Transaction and with the filing of tax
returns in Puerto Rico.
PwC will:
a. audit Century/ML's consolidated financial statements at
December 31, 2004, 2003, 2002, 2001 and 2000 and for each
of the years then ended, which will include:
-- examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements;
-- assessing accounting principles used and significant
estimates made by management; and
-- evaluating the overall financial statement
presentation;
b. inform members of the Management Board, prior to the
issuance of any audit report, if feasible, of other matters
related to the conduct of the audit, including:
-- any disagreements with management about matters that
could be significant to Century/ML's consolidated
financial statements or PwC's report thereon;
-- any serious difficulties encountered in performing
the audit;
-- information relating to PwC's independence with
respect to Century/ML and its wholly owned
subsidiary, Century/ML Cable Corp.; and
-- other matters related to Century/ML and Cable Corp.'s
financial statements including its accounting
policies and practices;
c. ensure that members of the Management Board receive copies
of certain written communications between PwC and
management, including management representation letters and
written communications on accounting, auditing, internal
control or operational matters; and
d. assist in the preparation of audited financial statements
necessary for the filing of tax returns with the Puerto
Rico tax authorities.
PwC professionals are paid at these hourly rates:
National Consulting Partner $875 - $950
Partner $710 - $860
Director/Senior Manager $550 - $750
Manager $415 - $575
Senior Associate $300 - $410
Associate $195 - $280
Administrative Assistant $90
Century Communications Corporation filed for Chapter 11 protection
on June 10, 2002. Century's case has been jointly administered to
proceedings of Adelphia Communications Corporation. Century
operates cable television services in Colorado, California and
Puerto Rico. CENTURY is an indirect wholly owned subsidiary of
ACOM and an affiliate of Adelphia Business Solutions, Inc.
Lawyers at Willkie, Farr & Gallagher represent CENTURY.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than
200 affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No.
100; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CHI-CHI'S: Wants to Sell Assets to WI QSL for $1.75 Million
-----------------------------------------------------------
Chi-Chi's, Inc., asks the U.S. Bankruptcy Court for the District
of Delaware for authority to sell its interest in a parcel of
commercial property located in Greenfield, Wisconsin to WI QSL,
LLC.
WI QSL will pay $1.75 million for the property. The Debtor holds
a 25% interest in the property, so Chi-Chi's 25% share of the
purchase price is $437,500. Chi-Chi's expects to receive $411,250
of the sale proceeds.
The Debtor also seeks Court approval to pay brokerage commissions
to The Polacheck Group, Inc., and Weich Group, Inc., in connection
with the commercial listing contract entered into among the
Debtor, Polacheck, OS Realty, Inc., and Emerald Realty, Inc.
Under the terms of the sale and listing agreement, Polacheck and
Weich will each receive a 3% brokerage commission payable from the
sale proceeds. Polacheck will collect the full $105,000
commission through the escrow, and pay Weich its 50% share outside
the escrow.
Headquartered in Irvine California, Chi-Chi's, Inc., is a direct
or indirect operating subsidiary of Prandium and FRI-MRD
Corporation and each engages in the restaurant business. The
Debtors filed for chapter 11 protection on October 8, 2003 (Bankr.
Del. Case No. 03-13063-CGC). Bruce Grohsgal, Esq., Laura Davis
Jones, Esq., Rachel Lowy Werkheiser, Esq., and Sandra Gail McLamb,
Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtor filed for bankruptcy, it estimated $50 to $100 million in
assets and more than $100 million in liabilities.
CHI-CHI'S: Wants to Pay $1,975,000 to One Hepatitis A Victim
------------------------------------------------------------
Chi-Chi's, Inc., asks the U.S. Bankruptcy Court for the District
of Delaware for authority to pay the survivors of an Hepatitis A
victim $1,975,000 in cash, future periodic payments totaling
$1,650,000 and a scholarship fund for $28,191.
The victim's family related that the person died from organ &
system failure caused by Hepatitis.
The Hepatitis A outbreak at the Beaver Valley Chi-Chi's arose from
exposure to contaminated green onions. Despite the fact that only
one of Chi-Chi's restaurant was involved, approximately 600
customers and 13 employees contracted the disease. To date,
Chi-Chi's settled 546 Hepatitis-related claims.
The settlement will be covered by the Debtors' insurance policies,
which provide aggregate coverage of $51 million for the Hepatitis
A claims.
Headquartered in Irvine California, Chi-Chi's, Inc., is a direct
or indirect operating subsidiary of Prandium and FRI-MRD
Corporation and each engages in the restaurant business. The
Debtors filed for chapter 11 protection on October 8, 2003 (Bankr.
Del. Case No. 03-13063-CGC). Bruce Grohsgal, Esq., Laura Davis
Jones, Esq., Rachel Lowy Werkheiser, Esq., and Sandra Gail McLamb,
Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtor filed for bankruptcy, it estimated $50 to $100 million in
assets and more than $100 million in liabilities.
CIMAREX ENERGY: Amends Cash Tender Offer for Magnum's Senior Notes
------------------------------------------------------------------
Cimarex Energy Co. (NYSE: XEC) (Cimarex) amended its offer to
purchase for cash any and all of its outstanding Floating Rate
Convertible Senior Notes due 2023 originally issued by Magnum
Hunter Resources, Inc. The offer is being made to satisfy
Cimarex's contractual obligations under the indenture governing
the Convertible Notes to offer to repurchase the Convertible Notes
in connection with its merger with MHR.
The amendment is being made to clarify the withdrawal rights of
holders of the Convertible Notes and certain disclosure
obligations of Cimarex, to amend the condition to the offer, and
to eliminate the right of Cimarex to terminate the offer. The
only condition to the offer as amended is that no event of default
under the indenture governing the Convertible Notes (other than
the failure to pay the purchase price for the Convertible Notes in
the offer) exists at the time the offer expires.
The expiration time of the offer has not changed. The offer is
scheduled to expire at 5:00 p.m., New York City time, on Aug. 5,
2005, unless extended.
Deutsche Bank Trust Company Americas is the depositary and the
information agent for the offer. Requests for assistance or
documentation should be directed to the information agent at c/o
DB Services Tennessee, Inc., 648 Grassmere Park Road, Nashville,
TN 37211, Attn: Reorganization Unit, telephone (800) 735-7777.
Beneficial owners of notes may also contact their brokers,
dealers, commercial banks, trust companies or other nominee
through which they hold their notes with questions and requests
for assistance.
Denver-based Cimarex Energy Co. is an independent oil and gas
exploration and production company with principal operations in
the Mid-Continent, Gulf Coast, Permian Basin of West Texas and New
Mexico and Gulf of Mexico areas of the U.S.
* * *
As reported in the Troubled Company Reporter on June 23, 2005,
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Cimarex Energy Co. At the same time, Standard &
Poor's assigned its 'B+' senior unsecured debt rating to the
$195 million senior notes due 2012 and $125 million senior notes
due 2023 being assumed from the acquisition of Magnum Hunter
Resources Inc. S&P said the outlook is stable.
Denver, Colorado-based Cimarex has roughly $544 million of debt.
"The ratings on Cimarex reflect risks associated with the
acquisition of Magnum Hunter, which more than doubles Cimarex's
size and a somewhat higher-than-average cost structure for the
combined entity relative to peers," said Standard & Poor's credit
analyst Paul B. Harvey. "Somewhat mitigating these concerns are a
record of good execution by management, a sizable onshore reserve
base, relatively conservative reserve accounting, a commitment to
maintaining low debt leverage, and a focus on growth through the
drillbit," he continued.
CIRCUIT RESEARCH: Net Losses Spur Going Concern Doubt
-----------------------------------------------------
Altschuler, Melvoin and Glasser LLP expressed substantial doubt
about Circuit Research Labs Inc.'s ability to continue as a going
concern after it audited the Company's financial statements for
the year ended Dec. 21, 2004. The auditing firm points to the
Company's net losses and working capital deficit.
Circuit Research Labs has incurred losses of $1,506,917 and
$384,877 during the years ended December 31, 2004 and 2003,
respectively. Its financial results, coupled with servicing the
Harman debt (approximately $8.5 million prior to the debt
restructure) strained its liquidity and made it difficult for the
Company to focus on its core competencies. Under the terms of its
debt agreement with Harman International Inc. in effect prior to
the restructure of the debt owed to Harman, Harman had the right
to demand at any time that the Company immediately pay in full the
outstanding balance of the debt.
If this had happened, the Company would likely have been forced to
file for protection under Chapter 11 of the United States
Bankruptcy Code. With the Harman debt restructuring completed,
management believes that it will be able to use cash flows to meet
current operational needs and make the scheduled principal and
interest payments due Harman.
Net sales during the three months ended March 31, 2005 were
$3.3 million compared to $3.3 million during the comparable period
in 2004, reflecting a steady trend. The Company currently has a
backlog of around $2.7 million and is looking at increasing its
capacity by contracting with subcontractors to do some of its low
level assembly with the final assembly being processed in its
Tempe plant to be done in parallel with the plant in San Leandro.
Circuit Research's aim is to be more responsive to its customers
demand for its products while increasing its efficiencies.
Management hopes to begin shipping in parallel by the end of June.
The Company's gross profit was 58% of net sales for the three
months ended March 31, 2005 and 2004. The steady production at
the San Leandro facility helps the Company maintain its
efficiencies while keeping the costs associated with set up, and
labor to a minimum.
The Company's net loss was $181,000 for the three months ended
March 31, 2005, compared to $37,000 for the same period in 2004.
The increase in net loss is primarily a result of increased
selling expenses associated with the launch of new products.
Liquidity and Capital Resources
Circuit Research Labs had negative working capital of
approximately $1.7 million at March 31, 3005, and the ratio of
current assets to current liabilities was .70 to 1. At December
31, 2004, it had negative working capital of approximately $1.6
million and a current ratio of .66 to 1. The decrease in working
capital is attributable to an increase in accrued expenses
including accrued salaries and benefits. With the Harman debt
restructure completed, management believes that it will be able to
use projected cash flows to meet current operational needs and
make the scheduled principal and interest payments due Harman.
Working capital generated from 2005 operations will be used to
service its commitments, excluding the obligations to Harman and
Dialog4. Any excess working capital generated from 2005
operations will be applied to expand business operations or for
general working capital purposes. The terms of the Harman debt
restrict the Company's ability to obtain financing for these types
of expansion expenditures, as well as financing for other
purposes. Accordingly, the Company's ability to expand will
primarily depend on its ability to generate sufficient working
capital from operations. Management will closely monitor the
working capital in 2005 as any expenditure related to expansion is
evaluated.
Accounts Receivable
Accounts receivable were $689,000 at March 31, 2005, compared to
$578,000 at December 31, 2004, representing a net increase of
$111,000, or 19%. The increase is primarily due to increased
sales in the month of March 2005.
Total inventories were $2,772,000 at March 31, 2005 compared to
total inventories of $2,373,000 at December 31, 2004. The
increase of $399,000, or 17%, is due in part to an increase in raw
materials and work in process to reduce the backlog.
For the year ending December 31, 2005, the Company's principal
working capital requirements will be the payment of normal
recurring operating costs. Management believes that these
requirements can be met from the operating cash flows.
Harman Debt Restructuring
On April 29, 2005, the Company formally executed its agreement
with Harman International Industries, Inc. and its subsidiary
Harman Pro North America, Inc. to document the agreement that was
reported in its Form 8-K, filed with the Securities and Exchange
Commission on October 12, 2004. The transaction restructured
CRL's short-term debt obligation to Harman of approximately $9.5
million ($8.5 million of principal plus $1.0 million of accrued
interest). The restructure reduced CRL's total debt to Harman to
be just over $3.2 million and the Company reclassified the debt
from a demand note status to long-term.
As part of the restructure of its indebtedness owed to Harman, the
Company in 2004 paid Harman $1,000,000 in cash in repayment of
debt as a condition for the restructure.
The funds for this payment came from two sources:
(i) $300,000 came from cash generated from Company operations
and
(ii) $700,000 came from a short term loan from a related party
investor who is a family member of the Company's President
and CEO.
The loan bears interest at 11.5% per annum and requires monthly
interest-only installments. The Company is currently negotiating
with the lender about the terms of repayment and the possibility
of the lender converting the note into preferred or common stock
of the Company. No agreement about the terms and conditions of
the payment or conversion has yet been completed.
Prior to the transaction, the interest rate on the debt owed
Harman was 12.0% per annum. As part of the debt restructure,
Harman waived all interest accrued after April 1, 2003 in excess
of 6% per annum. On September 30, 2004, the accumulated accrued
interest before the restructure was $1,012,910, of which $763,380
was waived. The remaining $249,530 of accrued interest was added
to the total outstanding principal balance of the Company's
indebtedness to Harman. After giving effect to the $1,000,000
principal payment, the principal amount due Harman by the Company
was $7,482,000 (before giving effect to the waiver of certain
unpaid interest and the addition of remaining accrued interest to
the loan principal balance). Adding the remaining unpaid interest
of $249,530 to principal resulted in a total unpaid principal loan
balance of $7,731,530 as of September 30, 2004.
Harman subsequently agreed to exchange $2,104,000 of the debt for
2,104,000 shares of the Company's common stock, and then sold all
such shares to a nominee of Jay Brentlinger, the Company's
President and Chief Executive Officer. The Nominee agreed to
purchase all such shares for $1,000,000. Payment was made by
delivery of a promissory note due and payable on September 30,
2007. Harman's recourse for non-payment under the note is limited
to a security interest in the shares purchased.
Harman exchanged an additional $2,400,000 of indebtedness for
additional shares of Company common stock such that Harman will
own approximately 1,509,000 shares resulting in ownership of 19%
of the then outstanding shares on a fully diluted basis after
giving effect to the transactions described above. Should the
private investor elect to convert his note into shares of the
Company's common stock, the company will issue as many additional
shares as necessary to cause Harman to maintain a 19% ownership
after the entire transaction is completed.
The remaining $3,227,530 of indebtedness owed to Harman by the
Company after giving effect to the transactions described above is
evidenced by a new note that:
1) renews and extends (but does not extinguish) the Company's
indebtedness owing to Harman and
2) reduces the interest rate to 6% per annum, with interest
payable monthly in arrears.
The Company's indebtedness to Harman shall continue to be secured
by a security interest covering all of the Company's assets.
Mandatory principal payments shall be made monthly, accruing from
October 4, 2004 for five years.
Circuit Research Labs, Inc., -- http://www.crlsystems.com/--
develops, manufactures and markets electronic audio processing,
transmission encoding and noise reduction equipment. The products
control the audio quality and range of radio, television, cable
and Internet audio reception and allow radio and television
stations to broadcast in mono and stereo. The Group's Orban
division manufactures and markets audio processing equipment under
the Orban, Optimod, Audicy and OptiCodec brand names. The product
line includes FM Series, AM Series and other audio post-production
workstations. The CRL division manufactures and markets audio
processing equipment, primarily using analog technology, under the
CRL, TVS and Amigo brand names. The customers include AM and FM
radio stations and television stations around the world. The
products are exported to Europe, Pacific Rim, Latin and South
America, Canada and Mexico. On January 18, 2002, the Group
acquired the assets of Dialog4 System Engineering GmbH.
At Mar. 31, 2005, Circuit Research Labs Inc.'s balance sheet
showed a $2,492,821 stockholders' deficit, compared to a
$2,311,872 deficit at Dec. 31, 2004.
CNH GLOBAL: Earns $114 Million of Net Income in Second Quarter
--------------------------------------------------------------
CNH Global N.V. (NYSE: CNH) reported second quarter 2005 net
income of $114 million, compared to second quarter 2004 net income
of $83 million. Results include restructuring charges, net of
tax, of $4 million in the second quarter of 2005, and $24 million
in last year's second quarter. Second quarter diluted earnings
per share were up 36% to $.49, compared to $.36 in the second
quarter of 2004.
"Net income was slightly better than expected, despite a greater
than anticipated deterioration of the agricultural sector in Latin
America," said Harold Boyanovsky, CNH President and Chief
Executive Officer. "Higher materials costs and shortages of some
key supplies constrained results. We expect these trends to
impact performance in the second half as well.
"Nevertheless, the robust growth of the global construction
equipment industry contributed to the continuing improvement in
CNH results in this sector, and CNH Capital continued its strong
performance."
Highlights from the quarter included:
-- In all regions, pricing actions enabled the company to
recover increased materials costs in the quarter. This was
particularly favorable news for both the agricultural
equipment and construction equipment businesses in Europe,
which had not been able to offset materials cost increases
earlier. However, materials costs are not moderating as
much as the company had anticipated.
-- After delaying their launch to ensure quality and
reliability, CNH began shipping its new generation of skid
steer loaders and track loaders. The company anticipates
improved volumes in the third and fourth quarters of 2005.
-- In the quarter, Equipment Operations net debt declined by
$726 million.
-- CNH's Case construction equipment business was awarded a
five-year contract by the U.S. government. Case will supply
more than 500 backhoe loaders, coupled with parts and
service, in a contract valued at $51 million, with the first
delivery in 2006.
-- CNH Capital leveraged improved portfolio performance and
strong investor demand for its $750 million wholesale
receivables asset backed securitization transaction,
confirming CNH Capital's funding capacity.
Equipment Operations
Net sales of equipment, comprising the company's agricultural and
construction equipment businesses, were $3.4 billion for the
second quarter, compared to $3.3 billion for the same period in
2004, with most of the increase due to currency variations.
CNH Agricultural Equipment Net Sales
-- Agricultural equipment net sales were $2.3 billion for the
second quarter, essentially unchanged from the prior year,
but down 3% excluding currency variations.
-- Sales in Latin America declined by approximately 60%,
excluding currency variations, continuing last quarter's
sharp market contraction, in particular for combines. Sales
in Europe were down 10%, excluding currency, in line with
combine industry declines and the company's de-stocking
actions. Sales in Rest of World markets were up 12% and up
4% in North America in a flat industry environment.
-- Second quarter 2005 production of agricultural tractors and
combines was approximately 2% lower than retail unit sales.
CNH Construction Equipment Net Sales
-- Net sales of construction equipment were $1.1 billion for
the second quarter, an increase of 13%, compared to
$1.0 in the second quarter 2004, and up 10% excluding
currency variations.
-- Three of four regions contributed to sales growth in the
quarter: North America was up 15% exclusive of currency
variations and Latin America was over 50%, but on a smaller
base. Sales in Europe decreased 2%, as the company
continued to adjust its sales and marketing activities as a
result of its previously announced brand rationalization.
Sales in Rest of World markets were up 1%.
-- Production of CNH's major construction equipment products
was higher than retail unit sales by approximately 10%.
Gross Margin
Equipment Operations gross margin (net sales of equipment less
cost of goods sold) for agricultural and construction equipment
was $574 million in the second quarter of 2005, compared to
$551 million in the second quarter last year.
-- Agricultural equipment gross margin declined slightly
compared to the prior year's second quarter, as most of the
improvement in North America was offset by a substantial
decline in volumes of higher-margin combines in Latin
America and Europe.
-- Construction equipment gross margin was higher than in the
prior-year second quarter, benefiting from volume
improvements, mostly in North America, and increased
pricing, which were partially offset by materials costs that
were greater than anticipated, and other economics
increases.
Industrial Operating Margin
Equipment Operations industrial operating margin (defined as
net sales, less cost of goods sold, SG&A and R&D costs) was
$248 million in the second quarter of 2005, or 7.3% of net sales,
compared to $256 million or 7.8%, in the same period of 2004. The
improvement in gross margin dollars, was offset by an increase in
selected investments to better support CNH's dealers, improve
product quality, enhance global sourcing initiatives, and
strengthen European logistics operations.
Adjusted EBITDA
Adjusted EBITDA for Equipment Operations was $274 million for the
quarter, or 8.1% of net sales, compared to $259 million in the
second quarter of 2004, or 7.9% of net sales. Interest coverage
was 5.1 times for the second quarter 2005, compared to 4.3 times
for the prior year second quarter.
Financial Services
Financial Services operations reported second quarter 2005 net
income of $44 million, compared to $29 million for the second
quarter last year. Improved yields on the wholesale portfolio and
higher retail and wholesale ABS volumes were the principal factors
contributing to the improvement in net income compared to the
prior period.
Consolidated Financial Information
CNH's consolidated second quarter 2005 income before taxes,
minority interest, and equity in income of unconsolidated
subsidiaries was $165 million, compared to $108 million for the
second quarter last year. The year-over-year improvement of
$57 million reflects the combination of the improvements in
Equipment Operations and at Financial Services in the period,
compared with the second quarter 2004. These results include
pretax restructuring charges of $6 million in the second quarter
of 2005 and $39 million in last year's second quarter.
Year-to-Date Financial Results
CNH's net income for the first six months was $129 million,
compared to $74 million for the first six months of 2004. Results
include restructuring charges, net of tax, of $8 million in the
first half of 2005, and $37 million in the first half of 2004.
First half diluted earnings per share were up 72% to $.55,
compared to $.32 in the first half of 2004.
Equipment Operations
Net sales of equipment, comprising the company's agricultural and
construction equipment businesses, were $6.2 billion for the first
six months of 2005, compared to $5.9 billion for the same period
in 2004. Net of currency variations, net sales increased by 2%
over the prior year's first half.
Adjusted EBITDA for Equipment Operations was $404 million for the
first half of 2005, or 6.5% of net sales, compared to $387 million
in the first half of 2004, or 6.5% of net sales. Interest
coverage was 3.6 times for the first half of 2005, compared to 3.1
times for the prior year first half.
Financial Services
Financial Services operations reported first half 2005 net income
of $93 million, compared to $56 million for the first half
last year. This improvement reflects the first quarter 2005
$1.4 billion retail asset backed securitization transaction, lower
risks costs associated with the improvements in Financial Services
receivables portfolio quality, improved yields on the wholesale
portfolio, and higher retail and wholesale ABS volumes in the
second quarter.
CNH's consolidated first half 2005 income before taxes, minority
interest, and equity in income of unconsolidated subsidiaries was
$188 million, compared to $99 million for the first half last
year. The year-over-year improvement of $89 million reflects the
combination of the improvements in Equipment Operations and at
Financial Services in the period, compared with the first half of
2004. These results include pre-tax restructuring charges of
$11 million in the first half of 2005 and $58 million in last
year's first half.
Net Debt and Operating Cash Flow
Equipment Operations net debt (defined as total debt less cash and
cash equivalents, deposits in Fiat affiliates cash management
pools and inter-segment receivables) was $824 million at June 30,
2005, compared to $1.6 billion on March 31, 2005 and $1.8 billion
at June 30, 2004. The decline in net debt in the quarter
reflected $882 million in cash from operating activities.
A decrease in working capital (defined as accounts and notes
receivable, excluding inter-segment notes receivable, plus
inventories less accounts payable), net of currency variations,
contributed approximately $472 million to cash from operating
activities, in the quarter. This decrease is primarily driven by
an expansion of our accounts receivables securitization program,
particularly in Europe, of approximately $345 million. This
represents a further step in CNH's initiative to consolidate
management of receivables within its Financial Services
operations.
Excluding the expansion of our accounts receivables program,
working capital decreased by $127 million, compared with an
increase of approximately $106 million in the second quarter last
year. At incurred currency rates, working capital on June 30, 2005
was $2.4 billion, compared to $3.1 billion on June 30, 2004.
In addition to the improvements in working capital, net income,
seasonal increases in accruals, and a $60 million dividend from
Financial Services to Equipment Operations contributed the balance
of the cash from operating activities in the quarter.
CNH expects to become an eligible borrower under Fiat S.p.A.'s
recently closed 1 billion Euro credit facility agreement. Under
the new facility, CNH will be allocated exclusive rights to 300
million Euros of the syndicated credit line, plus the opportunity
to access the remainder of any unutilized capacity. This
arrangement will replace CNH's expiring $1.8 billion credit line
which was never utilized and was a back-up to support CNH's then-
existing commercial paper program. With the new facility, other
existing facilities and liquidity on its balance sheet, CNH
believes its liquidity needs are adequately covered.
Financial Services net debt increased approximately $800 million
to $4.0 billion on June 30, 2005 from $3.2 billion on March 31,
2005, reflecting primarily the increased portfolio of receivables
under management.
CNH Outlook for 2005
CNH believes that for the full year 2005, the agricultural
equipment market will be at the same level as last year, although
slightly different by region than was previously anticipated. CNH
expects that total tractor industry sales in North America should
be slightly lower than was previously forecast, but over-40-
horsepower tractors are expected to be better than last year by
5%-10%. In Western Europe, the industry unit sales of tractors
should be down about 5%, as previously forecast. In Latin
America, CNH expects that full-year tractor industry volumes will
be about 25% below last year and sales of combines will be down
60%-65%. Industry sales in rest-of-world markets are now expected
to be up slightly.
CNH believes that, for the construction equipment industry, all
regions will be stronger except for Western Europe, which will be
slightly weaker than previously expected. CNH's estimates of
major agricultural and construction equipment industry retail unit
sales, by major market area, are included in the supplemental
information provided at the end of the release.
CNH expects that its net sales of equipment for the full year 2005
will increase by up to 5%. Including selected investments to
better support CNH's dealers, improve product quality, enhance
global sourcing initiatives, and strengthen European logistics
operations, the company expects that its consolidated income
before taxes, minority interest and equity in income of
unconsolidated subsidiaries will improve by 60%-70%. This
improvement is due to reduced restructuring expenses, improvement
in Financial Services results, and improvements in Equipment
Operations. The full benefit of these expected improvements will
be partially offset by an increase in our effective tax rate when
compared to 2004. As a result, we anticipate net income before
restructuring will improve by approximately 10% to 15% compared
with the full year 2004, depending upon market conditions and
commodity cost evolution. Net of tax, restructuring costs for the
full year are expected to be approximately $65 million.
For the third quarter, the company expects its revenues from net
sales of equipment to increase slightly compared with the third
quarter of 2004. Including the effects of our increased spending
for SG&A and R&D, CNH expects that net income, excluding
restructuring costs, will be approximately the same as in the
third quarter last year. Net of tax, restructuring costs for the
third quarter are expected to be approximately $10 million.
Further, the company expects Equipment Operations to generate
approximately $250 million of cash flow during the year, after
including its third-quarter contribution to its US defined benefit
pension plans of about $100 million, as previously anticipated.
CNH expects to use that cash to further reduce Equipment
Operations net debt, when compared with year-end 2004 levels.
CNH -- http://www.cnh.com/-- is the power behind leading
agricultural and construction equipment brands of the Case and New
Holland brand families. Supported by more than 12,000 dealers in
more than 160 countries, CNH brings together the knowledge and
heritage of its brands with the strength and resources of its
worldwide commercial, industrial, product support and finance
organizations.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2004,
Standard & Poor's Ratings Services revised its outlook on CNH
Global N.V, to negative from stable, following that same outlook
action taken by Standard & Poor's on parent company, Italy-based
Fiat SpA (BB-/Negative/B). At the same time, Standard & Poor's
affirmed its 'BB-' corporate credit rating on CNH.
CULLODEN TIMBER: Case Summary & 19 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Culloden Timber Co., Inc.
410 Main Street
Culloden, Georgia 30016
Bankruptcy Case No.: 05-52942
Type of Business: The Debtor operates a logging company.
Chapter 11 Petition Date: July 26, 2005
Court: Middle District of Georgia (Macon)
Judge: Robert F. Hershner, Jr.
Debtor's Counsel: Wesley J. Boyer, Esq.
Katz, Flatau, Popson & Boyer, LLC
355 Cotton Avenue
Macon, Georgia 31201-2687
Tel: (478) 742-6481
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 19 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service Past due taxes for $205,000
401 W. Peachtree, N.W. 2001
Stop 334-D
Atlanta, GA 30365
Cherokee Logging, Inc. Value of security: $170,702
c/o Thomas Peter Allen, $85,000
III, Esq.
Martin Snow, LLP
P.O. Box 1606
Macon, GA 31202-1606
Georgia Dept. of Revenue $108,766
P.O. Box 740387
Atlanta, GA 30374
Caterpillar Financial Deficiency $39,124
Soris Financial $36,169
Smith & Turner Equipment $22,803
Company
The Fuel Island $15,000
John Deere Credit Company Value of security: $12,929
$10,000
John Deere Credit $12,000
Premium Finance $8,974
Pioneer Machinery $8,900
Rossee Oil Co. $8,095
Monroe County Tax Property tax- $7,476
Equipment
GCR Tire Center $3,988
Atlanta Freightliner Returned check $3,814
Georgia Dept. of $3,162
Transportation
Southern Rivers Energy $1,658
Capital City Insurance $1,554
Monroe County Hospital $1,372
D&G INVESTMENTS: Section 341(a) Meeting Slated for Aug. 25
----------------------------------------------------------
The U.S. Trustee for Region 21 will convene a meeting of D & G
Investments of West Florida, Inc.'s creditors at 3:00 p.m., on
Aug. 25, 2005, at Room 110-B, Timberlake Annex, 501 Polk Street,
in Tampa, Florida. This is the first meeting of creditors
required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Seminole, Florida, D & G Investments of West
Florida, Inc., filed for chapter 11 protection on July 20, 2005
(Bankr. M.D. Fla. Case No. 05-14434). Thomas C. Little, Esq., at
Thomas C. Little, PA, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it estimated assets of $10 million to $50 million and debts of
$1 million to $10 million.
DELTA AIR: Employees Thank Lawmakers Supporting Pension Reform
--------------------------------------------------------------
Delta Air Lines' (NYSE: DAL) employees rallied to thank U.S.
Senator Johnny Isakson (R-Ga.) for his support of pension reform
and for authoring S.861, the Employee Pension Preservation Act.
He was joined by U.S. Rep. Tom Price (R-Ga.) and U.S. Rep. Lynn
Westmoreland (R-Ga.), two of the nine members of the Georgia
Congressional delegation who support similar legislation in House.
"We are grateful to Sen. Isakson, Rep. Price and Rep. Westmoreland
for their unwavering support of pension reform and their fight to
make sure that airlines are able to preserve the pension benefits
that employees have earned," said Jerry Grinstein, chief executive
officer for Delta. "Delta employees and retirees wanted to show
their appreciation to them for taking the time to listen to their
constituents and understand the issues that affect their everyday
lives."
Delta, its employees, retirees and the Air Line Pilots Association
support pension reform bills introduced in April by Sen. Isakson
and U.S. Sen. Jay Rockefeller (D-W.Va.) in the Senate and U.S.
Rep. Tom Price (R-Ga.) in the House of Representatives. With this
legislation, airlines would be given the ability to alter the
payment time frame by paying their pension obligations to their
employees over a 25-year period, using more stable, long-term
assumptions. In return, airlines would agree to limit pension
liabilities by freezing pension benefits and could choose to offer
more manageable defined contribution plans, such as a 401(k).
"If Delta can make its pension payments, everybody benefits - the
employees, the company, the people of Atlanta and the American
taxpayers. It's a win-win for all stakeholders," said Sen.
Isakson. "Delta employees have spent years earning this pension,
and I want to make sure they collect the benefits they have worked
so hard to earn."
With a permanent solution, airline employees have a greater
likelihood of receiving the full benefits they have already
accrued.
"With this legislation, Delta can work to keep our benefit
commitments to our employees while continuing to work toward a
more competitive cost structure," Mr. Grinstein said. "The
airlines are not asking for a financial bailout - just more time
to meet their pension obligations."
The federal government also benefits, as the bills would minimize
the need for airlines to shift liabilities to the already over-
burdened Pension Benefit Guaranty Corp. In addition, all
taxpayers would be helped by this pension legislation, as the
bills greatly decrease the chances of a taxpayer rescue of the
PBGC.
Delta is also holding a Pension Reform Support Day in Cincinnati
to thank Rep. Geoff Davis for his support of H.R. 2106.
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 June 30, 2005, Delta Air's balance sheet showed a $6.9 billion
stockholders' deficit, compared to a $5.8 billion deficit at
Dec. 31, 2004. Delta reported a $382 million net loss for the
June 2005 quarter, 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.
DLJ COMMERCIAL: Fitch Holds Low-B Ratings on 6 Certificate Classes
------------------------------------------------------------------
Fitch Ratings upgrades DLJ Commercial Mortgage Corp.'s commercial
mortgage pass-through certificates, series 2000-CF1:
-- $44.3 million class A-2 to 'AAA' from 'AA';
-- $37.7 million class A-3 to 'AA+' from 'A';
-- $13.3 million class A-4 to 'AA' from 'A-';
-- $31 million class B-1 to 'A-' from 'BBB';
-- $11.1 million class B-2 to 'BBB+ from 'BBB-'.
These classes are affirmed by Fitch:
-- $53.9 million class A-1A at 'AAA';
-- $566.4 million class A-1B at 'AAA';
-- Interest-only class S at 'AAA';
-- $31 million class B-3 at 'BB+';
-- $8.9 million class B-4 at 'BB';
-- $2.2 million class B-5 at 'BB-';
-- $6.6 million class B-6 at 'B+';
-- $8.9 million class B-7 at 'B';
-- $8.9 million class B-8 at 'B-'.
Fitch does not rate the $16 million class C and the $3 million
class D certificates.
The rating upgrades reflect the transaction's increased credit
enhancement since issuance, as well as the defeasance of 7% of the
pool. As of the July 2005 distribution date, the transaction has
paid down 4.9%, to $843.1 million from $886.2 million at issuance.
Nine loans are currently in special servicing (5.7%) and include
seven real estate owned (REO) assets (3.7%), one loan in
foreclosure (2%), and one loan that is 30 days delinquent (0.1%).
The largest group of specially serviced assets (3.4%) are five
multifamily properties that formerly secured one mortgage note and
are currently REO. The properties are located in various
locations in Texas and a sale for all five has been approved. The
next largest specially serviced loan (2%) is collateralized by a
multifamily property and two office/retail buildings in St. Louis,
MO. The properties have suffered from soft market conditions and
have low occupancies. The loan is in foreclosure.
Losses are expected on most of the loans in special servicing.
While these losses are likely to be significant, they are not
expected to impact the Fitch rated classes at this time.
DLJ COMMERCIAL: Fitch Junks Rating on $12.4 Mil. Mortgage Certs.
----------------------------------------------------------------
DLJ Commercial Mortgage Corp.'s, series 1999-CG1, commercial
mortgage pass-through certificates are downgraded by Fitch:
-- $12.4 million class B-8 to 'CC' from 'CCC'.
These classes are upgraded by Fitch:
-- $58.9 million class A-2 to 'AAA' from 'AA';
-- $65.1 million class A-3 to 'AA' from 'A';
-- $18.6 million class A-4 to 'AA-' from 'A-';
-- $46.5 million class B-1 to 'A+' from 'BBB';
-- $15.5 million class B-2 to 'A-' from 'BBB-';
-- $37.2 million class B-3 to 'BBB' from 'BB+';
-- $21.7 million class B-4 to 'BB+' from 'BB'.
In addition, Fitch affirms the following classes:
-- $83.1 million class A-1A at 'AAA';
-- $686.2 million class A-1B at 'AAA';
-- Interest-only class S at 'AAA';
-- $9.3 million class B-5 at 'BB-';
-- $12.4 million class B-6 at 'B+';
-- $12.4 million class B-7 at 'B'.
The $6.2 million class C is not rated by Fitch.
The downgrade of class B-8 is due to anticipated losses on the two
specially serviced loans, which will ultimately deplete class C
and negatively affect the credit enhancement of the non-
investment-grade classes.
The upgrades are a result of increased credit enhancement due to
additional paydown and defeasance within the pool. Thirty-three
loans (14.0%) have been fully defeased.
As of the July 2005 distribution date, the pool's aggregate
principal balance has been reduced 12.1% to $1.10 billion from
$1.24 billion at issuance. To date, the transaction has realized
$18.6 million in losses. There are currently two loans (1.9%) in
special servicing and losses are expected.
The largest specially serviced loan (1.0%) is a retail property
located in Roanoke Rapids, NC. The special servicer is proceeding
with a deed-in-lieu of foreclosure. The other specially serviced
loan (0.9%) is a multifamily property located in Houston, TX and
is currently 90 plus days delinquent. The special servicer is
marketing the note for sale.
The transaction contains one Fitch credit assessed loan. The
Winston hotel portfolio (5.8%) maintains a below investment-grade
credit assessment. The loan is secured by 14 limited-service
hotels located in nine states. As of year-end 2004, the Fitch-
adjusted net cash flow declined 32.7% since issuance. The decline
is attributed to a drop in the weighted average occupancy to 70.0%
as of YE 2004, compared with 78.7% at issuance. As of YE 2004,
the Fitch-adjusted DSCR was 1.48 times (x), compared with 2.51x at
issuance, based on the current loan balance and a hypothetical
stressed mortgage constant.
ENRON CORP: Court Okays Settlement Pact Under Trigen Contracts
--------------------------------------------------------------
Before filing for bankruptcy, the Reorganized Enron Corporation
Debtors and their affiliate, Enron Canada Corp., entered into
financial and physical trading transactions relating to the
purchase or sale of energy products with:
-- Suez Energy Marketing NA, Inc., formerly known as
Tractabel Energy Marketing, Inc.;
-- Trigen-Nassau Energy Corporation, formerly known as Nassau
District Energy Corp., and
-- Trigen-Syracuse Energy Corporation.
Enron Corp. issued certain guarantees in connection with the
Contracts.
The Counter-parties filed several claims against the Reorganized
Debtors:
(1) Claim No. 13980 filed by Suez against Enron North America
Corp., for $2,873,000;
(2) Claim No. 13982 filed by Trigen-Syracuse against ENA for
$600,000; and
(3) Claim No. 13893 filed by Suez against Enron Power
Marketing, Inc., for $22,695,728.
ENA objected to and sought disallowance of Claim No. 13982.
After arm's-length negotiations, the parties agree that:
(1) Trigen-Nassau will pay ENA $810,109 in immediately
available funds in full satisfaction of Trigen's
obligations to ENA under the Contracts;
(2) Claim No. 13980 will be allowed as a Class 5 general
unsecured claim against ENA for $927,000, net of all
set-offs and deductions;
(3) Claim No. 13982 will be allowed as a Class 5 general
unsecured claim against ENA for $600,000, net of all
set-offs and deductions;
(4) Claim No. 13893 will be allowed as a Class 6 general
unsecured claim against EPMI for $18,645,016, with all
set-offs and deductions deemed to have been made;
(5) With the exception of the Allowed Claims, all other
scheduled and filed claims by the Trigen Entities will be
disallowed and expunged; and
(6) The parties will mutually release one another with
respect to claims related to the Trigen Contracts
and Guarantees.
Judge Gonzalez approves the stipulation.
Headquartered in Houston, Texas, Enron Corporation --
http://www.enron.com/-- is in the midst of restructuring various
businesses for distribution as ongoing companies to its creditors
and liquidating its remaining operations. Before the company
agreed to be acquired, controversy over accounting procedures had
caused Enron's stock price and credit rating to drop sharply.
Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed. The Confirmed Plan took effect on
Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,
Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in
their restructuring efforts. (Enron Bankruptcy News, Issue No.
150; Bankruptcy Creditors' Service, Inc., 15/945-7000)
ENRON CORP: Royal Bank Inks $49 Million MegaClaims Settlement
-------------------------------------------------------------
Enron Corp. reached an agreement with The Royal Bank of Canada to
settle RBC's portion of the MegaClaims litigation. Under the
terms of the agreement, RBC, which did not admit any wrongdoing,
agreed to pay $49 million to Enron, which includes:
-- $25 million in cash to settle claims against the bank and
other members of the RBC financial group; and
-- $24 million in cash to allow Enron to pursue $114 million of
claims held by RBC or transferred by RBC to third parties.
The bank will take the combined $49 million of payments as a
charge in the fiscal third quarter, spokesman David Moorcroft told
Sean B. Pasternak of Bloomberg News.
"This settlement reflects our assessment that RBC played the
smallest role of any of the financial institutions involved in
this case," Stephen Cooper, Enron's interim CEO and chief
restructuring officer, said. "This is the second settlement in
the MegaClaims litigation in recent weeks and we are pleased that
we were once again able to achieve a meaningful cash recovery for
the estate."
The agreement, which resolves all open issues between Enron and
RBC, remains subject to the approval of the United States
Bankruptcy Court for the Southern District of New York.
"We are pleased with this resolution and the opportunity to put
this matter behind us on favorable terms," said Charles M.
Winograd, president and chief executive officer of RBC Capital
Markets.
Other Settlements
With this latest $25 million settlement, the Enron investors has
now obtained more than $4.8 billion in settlements including:
-- $41.8 million from The Royal Bank of Scotland PLC,
-- $2.2 billion from JPMorgan Chase & Co.,
-- $2 billion from Citigroup,
-- $222.5 million from Lehman Brothers,
-- $69 million from Bank of America,
-- $168 million from Enron's outside directors, and
-- $32 million from Andersen Worldwide.
Through the bankruptcy proceeding for the LJM2 partnership
involved in the Enron scheme, UC will secure a distribution of
approximately $32 million for investors.
Remaining Defendants
The remaining financial institutions involved in the MegaClaims
litigation include:
-- Barclays PLC;
-- Canadian Imperial Bank of Commerce;
-- Citigroup Inc.;
-- Credit Suisse First Boston, Inc.;
-- Deutsche Bank AG;
-- J.P. Morgan Chase & Co.;
-- Merrill Lynch & Co., Inc.; and
-- The Toronto-Dominion Bank.
The complaint includes claims that the banks aided and abetted
breaches of fiduciary duties; aided and abetted fraud; and engaged
in civil conspiracy. The suit also includes bankruptcy-based
claims relating to equitable subordination; preferential and/or
fraudulent transfers; and the re-characterization of certain
transactions.
Certain of these banks allegedly set up false investments in
clandestinely controlled Enron partnerships, used offshore
companies to disguise loans and facilitated phony sales of phantom
Enron assets. As a result, Enron executives were able to deceive
investors by reporting increased cash flow from operations and by
moving billions of dollars of debt off Enron's balance sheet,
thereby artificially inflating securities prices.
Additional remaining defendants include Goldman Sachs, because of
its role as an underwriter of Enron securities, as well as former
officers of Enron, its accountants, Arthur Andersen, and certain
law firms.
Depositions in the case began in June 2004, with the trial slated
to begin in Houston on Oct. 16, 2006.
Enron is represented in this matter by Susman Godfrey LLP; Togut,
Segal & Segal; and Venable LLP.
Headquartered in Houston, Texas, Enron Corporation --
http://www.enron.com/-- is in the midst of restructuring various
businesses for distribution as ongoing companies to its creditors
and liquidating its remaining operations. Before the company
agreed to be acquired, controversy over accounting procedures had
caused Enron's stock price and credit rating to drop sharply.
Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed. The Confirmed Plan took effect on
Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,
Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in
their restructuring efforts.
ENRON CORP: Wants Smurfit Entities to Return $1.9 Mil. to Estate
----------------------------------------------------------------
Before filing for chapter 11 protection, Enron North America Corp.
and Smurfit Packaging Corporation were parties to three Swap
Confirmation Agreements involving "fixed-for-floating" old
newsprint price swaps. Jefferson Smurfit Group PLC guaranteed
Smurfit Packaging's obligations under the Swaps.
Jonathan D. Polkes, Esq., at Cadwalader, Wickersham & Taft LLP,
in New York, relates that under the Agreements, if a party's
conduct causes an event of default, the non-defaulting party may
designate an early termination date, whereby all outstanding
transactions become terminated, and one party would have to pay
the other an early termination payment.
The Early Termination Payment is largely a function of movements
in the market price of the particular commodity during the term
of an underlying Transaction, Mr. Polkes explains. If at the
Early Termination Date, the Floating Price curve for old
newsprint was lower than the Fixed Price curve, then Smurfit
would owe ENA the Payment. On the other hand, if the Floating
Price curve was higher, then ENA would owe Smurfit the Payment.
Pursuant to the "full two-way payment" under the Agreements, the
Early Termination Payment must be paid to whomever it is owed,
regardless of which party is the Defaulting Party.
On Dec. 19, 2001, Smurfit informed ENA that, as a result of
ENA's failure to make the payment due under the Agreements, ENA
was in default and, thus, Smurfit was designating that date as
the Early Termination Date. Smurfit calculated that ENA owed
Smurfit $240,717 as Early Termination Payment.
On Aug. 29, 2002, ENA sent a letter to Smurfit detailing the
correct Early Termination Payment calculation of $1,896,209 and
demanding payment for that amount. The Smurfit entities,
however, ignored the demand.
Section 542(b) of the Bankruptcy Code provides that "an entity
that owes a debt that is property of the estate and that is
matured, payable on demand, or payable on order, shall pay the
debt to, or on the order of, the trustee . . ."
Mr. Polkes asserts that Smurfit is wrongfully in possession,
custody and control of the Early Termination Payment, which
belongs exclusively to the estate. Smurfit should be ordered to
turn the property over immediately. In addition, Smurfit is in
violation of the automatic stay provisions of Section 362 of the
Bankruptcy Code because it has wrongfully exercised control over
property of the estate by improperly withholding and refusing to
pay the Early Termination Payment owed to ENA.
Accordingly, ENA asks the Court to:
(1) order the Smurfit Entities to turn over the property
of the estate amounting to $1,904,209, plus interest at
the applicable rate;
(2) declare that Smurfit has violated the automatic stay;
(3) declare that Jefferson has breached the Guaranty;
(4) declare that the arbitration provision within the
Agreements should not be enforced; and
(5) award damages in amounts to be determined at trial
resulting from:
-- Smurfit's failure to pay ENA the Early Termination
Payment;
-- Jefferson's failure to pay ENA under the Guaranty;
and
-- Smurfit Entities' unjust enrichment.
Headquartered in Houston, Texas, Enron Corporation --
http://www.enron.com/-- is in the midst of restructuring various
businesses for distribution as ongoing companies to its creditors
and liquidating its remaining operations. Before the company
agreed to be acquired, controversy over accounting procedures had
caused Enron's stock price and credit rating to drop sharply.
Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed. The Confirmed Plan took effect on
Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,
Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in
their restructuring efforts. (Enron Bankruptcy News, Issue No.
150; Bankruptcy Creditors' Service, Inc., 15/945-7000)
EXIDE TECH: Appoints Rich Cockrell as Senior Director
-----------------------------------------------------
Exide Technologies (NASDAQ: XIDE)-- http://www.exide.com-- a
global leader in stored electrical-energy solutions, reported that
Rich Cockrell has joined the Company as Senior Director - Investor
Relations, effective immediately. He will report to Exide Chief
Financial Officer Tim Gargaro.
"One of the first commitments that I made when I joined Exide was
to increase the level of communication with shareholders and to
make our Company's performance more transparent for the investment
community," said Exide President and Chief Executive Officer
Gordon A. Ulsh. "I am delighted that Rich Cockrell has joined our
team to help us to fulfill that commitment. I believe that the
investment community will find that Rich brings a unique
perspective to this position having served on both sides of the
fence - working in corporate IR and as an investment analyst."
Prior to joining Exide, Mr. Cockrell was Head of Strategic
Financial Analysis and Investor Relations at ING Americas.
Earlier, he served as Manager of Investor Relations/Strategic
Finance at The Home Depot; Manager of Investor Relations at El
Paso Corporation; and Director of Investor Relations for
Motorola's wholly owned subsidiary and pre-IPO company Propel
Inc.
Before entering the field of corporate investor relations, Mr.
Cockrell served as an Associate Equity Analyst at UBS Warburg and
at Jeffries & Company. He also was an Investor Relations Analyst
at Morgan Stanley Dean Witter.
Mr. Cockrell holds a bachelor's degree in economics from the
University of Houston and an MBA from Georgia State University.
Headquartered in Princeton, New Jersey, Exide Technologies --
http://www.exide.com/-- is the worldwide leading manufacturer and
distributor of lead acid batteries and other related electrical
energy storage products. The Company filed for chapter 11
protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125).
Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland &
Ellis, represent the Debtors in their restructuring efforts.
Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On
April 14, 2002, the Debtors listed $2,073,238,000 in assets and
$2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 70;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on July 8, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Exide Technologies to 'CCC+' from 'B-', and removed the
rating from CreditWatch with negative implications, where it was
placed on May 17, 2005.
"The rating action reflects Exide's weak earnings and cash flow,
which have resulted in very high debt leverage, thin liquidity,
and poor credit statistics," said Standard & Poor's credit analyst
Martin King. Lawrenceville, New Jersey-based Exide, a
manufacturer of automotive and industrial batteries, has total
debt of about $740 million, and underfunded postemployment benefit
liabilities of $380 million.
EXIDE TECH: Closes Senior Secured & Convertible Note Offerings
--------------------------------------------------------------
As previously reported, Exide Technologies issued $60 million of
Floating Rate Convertible Senior Subordinated Notes due 2013 to
initial purchasers in a private placement on March 18, 2005.
According to J. Timothy Gargaro, Exide's executive vice president
and chief financial officer, the initial purchasers resold the
notes in transactions exempt from the registration requirements
of the Securities Act to qualified institutional buyers within
the meaning of Rule 144A under the Securities Act.
The selling securityholders are:
Principal Common
Amount of % of Stock
Notes Notes Owned
Beneficially Out- after
Selling Securityholder Owned standing Offering
---------------------- ------------ -------- --------
Acuity Master Fund, Ltd. 500,000 < 1.00 28,785
BNP Paribas Equity Strategies 1,080,000 1.80 66,547
CooperNeff Convertible
Strategies Masterfund, LP 396,000 < 1.00 22,797
CRT Capital Group LLC 3,250,000 5.40 187,104
Deutsche Bank Securities, Inc. 4,750,000 7.92 273,459
Fidelity Puritan Trust:
Fidelity Balanced Fund 990,000 1.65 56,994
Fidelity Management Trust Co. 10,000 < 1.00 575
Fore Convertible Master Fund 4,000,000 6.66 230,282
Fore ERISA Fund, Ltd. 300,000 < 1.00 17,271
Fore Multi Strategy Master Fund 500,000 < 1.00 28,785
Grace Convertible Arbitrage Fund 2,500,000 4.16 143,926
Guggenheim Portfolio Co. VIII 3,000,000 5.00 172,711
HFR RVA Combined Master Trust 125,000 < 1.00 7,196
Lyxor/Convertible Arbitrage
Fund Limited 180,000 < 1.00 10,362
Man Mac I Limited 3,000,000 5.00 172,711
Mellon HBV Master US Event
Driven Fund 250,000 < 1.00 196,392
PIMCO Convertible Fund 250,000 < 1.00 14,392
Singlehedge US Convertible
Arbitrage Fund 158,000 < 1.00 9,096
SOCS Ltd. 2,750,000 4.58 158,318
Stanfield Offshore Leveraged
Assets, Ltd. 16,500,000 27.50 1,884,331
Sturgeon Limited 186,000 < 1.00 10,708
Tribeca Global Convertible
Investments, Ltd. 4,250,000 7.10 244,674
Vicis Capital Master Fund 2,000,000 3.33 115,141
Waterstone Market Neutral MAG51 68,000 < 1.00 3,914
Waterstone Market Neutral
Master Fund, Ltd. 932,000 1.55 53,655
Whitebox Convertible Arbitrage
Partners, LP 7,000,000 11.66 402,177
Whitebox Diversified Convertible
Arbitrage Partners, LP 750,000 1.25 43,177
Any other holder of notes or
Future Transferees, pledges
or donees of or from any holder 325,000 < 1.00 18,710
Headquartered in Princeton, New Jersey, Exide Technologies --
http://www.exide.com/-- is the worldwide leading manufacturer and
distributor of lead acid batteries and other related electrical
energy storage products. The Company filed for chapter 11
protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125).
Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland &
Ellis, represent the Debtors in their restructuring efforts.
Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On
April 14, 2002, the Debtors listed $2,073,238,000 in assets and
$2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 70;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on July 8, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Exide Technologies to 'CCC+' from 'B-', and removed the
rating from CreditWatch with negative implications, where it was
placed on May 17, 2005.
"The rating action reflects Exide's weak earnings and cash flow,
which have resulted in very high debt leverage, thin liquidity,
and poor credit statistics," said Standard & Poor's credit analyst
Martin King. Lawrenceville, New Jersey-based Exide, a
manufacturer of automotive and industrial batteries, has total
debt of about $740 million, and underfunded postemployment benefit
liabilities of $380 million.
FEDERAL-MOGUL: Inks Environmental Settlement Pact with Michigan
---------------------------------------------------------------
The State of Michigan filed Claim Nos. 5350, 5351, 5352, 5353, and
6938 in Federal-Mogul Corporation and its debtor-affiliates'
chapter 11 cases, asserting secured claims for:
a. $139,646 representing unreimbursed past response costs and
future response costs incurred; and
b. $7.950 million representing anticipated future response
costs.
Both the past and future response costs relate to certain
Liquidated Sites, Debtor-Owned Sites, and a Specified Site.
On August 25, 2003, the State filed an application seeking
allowance of an administrative claim for $22,685 representing
unreimbursed Future Response Costs incurred at certain sites
between the Petition Date and the filing of its claims.
To address certain of the U.S. Debtors' actual and potential
environmental liabilities to the State, the Debtors and the State
agreed to enter into a settlement agreement.
The salient terms of the Settlement Agreement are:
A. Environmental Sites
To address each of the Claims asserted by the State as well as
to acknowledge that some liability may not yet be known or
quantifiable and that some sites have yet to be discovered or
linked to applicable U.S. Debtors. The Settlement treats each
site classification as:
a. Liquidated Sites
The Liquidated Sites were previously owned or operated by
certain U.S. Debtors.
The Claims relating to the Liquidated Sites allege that
certain of the U.S. Debtors are liable for past and future
response costs or natural resource damages with respect to
those sites pursuant to federal or state environmental law
or private contractual obligations.
The Claims will be treated as allowed unsecured claims for
past and future response costs. There are three Liquidated
Sites, which collectively relate to allegedly secured
claims filed by the State for $3.2 million. The Settlement
compromises those claims as allowed unsecured claims in
amounts totaling $2,290,265.
The U.S. Debtors may eventually recover insurance proceeds
with respect to the Liquidated Sites.
Accordingly, the State may be entitled to a 50% pro rata
portion of the insurance proceeds recovered on account of
the Liquidated Sites, which would be in addition to the
distribution it is entitled to under the Plan as a holder
of an Allowed Unsecured Claim.
b. Additional Sites
Additional Sites encompass all sites, including without
limitation, all facilities other than those sites
designated as Debtor-Owned Sites, Specified Sites, and the
Liquidated Sites, where, among others, a prepetition
release or threatened release of a hazardous substance has
occurred.
All liabilities and obligations of the applicable U.S.
Debtors to the State with respect to Additional Sites will
be discharged under Section 1141 of the Bankruptcy Code
pursuant to the terms of the confirmed Plan, and the State
will receive no distributions under the Plan on account of
the liabilities and obligations.
In exchange for the discharge, the State may require the
applicable U.S. Debtor(s) to pay the State the amounts
incurred if the State undertakes response activities in the
ordinary course with respect to any Additional Site,
subject to the State's claims receiving treatment as
unsecured claims.
The State will also have the ability to determine the
applicable U.S. Debtors' liability and may seek to obtain
and liquidate a judgment of liability, or enter into a
settlement of the liability, with one or more of the U.S.
Debtors in the manner and before the administrative or
judicial tribunal the State would have utilized if the
Chapter 11 cases had never been commenced.
In the event that any claim regarding an Additional Site is
liquidated by settlement or judgment, the applicable U.S.
Debtor(s) will satisfy the determined amount.
The Determined Amount will be satisfied by providing the
value of the consideration that would have been distributed
under the Plan to the holder of the claim if the Determined
Amount had been an allowed unsecured claim under the Plan.
The Distribution Amount will be paid in cash, notes or
other similar forms distributed to holders of allowed
unsecured claims under the Plan.
c. Debtor-Owned Sites
Debtor-Owned Sites include those in the State of Michigan
that the applicable U.S. Debtors own on the date of
confirmation of the Plan.
If between June 2005 and prior to plan confirmation any of
the properties or sites are no longer owned by any of the
U.S. Debtors, the properties or sites will become Specified
Sites.
The applicable U.S. Debtors' liabilities and obligations at
the Debtor-Owned Sites will not be discharged pursuant to
Section 1141, or in any way affected or waived by the Plan
or the Settlement. Thus, the Claimants are free to assert
claims and pursue enforcement actions or other proceedings
against the U.S. Debtors with respect to the Debtor-Owned
Sites.
d. Specified Sites
Specified Sites are those properties within the State of
Michigan that the applicable U.S. Debtors no longer own at
any time after June 2005 and prior to plan confirmation,
including the ICD Muskegon Site and other sites.
The applicable U.S. Debtors will continue their legal
obligations and liabilities to the State to remediate or
address any release of a hazardous substance from the site
that occurred on or prior to the last date of ownership of
the property or site by the applicable U.S. Debtor, as if
that site was a Debtor-Owned Site.
To the extent a release of hazardous substances occurs
after the transfer date of the site, other than the
continuation of releases to the environment that originated
prior to that date, or migrations therefrom, the applicable
U.S. Debtors will not be responsible.
The applicable U.S. Debtors will not be responsible for
post-Transfer Date compliance with any legal obligations,
environmental or otherwise, pertaining to the Specified
Site, other than the permit or other obligations that are
required in connection with the remediation of any release
of hazardous substances from a Specified Site that occurred
or originated prior to the Transfer Date.
B. Administrative Claims
The State agreed:
a. to withdraw, with prejudice, its application for allowance
of an administrative claim;
b. not to file any other application in the Debtors' cases
seeking allowance of an administrative expense claim; and
c. that any claims it may have in the Debtors' proceedings
will be treated as unsecured claims.
Pursuant to Section 363 of the Bankruptcy Code, the parties ask
the U.S. Bankruptcy Court for the District of Delaware to approve
the settlement agreement.
A full-text copy of the 35-page Settlement Agreement is available
for free at:
http://bankrupt.com/misc/MichiganFMO.pdf
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some US$6
billion. The Company filed for chapter 11 protection on October
1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq.,
James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin
Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang,
Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed US$10.15 billion in
assets and US$8.86 billion in liabilities. At Dec. 31, 2004,
Federal-Mogul's balance sheet showed a US$1.925 billion
stockholders' deficit. At Mar. 31, 2005,
Federal-Mogul's balance sheet showed a US$2.048 billion
stockholders' deficit, compared to a US$1.926 billion deficit at
Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner &
Newall, is based at Dudley Hill, Bradford. (Federal-Mogul
Bankruptcy News, Issue No. 87; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
FIRST UNION: Fitch Affirms Low-B Ratings on 6 Certificate Classes
-----------------------------------------------------------------
Fitch Ratings upgrades First Union National Bank-Chase Manhattan
Bank's commercial mortgage pass-through certificates, series 1999-
C2:
-- $47.3 million class B to 'AAA' from 'AA';
-- $62 million class C to 'AA+' from 'A';
-- $14.8 million class D to 'AA' from 'A-';
-- $41.4 million class E to 'A-' from 'BBB';
-- $17.7 million class F to 'BBB+' from 'BBB-'.
In addition, Fitch affirms the following classes:
-- $34.5 million class A-1 at 'AAA';
-- $673.7 million class A-2 at 'AAA';
-- Interest-only class IO at 'AAA';
-- $41.4 million class G at 'BB+';
-- $11.8 million class H at 'BB';
-- $11.8 million class J at 'BB-';
-- $11.8 million class K at 'B+';
-- $11.8 million class L at 'B';
-- $11.8 million class M at 'B-'.
The $9.7 million class N is not rated by Fitch.
The rating upgrades reflect the principal paydown from three loan
payoffs since Fitch's last rating action and the defeasance of 14
loans (7.17%) of the pool. As of the July 2005 distribution
report, the pool's aggregate certificate balance was reduced by
15.2% to $1 billion from $1.18 billion at issuance. To date, the
trust has realized $11 million in losses.
Currently, six loans (2.7%) are in special servicing. The largest
loan is secured by a 324-unit multifamily property located in
Indianapolis, IN. The loan transferred to the special servicer
due to monetary default. The special servicer has begun
foreclosure proceedings but is also evaluating the inclusion of
the subject mortgage loan in a multifamily portfolio note sale.
Losses are likely upon the disposition of this asset.
The second-largest specially serviced loan is secured by a 196-
unit multifamily property in Charlotte, NC. This loan also
transferred to the special servicer due to monetary default and is
being evaluated for the inclusion in the multifamily portfolio
note sale. Some losses may be realized upon the disposition of
this asset.
FRANK'S NURSERY: Exits Chapter 11 as FNC Realty Corp.
-----------------------------------------------------
Frank's Nursery & Crafts, Inc. (OTCBB:FNCNQ) formally emerged from
chapter 11 protection on Wednesday, July 27, 2005, pursuant to its
Second Amended Chapter 11 Plan of Reorganization. The reorganized
Company will operate as a real estate development company under
the name FNC Realty Corporation.
FNC Realty Corporation will retain approximately 42 parcels of
real estate for development and will continue to hold certain
other properties until such properties can be sold. As previously
announced, funding for the Plan has been provided by certain
shareholders of the Company in the form of convertible notes in
the aggregate principal amount of approximately $77 million and a
$20 million equity investment. The Plan generally provides that
all unsecured claims will be paid in full, plus post-petition
interest. Shareholders owning 5,000 shares or less will receive
$0.75 per share in cash. Shareholders owning more than 5,000
shares were provided the option either to receive $0.75 per share
in cash, or to exchange their existing shares for shares in the
reorganized Company (subject to dilution). Shareholders who are
accredited investors and held more than 100,000 shares were also
offered the right to invest in the convertible notes and equity to
be issued by FNC Realty Corporation, pro rata with the Plan
funders.
Distributions under the Plan commenced on July 27, 2005, and will
be completed as soon as practicable.
Twenty-five holders of approximately 15.2 million shares of the
Company's common stock elected to exchange their shares of common
stock for stock in the reorganized Company, and 15 of such
holders, holding approximately 14.3 million shares, elected to
invest in the convertible notes and equity. Thus, FNC Realty
Corporation will be a private company with approximately 25
shareholders.
Headquartered in Troy, Michigan, Frank's Nursery & Crafts, Inc.,
operated the largest chain (as measured by sales) in the United
States of specialty retail stores devoted to the sale of lawn and
garden products. Frank's Nursery and its parent company, FNC
Holdings, Inc., each filed a voluntary chapter 11 petition in the
U.S. Bankruptcy Court for the District of Maryland on Feb. 19,
2001. The companies emerged under a confirmed chapter 11 plan in
May 2002. Frank's Nursery filed another chapter 11 petition on
September 8, 2004 (Bankr. S.D.N.Y. Case No. 04-15826). Allan B.
Hyman, Esq., at Proskauer Rose LLP, represents the Debtor. In the
Company's second bankruptcy filing, it listed $123,829,000 in
total assets and $140,460,000 in total debts.
The Court confirmed the Debtor's Second Amended Chapter 11 Plan of
Reorganization on June 15, 2005
GMAC COMMERCIAL: Fitch Affirms Low-B Rating on Six Cert. Classes
----------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc.'s mortgage pass-through
certificates, series 2001-C2, are affirmed by Fitch Ratings:
-- $122.3 million class A-1 at 'AAA';
-- $437.7 million class A-2 at 'AAA';
-- Interest-only class X-1 at 'AAA';
-- Interest-only class X-2 at 'AAA';
-- $34 million class B at 'AA+';
-- $11.3 million class C at 'AA';
-- $15.1 million class D at 'A+';
-- $9.4 million class E at 'A';
-- $15.1 million class F at 'BBB+';
-- $10.4 million class G at 'BBB';
-- $9.4 million class H at 'BBB-';
-- $23.6 million class J at 'BB+';
-- $5.7 million class K at 'BB';
-- $5.7 million class L at 'BB-';
-- $11.3 million class M at 'B+';
-- $3.8 million class N at 'B';
-- $3.8 million class O at 'B-';
Fitch does not rate the $11.3 million class Q certificates and the
$3.8 million class P certificates remain at 'CCC'.
The ratings affirmations reflect the consistent loan performance
of the pool since issuance. As of the July 2005 distribution
date, the pool's aggregate certificate balance has decreased 6.21%
to $708 million from $754.9 million at issuance.
Currently, there is one loan (0.16%), collateralized by a
multifamily property in Mesquite, TX that is with the special
servicer. The loan transferred to the special servicer in March
2005 due to imminent default. The condition of the property has
deteriorated significantly. The special servicer is working with
the borrower and the City of Mesquite to correct the deficiencies.
G-STAR 2003-3: Fitch Holds BB Rating on $24 Mil. Preferred Shares
-----------------------------------------------------------------
(Fitch Ratings-New York-July 27, 2005)
Fitch Ratings affirms all classes of the notes co-issued by G-Star
2003-3, Ltd. /G-Star 2003-3 Corp. The affirmations are the result
of Fitch's review process and are effective immediately:
-- $340,000,000 class A-1 notes at 'AAA';
-- $48,000,000 class A-2 notes at 'AAA';
-- $18,000,000 class A-3 notes at 'AA';
-- $5,000,000 class B-1 notes at 'A';
-- $15,000,000 class B-2 notes at 'BBB';
-- $24,000,000 preferred shares at 'BB'.
G-Star 2003-3 is a collateralized debt obligation which closed
March 13, 2003 and is supported by a managed pool of commercial
mortgage-backed securities [32.9%]), residential mortgage-backed
securities [41.2%]), real estate investment trusts [17.6%]),
asset-backed securities [4.7%]), and CDOs (3.5%). The collateral
is managed by GMAC Institutional Advisors, rated 'CAM1' by Fitch
for structured finance collateral management.
Since the last rating affirmation in September 2004, the
collateral credit quality remained relatively stable with the
weighted average rating factor showing marginal improvement. As
of the June 15, 2005 trustee report, the WARF improved slightly to
8.64 ('A-'/ 'BBB+'), from 9.2 ('A-'/ 'BBB+'), as reported in the
July 2004 trustee report. Overcollateralization levels also
remained stable over the same time period; however, interest
coverage levels declined. The class A IC test weakened to 127.8%
from 191.6%, but the test still retains a margin of safety above
the minimum required threshold of 106%.
To date there have been approximately $13.2 million in
distributions to the preferred shares leaving the rated balance at
approximately $10.8 million. The rating of the preference shares
addresses the likelihood that investors will receive ultimate
payments of the initial preference share balance by the legal
final maturity. The ratings on the class A-1, class A-2 and class
A-3 notes address the timely payment of interest and ultimate
repayment of principal. The ratings on the class B-1 and class B2
notes address the ultimate payment of interest and ultimate
repayment of principal.
Based on the stable performance of the underlying collateral and
lack of substantive change in coverage levels, Fitch affirms all
rated liabilities issued by G-Star 2003-3.
Fitch will continue to monitor and review this transaction for
future rating adjustments. Additional deal information and
historical data are available on the Fitch Ratings web site at
http://www.fitchratings.com/ For more information on the Fitch
VECTOR model, see 'Global Rating Criteria for Collateralized Debt
Obligations,' dated Sept. 13, 2004, also available at
http://www.fitchratings.com/
HEALTHEAST: Fitch Puts BB+ Rating on $195 Mil. Series 2005 Bonds
----------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' rating to the approximately
$195 million Saint Paul, MN Housing and Redevelopment Authority
hospital revenue bonds, series 2005 (HealthEast Project). In
addition, Fitch affirms the outstanding debt listed below. The
Rating Outlook has been revised to Stable from Positive.
Total debt outstanding after the series 2005 issuance will total
approximately $269 million. The series 2005 bond proceeds will be
used to refund the series 1993, 1994, and 1996 bonds, fund
approximately $80 million of capital expenditures, establish a
debt service reserve, and pay costs of issuance. The bonds are
expected to sell the week of Aug. 8 by UBS. Sufficient draft
legal documents for the series 2005 transaction were not available
at the time of the rating. The rating assumes no weakening of the
legal structure for the bonds, and the amended documents are
expected to include a mortgage pledge and higher rate covenant
(1.2x).
At the time of Fitch's last review in December 2004, a Positive
Outlook was placed on HealthEast due to its sustained improved
financial performance exhibited over the past three years and most
recent interim period. However, Fitch did not anticipate the
level of additional debt that would be issued to fund strategic
capital needs. HealthEast plans to significantly renovate its St.
Joseph's facility by constructing a five-story building with
modern patient rooms and renovating the majority of the existing
facility, including the operating rooms, emergency room, and
relocation of the front entrance. Although Fitch views the
strategic investment favorably, HealthEast's balance sheet will be
highly leveraged after this debt issuance, therefore, a Stable
Outlook is maintained at this time.
HealthEast's continued better financial performance has been
driven by increased managed care rates, rising volume, and
improved performance at its new hospital, Woodwinds. The
operating margin improved to 2.2% in fiscal 2004 from negative
1.9% in fiscal 2001 and was 2.7% through the nine months ended May
31, 2005. HealthEast is performing ahead of budget through the
interim period and should meet its fiscal 2005 operating income
budget of $15 million (2.2% operating margin). Utilization has
also increased at a steady pace, leading to revenue and
profitability growth. Through the nine months of fiscal 2005,
admissions were up 4.6% over the prior-year period. Other credit
strengths include a leading market position in St. Paul with 38.7%
market share through May 31, 2005 compared with the next closest
competitor United Hospital (part of Allina Health System, rated
'A' by Fitch) with 30.2% market share. Market share has remained
relatively stable over the past four years for the three large
players in the market.
Credit concerns include weak liquidity and high debt burden.
HealthEast's liquidity has always been light but recently improved
to 69.7 days at May 31, 2005 from 42.3 days at fiscal year-end
2004 due to a sale leaseback transaction of an administrative
building. The transaction added $37.6 million to HealthEast's
balance sheet. Despite this, HealthEast's liquidity position
remains thin, and Fitch believes it will take HealthEast several
years to build its liquidity position. HealthEast's five-year
capital plan totals approximately $120 million with $80 million
funded by the series 2005 bond issuance. This significantly
leverages HealthEast's balance sheet with pro forma debt to
capitalization of 76.8%. However, coverage remains solid due to
the restructuring of HealthEast's outstanding debt that allowed
maximum annual debt service to remain relatively the same despite
the additional debt. Debt service coverage was 2.3x through the
nine months of fiscal 2005.
Fitch believes HealthEast's main impediment to an investment-grade
rating is its weak balance sheet. HealthEast needs to build more
financial flexibility due to its operating environment and
significant construction project upcoming. The Minneapolis-St.
Paul metropolitan area is dominated by four major managed care
companies, in addition, the nurses' union has strong bargaining
power. These issues may cause stress on the organization, which
has been exhibited in the past. However, successful management of
the project and continued growth of its liquidity position may
lead to a higher rating over the medium term.
Headquartered in St. Paul, Minnesota, HealthEast is a large health
care system providing inpatient and outpatient care and
rehabilitation services, as well as a variety of other ancillary
services primarily through three acute-care hospitals, one long-
term care hospital, two ambulatory surgery centers, and 11 primary
care clinics. The three acute care hospitals operate 511 of 654
licensed beds. HealthEast will covenant to provide annual and
quarterly disclosure to the nationally recognized municipal
securities information repositories. Disclosure to Fitch has been
good with the receipt of timely quarterly interim statements and
annual updates after the completion of the audit. Quarterly
disclosure includes a balance sheet, income statement, and
utilization statistics. No cash flow statement is provided.
Outstanding debt:
-- $49,135,000 Washington County Housing and Redevelopment
Authority hospital facility revenue bonds (HealthEast
Project), series 1998;
-- $26,530,000 City of St. Paul, MN Housing and Redevelopment
Authority hospital facility revenue bonds (HealthEast
Project), series 1997;
-- $8,440,000 City of Maplewood, MN, health care facility
revenue bonds (HealthEast Project), series 1996 (1);
-- $14,095,000 City of South St. Paul, MN Housing and
Redevelopment Authority hospital facility revenue
refunding bonds (HealthEast Project), series 1994 (1);
-- $91,345,000 City of St. Paul, MN Housing and Redevelopment
Authority hospital facility revenue crossover refunding
bonds (HealthEast Project), series 1993 (1).
(1) To be refunded with series 2005 bonds.
HPL TECHNOLOGIES: Recurring Losses Prompt Going Concern Doubt
-------------------------------------------------------------
PricewaterhouseCoopers, LLP, expressed substantial doubt about HPL
Technologies, Inc.'s ability to continue as a going concern after
it audited the Company's financial statement for the year ended
March 31, 2005. The auditing firm points to the Company's
recurring losses and net capital deficiency.
As of March 31, 2005, HPL Technologies had an accumulated deficit
of $107.5 million. Since going public in 2001, the Company has
not achieved profitability on a quarterly or annual basis. As it
continues to build its customer base and further develop new
products, management expects to continue to incur net operating
losses, at least through the Company's fiscal year ending March
31, 2006. The Company will need to generate significantly higher
revenues in order to sustain its operations and to achieve and
maintain profitability.
The ability to generate higher revenues may continue to be
impacted by the Company's previous litigation, the capital
spending trends of its potential and current customers in the
semiconductor industry, the time to market of its new products and
the ability to compete in its market segment.
For the year ended March 31, 2005, cash used in operations and to
fund capital expenditures was $7.2 million. At March 31, 2005,
the Company had approximately $3.2 million in cash and cash
equivalents and short-term investments. Its current operating
plan for the year ending March 31, 2006 projects that cash
available from planned revenue combined with the $3.2 million on
hand at March 31, 2005 will not be adequate to fund operations
through March 31, 2006. The Company's future cash position will
be adversely affected by slow or diminished revenue growth,
research and development expenses, additional sales and marketing
costs and higher general and administrative expenses, such as
professional fees associated with litigation. HPL needs to raise
additional capital or it will be forced to curtail or cease
operations. There is no assurance that the Company will be able
to raise such funds on terms acceptable to the Company, or at all.
Headquartered in San Jose, California, HPL Technologies, Inc.,
-- http://www.hpl.com/-- supplies the software, services and
technology necessary for semiconductor companies to streamline
their design process and optimize product yields. Integrated
device manufacturers (IDMs), fabless semiconductor companies, and
foundries all utilize HPL's comprehensive portfolio of silicon-
proven intellectual property (IP), highly flexible data analysis
platforms, factory floor systems and professional services to
facilitate product development from design through manufacturing
and test phases. HPL solutions also support the flat-panel
display industry, making the Company a leading supplier to the
world's top 25 semiconductor and flat-panel display manufacturers.
HPL has design and customer support offices located throughout the
United States, Europe, and Asia.
HPL TECHNOLOGIES: Secures $3M Bridge Loan from Silicon Valley Bank
------------------------------------------------------------------
On July 21, 2005, HPL Technologies, Inc., and Silicon Valley
Bank entered into a Loan and Security Agreement and an
Intellectual Property Security Agreement, which set forth the
terms and conditions of a secured bridge loan from the Bank to the
Company.
Under the Loan Agreement, the Company may borrow from the Bank up
to $3,000,000, of which $500,000 is available to the Company as of
the signing of the Loan Agreements, and the remaining $2,500,000
will be available to the Company upon satisfaction of certain
conditions set forth in the Loan and Security Agreement. Each
advance must be in an amount equal to at least $250,000. The
interest rate on each advance from the Bank will be 4.0% above the
Bank's prime rate, subject to increase in the event of a default
by the Company.
The Company is obligated to repay all advances under the Loan and
Security Agreement upon the earlier of:
(a) the closing of a liquidity event, as defined in the Loan
and Security Agreement; or
(b) November 30, 2005, and will be charged a late fee of
0.08333% of the then outstanding principal amount of the
loan for each day that such repayment is late.
Interest on the aggregate amount of advances under the Loan
Agreement is due and payable on the first of each month.
The Company also paid the Bank a non-refundable commitment fee of
$37,500 and is obligated, upon the closing of a liquidity event,
to pay the Bank a success fee of 5.0% of the aggregate advances
made by the Bank.
The Company's ability to receive advances under the Loan Agreement
is subject to the Company's compliance with various covenants,
representations, warranties and conditions, including but not
limited to negative covenants against the transfer of the
Company's business or property, changes in the Company's business
and certain mergers or consolidations involving the Company or its
subsidiaries. In the event of a default by the Company under
certain circumstances, the Company's obligations to repay advances
may be accelerated, and the Bank may stop advancing funds to the
Company under the Loan Agreement or any other agreements between
the Bank and the Company.
The Company's obligations under the Loan Agreements are secured by
a continuing first priority security interest in all of the
Company's assets, including its equipment, contract rights, cash
and intellectual property.
Headquartered in San Jose, California, HPL Technologies, Inc.,
-- http://www.hpl.com/-- supplies the software, services and
technology necessary for semiconductor companies to streamline
their design process and optimize product yields. Integrated
device manufacturers (IDMs), fabless semiconductor companies, and
foundries all utilize HPL's comprehensive portfolio of silicon-
proven intellectual property (IP), highly flexible data analysis
platforms, factory floor systems and professional services to
facilitate product development from design through manufacturing
and test phases. HPL solutions also support the flat-panel
display industry, making the Company a leading supplier to the
world's top 25 semiconductor and flat-panel display manufacturers.
HPL has design and customer support offices located throughout the
United States, Europe, and Asia.
* * *
Going Concern Doubt
PricewaterhouseCoopers, LLP, expressed substantial doubt about HPL
Technologies, Inc.'s ability to continue as a going concern after
it audited the Company's financial statement for the year ended
March 31, 2005. The auditing firm points to the Company's
recurring losses and net capital deficiency.
IMPROVENET INC: Stockholders to Vote on Merger at Aug. 9 Meeting
----------------------------------------------------------------
ImproveNet, Inc. (OTC Bulletin Board: IMPV) scheduled a special
meeting of stockholders for August 9, 2005, at 9:00 a.m., at the
company's principal executive offices at 10799 N. 90th Street,
Suite 200, Scottsdale, AZ 85260.
The record date for the special meeting is July 15, 2005. At the
special meeting, holders of the company's common stock as of the
close of business on July 15, 2005, will be asked to consider and
vote upon a proposal to adopt the Agreement and Plan of Merger,
dated as of June 22, 2005, by and among ServiceMagic, Inc.,
Sunbelt Acquisition Corp., ImproveNet, Inc., and the principal
stockholders of ImproveNet signatory thereto, providing for the
acquisition of ImproveNet by ServiceMagic. The definitive proxy
statement and other soliciting materials for the special meeting,
filed with the Securities and Exchange Commission, are being
mailed to the stockholders of record as of July 15, 2005.
ServiceMagic Merger
On June 22, 2005, ServiceMagic(R), Inc. and ImproveNet, Inc. (OTC
Bulletin Board: IMPV) entered into an agreement whereby
ServiceMagic will acquire all of the outstanding stock of
ImproveNet. ServiceMagic agreed to buy all of the outstanding
shares and in-the-money warrants and stock options of ImproveNet
for approximately $6.72 million in cash or approximately $.12 per
share.
Together ServiceMagic and ImproveNet will offer residential
contractors and home service professionals the most complete range
of interactive services and solutions for marketing and managing
their businesses online. The combined consumer bases and
contractor networks are expected to drive more leads to
participating contractors and improve choice for consumer members.
The increased demand is projected to result in more than 165,000
consumer service requests every month to member contractors, which
represents an estimated $400 million in monthly home improvement
related spending by homeowners.
Subject to completion of the transaction, ImproveNet business
lines will transition to ServiceMagic, including ImproveNet.com,
AdServePRO(R), ImproveNetPRO.com, 1-800-Contractor and 1-800-
CONTRACTOR.COM. The transaction is expected to close in the third
quarter of 2005, at which point the services will be combined.
Residential contactors in the ImproveNet network will be
transitioned to ServiceMagic; resulting in an ultimate increase in
ServiceMagic's network of prescreened residential contractors.
The transaction is subject to customary closing conditions,
including approval of ImproveNet's shareholders, which if not
satisfied in the anticipated timeframe would cause an extension of
the expected close date. Under a separate agreement, certain
members of ImproveNet's senior management, each of whom are
significant shareholders of ImproveNet, have agreed to support the
transaction.
Headquartered in Golden, Colorado, ServiceMagic(R), Inc., --
http://www.servicemagic.com/-- is the nation's leading online
marketplace connecting homeowners with prescreened and customer-
rated home service professionals. Using proprietary technology to
match consumer service requests with local service professionals
in real time, the company addresses more than 500 different home
service needs that range from simple home repairs and maintenance
to complete home remodeling projects. In addition, its 31,000
member businesses are prescreened to help consumers connect with
licensed, insured, credible service professionals. ServiceMagic is
an operating business of IAC/InterActiveCorp (NASDAQ: IACI).
ImproveNet, Inc. -- http://www.improvenet.com/-- is a leading
Internet-based home improvement services company that, through its
TrueMatch(TM) platform, connects homeowners to local screened home
improvement service providers throughout the United States. The
Company was recognized by Money Magazine as "Best of the Web" in
2003 under the Home Improvement Category and was recently featured
nationally on the Today Show, MSNBC, CNNfn, CBS Marketwatch and
locally on many news networks and in newspapers. ImproveNet has
been connecting homeowners with local screened home improvement
service providers since 1996.
* * *
Going Concern Doubt
Semple & Cooper, LLP, expressed substantial doubt about
ImproveNet, Inc.'s ability to continue as a going concern after it
audited the Company's financial statements for the fiscal year
ended Dec. 31, 2004. The auditors pointed to the Company's net
losses for 2004 and 2003, and ImproveNet's nominal working capital
at Dec. 31, 2004.
INTERCELL INTERNATIONAL: Court Sets August 5 as Claims Bar Date
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Colorado set
August 5, 2005, at 5:00 p.m., as the deadline for all creditors
owed money by Intercell International Corporation on account of
claims arising prior to March 16, 2005, to file written proofs of
claim.
Creditors must file proofs of claim on or before the August 5
Claims Bar Date and those forms must be sent either by mail or
courier to:
Office of the Clerk
U.S. Bankruptcy Court for the District of Colorado
United States Custom House
721 19th Street
Denver, CO 80202
Headquartered in Denver, Colorado, Intercell International
Corporation -- http://www.intercell.com/-- is a technology
holding company that provides capital, guidance, and strategic
support to small private technology companies. The Company filed
for chapter 11 protection on March 16, 2005 (Bankr. D. Co. Case
No. 05-15181). Michael A. Littman, Esq., in Arvada, Colorado,
represents the Debtor in its restructuring efforts. When the
Debtors filed for protection from its creditors, it listed
$180,898 in total assets and $400,800 in total debts.
INTERSTATE BAKERIES: Can Walk Away from 18 Real Estate Leases
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
gave Interstate Bakeries Corporation and its debtor-affiliates
authority to reject non-residential real property leases for 18
locations. The Debtors want to walk away from the leases in order
to reduce postpetition administrative costs.
The nine real property leases rejected effective as of June 8,
2005:
Lessor Address of Leased Premises Lease Date
------ -------------------------- ----------
Tropic Real Estate 3613 South Military Trail, 10/22/1982
Holding LLC Lake Worth, Florida
Jimel Baz d/b/a Baz 312 6th Street NW, Winter 07/30/1990
Bros. Enterprises Haven, Florida
Lavin Trust 2615 North 4th Street, 06/23/1992
Coeur D'Alene, Idaho
Equity One Realty & 8655 Regency Park Blvd., 08/01/1994
Management Space 21, Port Richey,
Florida
Chevy Chase Center, 5809 Margate Boulevard, 10/19/1994
Inc. Margate, Florida
J. Burns Creighton, 4228 North Armenia Avenue, 06/30/1995
Jr. Tampa, Florida
DRG Properties, Inc. 2086 N.E. 8th Street, 12/18/2000
Homestead, Florida
Cole's Hardware & 5108 South Irby Street, -
Supply Effingham, South Carolina
Steve Shelton 1625 Pearl Street 2&3, -
Owensboro, Kentucky
The other nine real property leases rejected effective as of June
28, 2005:
Lessor Address of Leased Premises Lease Date
------ -------------------------- ----------
Cross Creek Center, 1238 Capitol Circle, Cross 07/22/1993
LLC Creek Square Shopping
Center, Tallahassee,
Florida
Walco Center 1026 East Alfred Street, 01/01/1992
Tavares, Florida
Gainsville Hotel 4035 SW 13th Street (13th 11/18/1998
Assets, Inc. and Williston Road),
Gainesville, Florida
Wilbur E. Turner 1818 Elkam Boulevard, 05/03/1999
Deltona, Florida
Claud Bertram 505 French Avenue, Sanford, 05/25/1999
Nelson, Jr. Florida
Lin I. Mayer 515 South Addison Road, 07/08/1969
Addison, Illinois
The Pantry, Inc. 2568 Blanding Boulevard, 02/11/2002
Middleburg, Florida
C & C Properties 103 Miller Street, -
Fruitland Park, Florida
Ruben E. Smith 422 North Kennedy Drive, -
Bradley, Illinois
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014,
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
INTERSTATE BAKERIES: Court Okays $2.3MM 363 Sale to R.W. Van Auker
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
gave Interstate Bakeries Corporation and its debtor-affiliates
authority to sell Boise Property to Ronald W. Van Auker, through
Pioneer 1031 Company, subject to higher or better offers.
As reported in the Troubled Company Reporter on June 23, 2005, the
Debtors have entered into an Asset Sale Agreement with Mr. Van
Auker, as the stalking horse bidder. The Debtors will sell the
Property for $2,315,015.
Mr. Van Auker has deposited $231,502 in an escrow account.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014,
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
INTERSTATE BAKERIES: Court Okays $14 Million San Pedro Asset Sale
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
approved the sale of Interstate Bakeries Corporation and its
debtor-affiliates' San Pedro, California, property to GMS Realty,
LLC, a Delaware limited liability company.
On June 23, 2005, the Debtors conducted an auction for the real
property located at 1605-1701 North Gaffey Street, in San Pedro,
California. Target Corporation emerged as the successful bidder
with its $18,700,000 offer.
The Debtors have executed an asset purchase agreement with
Target. Target has deposited $2,000,000 in an escrow account.
The Property includes approximately 9.8 acres of land with an
approximately 171,028-square foot building.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014,
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
IPC ACQUISITION: Extends Tender Offer for 11.5% Notes Until Aug. 5
------------------------------------------------------------------
IPC Acquisition Corp. extended the Expiration Time of its
previously announced cash tender offer relating to its outstanding
11.50% Senior Subordinated Notes due 2009 from 10:00 a.m., New
York City time, on Monday, August 1, 2005, to 10:00 a.m. New York
City time, on Friday, August 5, 2005, unless further extended or
earlier terminated by IPC. Subject to the terms and conditions of
the Offer, payment for any Notes tendered will be made promptly
after the Expiration Time. The Offer and Consent Solicitation
were commenced pursuant to IPC's Offer to Purchase and Consent
Solicitation Statement dated June 17, 2005.
Except for the extension described above, all other terms and
conditions of the Offer remain unchanged. As of July 26, 2005,
holders of $144,525,000 in aggregate principal amount of the
Notes, which represents 96.35% of the $150,000,000 outstanding
principal amount of the Notes, have tendered their outstanding
Notes and delivered related consents pursuant to the Offer and
Consent Solicitation. Under the terms of the Offer and Consent
Solicitation, tendered Notes and delivered consents may no longer
be withdrawn or revoked, except under limited circumstances.
Accordingly, IPC has received the requisite consents from
registered holders of these Notes to amend the related indenture.
The closing of the Offer is conditioned on, among other things,
the Company entering into a new Senior Credit Facility, which
would be used to fund the purchase of the Notes.
Information regarding the pricing, tender and delivery procedures
and conditions of the Offer and Consent Solicitation is contained
in the Offer to Purchase and related documents. Copies of these
documents can be obtained by contacting Global Bondholders
Services Corporation, the information agent for the Offer and
Consent Solicitation at (866) 924-2200. Goldman, Sachs & Co. is
the exclusive dealer manager and solicitation agent for the Offer
and Consent Solicitation. Additional information concerning the
terms and conditions of the tender offer and consent solicitation
may be obtained by contacting Goldman, Sachs & Co., toll-free at
(800) 828-3182 or collect at (212) 357-7867.
IPC Acquisition Corporation -- http://www.ipc.com/-- is a leading
provider of mission-critical communications solutions to global
enterprises. With more than 30 years of expertise, IPC provides
its systems and services to the world's largest financial services
firms, as well as to public safety; government; power, energy and
utility; and transportation organizations. IPC offers its
customers a suite of products and enhanced services that includes
advanced Voice over IP technology, and integrated network and
management services to 40 countries. Based in New York, IPC has
over 800 employees throughout the Americas, Europe and the Asia
Pacific regions.
* * *
As reported in the Troubled Company Reporter on July 6, 2005,
Moody's Investors Service assigned a B2 rating to IPC Acquisition
Corporation's proposed $50 million senior secured first lien
revolving credit facility and $285 million senior secured first
lien term loan and a B3 rating to its proposed $150 million senior
secured second lien term loan. Proceeds from the credit
facilities will be used repurchase approximately $210 million of
shares outstanding, tender for existing 11.5% senior subordinated
notes ($165 million), and refinance the existing credit facility
($48 million).
Additionally, Moody's has downgraded IPC's corporate family rating
(formerly known as the senior implied rating) to B2 from B1. The
ratings broadly reflect IPC's decision to recapitalize the company
by using its free cash flow generating ability to increase
leverage and to repurchase equity. Pro forma for this
recapitalization transaction, leverage will have more than doubled
(from 2.8x to nearly 6.2x).
JILLIAN'S ENT: Court Turns Down Proposed Asset Sale
---------------------------------------------------
The Honorable David T. Stosberg of the U.S. Bankruptcy Court for
the Western District of Kentucky rejected Jillian's Entertainment
Holdings, Inc. and its debtor-affiliates' request to sell their
partnership interest in Sugarloaf Gwinnett Entertainment Company
to Lucky Strike Atlanta, Inc.
Steven L. Victor, the plan administrator appointed pursuant to the
Debtors' confirmed plan of reorganization, had executed a contract
with Lucky Strike to sell the Debtors' 50.10% interest in the
partnership for $850,000.
The Sugarloaf Partnership
Sugarloaf Gwinnett Entertainment Company is a limited partnership
formed by Sugarloaf Mills Limited Partnership and Jillian's of
Gwinnett GA, Inc. in September 2001. Jillian's is the general
partner under the partnership agreement while Sugarloaf Mills is a
limited partner, owning a 49.90% interest. The partnership
constructed and operated a family-style restaurant and
entertainment center.
Dave & Buster's, Inc., who had purchased all of the Debtors'
assets for approximately $65 million in 2004, had the option to
acquire the partnership interest pursuant to the terms of the
asset purchase agreement.
When Dave & Buster's, Inc., failed to exercise its option through
several rejection deadlines from March 31 to June 30, 2005, the
plan administrator moved to negotiate a sale with other interested
parties.
Sale of Partnership Interest
Mr. Victor had negotiated and executed an assignment and
assumption agreement with Lucky Strike for the sale of the
Debtor's partnership interest for $850,000. However, Dave &
Buster's opposed the sale, contending their $1,105,000 counter-
offer for the partnership interest would result in a higher return
to the bankruptcy estate. This prompted Lucky Strike to raise its
bid to $1,000,000.
At the hearing on July 5, 2005, Mr. Victor defended the agreement
with Lucky Strike saying there could be risk of litigation with
Sugarloaf Mills if he were to take Dave & Busters' offer. Dave &
Busters subsequently offered to purchase the partnership interest
for $3.8 million, which, they stated, would indemnify the plan
administrator from all litigation stemming from the sale.
After reviewing the facts of the sale dispute, Judge Stotsberg
concluded that an auction allowing all interested parties to bid
on the partnership would give the best benefit to the bankruptcy
estate. The Court has set the auction at 1:30 p.m. on August 15,
2005.
Headquartered in Louisville, Kentucky, Jillian's Entertainment
Holdings, Inc. -- http://www.jillians.com/-- operates more than
40 restaurant and entertainment complexes in about 20 states. The
Company filed for chapter 11 protection on May 23, 2004 (Bankr.
W.D. Ky. Case No. 04-33192). Edward M. King, Esq., at Frost Brown
Todd LLC and James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
estimated assets of more than $100 million and estimated debts of
over $100 million. Judge David T. Stosberg confirmed the Debtors'
Amended Joint Liquidating Plan on Dec. 12, 2004.
KAISER ALUMINUM: Court Authorizes Sherwin Alumina to Amend Claim
----------------------------------------------------------------
As previously reported, Kaiser Bauxite asked the U.S. Bankruptcy
Court for the District of Delaware disallow Claim No. 11318
because Sherwin Alumina has failed to establish that it has
incurred, and is entitled to, damages as a result of the
rejection.
Alternatively, if Sherwin Alumina provides adequate documentation
to establish that it has incurred damages, Kaiser Bauxite asks the
Court, after providing Kaiser Bauxite ample time to assess and
respond to Sherwin Alumina's documentation, to liquidate the
Sherwin Claim or, to the extent that liquidation would unduly
delay the administration of Kaiser Bauxite's Chapter 11 case, to
estimate the Claim under Section 502(c) of the Bankruptcy Code.
Sherwin Alumina Wants to Amend Claim
William F. Taylor, Jr., Esq., at McCarter & English, LLP, in
Wilmington, Delaware, tells the Court that in May 2005, Sherwin
Alumina, L.L.P., entered into a contract to replace -- through
2007 -- the bauxite supply that was to have been provided by
Kaiser Bauxite Company pursuant to the Supply Agreement.
Consistent with its reservation of rights in the Original Claim,
Sherwin Alumina intends to amend its Claim to state the damages
resulting from the rejection of the Supply Agreement with greater
specificity.
Under the proposed amendment, Sherwin Alumina asserts certain
claims against Kaiser Bauxite for $68,619,084. Mr. Taylor
explains that the vast majority of that claim consists of "cover"
damages pursuant to the Uniform Commercial Code, made up primarily
of $9.50 per ton difference in the price between the per ton price
provided for in the Supply Agreement and Sherwin Alumina's new
supply agreement with the buyer, times 1.6 million tons per year
for five years, discounted to present value.
The Official Committee of Unsecured Creditors supports Sherwin
Alumina's request to amend Claim No. 11318 filed against Kaiser
Bauxite Company on account of damages resulting from Kaiser
Bauxite's rejection of the Supply Agreement.
Considering the ongoing discussions for a possible resolution of
Sherwin Alumina's claims, the Creditors Committee, however,
expressly reserves all of its rights to object to the Amended
Claim in the event (i) the Court grants the request, or (ii) the
agreed resolution is unacceptable to the Creditors Committee.
* * *
Judge Fitzgerald denies the Debtors' request as moot and
authorizes Sherwin Alumina to amend Claim No. 11318 to state the
damages with greater specificity. Any amendment once filed will
relate back to the filing date of the Original Proof of Claim, and
will be considered timely filed in all respects.
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company filed for chapter 11 protection on
February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold
off a number of its commodity businesses during course of its
cases. Corinne Ball, Esq., at Jones Day, represents the Debtors
in their restructuring efforts. On June 30, 2004, the Debtors
listed $1.619 billion in assets and $3.396 billion in debts.
(Kaiser Bankruptcy News, Issue No. 73; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
KAISER ALUMINUM: Wants USWA Experts' Fees Paid Under Revised Pact
-----------------------------------------------------------------
When Kaiser Aluminum Corporation, its debtor-affiliates and the
United Steelworkers of America, AFL-CIO/CLC, originally agreed on
the $600,000 fee limit in 2003, the parties were anticipating
professional fees relating only to negotiations on a potential
restructuring of retiree medical and pension liabilities, Daniel
J. DeFranceschi, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, relates.
Those negotiations ultimately succeeded, and in January 2004, the
parties signed an agreement to terminate:
-- the applicable plans providing for retiree benefits and to
provide the hourly retirees with an opportunity for
continued medical coverage through COBRA or for coverage
pursuant to a Voluntary Employee Beneficiary Association,
which would be funded by Kaiser Aluminum & Chemical
Corporation with a mixture of cash and equity in the
reorganized KACC; and
-- the applicable pension plans and to institute replacement
pension plans, although the parties understood that
termination required approval of and action by the
Pension Benefit Guaranty Corporation and that the
replacement plans were subject to the PBGC's review and
potential challenge to the extent they were viewed by the
PBGC as abusive follow-on plans.
Since the 1113/1114 Agreement was entered into with the USWA in
January 2004, substantial additional work has been required of the
USWA and its advisors to address a number of matters relating to
the agreement and its implementation. In particular, the Debtors
and the USWA subsequently negotiated:
(a) modifications to the 1113/1114 Agreement to adjust monthly
cash advances by KACC to the Union VEBA; and
(b) a restated and amended 1113/1114 Agreement to, inter alia,
alter certain aspects of the replacement defined
contribution pension plan, which was necessary in light of
the Debtors' October 2004 settlement agreement with the
PBGC regarding the termination of the three largest
pension plans sponsored by the Debtors, and the PBGC's
approval of the Debtors' replacement defined contribution
pension plan.
The modifications and the amendment to the 1113/1114 Agreement
were approved on May 25, 2004, and February 1, 2005.
In April, May and June 2005, the Debtors and the USWA negotiated
new long-term collective bargaining agreements.
Mr. DeFranceschi further relates that the USWA and its advisors
expended a substantial amount of time and effort relating to the
settlement reached between the Debtors and the Official Committee
of Unsecured Creditors regarding intercompany claims and related
intercompany issues.
Mr. DeFranceschi notes that the Intercompany Claims Settlement was
necessary for the 1113/1114 Agreement to have finality because the
Debtors and the USWA each had the right under the agreement to
terminate it if the intercompany issues were not resolved in a
satisfactory manner.
The negotiations and work related to the Intercompany Claims
Settlement spanned over nine months, the USWA took the lead in
representing KACC's creditors.
Although the U.S. Bankruptcy Court for the District of Delaware
approved the Creditor Committee's application for payment of fees
and expenses in connection with the Intercompany Claims
Settlement, the application specifically noted that fees and
expenses were not being sought on the USWA's behalf because a
separate application would be made, including those incurred in
connection with the Intercompany Claims Settlement.
In addition to the foregoing work, the Debtors and the USWA have
been working together on several issues related to the Debtors'
ultimate emergence from bankruptcy, many of which affect KACC's
funding of the Union VEBA upon emergence, including:
(a) working on a second amendment and restatement of the
1113/1114 Agreement to address liquidity needs of the
Union VEBA, as well as to clarify certain terms within the
agreement;
(b) working on valuation issues relating to Kaiser Aluminum &
Chemical of Canada Limited;
(c) working with the Debtors to craft an agreement to effect
the director nomination rights of the USWA under the
1113/1114 Agreement and to prepare various corporate
governance documents;
(d) working with the Debtors and the NLRB regarding procedures
to deal with the NLRB's claim in respect of the
prepetition unfair labor practice litigation; and
(e) negotiating transfer restrictions on any equity securities
to be received by the Union VEBA as necessary to preserve
valuable tax attributes for the reorganized Debtors.
Because of the substantial work that has been and will be required
to address those complex issues, the USWA and the Debtors agreed
that:
(1) Subject to an overall limit of $2,000,000, KACC will
reimburse the USWA for the reasonable fees and out-of
pocket expenses incurred by:
* the investment banker, Leon Potok, through his
affiliated companies, whose cumulative fees will be at
the agreed rate of $40,000 per month;
* the bankruptcy and labor counsel, Cohen, Weiss and
Simon, LLP;
* the corporate law counsel, Arnold & Porter; and
* the actuarial consultant, Martin E. Segal & Co.
(2) All reasonable fees and out-of-pocket expenses incurred by
those professionals in connection with the Intercompany
Claims Settlement will be included in the $2,000,000
aggregate limit, and those fees and expenses will not be
included in the fee application contemplated by the
Intercompany Claims Settlement.
(3) KACC is not agreeing, pursuant to the Revised Fee
Agreements, to pay any fees and expenses of any
professional or other entity providing services in
connection with the Union VEBA, including, without
limitation, services provided by labor, pension and
benefits counsel, Bredhoff & Kaiser.
(4) As of March 31, 2005, the USWA has invoiced $568,826 on
KACC for professional fees and expenses, which amount will
be credited against the $2,000,000 limit.
By this motion, the Debtors seek Judge Fitzgerald's authority to
reimburse the USWA's professional fees and expenses pursuant to
the terms of the Revised Fee Agreement.
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company filed for chapter 11 protection on
February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold
off a number of its commodity businesses during course of its
cases. Corinne Ball, Esq., at Jones Day, represents the Debtors
in their restructuring efforts. On June 30, 2004, the Debtors
listed $1.619 billion in assets and $3.396 billion in debts.
(Kaiser Bankruptcy News, Issue No. 73; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
LAIDLAW INT'L: Earns $29.4 Million of Net Income in Third Quarter
-----------------------------------------------------------------
Laidlaw International, Inc. (NYSE:LI), a holding company for North
America's largest providers of school and inter-city bus
transport services and a leading supplier of public transit
services, reported financial results for its fiscal third quarter
ended May 31, 2005. Following completion of the company's
recapitalization plan last week, Laidlaw's Board of Directors has
adopted a policy to pay a $0.15 per share quarterly dividend to
the owners of the company's common stock.
The Company reported $29.4 million of net income against
$836.1 million in revenues for the three months ended May 31,
2005.
For the third quarter 2005, the company had income from continuing
operations of $30 million as compared to $32 million for the prior
year, and earnings per share from continuing operations of $0.30
as compared to $0.31 for the prior year. For the nine-month
period of fiscal 2005, income from continuing operations was
$76 million as compared to $57 million for the prior year, and
earnings per share were $0.74 as compared to $0.55.
"Laidlaw has made substantial progress in the last two years,"
said Kevin Benson, President and Chief Executive Officer. "We
have focused the portfolio on our core transportation expertise
and continue to target profitability improvements in these
businesses. The successful sale of our healthcare assets has let
us pay off more than $800 million of debt and achieve investment
grade ratings. The adoption of a quarterly dividend policy
demonstrates our confidence in the earnings power of Laidlaw."
Revenue for the third quarter of 2005 was $836 million, relatively
flat to prior year reflecting the company's efforts to focus on
improving profitability by shedding underperforming contracts and
bus routes. Favorable foreign exchange translation offset the
impact of the elimination of the contracts and the termination of
bus routes.
While operating income for the third quarter of 2005 of $62
million was down $12 million from the previous year, EBITDA of
$133 million for the same period was only marginally lower than
EBITDA of $135 million for the third quarter of 2004. The
company's success at managing compensation and insurance costs
was offset by high fuel costs, a loss on the sale of non-core
tour bus operations in western Canada and other incremental
corporate costs.
EBITDA is a non-GAAP financial measure, representing operating
income plus depreciation and amortization.
The Board has declared the first dividend payable on Aug. 25,
2005, to stockholders of record as of Aug. 4, 2005. While Laidlaw
intends to pay regular quarterly dividends for the foreseeable
future, all subsequent dividends will be reviewed quarterly and
declared by the Board at its discretion.
As the company has outlined in the past, the strategic plans
prioritize improvements in profitability rather than revenue
growth. As a result, consolidated revenue from continuing
operations for fiscal 2005 is expected to be flat to down 2% over
fiscal 2004. EBITDA from continuing operations for fiscal 2005
is projected to range from $405 to $420 million. On a continuing
operations basis Laidlaw reported EBITDA for fiscal 2004 of $373
million. Net capital expenditures for fiscal 2005 are projected
to be approximately $170 to $180 million.
As of May 31, 2005, the company had unrestricted cash and cash
equivalents of $428 million and debt outstanding of $543 million.
At completion of its debt recapitalization, the company forecasts
to have debt outstanding of approximately $315 million. Net
capital expenditures for the nine-month period were $109 million
as compared to $124 million for the prior year.
Headquartered in Arlington, Texas, Laidlaw, Inc., now known as
Laidlaw International, Inc. -- http://www.laidlaw.com/-- is
North America's #1 bus operator. Laidlaw's school buses transport
more than 2 million students daily, and its Transit and Tour
Services division provides daily city transportation through more
than 200 contracts in the US and Canada. Laidlaw filed for
chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No.
01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents
the Debtors. Laidlaw International emerged from bankruptcy on
June 23, 2003.
* * *
As reported in the Troubled Company Reporter on June 6, 2005,
Moody's Investors Service has upgraded the ratings of Laidlaw
International Inc. senior implied to Ba2 from B1. In a related
action, Moody's assigned Ba2 ratings to the company's proposed
$300 million Term Loan and $300 million Revolving Credit facility.
Moody's said the rating outlook is stable. This completes the
ratings review opened on December 22, 2004.
LAUREL VALLEY: Chapter 11 Involuntary Case Summary
--------------------------------------------------
Alleged Debtors: Laurel Valley Oil Co.
10540 State Route 800 Southeast
Uhrichsville, Ohio 44683
Involuntary Petition Date: July 27, 2005
Case Number: 05-64330
Chapter: Chapter 11
Court: Northern District of Ohio (Canton)
Judge: Russ Kendig
Petitioners' Counsel: Kate M. Bradley, Esq.
Marc Merklin, Esq.
Brouse McDowell, LPA
388 South Main Street, Suite 500
Akron, Ohio 44311
Tel: (330) 535-5711
Fax: (330) 253-8601
- and -
Bruce R Schrader, II, Esq.
Roetzel & Andress
222 South Main Street
Akron, Ohio 44308
Tel: (330) 376-2700
Fax: (330) 376-4577
Petitioners Amount of Claim
----------- ---------------
Julian W. Perkins, Inc. $4,000,000
Paul Brine, President
P.O. Box 1137
Elyria, Ohio 44036
Truck World Inc. $1,136,190
Barry Brocker, CFO
1610 Thomas Road
P.O. Box 248
Hubbard, Ohio 44425
Marathon Ashland Petroleum, LLC $6,376,855
Commercial Credit
539 South Main Street
Findlay, Ohio 45840
MEGA-C: Axion Files Declaratory Judgment Against Ch. 11 Trustee
---------------------------------------------------------------
Axion Power International, Inc. (OTCBB:AXPW) filed a declaratory
judgment action in the U.S. Bankruptcy Court for the District of
Nevada against William M. Noall, the Chapter 11 trustee of Mega-C
Power Corporation and Sally Fonner, the trustee of the Trust for
the Benefit of the Shareholders of Mega-C Power Corporation.
Axion is seeking a declaratory judgment that:
-- Mega-C does not have any interest in Axion's e3 Supercell
technology;
-- Mega-C did not transfer any property to Axion with the
intent to damage or defraud any entity;
-- Mega-C did not transfer any property to Axion for less than
reasonably equivalent value; and
-- If the court ultimately decides that Mega-C has a valid
legal interest in Axion's e3 Supercell technology, then
Axion can terminate the Mega-C Trust and cancel the
7,827,500 Axion shares held by the trust.
"Since February 2004, we have been involved in a number of legal
proceedings that relate to the business failure of Mega-C and our
subsequent acquisition of the e3 Supercell technology," said John
Petersen, Chairman of Axion. "Many of the pleadings and motions
in these cases distort historical timelines and make inaccurate
and misleading factual statements to support the positions
advanced by adverse parties. Historically, our litigation
strategy was defensive. From this point forward we intend to
assume a more proactive posture in order to identify timeline
distortions, clarify factual inaccuracies, protect our
intellectual property and assert our legal position."
Axion Power International, Inc., is developing advanced energy
storage devices that it refers to as e3 Supercells. Axion's e3
Supercells replace the lead-based negative electrodes found in
conventional lead-acid batteries with nanoporous carbon
electrodes. The result is a new class of hybrid energy storage
devices that offer a unique combination of battery and
supercapacitor performance characteristics.
In March 2003, the Ontario Securities Commission commenced an
investigation into the activities of Mega-C Power Corporation and
its promoters. The commencement of this investigation, with
hindsight, was a key precursor to the demise of Mega-C Power's
business activities and resale activities of its promoters.
Axion Power Corporation initiated an involuntary chapter 11
protection against Mega-C on Apr. 6, 2004 (Bankr. D. Nev. Case No.
04-50962). Cecilia L. Rosenauer, Esq., in Reno, Nevada,
represents the petitioning creditor. The Court appointed William
Noall, as chapter 11 trustee, and is represented by Matthew C.
Zirzow, Esq., and Talitha B. Gray, Esq., at Gordon & Silver, Ltd.
MERIDIAN AUTOMOTIVE: Wants Exclusive Period Stretched to Dec. 22
----------------------------------------------------------------
Section 1121(b) of the Bankruptcy Code provides for an initial
120-day period after the Petition Date during which a debtor has
the exclusive right to file a Chapter 11 plan. Section
1121(c)(3) provides that, if a debtor proposes a plan within the
exclusive filing period, it has a period of 180 days after the
Petition Date to obtain acceptances of the plan.
The Exclusive Periods are intended to afford Chapter 11 debtors a
full and fair opportunity to rehabilitate their business and to
negotiate and propose a reorganization plan without the
deterioration and disruption of their business that might be
caused by the filing of competing reorganization plans by non-
debtor parties.
Meridian Automotive Systems, Inc., and its debtor-affiliates ask
the U.S. Bankruptcy Court for the District of Delaware to extend
their exclusive period to:
(1) file a plan through December 22, 2005; and
(2) solicit and obtain acceptances of that plan through
February 20, 2006.
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware, relates that since the Petition Date,
the Debtors have concentrated on stabilizing their business
operations and managing a smooth transition to operating under
bankruptcy protection. Much of the Debtors' time and resources
to date have been devoted to securing permanent postpetition
financing.
The Debtors have also devoted substantial time in:
-- allocating considerable resources to the development of a
long-range strategic plan;
-- responding to numerous requests for information from
various creditor constituencies, including the Official
Committee of Unsecured Creditors, and the Debtors'
prepetition secured lenders and postpetition lenders;
-- negotiating agreements with numerous utilities regarding
requests for adequate assurance with respect to
postpetition utility services; and
-- beginning the process of reviewing and analyzing the
significant number of reclamation claims submitted in
their Chapter 11 cases.
As a result of these efforts, the Debtors' business operations
have remained stable, and none of the Debtors' plants have
experienced a shutdown or disruption since the Petition Date.
With permanent financing in place, going forward the Debtors will
be able to devote additional attention to other critical matters,
including their ongoing efforts toward the development of a
business plan that may form the basis of a confirmable
reorganization plan.
Mr. Brady tells the Court that the Debtors are proceeding with
the goal of timely formulating a confirmable reorganization plan.
In fact, the Credit Suisse Facility contemplates the delivery of
a reorganization plan by September 30, 2005 and a term sheet
outlining the principal terms of the plan by December 15, 2005.
"These 'deliverables' and the timeline for their completion were
negotiated by the Debtors and their major creditor
constituencies," Mr. Brady reports. "As such, they provide a
reasoned and logical basis for a co-extensive extension of the
Exclusive Periods, as it would clearly make little sense for the
Exclusive Periods to lapse prior to the Debtors' ability to
perform these benchmarks within the agreed upon timeframe."
The Court will convene a hearing on August 11, 2005, to consider
the Debtors' request.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
MERIDIAN AUTOMOTIVE: Wants Stay Lifted to Settle Grievance Claims
-----------------------------------------------------------------
Edward J. Kosmowski, Esq., at Young Conaway Stargatt & Taylor,
LLP, in Wilmington, Delaware, reports that the Debtors and their
non-debtor affiliates employ approximately 5,400 employees
worldwide, of whom 4,700 are employed by the Debtors. Of the
Debtors' employees, 3,740 are hourly employees and 960 are full-
time salaried employees.
Some of Meridian Automotive Systems, Inc., and its debtor-
affiliates' hourly employees are also members of these
labor unions:
1. Communications Workers of America;
2. The International Union of Electronic, Electrical,
Salaried, Machine and Furniture Workers;
3. The International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America; and
4. United Steelworkers of America
Thus, their employment is governed by collective bargaining
agreements.
The Debtors and their affiliates are parties to seven CBAs:
Plant Location Union Local Expiration Date
-------------- ------- ----- ---------------
Angola, Indiana IUE/CWA 888 12/17/2007
Canandaigua, New York UAW 3034 08/17/2007
Canton, Michigan UAW 36 TBD
Detroit, Michigan UAW 174 10/14/2005
Ionia, Michigan IUE/CWA 436 12/20/2008
Jackson, Ohio USW 820-L 04/15/2006
Shreveport, Louisiana UAW - TBD
Mr. Kosmowski explains that, in general, the CBAs set out defined
procedures for the resolution of disputes between employees and
management with respect to the interpretation, application or
claimed violation of a CBA, including claims for back wages or
alleged incorrect wages paid. Although the specific Grievance
Procedures vary among the CBAs, the procedures generally involve
several steps, each more formal than the previous step, and are
initiated through informal discussions between the employee and
management.
In situations where the parties are unable to resolve their
dispute through the internal processes, the parties may submit
their dispute to arbitration. Pursuant to the Grievance
Procedures, an arbitrator's decision is final and binding on both
the employee and management.
As of the Petition Date, there were approximately 100 pending
employee grievance proceedings under various stages of the
Grievance Procedures.
By this motion, the Debtors ask the Judge Walrath of the U.S.
Bankruptcy Court for the District of Delaware to modify the
automatic stay to permit the resolution and liquidation of all
pending and future Union Employee grievance claims pursuant to
the Grievance Procedures.
According to Mr. Kosmowski, the treatment of any liquidated Union
Employee grievance claim will be determined on a case-by-case
basis in accordance with the Bankruptcy Code and subject to the
terms of a confirmed plan of reorganization.
The Debtors believe that the Grievance Procedures will provide
for the efficient and effective resolution and liquidation of
Union Employee grievance claims.
"[I]f all Union Employee grievance claims seeking monetary and
wage claims had to be resolved by the Bankruptcy Court, the
Grievance Proceedings would likely be more costly and
inefficient, and would place a further burden on the Debtors and
their estates," Mr. Kosmowski maintains.
The Debtors believe that even the affected unions and employees
would prefer to continue with the Grievance Proceedings and
consent to the modification of the stay to resolve and liquidate
any Union Employee grievance claim.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
MERITAGE HOMES: Earns $59.2 Million of Net Income in 2nd Quarter
----------------------------------------------------------------
Meritage Homes Corp. (NYSE: MTH) reported all-time quarterly
records for net earnings, diluted earnings per share and the
dollar value of sales orders.
"Meritage's exceptional performance during the second quarter of
2005 reflects the successful execution of our growth strategy. It
supports our belief that among the country's largest public
builders, we have a unique potential for growth," said Steven J.
Hilton, Meritage co-chairman and CEO. "We are now operating coast
to coast in many of America's most robust housing markets and
believe we still have room for growth within our existing markets
and many opportunities for expansion into untapped markets."
The company increased net earnings by 140% to $59.2 million for
the second quarter of 2005 over the prior year's second quarter.
Home closing revenue for the quarter was up 51% to $652 million,
with the number of homes closed up 29% to 2,095. The number of
homes ordered during the second quarter of 2005 rose 15% over the
same period a year ago to 2,931, while the dollar value of those
homes advanced 44% to $1.0 billion.
For the first half of 2005, net earnings were up 62% over the same
period a year ago to $83.4 million. Home closing revenue reached
$1.2 billion in the first six months of 2005, up 41% from the same
period a year ago. For the first half of 2005, Meritage took
orders for 5,570 homes valued at $1.9 billion, increases of 17%
and 46%, respectively.
"This quarter has indeed been outstanding for Meritage," said John
R. Landon, Meritage co-chairman and CEO. "Demand for our homes
continues to be very strong and our earnings growth and margin
expansion are robust. For the first time in our company's history
we eclipsed $1.0 billion in sales orders for a quarter. In
addition, our gross margin increased 500 basis points over the
second quarter of 2004 to 23.4% and pre-tax margin rose 532 basis
points to 14.5%. This margin expansion is the result of our
ability to raise home prices while managing our construction costs
and leveraging our SG&A expenses."
"Second quarter home closing revenue in California and Arizona
rose 84% and 68%, respectively, over the second quarter of 2004 as
those housing markets continue to expand," added Hilton. "In
Texas, where the housing market remains very competitive, we are
pleased with a 15% increase in home closing revenue. In Nevada,
where our closings have been down somewhat recently due to
communities closing out earlier than anticipated, new home orders
rose 112% during the first half of 2005 over the first half of
2004. We anticipate generating growth in closings in Nevada
during the second half of 2005."
"We are also very excited to report that during the second quarter
we took orders for our first homes in our recently established
startup operations in Denver and Orlando," said Landon. "In
addition, order demand in our Fort Myers/Naples, Florida, division
has exceeded our expectations thus far. We anticipate that we
will deliver our first homes in Orlando and Denver in the fourth
quarter of this year."
The company's balance sheet shows a net debt-to-capital ratio of
43% at June 30, 2005, compared to 50% at June 30, 2004. For the
second quarter of 2005, EBITDA increased 117% over the second
quarter of 2004 to $108.6 million. For the twelve months ending
June 30, 2005, EBITDA rose 53%, resulting in an interest coverage
ratio of 7.9 times as compared to 6.7 times for the comparable
period a year earlier. For the twelve months preceding June 30,
2005, the Company's debt to EBITDA ratio was 1.7 times, an
improvement from 2.2 times a year ago. At June 30, 2005, the
company had $38 million outstanding on its bank credit facility
and $301 million available to borrow after considering the
facility's most restrictive debt covenants.
"In order to support our future growth, we increased our actively
selling community count to 163 at June 30, 2005, a rise of 19%
over June 30, 2004 and 17% higher than at the end of 2004,"
continued Landon. "At the end of the second quarter 2005, we had
approximately 50,200 lots under control, of which 90% were
controlled through option contracts. This level of lot supply
represents about a 5.5-year supply based on our anticipated 2005
closings and is 41% higher than a year ago at this time. Much of
this increase was the result of adding lots in our newer markets,
particularly in Florida, to drive their rapid growth," added
Landon. "Our strong earnings growth thus far this year has also
yielded stronger returns for our shareholders. For the four
quarters ended June 30, 2005, our after-tax return on average
equity was 31.1%, up from 26.9% a year ago, and our after-tax
return on average assets was 12.8%, up from 11.0% for the same
period a year earlier."
"We are very encouraged by our results during the first half of
2005 and are excited about the growth in our existing markets, as
well as the new markets we've entered recently," added Hilton.
"As a result of our excellent order activity during the first half
of 2005, order backlog at June 30, 2005 reached $2.1 billion, up
83% over $1.2 billion at June 30, 2004, providing strong earnings
visibility for the balance of the year. Accordingly, we are
raising our full-year 2005 diluted EPS guidance by approximately
25% from a range of $6.15 to $6.40 to a range of $7.75 to $8.00,
on our previously announced revenue guidance of $2.9 to $3.0
billion. This level of diluted EPS also represents an increase of
54% to 59% over the full-year 2004. The Company also anticipates
our third quarter 2005 diluted EPS to approximate $2.20 to $2.30,
an increase of 69% to 76% over the prior year's third quarter,"
concluded Hilton.
Meritage Homes Corp. -- http://www.meritagehomes.com/-- is one of
the nation's largest single-family homebuilders, and is traded on
the NYSE, symbol: MTH. The company appears on Forbes' "Platinum
400" list as No. 1 in terms of five-year annualized total return,
and is included in the S&P SmallCap 600 Index. Fortune magazine
recently ranked Meritage 747th in its "Fortune 1000" list of
America's largest corporations and included the company as a "top
pick from 50 great investors" in its Investor's Guide 2004.
Additionally, Meritage is ranked as one of Fortune's Fastest
Growing Companies in America, its fourth appearance on this list
in six years. The company has built approximately 39,000 homes,
ranging from entry-level to semi-custom luxury. Meritage operates
in fast-growing states of the southern and western United States,
including six of the top 10 single-family housing markets in the
country.
* * *
As reported in the Troubled Company Reporter on March 2, 2005,
Fitch Ratings has assigned a 'BB' rating to Meritage Homes
Corporation's (NYSE: MTH) $350 million, 6.25% senior notes due
March 15, 2015. The Rating Outlook is Stable. The issue will be
ranked on a pari passu basis with all other senior unsecured debt,
including Meritage's $400 million bank credit facility. Meritage
also has announced the pricing of its public offering of 900,000
shares of its common stock at a public offering price of $70.35
per share. The company intends to use proceeds from these two
offerings to repurchase up to all of its $280 million in
outstanding principal amount of 9 3/4% senior notes due 2011,
pursuant to a previously announced concurrent tender offer and
consent solicitation and to repay a portion of its credit
facility.
METALFORMING TECH: Court Approves Auction on September 26
---------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
the sale of Metalforming Technologies, Inc., and its debtor-
affiliates' operating assets. Zohar Tubular Acquisition, LLC,
offers to buy the assets for $25 million. Also, Zohar agrees to
assume some postpetition liabilities.
The Debtors will sell all of the assets of:
-- their structural and tubular business;
-- their Saline and Milan plants; and
-- Metalform's 49% equity interests in the Lexington Joint
Venture and the Engineered Systems business.
Zohar Tubular has deposited $1,250,000 in an escrow account. The
sale is expected to close on September 30, 2005.
An auction will be conducted on Sept. 26, 2005, at 10:00 a.m. at
Young Conaway Stargatt & Taylor, LLP's offices at The Brandywine
Building 1000 West Street, 17th Floor in Wilmington, Delaware.
Competing bids, if any, must exceed Zohar's offer by $750,000. In
the event that Zohar is not the successful bidder, the Debtors
will pay Zohar a $500,000 break-up fee.
Objection to the sale, if any, must be submitted by Sept. 19,
2005, at 4:00 p.m. The Court will convene a sale hearing on Sept.
28, 2005, at 2:00 p.m.
Headquartered in Chicago, Illinois, Metalforming Technologies,
Inc., and its debtor-affiliates manufacture seating components,
stamped and welded powertrain components, closure systems, airbag
housings and charge air tubing assemblies for automobiles and
light trucks. The Company and eight of its affiliates, filed for
chapter 11 protection on June 16, 2005 (Bankr. D. Del. Case Nos.
05-11697 through 05-11705). Joel A. Waite, Esq., Robert S. Brady,
Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt &
Taylor, represent the Debtors in their restructuring efforts. As
of May 1, 2005, the Debtors reported $108 million in total assets
and $111 million in total debts.
MIRANT CORP: PBGC Agrees Not to Vote Its $146 Million Claims
------------------------------------------------------------
Mirant Services, LLC, a Mirant Corporation debtor-affiliate has
established and maintains two pension plans for certain of its
employees -- the Non-Bargaining Unit Pension Plan and the
Bargaining Unit Pension Plan.
The Pension Benefit Guaranty Corporation is a United States
Government corporation that guarantees the payment of certain
pension benefits on termination of pension plans under applicable
law.
On December 16, 2003, the PBGC filed Claim Nos. 7147, 7148, 7149,
7150, 7151 and 7152 for $146,000,000 in aggregate. In support of
the Claims, the PBGC has taken the position that in the event of
a termination of the Pension Plans, the Debtors may be jointly
and severally liable for the unfunded benefit liabilities of the
Pension Plans.
Pursuant to their First Amended Plan, the Debtors intend to
continue funding and maintaining the Pension Plans, and those
plans will not be terminated under the Plan. The Debtors' Plan
project that the minimum funding amounts related to the Pension
Plans will be $15 million per year, on average, through 2012.
Mirant Services is current in its payment obligations, including
all administrative expenses and minimum funding payments required
under the Pension Plans.
The parties agreed that the Claims are contingent on the
termination of the Pension Plans and that if the Pension Plans
continue to be maintained by Mirant Services, then the Claims are
moot and will be deemed voluntarily withdrawn.
The PBGC asked the Debtors to forbear from objecting to the
Claims at this time to avoid additional fees and costs in
connection with the preparation, and filing of, an objection and
response thereto.
The Debtors are willing to forbear so long as the PBGC
acknowledges and agrees that it will not vote any of the claims.
The PBGC agrees.
The PBGC also agrees that the Debtors need not solicit its vote
with respect to any claim, including the six claims. Any claim
voted by or on behalf of the PBGC with respect to the six Claims
will not be counted or tabulated in connection with determining
whether any particular class, or creditor, has accepted the Plan.
For purposes of voting on the Plan, the PBGC Claims will not be
deemed "allowed claims" under Section 1126(a) of the Bankruptcy
Code, nor will the claims be considered in determining whether a
class of claims has accepted a plan under Section 1126(a).
Provided that the Pension Plans are continued, upon the
effectivity of the Debtors' First Amended Plan, the PBGC agrees
that the six Claims are automatically and voluntarily withdrawn,
with prejudice.
In the event that the Debtors modify their Plan in a manner that
adversely impacts the continued maintenance of the Pension Plans,
the PBGC may ask the Bankruptcy Court to temporarily allow its
claim for voting purposes.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines. Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally. Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White &
Case LLP, represents the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $20,574,000,000 in assets and $11,401,000,000 in debts.
(Mirant Bankruptcy News, Issue No. 70; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MIRANT CORP: Wants Avoidance Actions & Claim Objections Stayed
--------------------------------------------------------------
On July 13, 2005, Mirant Corporation and its debtor-affiliates
initiated adversary proceedings to recover avoidable transfers
pursuant to Chapter 5 of the Bankruptcy Code, and objections
seeking to disallow certain claims based on Sections 502(b)
or (d).
The Avoidance Actions include:
1. Mirant Americas Energy Capital, LP et al v. Castex Energy,
Inc., et al., Adversary No. 05-4139-dml;
2. Mirant Corporation et al v. Salomon Smith Barney, Inc., et
al., Adversary No. 05-4140-dml;
3. Mirant Corporation v. Commerzbank, AG, et al., Adversary
No. 05-4142-dml;
4. Mirant Corporation, et al v. Mesquite Investors, L.L.C., et
al., Adversary No. 05-4143-dml; and
5. Mirant Corporation, et al v. Salomon Smith Barney, formerly
known as, Smith Barney, et al., Adversary No. 05-4144-dml.
The Claim Objections are asserted against:
1. Deutsche Bank Securities, Inc., for Claim Nos. 7250, 7251,
7252, 7257, 7258 and 7259; and
2. Bayerische Hypo Und Vereinsbank, Cayman Branch, for Claim
Nos. 6045 and 6046.
Robin E. Phelan, Esq., at Haynes and Boone, LLP, in Dallas,
Texas, relates that upon filing the complaints, the Clerk's
Office for the United States Bankruptcy Court for the Northern
District of Texas automatically summoned the parties in each of
the Adversary Proceedings.
The issuance of the summons, Mr. Phelan notes, triggered certain
deadlines with respect to each Adversary Proceeding under the
Federal Rules of Bankruptcy Procedure and the Local Rules.
Mr. Phelan adds that upon filing of the Claim Objections, certain
deadlines will arise for both the Debtors and affected creditors
pursuant to the Bankruptcy Court's Order establishing procedures
for objections to proofs of claim.
The deadlines for the Adversary Proceedings and Claim Objections
include, but are not limited to:
a. the Debtors' deadline to serve the summons and complaint on
each defendant;
b. the defendants' deadlines to file an answer or response to
the complaint or Claim Objection; and
c. discovery deadlines for both the Debtors and the defendants
arising under the Federal Rules of Bankruptcy Procedure and
the Orders of the Bankruptcy Court related to the Adversary
Proceedings or Claim Objections.
To avoid unnecessary burden and expense and to promote the
interests of judicial economy among the parties, the Debtors ask
the Court to:
(1) stay all actions in the Adversary Proceedings and Claim
Objections until further order;
(2) toll the deadlines related to the Adversary Proceedings
and Claim Objections until further order, without
prejudice to the Debtors' ability to make further
scheduling requests, including:
(a) seeking further extensions of the deadlines; or
(b) requesting the entry of a scheduling order;
(3) allow the defendants in the Adversary Proceedings and
Claim Objections to ask the Court to lift the stay upon a
showing of changed circumstances in the Debtors' cases;
and
(4) allow the Debtors to serve the summons and complaints
for each of the Adversary Proceedings at their election.
Citibank Objects
Citibank, N.A., is agent to Certificate Holders and Note Holders
under a Participation Agreement dated as of October 22, 2001.
The Debtors' Motion should be denied, David M. Bennett, Esq., at
Chadbourne & Parke LLP, in New York, asserts. "When viewed in
the full light of day, the relief sought by the Motion would give
the Debtors much more than 'breathing space'. Rather, by holding
the unfettered right to delay the outcome of the Participation
Agreement Action until months or potentially years after
confirmation of a plan in these cases, the Debtors would gain
tremendous and unfair leverage over the defendants."
Mr. Bennett points out that the Stay Motion seeks "an indefinite
stay of the avoidance actions until the Debtors, at their sole
discretion, elect to flip the switch and proceed with
litigation."
Citibank believes that it has very strong and meritorious
defenses to the allegations made in the Participation Agreement
Action. Citibank wants to assert those defenses immediately, to
take appropriate discovery, and to litigate the action to its
conclusion as soon as practicable. "Citibank and the other
defendants should not be forced to have [the] indefinite cloud
hanging over [their heads] until the Debtors decide it is
convenient [or strategically advantageous] to litigate."
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines. Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally. Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White &
Case LLP, represents the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $20,574,000,000 in assets and $11,401,000,000 in debts.
(Mirant Bankruptcy News, Issue No. 71; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MITCHELL EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Mitchell Equipment Corporation
10010 Airport Highway
Monclova, Ohio 43542
Bankruptcy Case No.: 05-37586
Type of Business: The Debtor designs and manufactures systems for
the railroad and construction equipment
industry. Mitchell Equipment also offers a
complete line of retractable Rail Gear systems
that can propel vehicles on a railroad track.
See http://www.mitchell-railgear.com/
Chapter 11 Petition Date: July 27, 2005
Court: Northern District of Ohio (Toledo)
Judge: Richard L. Speer
Debtor's Counsel: James M. Perlman, Esq.
Law Office of James M. Perlman
1776 Tremainsville
Toledo, Ohio 43613
Tel: (419) 478-1776
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Scott Industrial System $29,882
4433 Interpoint Boulevard
Dayton, OH 45424-5702
Seabee Hampton Hyrdaulics $13,498
712 1st Street Northwest
Hampton, IA 50441
Tiremaxx $12,899
2555 Dorr Street
Toledo, OH 43607
Lefere Forge & Machine $10,837
Toledo Edison $9,149
Applied Industrial Tech. $9,029
William Vaughan Co. $8,632
Fisher Hydraulics $7,764
Walker Machine & Foundry Corp. $7,466
Precision Laser & Forming $7,130
Parton & Preble $7,072
UCF America $6,660
McKees Rocks Forgings I $6,342
The Timken Company $6,024
Maumee Valley Fabrication $5,672
Monett Metals, Inc. $4,375
Roadway Express $4,301
S.G. Morris $4,015
Power Brake & Spring Service Co. $3,458
795 Tire Service $3,180
NATIONAL ENERGY: Wants Court to Compel $1.4MM Columbia Gas Payment
------------------------------------------------------------------
NEGT Energy Trading-Power, L.P., and NEGT Energy Trading-Gas
Corporation ask the U.S. Bankruptcy Court for the District of
Maryland to compel:
(a) Columbia Gas Transmission Corporation to turn over
$1,481,897 drawn upon a letter of credit posted by ET
Power, which was in excess of any obligation supported by
the letter of credit.
(b) Columbia Gulf Transmission Corporation to pay to ET Gas a
$4,158 matured debt.
On February 25, 2000, Columbia Gas assigned to ET Gas the
capacity and service rights in a certain transportation agreement
between USGen New England, Inc., and Columbia Gas.
Pursuant to the Columbia Gas Transportation Agreement, ET Power
established a $2 million letter of credit with JP Morgan Chase
Bank to support the obligations of ET Power and USGen to Columbia
Gas and Columbia Gulf.
In July 2003, Columbia Gas provided notice to ET Power that it
intended to draw on the Letter of Credit. Columbia Gas alleged
that it was entitled to do so because:
(a) the Letter of Credit was not renewed within 30 days prior
to its expiration; and
(b) ET Power or USGen was in default under the terms of
service agreements and the default had not been cured.
Columbia Gas drew down the entire Letter of Credit on Aug. 4,
2003, and purportedly applied:
-- $518,103 of the proceeds to amounts owed by ET Gas; and
-- $435,364 of the proceeds to amounts owed by USGen.
According to Martin T. Fletcher, Esq., at Whiteford, Taylor &
Preston LLP, in Baltimore, Maryland, prior to Columbia Gas' draw
on the Letter of Credit, USGen satisfied its Obligation.
Mr. Fletcher notes that Columbia Gas' draw on the Letter of
Credit exceeded the obligations it supported by $1,481,892 -- the
$2 million draw less amounts applied to the obligation owed by ET
Gas. The Excess Draw constitutes property of ET Power's
bankruptcy estate and must be returned, Mr. Fletcher insists.
In addition, Columbia Gulf currently owes $4,158 to ET Gas
pursuant to a transportation service agreement between Columbia
Gulf and ET Gas. The Columbia Gulf Obligation is a matured debt
that is property of ET Gas' bankruptcy estate and must be paid to
ET Gas, Mr. Fletcher maintains.
Furthermore, Mr. Fletcher argues that neither Columbia Gas nor
Columbia Gulf is a trustee, receiver or agent appointed or
authorized to take charge of property of ET Power and is not a
custodian as defined in Section 101(11) of the Bankruptcy Code.
Headquartered in Bethesda, Maryland, PG&E National Energy Group,
Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas
Transmission, Inc.) develops, builds, owns and operates electric
generating and natural gas pipeline facilities and provides energy
trading, marketing and risk-management services. The Company and
its debtor-affiliates filed for Chapter 11 protection on July 8,
2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq.,
Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at
Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin
T. Fletcher, Esq., at Whiteford, Taylor & Preston, L.L.P.,
represent the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$7,613,000,000 in assets and $9,062,000,000 in debts. NEGT
received bankruptcy court approval of its reorganization plan in
May 2004, and that plan took effect on Oct. 29, 2004.
The Hon. Paul Mannes confirmed NEGT Energy Trading Holdings
Corporation, NEGT Energy Trading - Gas Corporation, NEGT ET
Investments Corporation, NEGT Energy Trading - Power, L.P., Energy
Services Ventures, Inc., and Quantum Ventures' First Amended Plan
of Liquidation on Apr. 19, 2005. The Plan took effect on May 2,
2005. (PG&E National Bankruptcy News, Issue No. 46; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
NRG ENERGY: Submits Bid for New York Power Plant Contract
---------------------------------------------------------
NRG Energy, Inc., has submitted a proposal to the New York Power
Authority for a state contract for building power plants in New
York.
According to Bloomberg News, NRG faces competing bids from nine
other energy companies including KeySpan Corp., Fortistar Capital
Inc., SCS Energy LLC, TransGas Energy Systems and Calpine Corp.
The New York Power Authority will select the winning bidder by
the end of the year.
NRG Energy, Inc., owns and operates a diverse portfolio of power-
generating facilities, primarily in the United States. Its
operations include baseload, intermediate, peaking, and
cogeneration facilities, thermal energy production and energy
resource recovery facilities. The company, along with its
affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case
No. 03-13024) on May 14, 2003. The Company emerged from chapter
11 on December 5, 2003, under the terms of its confirmed Second
Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor,
Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented
NRG Energy in its $10 billion restructuring.
* * *
Moody's Investor Services and Standard & Poor's assigned single-B
ratings to NRG Energy's 8% secured notes due 2013.
OEM SALES: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: OEM Sales, Inc.
ta Jasons Sheet Metal Co.
P.O. Box 134
Cinnaminson, New Jersey 08077-0134
Bankruptcy Case No.: 05-34294
Type of Business: The Debtor fabricates stainless steel equipment
for the food service industry.
Chapter 11 Petition Date: July 28, 2005
Court: District of New Jersey (Camden)
Debtor's Counsel: Peter Broege, Esq.
Broege, Neumann, Fischer & Shaver, LLC
25 Abe Voorhees Drive
Manasquan, New Jersey 08736
Tel: (732) 223-8484
Financial Condition as of July 28, 2005:
Total Assets: $1,914,310
Total Debts: $2,947,884
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Shedaker Metal Arts, Inc. Trade debt $70,000
519 Browns Lane
Croydon, PA 19021-6601
Cutabove Cabinetry Trade debt $46,254
1702 Industrial Highway
Cinnaminson, NJ 08077-2567
c/o Carlamere & Rowan
1000 Haddonfield Berlin Road
Suite 203
Voorhees, NJ 08043-3520
Penn Stainless Products Trade debt $41,743
190 Kelly Road
P.O. Box 9001
Quakertown, PA 18951-9001
c/o Kaufman and Forman, P.A.
406 West Pennsylvania Avenue
Towson, MD 21204-4228
General Metal Company Trade debt $32,755
1286 Adams Road
Bensalem, PA 19020-3913
c/o Blank Rome, LLP
One Logan Square
18th & Cherry Streets
Philadelphia, PA 19103
McKeon, Inc. Trade debt $31,775
Attn: John Murphy
1523 North 27th Street
Philadelphia, PA 19121-3705
Bristol Alloys, Inc. Trade debt $27,846
225 Lincoln Highway
Fairless Hills, PA 19030-1103
Sarlo Tool & Machine Co. Trade debt $21,624
62 Suburban Boulevard
Delran, NJ 08075-1635
Paul Rabinowitz Glass Co. Trade debt $20,065
1401-15 North American Street
Philadelphia, PA 19122
Port Richmond Tool & Die Trade debt $18,788
Manufacturing
2839 East Tioga Street
Philadelphia, PA 19134-6119
Sheet Metal Workers Local 194 Union Benefits $17,168
514 Ryers Avenue
P.O. Box 58
Cheltenham, PA 19012-0058
c/o O'Neill Consulting
1560 Old York Rd
Abington, PA 19001-1709
Custom Built Products Trade debt $16,255
760 Oxford Avenue
Tullytown, PA 19007-6012
Lobstein Design Trade debt $16,150
1815 North Roosevelt Street
Arlington, VA 22205-1971
Stainless Tubular Products Trade debt $15,568
19 Audrey Plaza
Fairfield, NJ 07004-3415
Lexus Financial Services $14,497
P.O. Box 17187
Baltimore, MD 21297-0511
Long Island Fire Door Trade debt $14,000
5 Harbor Park Drive
Port Washington, NY 11050-4698
CCI Thermal Technologies Trade debt $13,000
5918 Roper Road
Edmonton, Alberta
Canada T6B 3E1
Sheet Metal Workers Union Benefits $12,809
National Benefit Funds
P.O. Box 79321
Baltimore, MD 21279-0321
Straub Metal International, Inc. Trade debt $12,033
P.O. Box 951608
Dallas, TX 75395-1608
Tad Metals, Inc. Trade debt $10,990
60 East 42nd Street, Room 2446
New York, NY 10165-2401
c/o Anthony F. Picheca, Jr., P.C.
P.O. Box 250-6
Far Hills, NJ 07931-0250
Wemco Casting, LLC Trade debt $10,817
20 Jules Court, Suite 2
Bohemia, NY 11716-4106
ORBIMAGE HOLDINGS: S&P Lifts Rating on $250 Mil. Sr. Notes to B-
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on the $250
million senior secured floating rate notes due 2012 of Dulles,
Virginia-based satellite imaging company ORBIMAGE Holdings Inc. to
'B-' from 'CCC+' and removed the rating from CreditWatch, where it
was placed with positive implications on June 22, 2005.
The action follows the repayment of the senior subordinated notes
due 2008 of the company's subsidiary, ORBIMAGE Inc., upon which
this entity became a guarantor of the senior secured notes. The
guarantee is secured by a first priority lien on, and security
interest in substantially all assets of ORBIMAGE Inc. The rating
on the senior secured notes was placed on CreditWatch at the time
of the initial offering, to reflect the pending guarantee of the
notes by ORBIMAGE Inc. following the planned redemption of the
senior subordinated notes using proceeds from the new notes.
Standard & Poor's B-/negative/-- corporate credit rating (which
was not on CreditWatch) on ORBIMAGE Holdings and its subsidiary
ORBIMAGE Inc., was affirmed. Total debt outstanding is $250
million.
"The ratings on ORBIMAGE reflect a high degree of business risk
because of revenue concentration from a government contract, high
debt leverage, weak near-term cash flow, relatively small asset
size, and dependence on the successful launch of the new
satellite," said Standard & Poor's credit analyst Eric Geil.
Somewhat tempering these factors are the rising demand for
commercial satellite imagery services, the company's young
satellite fleet, and experienced management.
ORBIMAGE will be one of two commercial providers of advanced high
resolution imagery to the government. The company expects to
obtain additional contracts from various government agencies,
particularly given the rising demand for such services since Sept.
11, 2001. ORBIMAGE currently provides imagery services to the
government and commercial customers from two existing digital
remote sensing satellites (OrbView 2 and OrbView 3), two U.S.
ground stations, and image processing facilities.
OWENS CORNING: Asks Court to Approve Aircraft Sale Procedures
-------------------------------------------------------------
Owens Corning leases two Raytheon Hawkers and Dassault Falcon
under three separate lease agreements with:
1. Pitney Bowes Credit Corporation;
2. Hitachi Capital America Corp., formerly known as Hitachi
Credit America Corp.; and
3. First Security Bank, National Association, as owner
trustee, for the benefit of PBCC.
The Aircraft Agreements expire on:
Agreement Expiry Date
--------- -----------
First Security Bank Falcon August 31, 2005
Hitachi Hawker Agreement November 30, 2005
PBCC Hawker Agreement December 1, 2005
Disposition of Aircraft
Owens Corning determined that the marketing of all of its current
aircraft for sale to a third party and the leasing of new
corporate aircraft would best maximize the value of the Debtors'
estates.
The Aircraft Agreements provide that in the event that Owens
Corning does not exercise the purchase option for a particular
aircraft, Owens Corning must, at least 180 days prior to the
expiration of each respective Aircraft Agreement, market the
aircraft for sale to a third party. The lessors retain the right
to reject any proposed buyer if the net sale proceeds are less
than the Maximum Lessor Risk Amount.
On the sale to a third party, the lessor retains the total sale
price, subject to certain end of term adjustment provisions:
1. So long as there is no event of default, Owens Corning is
entitled to the excess of the proceeds from the sale of the
aircraft, if the Net Proceeds of Sale of a particular
aircraft by the lessor to a third party are greater than
the Estimated Residual Value of the aircraft and Owens
Corning has paid, on or before the closing date of the
aircraft's sale transactions, the lessor all rent and other
amounts due and payable for the aircraft; and
2. If the aircraft is sold by the lessor to a third party and
the Net Proceeds of Sale are less than the Estimated
Residual Value of the aircraft, then Owens Corning is
obligated to pay to the lessor, on or before the closing
date of the aircraft's sale transactions, the difference,
with the deficiency being capped at a predetermined amount
so long as no event of default has occurred, plus any rent
due and payable for the aircraft pursuant to the aircraft
agreements.
According to J. Kate Stickles, Esq., at Saul Ewing LLP, in
Wilmington, Delaware, PBCC has asserted that certain events of
default have occurred under the Aircraft Agreements. Hitachi
also asserted certain events of default that have occurred under
the Hitachi Hawker Agreement. Owens Corning however denied the
assertions.
If the assertion is correct, Owens Corning may not be entitled to
receive any resulting excess proceeds from the disposition of any
of the Aircraft and may face an unlimited deficiency payment
liability with respect to the disposition of any of the Aircraft.
If either of the Raytheon Hawkers is sold to a third party prior
to the last day of the lease term, then Owens Corning is also
obligated to pay to the lessor a Reinvestment Premium, which is
calculated by determining the excess of:
(a) the net present value of the sum of:
(1) all rent remaining to be paid through the expiration
of the lease; and
(2) the Estimated Residual Value of the aircraft at the
end of the lease term over
(b) the Estimated Residual Value of the aircraft at the time
of the sale.
In anticipation of a successful completion of the on-going
marketing effort and the resulting disposition of the Aircraft,
the Debtors ask the U.S. Bankruptcy Court for the District of
Delaware to approve procedures for the disposition of the Aircraft
and the distribution of the proceeds.
The procedure provides that:
a. Owens Corning will notify PBCC and Hitachi, as applicable,
of qualifying bids received;
b. Upon confirming that a bid received for a particular
aircraft complies with the terms of the aircraft agreement,
PBCC and Hitachi, as applicable, will be obligated to
consummate the proposed sale of the aircraft;
c. After confirming a particular bid for an aircraft, PBCC or
Hitachi, as applicable, will provide Owens Corning with a
schedule on the projected surplus or shortfall of net
proceeds resulting from the particular sale;
d. After receipt of a Sale Proceeds Schedule, Owens Corning
will send a "Dispute Notice" to PBCC and Hitachi, as
applicable, of any dispute with respect to the amounts set
forth on the Sales Procedure Schedule;
e. Absent consensual resolution, the dispute will be brought
to the Bankruptcy Court for resolution;
f. Upon the closing of a particular aircraft sale, the
purchaser will pay the gross proceeds to PBCC or Hitachi,
as applicable, and PBCC or Hitachi, will transfer their
interest in the aircraft to the purchaser free and clear of
any interest of the Debtors. PBCC or Hitachi and Owens
Corning will deliver the aircraft to the purchaser in
accordance with the provisions of the aircraft agreement;
g. In the event that the resulting Net Proceeds of Sale are
greater than the sum of:
(1) the Estimated Residual Value of the aircraft;
(2) the rent owing; and
(3) all other amounts due and payable for the aircraft
pursuant to the respective aircraft agreement,
including reasonable legal fees,
PBCC or Hitachi, as applicable, will pay the excess amount
to Owens Corning from the proceeds at Closing;
h. If the resulting Net Proceeds of Sale are less than the
Estimated Residual Value of the aircraft, Owens Corning
will pay to PBCC or Hitachi, as applicable:
(1) the amount of the shortfall up to the Maximum Lessee
Risk Amount;
(2) all rent due and payable for the aircraft; and
(3) all other amounts due and payable for the aircraft:
i. Owens Corning will provide notice of the pending sale of a
particular aircraft and a copy of the Sale Proceeds
Schedule to:
-- counsel for the Creditors' Committee;
-- counsel for the Asbestos Committee;
-- the Futures Representative and his counsel;
-- Bank of America, N.A., as the Debtors' Postpetition
Lender;
-- Credit Suisse First Boston, as agent under the $2.0
billion Credit Agreement dated June 26, 1997;
-- special counsel to the Creditors' Committee; and
-- the Office of the United States Trustee;
j. Upon the completion of the transfer of the aircraft, Owens
Corning will file with the Bankruptcy Court a certification
of:
(1) the gross sale proceeds;
(2) the resulting surplus proceeds or shortfall;
(3) the amount paid to Owens Corning by PBCC or Hitachi;
(4) the shortfall amount paid by Owens Corning to PBCC or
Hitachi; and
(5) the identity of the purchaser; and
k. The Debtors may, with the consent of PBCC and Hitachi, as
applicable, extend the marketing period as appropriate with
due notice to certain parties. The extension period should
not exceed six months. During the Extension Period, Owens
Corning will continue to pay all amount due and payable
under the Aircraft Agreements and certain stipulations. If
no sale is consummated at the end of the Extension Period
and Owens Corning does not exercise the Purchase Option,
Owens Corning will return the aircraft and pay all amounts
due.
Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com/-- manufactures fiberglass
insulation, roofing materials, vinyl windows and siding, patio
doors, rain gutters and downspouts. The Company filed for chapter
11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom,
represents the Debtors in their restructuring efforts. At Sept.
30, 2004, the Company's balance sheet shows $7.5 billion in assets
and a $4.2 billion stockholders' deficit. The company reported
$132 million of net income in the nine-month period ending
Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 112;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
PHILLIP NEIDLINGER: Case Summary & 9 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Phillip Jerome Neidlinger, Sr.
510 Lakewinds Boulevard
Inman, South Carolina 29349
Bankruptcy Case No.: 05-08479
Chapter 11 Petition Date: July 27, 2005
Court: District of South Carolina (Spartanburg)
Judge: William Thurmond Bishop
Debtor's Counsel: Robert H. Cooper, Esq.
The Cooper Law Firm
3523 Pelham Road, Suite B
Greenville, South Carolina 29615
Tel: (864) 271-9911
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 9 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Wachovia Bank, N.A. Credit line $80,000
P.O. Box 96074
Charlotte, NC 282960074
Wachovia Bankcard Services Credit card $16,000
P.O. Box 15137
Wilmington, DE 198865138
Wachovia Bank Revolving charge $11,000
c/o Bankruptcy Department account
P.O. Box 94014
Palatine, IL 60094
Bank One Credit card $9,200
Cardmember Service
P.O. Box 15153
Wilmington, DE 198865153
Chase Bank Credit card $7,800
Bankruptcy Division
3415 Vision Drive
Columbus, OH 43219
Discover Unsecured credit $5,400
c/o Bankruptcy Department card
P.O. Box 6011
Dover, DE 19903
Walmart Credit card $900
P.O. Box 960023
Orlando, FL 328960023
Stanley Steamer $477
P.O. Box 2728
Gastonia, NC 28054
Zales Credit line $300
P.O. Box 689182
Des Moines, IA 503649182
PHOENIX CDO: Fitch Holds Junk Ratings on Three Note Classes
-----------------------------------------------------------
Fitch Ratings affirms four classes of notes issued by Phoenix CDO
II, Ltd. These rating actions are effective immediately:
-- $214,562,679 class A notes affirmed at 'AAA';
-- $39,000,000 class B notes affirmed at 'BBB';
-- $22,172,791 class C-1 notes affirmed at 'CCC';
-- $13,440,888 class C-2 notes affirmed at 'CCC';
-- $8,000,000 class D notes remain at 'C'.
Furthermore, the class B notes are removed from Rating Watch
Negative.
Phoenix II is a collateralized debt obligation managed by Phoenix
Investment Counsel, Inc. which closed May 16, 2000. Phoenix II is
composed of a diversified portfolio of asset-backed securities,
residential mortgage-backed securities and commercial mortgage-
backed securities. Included in this review, Fitch discussed the
current state of the portfolio with the asset manager and their
portfolio management strategy going forward. In addition, Fitch
conducted cash flow modeling utilizing various default timing and
interest rate scenarios to measure the breakeven default rates
relative to the minimum cumulative default rates for the rated
liabilities.
In June 2003, the aggregate principal balance of the collateral
debt securities dropped below the aggregate balance of the rated
notes, resulting in an event of default. In December 2003, the
majority holders of the senior class voted to accelerate the
maturity of the transaction, which diverts all interest and
principal cash flows to pay down the class A notes. As a result,
the class B notes have accrued approximately $1.76 million of
defaulted interest payments since the December 2003 payment date
and will continue to accrue defaulted interest until the class A
notes are paid in full. Although the class B noteholders may not
receive interest or principal distributions for several years,
Fitch expects the class B investors to receive the ultimate
payment of interest and principal under 'BBB' stress scenarios by
the legal final maturity date.
Phoenix II continues to de-leverage. Approximately 31.9% of the
original class A balance has been redeemed since closing, as well
as 16.1% since the last rating action on Feb. 25, 2004. Although
Phoenix II is currently failing its overcollateralization tests,
the class A OC test has remained stable. Due to the diversion of
interest and principal to redeem the class A notes, the
accumulated class B defaulted interest and class C deferred
interest has contributed to slight declines in the class B and
class C OC tests. Additionally, the creditworthiness of the
collateral has remained relatively stable as the weighted average
rating remains in the 'BBB-' rating category.
The class C-1 and class C-2 notes have deferred interest totaling
$2.17 million and $2.94 million, respectively, and it is expected
that the class C-1 and class C-2 notes will continue to defer
interest at rates of three month LIBOR plus 2.5% and 10%.
Fitch will continue to monitor and review this transaction for
future rating adjustments. Additional deal information and
historical data are available on the Fitch Ratings web site at
http://www.fitchratings.com/
For more information on the Fitch Vector Model, see 'Global
Rating Criteria for Collateralised Debt Obligations,' dated
Sept. 13, 2004, also available on Fitch's Web site.
PILLOWTEX CORP: Inks Confidentiality Pact with Former Employees
---------------------------------------------------------------
On Jan. 14, 2005, Pillowtex Corporation and its debtor-affiliates;
Gary Gardner, Joyce Grant and Joseph Leon Niblett, on behalf of
themselves and of certain other similarly situated former
employees of the Debtors; the Union of Needletrades Industrial and
Textile Employees, AFL-CIO; the International Union, United
Automobile, Aerospace and Agricultural Implement Workers of
America and its Local 6519; and the Official Committee of
Unsecured Creditors agreed to disclose among themselves, both
orally and in writing, certain confidential and proprietary
information and documentation pertaining to the adversary
proceeding and related contested matters pending in the Court.
The parties entered into a confidentiality and non-disclosure
agreement.
A full-text copy of the Confidentiality Agreement is available
for free at http://ResearchArchives.com/t/s?99
The Agreement, which the Court approved, supersedes all prior
written or oral communication, agreements, and understandings of
the parties relating to Confidential Information. The Agreement
may only be modified by the parties through written agreement and
will be governed by and construed and interpreted in accordance
with the laws of the State of New York, without regard to that
state's conflicts of laws rules.
Headquartered in Dallas, Texas, Pillowtex Corporation --
http://www.pillowtex.com/-- sold top-of-the-bed products to
virtually every major retailer in the U.S. and Canada. The
Company filed for Chapter 11 protection on November 14, 2000
(Bankr. Del. Case No. 00-4211), emerged from bankruptcy under a
chapter 11 plan, and filed a second time on July 30, 2003 (Bankr.
Del. Case No. 03-12339). The second chapter 11 filing triggered
sales of substantially all of the Company's assets. David G.
Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., at
Morris Nichols Arsht & Tunnel, represent the Debtors. On July 30,
2003, the Company listed $548,003,000 in assets and $475,859,000
in debts. (Pillowtex Bankruptcy News, Issue No. 81; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PITTSBURGH COATINGS: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Pittsburgh Coatings Corporation
8105 Perry Highway
Pittsburgh, Pennsylvania 15237
Tel: (412) 366-4260
Bankruptcy Case No.: 05-29641
Type of Business: The Debtor offers corrosion protection
services of fabricated metal structures,
tanks, railway cars, heavy machinery,
piping, and mass production equipment.
See http://www.pittcoat.com/
Chapter 11 Petition Date: July 27, 2005
Court: Western District of Pennsylvania (Pittsburgh)
Debtor's Counsel: Alan E. Cech, Esq.
Law Office of Alan E. Cech
10521 Perry Highway, Suite 115
Wexford, Pennsylvania 15090
Tel: (724) 935-9119
Estimated Assets: $50,000 to $100,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
PLYMOUTH RUBBER: Hires Focus Management Group as Financial Advisor
------------------------------------------------------------------
Focus Management Group USA, Inc. was appointed Financial Advisor
to Plymouth Rubber Company, Inc. under an Order entered by the
United States Bankruptcy Court for the District of Massachusetts,
effective July 22, 2005.
Plymouth Rubber Company, Inc. filed a voluntary petition for
relief under Chapter 11 of the United States Bankruptcy Code on
July 5, 2005. The Company manufactures and distributes plastic and
rubber products, including automotive tapes, insulating tapes, and
other industrial tapes, mastics and films. Plymouth announced in
March 2005 that it planned to discontinue manufacturing operations
at its Canton, MA site in 2006. The joint venture's new plant,
located near Shanghai, has been in production since April and is
expected to reach full production capacity later this year.
FOCUS provided Plymouth Rubber Company, Inc. with advisory
services in planning the Company's Chapter 11 filing and is
assisting the Company in the preparation of a comprehensive
operational restructuring plan and administration of the Chapter
11 process.
The FOCUS restructuring and bankruptcy advisory team is led by
Samuel M. Williams, a Certified Turnaround Professional based out
of the firm's Chicago office. Mr. Williams is a turnaround
manager and restructuring specialist who has extensive leadership
experience in Chapter 11 reorganizations, financial
restructurings, operational turnarounds and distressed business
sales.
About Focus Management
FOCUS Management Group offers nationwide capabilities in
turnaround management, business restructuring and asset recovery.
Headquartered in Tampa, FL, with offices in Atlanta, Chicago,
Greenwich, Los Angeles and Nashville, FOCUS Management Group
provides turn-key support to stakeholders including secured
lenders and equity sponsors. The Company provides a comprehensive
array of services including turnaround management, interim
management, operational analysis and process improvement, bank and
creditor negotiation, asset recovery, recapitalization services
and investment banking services to distressed companies.
Headquartered in Canton, Massachusetts, Plymouth Rubber, Inc.,
manufactures and distributes plastic and rubber products,
including automotive tapes, insulating tapes, and other industrial
tapes, mastics and films. Through its Brite-Line Technologies
subsidiary, Plymouth manufactures and supplies highway marking
products. The Company and its subsidiary filed for chapter 11
protection on July 5, 2005 (Bankr. D. Mass. Case Nos. 05-16088
through 05-16089). Victor Bass, Esq., at Burns & Levinson LLP,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they estimated
$1 million to $50 million in assets and debts.
PROXIM CORP: Terabeam Wireless Completes Acquisition of All Assets
------------------------------------------------------------------
Terabeam Wireless, the business name of YDI Wireless, Inc.
(NASDAQ:YDIW) completed its previously-announced purchase of
substantially all of the assets of Proxim Corporation (OTC:
PROXQ), pursuant to an asset purchase agreement. With the
combined company's proven product portfolio, global partnerships
and customer base, Terabeam is a formidable contender for
leadership of the broadband wireless systems industry.
The combined company represents one of the largest pure-play
broadband wireless solutions providers, with products including
Wi-Fi(R) turnkey indoor and outdoor systems, WiMAX(TM) systems,
and wireless Gigabit Ethernet solutions. The company will pursue
unique applications of its Ricochet(R) wireless mesh networks, and
continue to serve the military market with millimeter wave systems
through its Terabeam-HXI product line. The combined portfolio of
solutions provides greater wireless choice and flexibility to
customers including service providers, enterprises,
municipalities, the federal government, the military and OEMs.
Substantially all of Proxim's employees have joined the Terabeam
team. Kevin Duffy, formerly Proxim's president and chief
executive officer, has become Terabeam's president and chief
operating officer. David Olson, formerly Proxim senior vice
president of Global Sales and Operations, retains that title at
Terabeam. Terabeam believes that this personnel continuation will
reduce any disruption felt by its customers, suppliers, and other
partners. The company expects to reveal a final corporate
branding strategy over the next several weeks. Initial briefings
by the company's senior management have resulted in enthusiastic
endorsements from major customers and channel partners.
"With the completion of our acquisition of Proxim, some of the
most recognizable brands in our industry have joined forces," said
Robert Fitzgerald, chief executive officer of Terabeam. "This is
a quantum step to allow our customers to provide and enjoy
ubiquitous broadband wireless connectivity."
According to Kevin Duffy, president and chief operating office of
Terabeam, "This union creates a new force with a powerhouse of
talent and technology. The industry can expect us to move quickly
to be a formidable player in our key market segments."
"I congratulate Rob Fitzgerald, Kevin Duffy, and the rest of the
Terabeam team for developing an aggressive growth plan based on
the combination of proven products and partnerships," said Gregory
Raskin, president of Winncom Technologies, one of Proxim's and
Terabeam's largest channel partners. "Our customers' demands for
wireless solutions continue to expand, and we are excited to be
able to bring an enhanced product set."
"With our stable financial footing, we believe we can make
significant inroads into our competitors' market share while
providing broader support to the customers who have continually
supported us in the past year," said David Olson, senior vice
president of sales for Terabeam.
Terabeam and Proxim entered into an asset purchase agreement for
this transaction on July 18, 2005. The asset purchase agreement
was approved by the U.S. Bankruptcy Court for District of Delaware
on July 20, 2005. Following that approval, the parties addressed
the other pre-closing issues and completed the transaction on
Wednesday, July 27. Under the terms of the asset purchase
agreement, Terabeam acquired and assumed most of the domestic and
foreign operations of Proxim for a cash purchase price of
approximately $25,200,000, subject to certain adjustments,
liability assumptions, and deductions. In addition, upon Court
approval, Terabeam is obligated to provide debtor-in-possession
financing, which will ultimately be deducted from the purchase
price.
As previously disclosed in Proxim's public filings with
the Securities and Exchange Commission, as a result of Proxim's
outstanding obligations to its creditors, no proceeds from the
sale of Proxim's assets will be distributed to Proxim
stockholders.
Terabeam Wireless -- http://www.terabeam.com/-- is the business
name of YDI Wireless, Inc. Terabeam Wireless is a world leader in
providing extended range, license-free wireless data equipment and
is a leading designer of turnkey long distance wireless systems
ranging from 9600 bps to 1.42 Gbps for applications such as
wireless Internet, wireless video, wireless LANs, wireless WANs,
wireless MANs, and wireless virtual private networks.
Headquartered in San Jose, California, Proxim Corporation --
http://www.proxim.com/-- designs and sells wireless networking
equipment for Wi-Fi and broadband wireless networks. The Debtors
provide wireless solutions for the mobile enterprise, security
and surveillance, last mile access, voice and data backhaul,
public hot spots, and metropolitan area networks. The Debtor
along with its affiliates filed for chapter 11 protection on
June 11, 2005 (Bankr. D. Del. Case No. 05-11639). When the Debtor
filed for protection from its creditors, it listed $55,361,000 in
assets and $101,807,000 in debts.
RCN CORP: Will Pay $4.9 Mil. to Resolve Kemper & Broadspire Claims
------------------------------------------------------------------
The Kemper Insurance and Broadspire Services, Inc., filed proofs
of claim against these Debtors:
Debtor Claim No.
------ ---------
TEC Air, Inc. 1025
RCN Finance, LLC 1026
RLH Property Corporation 1027
Hot Spots Production, Inc. 1028
RCN Corporation 1029
The Kemper Insurance Companies are:
* American Motorists Insurance Company,
* Lumbermens Mutual Casualty Company,
* American Protection Insurance Company, and
* American Manufacturing Mutual Company, and
* each of its and their parent corporations, subsidiaries,
affiliates, legal successors and assigns.
The Debtors dispute the Claims. Rather than litigate the issue,
however, the parties have agreed to resolve their differences.
In a stipulation approved by the Court, the RCN Companies agree
to pay $4,900,000 into a third party trust account. The amount
is at least equal to 175% of the total amount currently estimated
to be owed by the RCN Companies under any policies, agreements or
other contracts between Kemper and any of the RCN Companies.
Kemper and Broadspire believe that they held, as of November 1,
2004, security, aggregating at least $6.5 million, for the
obligations of certain of the RCN Companies under the Insurance
Policies in the form of certain amounts held in one or more
escrow accounts, secured letters of credit and other forms of
security. The RCN Companies believe that the amount of the
Security held by Kemper and Broadspire total at least $6.8
million.
Pursuant to the Stipulation, the parties agree that the cash held
by Kemper or Broadspire in various escrows or accounts as part of
the Security will be transferred to the Fund as part of the $4.9
million payment by the RCN Companies.
Kemper will be entitled to payment from the Fund as to any
amounts that come due under the Insurance Policies.
The amount in the Fund will be subject to adjustment. The
parties may adjust the Fund annually.
Kemper and Broadspire will provide one or more spreadsheets
detailing the balances in any and all accounts held by the
Insurers as of the Petition Date and invoices sent and payments
received by the Insurers from the RCN Companies from the Petition
Date through the execution of the Stipulation. RCN will review
the Accounting.
If the parties cannot reach agreement with respect to the
Accounting and the amount of funds belonging to the RCN Companies
held by the Insurers, then the RCN Companies will submit the
dispute on motion by July 1, 2005, to the Bankruptcy Court for
resolution. Pending the resolution of any dispute with respect
to the Accounting and the amount of funds belonging to the RCN
Companies held by Kemper and Broadspire as security, the RCN
Companies will have no obligation to contribute any amounts in
addition to the cash Security already held by Kemper and
Broadspire to the Fund.
Upon resolution of any dispute, however, the RCN Companies agree
to pay into the Fund the difference between the amount of the
cash Security that is determined to be held by Kemper and
Broadspire plus the amount of any invoices paid by Kemper and
Broadspire from the Security that were due and payable as of
October 1, 2004, including any invoices sent to the RCN Companies
after November 1, 2004, and $4.9 million.
Simultaneously with the payment of the Fund Difference by the RCN
Companies, Kemper and Broadspire will release the Security.
Kemper and Broadspire will have an allowed, contingent, non-
recourse, un-liquidated claim against RCN; The Insurers will
withdraw all claims against any of the RCN Companies. The
Remaining Claim will be satisfied solely from the amounts in the
Fund at the time the claim becomes liquidated and non-contingent.
Kemper and Broadspire will continue to invoice RCN on a monthly
basis for any amounts due under the Insurance Policies.
In the event that RCN disputes a Monthly Invoice, notice of the
Disputed Monthly Invoice will be provided to the trustee or other
custodian responsible for the Fund and to Kemper or Broadspire,
as applicable.
The parties agree to establish a separate escrow account for
$350,000 to be used by Kemper and Broadspire for the payment of
Monthly Invoices.
The trustee or other custodian responsible for the Fund will
withhold the amount of the Disputed Monthly Invoice from future
payments to the Working Escrow until the time as the Disputed
Monthly Invoice is resolved.
Beginning on a date that is not more than one year after the
Effective Date, the parties will undertake a standard collateral
review to determine an amount that represents the projected
amounts owed under the Insurance Policies by the RCN Companies.
The parties agree that the Fund will be no more than 175% of the
amount. To the extent that 175 % of the amount exceeds the Fund
amount, the amount will not increase. To the extent that 175% of
the amount is less than the Fund amount, the Fund will be reduced
to 175% of the amount and the difference will be returned to the
RCN Companies.
If within three months of the collateral review, the parties are
unable to agree upon the appropriate amount in the Fund, the
parties will undertake the dispute resolution procedures set
forth in the Insurance Policies. The parties agree to be bound
by any decision reached after the dispute resolution procedures
with respect to the Fund amount.
On a date that not more than two years from the Effective Date,
the parties will meet to determine an amount that represents the
remaining amounts owed by the RCN Companies under the Insurance
Policies. At that time, the parties will agree on a formula and
process for determining a "buy out" amount.
The Buy Out Amount will subsequently be paid from the Fund to
Kemper or to another third-party with respect to which the
Insurers or the Debtors agree has made an offer of a Buy Out
Amount that is acceptable to all of the parties. Any amounts
remaining in the Fund after the payment of the Buy Out Amount
will be returned to RCN and the Fund will be dissolved or
otherwise terminated.
The parties will undertake the dispute resolution procedures if
they are unable to agree upon a Buy Out Amount within three
months.
David J. Fischer, Esq., at Wildman, Harrold, Allen & Dixon LLP,
in Chicago, Illinois, represents Kemper and Broadspire in the
chapter 11 cases.
Headquartered in Princeton, New Jersey, RCN Corporation --
http://www.rcn.com/-- provides bundled Telecommunications
services. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on
May 27, 2004. The Debtors' confirmed chapter 11 Plan took effect
on December 21, 2004. Frederick D. Morris, Esq., and Jay M.
Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed
$1,486,782,000 in assets and $1,820,323,000 in liabilities.
The Debtor consummated its plan of reorganization and formally
emerged from Chapter 11 protection. The plan, confirmed on
Dec. 8, 2004, by Judge Robert Drain of the Bankruptcy Court in New
York, converted approximately $1.2 billion in unsecured
obligations into 100% of RCN's new equity, and eliminated
approximately $1.8 billion in preferred share obligations.
(RCN Corp. Bankruptcy News, Issue No. 27; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
RELIANCE GROUP: Foxmeyer Trustee Sells RIC Claim to Goldman Sachs
-----------------------------------------------------------------
Bart A. Brown, Jr., the Chapter 7 Trustee for FoxMeyer
Corporation, asks the U.S. Bankruptcy Court for the District of
Delaware for permission to sell its claim against Reliance
Insurance Company to Goldman Sachs Credit Partners, L.P., for
$1,175,500.
On August 27, 1996, FoxMeyer and its subsidiaries filed Chapter
11 petitions. FoxMeyer sold substantially all of its business
operations and assets to McKesson Corporation in November 1996.
In March 1997, the Delaware Court ordered FoxMeyer's cases
converted to Chapter 7 under the Bankruptcy Code. Currently, the
estates consist of residual cash proceeds, rights to certain
chargeback credits, avoidance causes of action and other causes
of action. The Chapter 7 Trustee is charged with monetizing the
estate's assets through prosecuting and selling claims.
On June 2, 2004, the Delaware Court approved a settlement between
the Trustee and the Defendant Directors, namely Abbey J. Butler,
Melvyn J. Estrin, Daniel J. Callahan, III, Harvey A. Fain and
Bruce Kahler. The Defendant Directors assigned the Trustee all
their rights under:
A) the RIC Directors and Officers Liability Policy No. NDA
125393495, issued by United Pacific Life Insurance Company;
and
B) the Excess Directors and Officers Liability and Company
Reimbursement Policy No. GA57-58551, issued by Gulf
Insurance Company.
The D&O Liability Policy and the Excess D&O Policy provided
coverage up to $15,000,000 and $25,000,000. United Pacific and
Gulf were subsidiaries of RIC.
In 1996, the FoxMeyer Litigation Plaintiff Class commenced a
lawsuit captioned Zuckerman v. FoxMeyer Health Corp., et al.,
Case No. 3-96-CV2258-L, against FM Health and certain officers
and directors for violations of federal securities laws. Avatex
Corporation, formerly known as FoxMeyer Health Corporation, and
the Class settled the Class Action. The Defendant Directors paid
cash to the Class and assigned their interests in the RIC D&O
Policy to the Class.
The Class filed a claim against RIC for $13,657,500. Avatex
filed a claim against RIC, which it assigned to the Class, for
$4,000,000. The Trustee filed a Claim in the RIC Liquidation for
$15,000,000.
In May 2005, the Trustee and the Class agreed to aggregate their
Claims against the RIC D&O Policy and continue pursuing the
Claims. Under the agreement, the Class is entitled to 66.67% of
the RIC D&O Policy while the Trustee is entitled to the remaining
33.33%. Since the aggregate Claim exceeds the $15,000,000
coverage limit, the Class will seek an allowed claim against RIC
for $10,000,000 and the Trustee will seek an allowed Claim
against RIC for $5,000,000.
The Trustee and the Class will divide any amounts recovered
against the Excess D&O Policy. The Class will be entitled to 15%
and the Trustee will be entitled to 85% of any recovery. The
Class and the Trustee have negotiated a settlement with Gulf over
the Excess D&O Policy for $1,130,000. That settlement will be
documented later.
To liquidate the claim against RIC, the Trustee solicited bids
from various parties who trade claims in Chapter 7 cases. The
Trustee negotiated an Assignment of Claim with Goldman Sachs.
The Assignment is conditioned upon the Delaware Court's approval
of the Settlement and the allowance of the Claim in the RIC
Liquidation for at least $5,000,000.
The RIC Claim has no strategic value to the FoxMeyer estates,
states David M. Friedman, Esq., at Kasowitz, Benson, Torres &
Friedman, in New York City. The Trustee is currently receiving
no distributions under the Claim. It is uncertain if additional
distributions will be made in the future. The Trustee invited
seven parties to bid on the Claim. Goldman Sachs made the
highest and best offer.
Mr. Friedman informs the Delaware Court that the Trustee received
no objections to the request. A hearing on the matter is
scheduled for August 1, 2005.
Headquartered in New York, New York, Reliance Group Holdings, Inc.
-- http://www.rgh.com/-- is a holding company that owns 100% of
Reliance Financial Services Corporation. Reliance Financial, in
turn, owns 100% of Reliance Insurance Company. The holding and
intermediate finance companies filed for chapter 11 protection on
June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing
$12,598,054,000 in assets and $12,877,472,000 in debts. The
insurance unit is being liquidated by the Insurance Commissioner
of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News,
Issue No. 76; Bankruptcy Creditors' Service, Inc., 215/945-7000)
RELIANCE GROUP: Liquidator Can Repurchase & Sell 3-Acre Property
----------------------------------------------------------------
The Hon. Judge James G. Colins of the Commonwealth Court of
Pennsylvania approved an Agreement of Sale between RIC and
Comstock Loudoun Station L.C., pursuant to the request filed by
M. Diane Koken, Insurance Commissioner of the Commonwealth of
Pennsylvania and Statutory Liquidator of Reliance Insurance
Company.
Under the Agreement, RIC will exercise its Repurchase Option to
repurchase 3.0 acres of land designated as Tax Map 79, Parcel 25D,
in the Ryan Park Center, Loudoun County, Virginia. The Liquidator
will convey a reacquired Parcel 15D to Comstock Loudoun.
Under the Repurchase Option, RIC will repurchase the 3.0 acres of
unusable land that was reserved for mass transit parking for
approximately $20,000. RIC will convey the Property to Comstock
Loudoun for $555,390, for an expected profit of $535,390.
Comstock Loudoun has paid an initial deposit of $55,000 into
escrow. RIC's closing costs are limited to payment of Virginia's
Grantor tax and attorney's fees. Comstock Loudoun will pay the
cost of any subdivision waiver, subdivision plot or boundary line
adjustment required by Loudoun County. Since no real estate
broker was utilized, there will be no commission paid.
Ms. Laupheimer assures the Commonwealth Court that the
transaction is in the best interests of the RIC estate. The
Liquidator obtained the advice of a licensed real estate
appraiser, Robert G. Johnson, MAI, of JMSP, Inc., in Herndon,
Virginia. Mr. Johnson's appraisal, dated April 11, 2005, valued
the Property at $526,000. Therefore, Ms. Laupheimer notes, the
purchase price exceeds the appraised fair market value of the
property.
Headquartered in New York, New York, Reliance Group Holdings, Inc.
-- http://www.rgh.com/-- is a holding company that owns 100% of
Reliance Financial Services Corporation. Reliance Financial, in
turn, owns 100% of Reliance Insurance Company. The holding and
intermediate finance companies filed for chapter 11 protection on
June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing
$12,598,054,000 in assets and $12,877,472,000 in debts. The
insurance unit is being liquidated by the Insurance Commissioner
of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News,
Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000)
At Apr. 30, 2005, Reliance Group Holdings, Inc.'s balance sheet
showed a $790.3 million stockholders' deficit.
RHODES INC: Will Auction Stores on August 8
-------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia,
Atlanta Division, gave its stamp of approval for Rhodes Inc. to
conduct an auction of its stores on August 8, 2005, at 9:00 a.m.
at the Offices of King & Spalding located at 191 Peachtree Street
in Atlanta, Georgia.
Competing bids, if any, must be submitted by Aug. 4, 2005, at 5:00
p.m. to:
The Debtors:
Rhodes Inc.
4730 Peachtree Road, NE
Atlanta, Georgia 30303
Fax: 404-572-5149
Counsel to the Debtors:
King & Spalding LLP
Attn: Paul K. Ferdinand, Esq.
191 Peachtree Street
Atlanta, Georgia 30303
Rhodes' DIP Lenders' Counsel:
Choate, Hall & Stewart
Attn: John F. Ventola
Exchange Place, 53 State Street
Boston, Massachusetts 02109
Fax: 617-248-4000
Counsel to the Official Committee of Unsecured Creditors:
Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow, LLP
Attn: Clifford A. Katz, Esq.
1065 Avenue of the Americas
New York, New York 10018
Fax: 212-593-0353
The Debtor's Financial Advisors:
FTI Consulting, Inc.
Attn: Stephen Coulombe
125 High Street, Suite 1402
Boston, Massachusetts 02110
Fax: 617-897-1510
The Court will convene a sale hearing on August 15, 2005,
at 10:00 a.m.
Stalking Horse Bidder
The RoomStore Inc., a former affiliate of Heilig-Meyers Co.,
offered to buy 50 of Rhodes' stores located in Florida, Alabama,
Georgia, Tennessee, North and South Carolina for $38.8 million.
In the event that RoomStore's bid will be topped by another
company, the successful bidder will pay it a $995,000 break-up
fee.
Rooms To Go Will Bid Higher
Rooms To Go, a competitor of RoomStore in the lower- to mid-priced
furniture market, intends to submit a higher and better offer for
Rhodes' stores. The amount of Rooms To Go's offer is undisclosed.
According to the Court-approved auction procedure, any competing
bid must exceed RoomStore's by a minimum of $100,000.
Committee's Unhappy with
The RoomStore Agreement
The Official Committee of Unsecured Creditors of Rhodes Inc. tells
the Court that the break-up fee is too high and will discourage
other bidders. It believes that the break-up fee must not be more
than $500,000. The Committee also wants to lower the minimum
overbid to $50,000.
Headquartered in Atlanta, Georgia, Rhodes, Inc., will continue to
offer brand-name residential furniture to middle- and upper-
middle-income customers through 63 stores located in 11 southern
and midwestern states (after disposing of the locations listed
above). The Company and two of its debtor-affiliates filed for
chapter 11 protection on Nov. 4, 2004 (Bankr. N.D. Ga. Case No.
04-78434). Paul K. Ferdinands, Esq., and Sarah Robinson Borders,
Esq., at King & Spalding represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they estimated less than $50,000 in assets and
more than $10 million in total debts.
ROUGE INDUSTRIES: Tinkers with Development Specialists' Fees
------------------------------------------------------------
Rouge Industries, Inc., and its debtor-affiliates sought and
obtained permission from the U.S. Bankruptcy Court for the
District of Delaware to modify the employment of Development
Specialists, Inc., as its restructuring consultant, nunc pro tunc
to June 1, 2005.
The Debtors sought to hire DSI as their restructuring consultant
and Steven L. Victor -- DSI's employee -- as their Chief
Restructuring Officer. Robert J. Dehney, Esq., at Morris,
Nichols, Arsht & Tunnell in Wilmington, Delaware tells the Court
that under Mr. Victor's stewardship, the Debtors have made
substantial advances toward completing the administration of the
Debtors' estates. As a result, the demands on Mr. Victor's time
is somewhat diminished.
In light of these developments, the Debtors, Mr. Victor and DSI,
in consultation with the Official Committee of Unsecured Creditors
and the U.S. Trustee have agreed to amend DSI's employment.
The two items modified in DSI's employment are:
* DSI's monthly fee will be reduced from $50,000 to $40,000;
* DSI will receive $10,000 additional compensation for any
month in which the total hourly fees exceed $60,000. The
term hourly fees means the fees reflected on the monthly
compensation report for the services of DSI's consultants
-- including Mr. Victor -- if billed on an hourly basis
using DSI's current hourly rates.
The Debtors believe that Development Specialists, Inc., is
disinterested as that term is defined in Section 101(14) of the
U.S. Bankruptcy Code.
Headquartered in Dearborn, Michigan, Rouge Industries, Inc., an
integrated producer of flat-rolled steel, filed for chapter 11
protection on October 23, 2003 (Bankr. D. Del. Case No. 03-13272).
Donna L. Harris, Esq., Robert J. Dehney, Esq., Eric D. Schwartz,
Esq., Gregory W. Werkheiser, Esq., and Alicia B. Davis, Esq., at
Morris, Nichols, Arsht & Tunnell represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $558,131,000 in total assets and
$558,131,000 in total debts. On Dec. 19, 2003, the Court approved
the sale of substantially all of the Debtors' assets to SeverStal
N.A. for $285.5 million. The Asset Sale closed on Jan. 30, 2005.
ROUGE INDUSTRIES: Expands Scope of Clifford Chance's Engagement
---------------------------------------------------------------
Rouge Industries, Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to expand the scope
of Clifford Chance US LLP's retention as their special counsel
with respect to the adversary proceeding and conflict matters.
Clifford Chance will represent the Debtors in all matters
involving Ford Motor Company where the company's general
bankruptcy counsel is conflicted.
The Debtors selected Clifford Chance because of the firm's
prepetition and postpetition experience and knowledge of their
businesses, as well as in the field of the Debtor's and creditor's
rights, and business reorganizations under chapter 11 of the
Bankruptcy Code.
David Brinton, Esq., a Clifford Chance partner, discloses its
firm's customary hourly rates:
Professional Designation Hourly Rate
------------ ----------- -----------
David Brinton Partner $750
Joel Cohen Member $645
David Sullivan Counsel $635
Wendy Rosenthal Associate $520
Jason D'Angelo Associate $520
Sara Tapinekis Associate $450
To the best of the Debtors' knowledge, Clifford Chance is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Dearborn, Michigan, Rouge Industries, Inc., an
integrated producer of flat-rolled steel, filed for chapter 11
protection on October 23, 2003 (Bankr. D. Del. Case No. 03-13272).
Donna L. Harris, Esq., Robert J. Dehney, Esq., Eric D. Schwartz,
Esq., Gregory W. Werkheiser, Esq., and Alicia B. Davis, Esq., at
Morris, Nichols, Arsht & Tunnell represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $558,131,000 in total assets and
$558,131,000 in total debts. On Dec. 19, 2003, the Court approved
the sale of substantially all of the Debtors' assets to SeverStal
N.A. for $285.5 million. The Asset Sale closed on Jan. 30, 2005.
ROBERT ADAMS: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Robert Lee Adams, Jr.
748 Eltham
Ann Arbor, Michigan 48103
Bankruptcy Case No.: 05-63741
Chapter 11 Petition Date: July 27, 2005
Court: Eastern District of Michigan (Detroit)
Judge: Phillip J. Shefferly
Debtor's Counsel: David I. Goldstein, Esq.
2010 Hogback Road, Suite 2
Ann Arbor, Michigan 48105
Tel: (734) 971-0110
Total Assets: Unknown
Total Debts: Unknown
The Debtor's list of its 20 Largest Unsecured Creditors was not
available at press time.
SBA COMMUNICATIONS: S&P Lifts Rating on $400 Million Loan to BB
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings for Boca
Raton, Florida-based wireless tower operator SBA Communications
Corp., including the corporate credit rating, which was upgraded
to 'B+' from 'CCC+'.
At the same time, Standard & Poor's raised its rating on the
company's $400 million secured bank loan to 'BB' from 'CCC+'. The
recovery rating was also raised to '1', indication the expectation
of 100% recovery of principal in the event of a payment default.
The ratings were removed from CreditWatch, where they were placed
with positive implications on April 21, 2005. The outlook is
stable.
"The ratings were placed on CreditWatch as part of our
reassessment of the wireless tower leasing business," said
Standard & Poor's credit analyst Catherine Cosentino. They joined
American Tower Corp., which had been placed on CreditWatch with
positive implications on Jan. 14, 2005. As a result of this
reassessment, we view this sector as having favorable
characteristics, supportive of a low investment grade business
profile. SBA has benefited from growth experienced by the
wireless carriers, both in terms of absolute subscribers and per
subscriber minutes of use. The latter in particular has been an
ongoing driver of tower co-location growth. Competition has led
the carriers to offer plans with larger minute volumes for the
same average revenues.
Moreover, the major carriers have upgraded their networks to
provide for higher speed wireless broadband capabilities, which in
many cases has required additional tower equipment, especially for
the GSM networks. The regional carriers have also increasingly
added to their coverage areas to offer competitive plans to the
national players, which in turn has elicited added tower leasing
revenues.
SFBC INTERNATIONAL: Reports Second Quarter 2005 Financial Results
-----------------------------------------------------------------
SFBC International, Inc. (NASDAQ:SFCC) reported second quarter
2005 financial results.
Direct revenue for the second quarter of 2005 was $82.4 million,
an increase of 147% compared to direct revenue for the second
quarter of 2004 of $33.3 million. Total net revenue for the
second quarter of 2005 was $106.4 million, which included
reimbursed out-of-pocket expenses of $24.0 million, a 192%
increase over the reported total net revenue of $36.4 million,
which included reimbursed out-of-pocket expenses of $3.1 million,
in the second quarter of 2004. After adjusting for the
acquisitions of PharmaNet and Taylor Technology, direct revenue
increased at an organic growth rate of 25.7%.
Earnings from operations for the second quarter of 2005 increased
84% to $12.1 million, representing a 14.7% operating margin on
direct revenue, compared to $6.6 million for the second quarter of
2004, representing a 19.7% operating margin on direct revenue.
Net earnings for the second quarter of 2005 increased by 50% to
$7.1 million, compared to net earnings of $4.7 million, in the
second quarter of 2004.
"Our results reflect the strength of our integrated service
offering with both our early stage and late stage services
contributing to our success," commented Lisa Krinsky, M.D.,
chairman and president of SFBC International. "During the
quarter, we completed the first half of the expansion of our early
stage clinic in Miami, adding approximately 75 beds to the
existing 600 beds at this facility. Our current offering of
approximately 1,075 beds in North America, with a total of more
than 1,270 planned by the end of 2005, provides us with
significant flexibility for meeting the needs of our global client
base. Our late stage business is consistently recognized for the
quality of its global trial management service offering.
CenterWatch's 2005 survey of more than 600 investigative sites in
the U.S. rated PharmaNet the best CRO to work with, which builds
upon CenterWatch's 2004 recognition of PharmaNet as the best CRO
to work with in Europe."
Arnold Hantman, chief executive officer, stated, "In June, we
successfully amended our Credit Facility and improved our debt-to-
capital ratio. As a result, we now have reduced our cost of
borrowing and increased our financial flexibility for internal
growth and future acquisitions. We remain confident in the
strength of our business given the continued growth in our revenue
across both early and late stage services and the strong bookings
momentum we are experiencing. As a result of our diversified
service offering and strong cross-marketing initiatives, we
continue to see additional demand from a growing global client
base. To support the demand and ensure the quality of our service
level, we increased our headcount during the quarter by
approximately 8%, expanded our employee training programs, and
continued to expand our capacity."
At June 30, 2005, backlog was approximately $379.4 million,
representing a sequential increase of 5.8% over the approximately
$358.5 million at March 31, 2005 and a 21.8% increase over the
approximately $311.5 million at December 31, 2004. Backlog
consists of anticipated direct revenue from letters of intent and
contracts that either have not started but are anticipated to
begin in the near future or are in process and have not been
completed.
For the second quarter 2005, SFBC recorded direct revenues by
geographic region of $50.2 million from U.S. operations and $32.2
million from foreign operations compared to $14.4 million from
U.S. operations and $18.9 million from foreign operations during
the second quarter 2004. SFBC's effective tax rate in the second
quarter of 2005 was 21.6% compared to 25.4% in the second quarter
of 2004.
Capital expenditures were approximately $5.6 million in the second
quarter of 2005, most of which was primarily attributable to new
laboratory equipment and leasehold improvements.
SFBC International, Inc. -- http://www.sfbci.com/-- provides
early and late stage clinical drug development services to branded
pharmaceutical, biotechnology, generic drug and medical device
companies around the world. SFBC has more than 30 offices located
in North America, Europe (including Central and Eastern Europe),
South America, Asia, and Australia. In early clinical development
services, SFBC specializes primarily in the areas of Phase I and
early Phase II clinical trials and bioanalytical laboratory
services, including early clinical pharmacology. SFBC also
provides late stage clinical development services globally that
focus on Phase II through IV clinical trials. SFBC also offers a
range of complementary services, including data management and
biostatistics, clinical laboratory services, medical and
scientific affairs, regulatory affairs and submissions, and
clinical IT solutions.
* * *
As reported in the Troubled Company Reporter on June 15, 2005,
Moody's Investors Service affirmed its B2 rating for SFBC
International's revised credit facility. Moody's also affirmed
its senior implied rating of B2. The rating outlook is stable.
Ratings affirmed:
* $160 million Senior Secured Credit Facilities, rated B2
* Senior Implied Rating, rated B2
The ratings reflect:
* the challenges of managing a business that has grown rapidly
through acquisitions over the past few years;
* the integration risk associated with the recent PharmaNet
transaction;
* the decentralization of the company's operations and systems;
* its smaller size relative to larger competitors; and
* high geographic concentration of business in the U.S and
Canada.
SHAW GROUP: Debt Reduction Cues S&P to Lift Credit Rating to BB
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on engineering and construction services provider The Shaw
Group Inc. to 'BB' from 'BB-' and removed it from CreditWatch,
where it was placed with positive implications in April 2005. The
outlook is stable.
At the same time, Standard & Poor's assigned a 'BB' rating and a
recovery rating of '3', indicating expectation of meaningful
recovery of principal (50%-80%) in the event of a payment default,
to the company's new, $450 million senior secured bank facility.
The rating on Shaw's senior unsecured debt, which the company
called in, was withdrawn.
"The upgrade reflects Shaw's improved financial profile following
the completion of its common stock offering," said Standard &
Poor's credit analyst Paul Kurias. Net proceeds of $262 million
were used to reduce debt such that pro forma lease-adjusted total
debt to EBITDA declined to about 2x at May 31, 2005.
However, the speculative-grade ratings continue to reflect Shaw's:
* merely fair business risk profile,
* low free cash flow generation, and
* modest margins despite leading market positions in some
segments.
These risks are partially offset by a moderately aggressive
financial profile.
Baton Rouge, Louisiana-based Shaw is a leading global provider of
E&C services, mainly to the power, process, and environmental and
infrastructure sectors. The company also has a modest-size
manufacturing and distribution unit, which is the leading
fabricator of piping systems in the U.S.
Many of Shaw's end markets are witnessing cyclical upturns and an
increase in investment, improving some prospects for revenue
growth. However, margins continue to be modest, partially because
of continuing pricing pressure. Standard & Poor's expects pricing
pressure to continue in the near term. Key growth drivers for
Shaw will be clean air legislation projects, U.S. Department of
Defense outsourcing, U.S. Department of Homeland Security
spending, and continued focus on obtaining operations and
maintenance projects.
The outlook is stable. An improved balance sheet as a result of
debt reduction should improve Shaw's competitive position. Upside
potential is restricted by Shaw's low free cash flow generation
and by contingencies on large projects. Downside risk is offset
by the company's improved capital structure.
SOLUTIA INC: Paying $5 Million to Alabama PCB Claimants on Aug. 26
------------------------------------------------------------------
As previously reported, Solutia, Inc., Monsanto Company and
Pharmacia Corporation entered into a Global Settlement Agreement,
which resolved certain lawsuits that were pending in the United
States District Court for the Northern District of Alabama and in
the Circuit Court, Etowah County Alabama. The Global Settlement
Agreement resolved about 21,000 personal injury and property
damage claims against Solutia, Pharmacia and Monsanto relating to
the manufacture of and alleged release of polychlorinated
biphenyls at Pharmacia's plant in Anniston, Alabama.
Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York,
relates that the Global Settlement Agreement covers two lawsuits:
(1) Antonia Tolbert, et al. v. Monsanto Company, et al., Civil
Action No. 01-C-1407-S; and
(2) Sabrina Abernathy, et al. v. Monsanto Company, et al.,
Civil Action No. CV-01-832 (Etowah County).
The Global Settlement Agreement provides for the total payment of
$600 million by Solutia, Monsanto, and Pharmacia to the
plaintiffs and certain other entities as specified by separate
settlement agreements in the Tolbert and Abernathy lawsuits.
As contemplated by the Global Settlement Agreement, Monsanto paid
about $550 million to the litigation plaintiffs. As a result,
$50 million remains to be paid. The Tolbert Settlement Agreement
and the Abernathy Settlement Agreement each required a $2.5
million payment to be made on August 26, 2004, and each August
26th thereafter through 2013. On August 19, 2004, the Court
authorized Solutia to make the First Settlement Installment.
The annual Tolbert Settlement Amount is to be paid to a community
medical clinic.
The annual Abernathy Settlement Agreement amount is paid:
(a) $1 million to the plaintiffs' counsel for attorneys' fees;
and
(b) $1.5 million to a trust that was established to provide
health care, educational grants or other welfare benefits.
Side Agreement
Before entering into the Litigation Settlement Agreements,
Solutia, Monsanto and Pharmacia entered into an agreement setting
forth each other's obligations under the Litigation Settlement
Agreements.
The Side Agreement provides that Solutia will:
(a) enter into the Global Settlement Agreement;
(b) pay $50,000,000 over 11 years in accordance with the terms
of the Litigation Settlement Agreements;
(c) fully perform all of its obligations as set forth in the
Side Agreement;
(d) issue warrants to Monsanto for the purchase of up to
10,000,000 shares of Solutia common stock;
(e) fully perform all of its obligations under the Global
Settlement Agreement relating to the Payton Litigation;
(f) acknowledge Monsanto's rights to access and receive direct
reimbursement from insurance policies relating to the
Anniston litigation claims; and
(g) release Monsanto and Pharmacia from claims relating to the
Anniston litigation.
The settlement amount to be paid by Solutia under the Side
Agreement corresponds to the remaining payments due under the
Litigation Settlement Agreements, although Solutia, Monsanto and
Pharmacia are jointly and severally liable for all payments due
under the Litigation Settlement Agreements.
Pursuant to the Side Agreement, Monsanto agrees to release
Solutia from all claims relating to the Litigation Settlement
Agreements, including its $550 million claim arising from the
indemnification provisions of the Amended Distribution Agreement.
Second Installment
According to Mr. Cieri, Solutia has determined that paying the
$5 million due on August 26, 2005, under the Side Agreement and
the Litigation Settlement Agreement will help preserve its
ability to argue that Monsanto's release of the Anniston
Indemnity Claim. Solutia's payment of the Second Installment is
contemplated by the Debtors' business plan, is permitted by the
Debtors' postpetition financing agreement and is consistent with
the First Installment Payment Order.
Accordingly, Solutia seeks the Court's authority to pay the
Second Settlement Installment pursuant to the Side Agreement,
with all other parties to the Side Agreement reserving their
rights.
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. Solutia is represented by
Richard M. Cieri, Esq., at Kirkland & Ellis. (Solutia Bankruptcy
News, Issue No. 42; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SPECTRASITE INC: S&P Lifts Corporate Credit Rating to BB+
---------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings for Cary,
North Carolina-based wireless tower operator SpectraSite Inc. The
corporate credit rating was raised to 'BB+' from 'B+', and the
rating on its secured bank loan was raised to 'BBB' from 'BB-';
the recovery rating for this loan remains at '1', indicating
expectations of a 100% recovery of principal in the event of a
payment default.
All ratings are removed from CreditWatch, where they were placed
with positive implications on April 21, 2005. The outlook is
stable. About $749 million of total debt is outstanding.
"The ratings on SpectraSite and three other wireless tower
operators -- AAT Communications, Crown Castle, and SBA
Communications -- were placed on CreditWatch when Standard &
Poor's initiated its reassessment of the wireless tower leasing
business," said Standard & Poor's credit analyst Catherine
Cosentino. They joined American Tower Corp., which had been
placed on CreditWatch with positive implications on Jan. 14, 2005.
(The CreditWatch on AAT was resolved on July 7, 2005, and the
rating is now BB-/Stable/--; the ratings on Crown Castle were
withdrawn on June 22, 2005.) As a result of this reassessment,
which included discussions with wireless tower companies and with
their customers, the wireless carriers, Standard & Poor's now
views the wireless tower industry as having favorable
characteristics consistent with a low investment grade business
profile.
On May 5, 2005, the CreditWatch implications for SpectraSite were
revised to developing after the announced merger agreement between
SpectraSite and American Tower Corp. (Because S&P had not at that
point completed the reassessment of the tower industry, the
developing CreditWatch reflected the potential of credit
weakening, given the higher leverage at American Tower.)
SpectraSite has benefited from ongoing stable monthly cash flows
from carriers with substantial financial resources, including
Verizon Wireless, Cingular Wireless, and Sprint. These long-term
contracts have very high renewal rates and generally include
annual escalators of between 2% and 5%. Moreover, the towers have
the ability to support multiple tenants, providing additional
upside to cash flows per tower, particularly since there is
minimal incremental operating expense associated with adding
tenants to existing towers. SpectraSite has in excess of two
tenants per tower on a broadband equivalent basis.
SPIEGEL INC: Commerzbank Holds Allowed $40,546,444 Claim
--------------------------------------------------------
On Oct. 1, 2003, Commerzbank AG -- New York and Grand Cayman
Branches -- filed Claim No. 3063 asserting claims related to:
(a) a $40,000,000 unsecured loan to Spiegel, Inc., guaranteed
by certain of Spiegel's subsidiaries; and
(b) damages in the form of costs arising from the termination
of a standard form interest rate swap agreement entered
into in connection with the loan.
Spiegel Creditor Trust, by its Trustee James M. Gallagher, as
successor-in-interest to Spiegel, and Commerzbank agree that the
allowed amount of the loan portion of Claim No. 3063 is
$40,546,444.
On September 24, 2004, Spiegel objected to the Swap Portion of
the Claim. The Court sustained Spiegel's Objection and, at the
Debtors' request, further disallowed Commerzbank's Claim in its
entirety on March 7, 2005.
On June 21, 2005 -- the Effective Date of the Debtors' Chapter 11
Plan -- all pending claims that have not been resolved were
transferred to the Trust.
Accordingly, the parties, having expressed their desire to settle
the dispute without incurring additional costs incident to
litigation, have agreed that Claim No. 3063 is:
(1) allowed as a general unsecured claim for $40,546,444; and
(2) disallowed as to the Claim's Swap Portion.
The Allowed Commerzbank Claim is in settlement of all amounts
that are due and owing by the Trust to Commerzbank.
In addition, the order expunging the Commerzbank Claim is vacated
and superseded by the Stipulation.
Headquartered in Downers Grove, Illinois, Spiegel, Inc. --
http://www.spiegel.com/-- is a leading international general
merchandise and specialty retailer that offers apparel, home
furnishings and other merchandise through catalogs, e-commerce
sites and approximately 560 retail stores. The Company filed for
Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No.
03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq.,
at Shearman & Sterling, represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $1,737,474,862 in assets and
$1,706,761,176 in debts. The Court confirmed the Debtors'
Modified First Amended Joint Plan of Reorganization on May 23,
2005. Impaired creditors overwhelmingly voted to accept the Plan.
(Spiegel Bankruptcy News, Issue No. 50; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
STELCO INC: CEO Urges Union to Go Back to Negotiating Table
-----------------------------------------------------------
The United Steelworkers' Local 8782 sent a letter to Stelco Inc.
CEO Courtenay Pratt, informing him that, as of Wednesday, July 27,
2005, the union is serving a 90-day strike notice.
"After meetings with my membership, and informing them that the
restructuring plan you have endorsed is not negotiable, it is with
deep regret that I must inform you that the Local 8782 Negotiating
Committee, executive and membership have given notice to Ford and
Chrysler, and now to you, that we are serving 90-day notice of our
intention to strike," said Local 8782 President Bill Ferguson.
"After 18 months of CCAA discussions and 12 months of contract
negotiations, it has become painfully apparent to my membership
and the local's leadership that you do not have any intention to
negotiate with us over a meaningful restructuring of Stelco that
will lead to a viable long-term solution to Stelco's problems."
Mr. Ferguson added that he still hopes Mr. Pratt will change
course and engage in serious negotiations on both the
restructuring plan and a collective agreement.
"As it now stands, the only stakeholders to benefit from Stelco's
proposed restructuring plan are the financial speculators. And to
the working people and pensioners of the Hamilton region, that is
simply not acceptable or even reasonable."
Stelco Responds
In response to the recent statement by the USW leadership and the
90-day strike notice by Local 8782, Stelco Inc. (TSX:STE) issued a
letter to its employees:
To all employees:
I'm writing to discuss the content of a document circulated in
recent days by a number of union Locals, and that appeared as
an advertisement in this morning's Hamilton Spectator. I also
wish to discuss the 90-day strike notice we received this
morning from the President of Local 8782. I'll respond first to
the claims made in the letter/advertisement, and then to the
strike notice.
USW Letter and Advertisement
----------------------------
"We have fought very hard to make good on our promise...that
Stelco would not use CCAA to take away our hard-won gains": In
the first place, the Locals' leadership have not had to fight
for the simple reason that once steel markets and Stelco's
business conditions improved as dramatically as they did, the
Company did not ask for concessions. The Company's
restructuring plan outline filed on July 15 does not call for
any "take away" of wages or benefits from employees or
retirees.
"The union will never agree to a 10-year freeze on our right to
negotiate pension improvements": Our restructuring plan outline
doesn't ask for a 10 year freeze. It does propose that pensions
not increase until the pension plan deficiency reaches an
agreed funding ratio. This protects the active work force and
retirees by ensuring that the pension deficiencies are dealt
with once and for all. Pension benefit increases for active
employees would increase the solvency deficiency. This would
only add to the Company's funding burden and increase the risk
for retirees.
The priority of the USW, employees, retirees and the Company
has been the elimination of the funding deficit. Our plan
outline does just that, resolving the pension funding issue
within 10 years through a combination of upfront contributions
and annual cash payments. While our pension funding plan takes
a different route than the one favoured by the Locals'
leadership, the destination and the outcome are the same.
"...others say that it is none of the union's business to be
involved in the restructuring": While some may be of that view,
that has never been the Company's position. I have consistently
said that the USW is one of the critical stakeholder groups in
the restructuring process. In fact, and as the record clearly
demonstrates, the Company has invited and urged the Locals'
leadership to participate in the process in a meaningful way
from the outset, often with little success.
Let's also recall that it was the Locals' leadership that
pursued a number of time-consuming and unsuccessful Court
challenges that questioned the very legality of the
restructuring process itself. They also refused many
invitations to participate in meaningful restructuring
negotiations. The USW International and Local 8782 have chosen
to use the leverage of an expired collective bargaining
agreement and strike threats to influence the CCAA
restructuring process, even though no concessions have been
asked of them. For its part, our largest Local, Local 1005, has
elected not to participate in the process at all.
"It was Stelco that underfunded the pension plan by choosing
not to pay down its insolvency": Let's be clear. Stelco has
funded its pension obligations at all times and in accordance
with its legal obligations. Stelco is not in default of any of
its pension funding or other employee related obligations.
Stelco has had the legal right to utilize an exemption from the
pension solvency funding obligations applicable to some other
employers. Stelco is not the only company that has been given
the benefit of this exemption. That exemption only relieves
Stelco of providing additional funding that is required if it
is assumed that Stelco does not continue in business - the
solvency deficiency.
Stelco has tabled a reasonable and achievable plan to resolve
that deficiency within 10 years through a combination of
initial contributions and annual cash payments. As I noted
earlier, our pension funding plan may take a different route
than the one favoured by the Locals' leadership, but the
destination and the outcome are the same.
"Stelco refuses to choose a plan that will deal with the
pension solvency and retire its debt": This is simply untrue.
We believe that we have tabled a plan that will do just that.
It just doesn't happen to be the plan favoured by the Locals'
leadership. I have said before that the Company does not
consider that plan to be fair to all stakeholders or
achievable. It's also important to point out that the plan
favoured by Local 8782 is not supported by Local 1005, which
represents by far the largest number of our employees and
retirees.
"Clearly our fight is not over": The Locals' leadership seems
to be the only stakeholder painting our restructuring in such
confrontational terms. You will not find one word of
confrontation or hostility towards Stelco employees and
retirees in any of the more than 170 letters and news releases
issued by the Company since the restructuring process began. As
the Court has observed on many occasions, we're all in the same
boat and will succeed or fail together. The plan filed by the
Company does not threaten jobs, pensions or union contracts. To
the contrary, no concessions are asked for and the funding of
the pension plans will be dramatically increased.
"The members of Local 8782 have voted overwhelmingly to
authorize any action, up to and including a strike": The
rhetoric used by the Local's leadership in this matter injected
uncertainty and instability into the Company's operations, into
the restructuring process, and into the minds and plans of our
customers, suppliers and other stakeholders.
Based on comments attributed to Local officials in the media,
the stated reasons for seeking the action authorization seem to
have nothing at all to do with the process of negotiating a
renewal collective agreement between Local 8782 and the
Company. The Company has been engaged in 'on again, off again'
bargaining with Local 8782 for months. We remain committed to
working towards a renewal collective agreement whenever the
Local leadership is prepared to sit down and negotiate
seriously. The reasons for seeking the authorization to act
seem to deal more with the restructuring plan outline filed on
July 15 than with the collective bargaining process at Lake
Erie.
Local 8782 Strike Notice
------------------------
As I pointed out at the beginning of this letter, Local 8782
has now served the Company with 90-days strike notice. In his
letter to me, Mr. Ferguson says that we have left Local 8782
with no other choice. Of course it had another choice - it
could have elected not to issue the notice at all. The decision
to issue the notice only creates further uncertainty among
employees, retirees, customers, suppliers and the communities
in which we operate. The last time the Local took this step,
the Company lost the business of General Motors, its largest
customer. That business has not been regained. The cost of this
loss to the Company, and particularly to Lake Erie's business,
has been significant.
In his letter, Mr. Ferguson urges the Company to engage in
serious negotiations on the restructuring plan and on the
renewal collective agreement. The fact that Local 8782's
collective bargaining has been an 'on again, off again' process
rests entirely in the hands of the USW Local's executive. As I
have said before, and will say again, the Company is open to
all discussions on its restructuring plan outline except with
respect to suggestions that would change the balancing of
stakeholder interests which we are required to do by law and
which we have endeavoured to do in the most responsible manner.
Finally, Mr. Ferguson states in his letter that "the only
stakeholders to benefit from Stelco's proposed restructuring
plan are the financial speculators". This is absolutely untrue.
The Stelco plan asks for no concessions from employees or
pensioners. In addition, it provides for the full funding of
the deficiencies in the pension plans. As well, the plan
envisions the conversion of a very significant portion of
existing debt into equity, and extends the maturity of the
remaining debt well into the future. We believe that these and
other provisions of our plan outline are fair to employees,
retirees, and the people of the communities in which we
operate.
There are other places and ways in which the Local leadership
could discuss its concerns about the plan outline itself or the
restructuring process in general. The public record clearly
demonstrates the number of occasions on which the Company has
invited and urged the leadership to participate in and
contribute to the search for a positive outcome for the members
of Local 8782 and for all our stakeholders. We have always
stated that the Local was a critical participant in this
process.
There Is Another Way
--------------------
There is, and for the past 18 months there has been, another
way to address the concerns of our employees and retirees. That
way consists of the meaningful discussions that the Company has
tried to generate throughout the restructuring process. No one
has a monopoly on concern for our employees, retirees and other
stakeholders. As I've said repeatedly, we all want the same
goal. It's time to work together if we are to achieve it.
We will only achieve that goal if everyone wants it and works
for it. It's just not possible for every group to get
everything it wants because the pie isn't big enough. As well,
Stelco is the only participant in the process with a legal
obligation to take into account the interests and competing
demands of other stakeholders.
I once again urge the Locals' leadership to reconsider the path
of confrontation it alone has chosen, to tone down the
rhetoric, to resume discussions, and to ease the uncertainty
and instability surrounding this last push for a positive
outcome for employees, retirees and other stakeholders.
Sincerely,
Courtney Pratt
President and Chief Executive Officer
Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified
steel producer. Stelco is involved in all major segments of the
steel industry through its integrated steel business, mini-mills,
and manufactured products businesses.
In early 2004, after a thorough financial and strategic review,
Stelco concluded that it faced a serious viability issue. The
Corporation incurred significant operating and cash losses in 2003
and believed that it would have exhausted available sources of
liquidity before the end of 2004 if it did not obtain legal
protection and other benefits provided by a Court-supervised
restructuring process. Accordingly, on Jan. 29, 2004, Stelco Inc.
and certain related entities filed for protection under the
Companies' Creditors Arrangement Act.
SUNRISE CDO: Fitch Cuts Rating on $45 Million Notes 4 Notches to B
------------------------------------------------------------------
Fitch Ratings downgrades three tranches of Sunrise CDO I:
-- $175,054,091 class A notes to 'BBB' from 'AAA';
--$ 45,100,000 class B notes to 'B' from 'BBB-';
-- $15,241,101 class C notes to 'C' from 'CCC+'.
Furthermore, class A, class B and class C notes are removed from
Rating Watch Negative.
Sunrise CDO I is a static-pool, collateralized debt obligation
structured by Credit Suisse First Boston. The CDO was established
in December 2001, to issue approximately $300 million in notes and
preference shares. The proceeds were utilized to purchase an
investment portfolio consisting primarily of CDOs, residential
mortgage-backed securities, commercial mortgage-backed securities,
asset-backed securities and corporate debt securities.
Since the last rating action in November 2004, the class A
overcollateralization ratio decreased from 118.8% to 101.9%, the
class B OC ratio decreased from 94.5% to 79.4% and the class C OC
ratio decreased from 88.5% to 73.9%, as reported on the June 30,
2005 trustee report. Consequently, all OC ratios are currently
failing their equivalent tests of 120%, 106.5%, and 101.8%,
respectively. The decline in OC since the last rating action was
caused primarily by over $14 million in write-downs related to
four assets, as well as an increase of over $18 million in PIKing
assets related to one exposure.
Overall, the portfolio has experienced continued downward
migration through impaired and defaulted assets, along with a
negative change to the weighted average rating factor. Since the
last rating action, assets rated 'B-' or lower have increased from
approximately 20% to over 37% of Sunrise's outstanding collateral
debt securities. Additionally, the class C notes have been PIKing
since the July 2004 payment, and it is anticipated that the class
C noteholders will not receive any additional interest payments
for the remainder of the transaction. Accordingly, Fitch has
determined that the ratings assigned to all rated securities no
longer reflect the current risk to noteholders.
Fitch will continue to monitor and review this transaction for
future rating adjustments as needed. Additional deal information
and historical data are available on the Fitch Ratings web site at
http://www.fitchratings.com/
TIAA REAL: Fitch Affirms BB Rating on $12 Mil. Fixed-Rate Notes
---------------------------------------------------------------
Fitch Ratings affirms all classes of the notes issued by TIAA Real
Estate CDO 2003-1 Ltd./TIAA Real Estate CDO 2003-1 Corp. The
affirmations are the result of Fitch's review process and are
effective immediately:
-- $213,949,580 class A-1 MM floating-rate notes 'AAA'/'F1+';
-- $10,000,000 class B-1 floating-rate notes 'AA';
-- $2,000,000 class B-2 fixed-rate notes 'AA';
-- $16,000,000 class C-1 floating-rate notes 'A-';
-- $14,000,000 class C-2 fixed-rate notes 'A-';
-- $13,500,000 class D fixed-rate notes 'BBB';
-- $12,000,000 class E fixed-rate notes 'BB'.
TIAA Real Estate CDO 2003-1 is a collateralized debt obligation,
which closed Nov. 6, 2003, supported by a static pool of
commercial mortgage-backed securities [52.7%], senior unsecured
real estate investment trust securities [45.22%], and CDOs
(0.86%). TIAA selected the initial collateral and Teachers
Advisors, a subsidiary of TIAA CREF Enterprises serves as the
collateral administrator.
Since the last rating affirmation in September 2004, the
collateral credit quality of the collateral as improved slightly.
As of the July 20, 2005 trustee report, the weighted average
rating factor improved slightly to 6.25 ('BBB-') from 6.56 ('BBB-
') as of the June 24, 2004 report. During the same period,
overcollateralization levels have remained stable at passing
levels. Interest coverage levels, while still passing minimum
required thresholds, have declined.
Based on the stable performance of the underlying collateral and
lack of substantive change in coverage levels, Fitch affirms all
rated liabilities issued by TIAA 2003-1.
Fitch will continue to monitor and review this transaction for
future rating adjustments. Additional deal information and
historical data are available on the Fitch Ratings web site at
http://www.fitchratings.com/ For more information on the Fitch
VECTOR model, see 'Global Rating Criteria for Collateralized Debt
Obligations,' dated Sept. 13, 2004, also available at
http://www.fitchratings.com/
TIAA REAL: Fitch Holds BB- Rating on $25 Mil. Preferred Equity
--------------------------------------------------------------
Fitch Ratings affirms all classes of the notes issued by TIAA Real
Estate CDO 2002-1 Ltd. / TIAA Real State CDO 2002-1 Corp. The
affirmations are the result of Fitch's review process and are
effective immediately:
-- $377,000,000 class I notes at 'AAA';
-- $17,000,000 class II-FL notes at 'A-';
-- $17,000,000 class II-FX notes at 'A-';
-- $46,500,000 class III notes at 'BBB';
-- $17,500,000 class IV notes at 'BB';
-- $25,000,000 preferred equity at 'BB-'.
TIAA 2002-1 is a collateralized debt obligation, which closed May
22, 2002, supported by a static pool of commercial mortgage-backed
securities [66%] and senior unsecured real estate investment trust
[33%] securities. TIAA Advisory Services LLC selected the initial
collateral and serves as the collateral administrator.
Since the last rating affirmation in September 2004, the
collateral credit quality of the collateral as improved slightly
with the weighted average rating remaining within the 'BBB-'
rating category. Overcollateralization levels have remained very
stable at passing levels. Interest coverage levels, while still
passing minimum required thresholds, have declined slightly.
To date there have been $16.6 million in distributions to the
preferred equity leaving the rated balance at approximately $8.4
million. The rating of the preference shares addresses the
likelihood that investors will receive ultimate payment of the
initial preference share balance by the legal final maturity date.
The rating on the class I note addresses the timely payment of
interest and ultimate repayment of principal. The ratings on the
class II-FL, class II-FX, class III and class IV notes address the
ultimate payment of interest and ultimate repayment of principal.
Based on the stable performance of the underlying collateral and
lack of substantive change in coverage levels, Fitch affirms all
rated liabilities issued by TIAA 2002-1.
Fitch will continue to monitor and review this transaction for
future rating adjustments. Additional deal information and
historical data are available on the Fitch Ratings web site at
http://www.fitchratings.com/ For more information on the Fitch
VECTOR model, see 'Global Rating Criteria for Collateralized Debt
Obligations,' dated Sept. 13, 2004, also available at
http://www.fitchratings.com/
TORCH OFFSHORE: Asks Court to Allow Set-Off Deal with Helis Oil
---------------------------------------------------------------
Torch Offshore, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Eastern District of Louisiana to lift the
automatic stay so that Helis Oil & Gas Company LLC can make setoff
payments to the Debtor's creditors pursuant to a Retainage
Agreement signed on April 26, 2005.
Helis Oil contracted with the Debtors in 2004 to build a pipeline
at High Island in the Gulf of Mexico. The Debtors billed Helis
Oil $2,009,545 for the work done in High Island.
Under the terms of the Retainage Agreement, the Debtors allowed
Helis Oil to retain $350,000 from its High Island receivables as
protection for any valid liens asserted against Helis Oil as a
result of the Debtors failure to pay subcontractors retained in
the High Island contract.
Two subcontractors have asserted liens against Helis Oil's
property as a result of the Debtors' non-payment. Central Gulf
Towing, LLC, asserts unpaid service fees totaling $54,000 and L&L
Ironworks wants to collect $5,846.
Helis Oil has agreed to pay $59,846 to Central Gulf and L&L
Ironworks, and will deduct the corresponding amount from amounts
to be returned to the Debtors.
Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides
integrated pipeline installation, sub-sea construction and support
services to the offshore oil and gas industry, primarily in the
Gulf of Mexico. The Company and its debtor-affiliates filed for
chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on
Jan. 7, 2005. When the Debtors filed for protection from their
creditors, they listed $201,692,648 in total assets and
$145,355,898 in total debts.
TULLY'S COFFEE: Apr. 3 Balance Sheet Upside-Down by $10.7 Million
-----------------------------------------------------------------
Tully's Coffee Corporation reported results for the year ended
April 3, 2005. Net sales for the year ended April 2005 were
$53,980,000 compared to $50,768,000 for the year ended March 2004.
The Company reported a net loss of $4,625,000 for the year ended
April 2005 compared to $2,595,000 for the year ended March 2004.
As of April 3, 2005, the Company had cash of $1,437,000, and a
working capital deficit of $7,415,000. Because the Company
principally operates as a "cash business," the Company generally
does not require a significant net investment in working capital
and historically have operated with current liabilities in excess
of our current assets.
The Company's Wholesale division reported a $2,994,000 (45.9%)
increase in net sales for Fiscal 2005 compared to Fiscal 2004 and
a $482,000 (115.0%) increase in operating income compared to
Fiscal 2004. In Fiscal 2005, the Company's Retail division's
operating income decreased $1,263,000 (52.1%) to $1,162,000, and
comparable store sales decreased 2.0%. The results of the
Company's Retail division's summer seasonal products and marketing
programs did not meet the Company's expectations and provided
less-than-expected momentum for our subsequent seasonal marketing
programs. In Fiscal 2005, the Company's Specialty division
reported a net increase of 71 licensed international stores and
four U.S. franchised stores. Specialty division net sales
increased by $733,000 (20.2%) and Specialty division operating
profits increased by $788,000 (23.8%) for Fiscal 2005 compared to
Fiscal 2004.
In Fiscal 2005, our operating cash flow was sufficient to cover
our operating expenses ($1,344,000 of cash was provided by
operations for the year). This reflects an increase of $57,000
compared to $1,287,000 of cash provided by operations in Fiscal
2004. Management expects that the continuing benefits from the
improvement initiatives will result in improved operating results
in Fiscal 2006 compared to Fiscal 2005. As described below under
"Liquidity and Capital Resources," management believes that the
operating cash flows, financing cash flows, and investing cash
flows projected in our Fiscal 2006 business plan, our credit
facilities, and the cash and cash equivalents of $1,437,000 at
April 3, 2005, will be sufficient to fund ongoing operations of
Tully's through Fiscal 2006.
The Company's inventory levels typically increase during the
spring due to coffee crop seasonality and, to a lesser degree,
during the autumn due to holiday season merchandise. Inventories
are also subject to short-term fluctuations based upon the timing
of coffee receipts.
"We expect that our investment in accounts receivable will
increase in connection with anticipated sales growth in the
Wholesale and Specialty divisions," the Company said. "Operating
with minimal or deficit working capital has reduced our historical
requirements for capital, but provides us with limited immediately
available resources to address short-term needs and unanticipated
business developments, and increases our dependence upon ongoing
financing activities," the Company continued.
Founded in 1992, Tully's Coffee Corporation --
http://www.tullys.com/-- is a leading specialty coffee retailer,
wholesaler and roaster. Tully's retail division operates
specialty retail stores in Washington, Oregon, California and
Idaho. The wholesale division distributes Tully's fine coffees
and related products through offices, food service outlets and
leading supermarkets throughout the West. Tully's specialty
division supports Tully's licensees in the United States and Asia.
Currently, more than 350 company-operated and licensed Tully's
retail locations serve Tully's premium handcrafted coffees, along
with other complementary products. Tully's corporate headquarters
and roasting plant are located in Seattle at 3100 Airport Way S.
At Apr. 3, 2005, Tully's Coffee Corporation's balance sheet showed
a $10,689,000 stockholders' deficit, compared to a $6,671,000
deficit at Mar. 28, 2004.
US AIRWAYS: Valuation Analysis Under Ch. 11 Plan of Reorganization
------------------------------------------------------------------
US Airways, Inc., and its debtor-affiliates' Reorganization
Valuation Analysis estimates the post-confirmation value for the
Debtors' Common Stock. Seabury Securities LLC, the Debtors'
financial advisor, prepared a valuation analysis of the projected
range for the Debtors' equity value upon emergence from
bankruptcy. The equity valuation was developed for evaluating:
-- the recoveries to unsecured claimholders; and
-- whether the Plan met the so-called "best interests test"
under Section 1129(a)(7) of the Bankruptcy Code.
In preparing its analysis, Seabury Securities:
(a) reviewed the financial statements of the Debtors and
America West Holdings Corporation;
(b) reviewed financial projections prepared by senior managers
at America West and the Debtors for 2005 through 2009;
(c) reviewed the assumptions underlying the projections;
(d) reviewed the merger agreement between US Airways Group,
Inc., America West and Barbell Acquisition Corp.;
(e) reviewed the Investment Agreements with ACE Aviation
Holdings Inc., Eastshore Aviation LLC, Par Investment
Partners, L.P., Peninsula Investment Partners, L.P., Tudor
Investment Corporation and Wellington Management Company,
LLP;
(f) considered the results of the solicitation process and
bidding procedures;
(g) reviewed the trading price of America West common stock
after it filed Registration Statement on Form S-4 on
June 28, 2005;
(h) prepared a discounted cash flow analysis of the business
on a "going-concern" basis using various discount rates,
terminal values and financial projections;
(i) considered the current and historical market values of
publicly traded competitors of the Merged Company;
(j) considered economic and industry information relevant to
the Merged Company;
(k) discussed the current operations and prospects of the
Merged Company with senior managers of the Debtors and
America West; and
(l) made other analyses and examinations as Seabury Securities
deemed necessary or appropriate.
Seabury Securities notes that the Common Stock will have limited
liquidity. The potential redemption of America West's 7.25%
Convertible Notes and the conversion price of the new Convertible
Notes issued to GE will be based on the trading price of the
Merged Company stock.
Seabury Securities derived an estimate based on a discounted cash
flow analysis using a range of 25% to 35% per annum required
return on equity investment to calculate the weighted average
cost of capital for the Merged Company. Seabury Securities also
prepared an analysis based on comparable company market trading
multiples of projected 2005 EBITDAR and 2006 EBITDAR. According
to Seabury Securities, the potential public market equity value
of the Merged Company is between $18 and $33 per share. The
midpoint of this equity valuation range produces a value of
$25.50 per share.
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue
No. 99; Bankruptcy Creditors' Service, Inc., 215/945-7000)
USG CORP: Selling U.S. Gypsum's Natural Gas Assets for $2 Million
-----------------------------------------------------------------
Daniel DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, informs the U.S. Bankruptcy Court for the
District of Delaware that United States Gypsum Company owned
certain natural gas assets in Western Pennsylvania, which consist
of:
-- leases for around 75 natural gas wells;
-- the associated pipelines; and
-- various related mineral and other rights and assets.
Mr. DeFranceschi notes that the Gas Wells are not located close
enough to any of U.S. Gypsum's plants to allow it to directly
utilize most of the natural gas produced from those wells. As a
result, U.S. Gypsum generally sells the gas that it produces from
the wells.
Mr. Defranceschi states that since U.S. Gypsum does not actually
directly use most of the gas from the Gas Wells, and given
current favorable prices for assets like the Gas Wells, U.S.
Gypsum has determined to sell the Natural Gas Assets.
Accordingly, to maximize the offers they can obtain for the
Natural Gas Assets, the Debtors seek Judge Fitzgerald's authority
to sell the Natural Gas Assets, free and clear of all liens,
claims and encumbrances, so long as the Debtors will not sell the
Natural Gas Assets for an aggregate amount less than $2,000,000.
The Debtors will serve a notice of the proposed sale to the
United States Trustee, the counsel to each of the Committees. and
the counsel to the Futures Representative. The Sale Notice will
include:
1. the identity of the purchaser or purchasers;
2. the major economic terms of the proposed sale; and
3. a copy of the proposed sale contract or contracts.
The Notice Parties will have 10 days to lodge an objection.
If no Party timely objects, the Debtors will be authorized to
consummate the sale or sales without further Court order.
If an objection to a sale is received, the sale may not proceed
absent:
(i) written withdrawal of the objection; or
(ii) entry of a Court order specifically approving the sale.
Sale Will Maximize the Value of Debtors' Estates
Given the current favorable market conditions, U.S. Gypsum
believes that the Sale will maximize the value of the Natural Gas
Assets for the Debtors' estates.
In addition, after the end of the useful life of the Gas Wells,
U.S. Gypsum will be required to "cap" the wells in accordance
with various environmental regulations and has posted significant
reclamation bonds to guarantee its obligations to do so.
By selling the Gas Wells before the end of their useful life,
U.S. Gypsum will reduce or eliminate its obligation to cap the
Gas Wells, and thus minimize a future expense to the Debtors, Mr.
DeFranceschi says.
If they are not sold, Mr. DeFranceschi further asserts, U.S.
Gypsum would be required to spend significant funds to repair and
improve the Gas Wells.
Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/ -- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes. The Company filed
for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No.
01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at
Jones Day represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG
Bankruptcy News, Issue No. 92; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
USGEN NEW ENGLAND: Inks Settlement Pact with Mohawk River Funding
-----------------------------------------------------------------
On Jan. 8, 2004, Mohawk River Funding III, L.L.C., filed
Claim No. 291 against USGen New England, Inc., for $171,032,979,
for purported damages arising from the termination of an Amended
and Restated Power Purchase Agreement and prepetition accounts
receivable.
Pursuant to USGen's First Amended Plan of Liquidation, the
holders of Allowed Class 3 Claims will receive full payment,
together with postpetition interest accruing from the Petition
Date.
USGen and Mohawk want to resolve Claim No. 291 as well as
Mohawk's administrative claim, estimated to be $250,000 to
$600,000, which has not been asserted against USGen.
In a Court-approved stipulation, the Parties agree:
(a) that Claim No. 291 will be reduced and allowed as a
Class 3 Claim for $168,000,000;
(b) that Mohawk will have the right to file the Administrative
Claim, subject to a $250,000 cap; and
(c) to exchange mutual releases.
Headquartered in Bethesda, Maryland, USGen New England, Inc., an
affiliate of PG&E Generating Energy Group, LLC, owns and operates
several electric generating facilities in New England and
purchases and sells electricity and other energy-related products
at wholesale. The Debtor filed for Chapter 11 protection on July
8, 2003 (Bankr. D. Md. Case No. 03-30465). John E. Lucian, Esq.,
Marc E. Richards, Esq., Edward J. LoBello, Esq., and Craig A.
Damast, Esq., at Blank Rome, LLP, represent the Debtor in its
restructuring efforts. When it sought chapter 11 protection, the
Debtor reported assets amounting to $2,337,446,332 and debts
amounting to $1,249,960,731. The Debtor filed its Second Amended
Plan of Liquidation and Disclosure Statement on March 24, 2005
(PG&E National Bankruptcy News, Issue No. 46; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
VINTAGE WINE: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Vintage Wine Shoppes, Inc.
2387 East Grand River
Howell, Michigan 48843
Bankruptcy Case No.: 05-33733
Type of Business: The Debtor sells wines.
Chapter 11 Petition Date: July 27, 2005
Court: Eastern District of Michigan (Flint)
Judge: Walter Shapero Flint
Debtor's Counsel: Thaddeus M. Stawick, Esq.
2140 Walnut Lake Road
West Bloomfield, Michigan 48323
Tel: (248) 855-2888
Total Assets: Unknown
Total Debts: Unknown
The Debtor's List of its 20 Largest Unsecured Creditors was not
available at press time.
WESTPOINT: Beal Bank Will Bring Asset Sale Conflict to Dist. Court
------------------------------------------------------------------
Beal Bank, S.S.B., as successor first lien agent and collateral
trustee, informs the Bankruptcy Court that it will take an appeal
to the United States District Court for the Southern District of
New York from Judge Drain's order approving the sale of
substantially all assets of WestPoint Stevens, Inc. and its
debtor-affiliates and other related orders.
The First Lien Lender will ask the District Court to review
whether the Bankruptcy Court erred, as a matter of law, in:
-- entering the Orders approving a plan sub rosa;
-- concluding that the transfer to the First Lien Lenders of
only a portion of the collateral securing the First Lien
Indebtedness constitutes full satisfaction and/or adequate
protection of the First Lien Indebtedness;
-- concluding that, contrary to the explicit and unambiguous
terms of the Intercreditor Agreement, the Second Lien
Lenders can nonetheless receive any payment or transfer of
collateral even though the First Lien Lenders are not
receiving payment in full in cash;
-- concluding that the Debtors can, pursuant to Sections
363(f)(3) or 363(f)(5) of the Bankruptcy Code, sell the
Purchased Assets free and clear of Interests of the First
Lien Collateral Trustee and/or the First Lien Lenders;
-- concluding that the Successful Bid was authorized, and
higher and better than the competing credit bids directed
by the Steering Committee, even though the Successful Bid
did not provide for payment in full and in cash of the
First Lien Lenders; and
-- concluding that the Debtors are authorized to transfer the
collateral directly to the First Lien Lenders, rather than
to the First Lien Collateral Trustee in its capacity as the
lienholder under the First Lien Collateral Trust Agreement.
Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on
June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J.
Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the
Debtors in their restructuring efforts. (WestPoint Bankruptcy
News, Issue No. 51; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
WORLD CLASS: Case Summary & 4 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: World Class Corporation
P.O. Box 783
DeKalb, Illinois 60115
Bankruptcy Case No.: 05-73775
Type of Business: The Debtor specializes in embroidered
products. The Debtor previously filed
for chapter 11 protection on Dec. 5, 2002,
in the U.S. Bankruptcy Court for the
Northern District of Illinois, Western
Division. See http://www.worldclasscorp.com/
Chapter 11 Petition Date: July 27, 2005
Court: Northern District of Illinois (Rockford)
Judge: Manuel Barbosa
Debtor's Counsel: Bernard Natale, Esq.
Bernard J. Natale, Ltd.
308 West State Street, Suite 470
Rockford, Illinois 61101
Tel: (815) 964-4700
Total Assets: $2,803,585
Total Debts: $2,147,442
Debtor's 4 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Michael Welsh $692,573
2201 Sycamore Road
DeKalb, IL 60115
Internal Reveue Service $13,107
Mail Stop 5010 CHI
230 South Dearborn Street
Chicago, IL 60634
United Parcel Service $6,262
100 Enterprise Parkway
West Columbia, SC 29170
DeKalb County Treasurer $5,500
133 West State Street
Sycamore, IL 61078
XYBERNAUT CORP: Wants to Hire McGuireWoods as Bankruptcy Counsel
----------------------------------------------------------------
Xybernaut Corporation and its debtor-affiliate, Xybernaut
Solutions, Inc., ask the U.S. Bankruptcy Court for the Eastern
District of Virginia for permission to employ McGuireWoods LLP as
their general bankruptcy counsel.
McGuireWoods will:
1) advise the Debtors with respect to their powers and duties
as Debtors and debtors-in-possession in the continued
management and operation of their business and properties;
2) advise the Debtors in connection with any contemplated sales
of assets or business combinations, including:
a) the negotiation of asset, stock purchase, merger or joint
venture agreements, and
b) formulating and implementing bidding procedures,
evaluating competing offers, drafting appropriate
corporate documents with respect to the proposed sales,
and counseling the Debtors in connection with the closing
of those sales;
3) advise the Debtors in connection with post-petition
financing and cash collateral arrangements, including:
a) negotiating and drafting documents related to the post-
petition financing and cash collateral arrangements,
b) providing advice and counsel with respect to pre-petition
financing arrangements and in connection with the
Debtors' emergence financing and capital structure, and
negotiating and drafting documents related to those
financing arrangements;
4) advise the Debtors with respect to legal issues arising in
in their ordinary course of business including:
a) attendance at senior management meetings, meetings with
the Debtors' financial and turnaround advisors and
meetings of the board of directors, and
b) advice on employee, workers' compensation, employee
benefits, executive compensation, tax, environmental,
banking, insurance, securities, corporate, business
operation, contracts, joint ventures, real property and
press and public affairs and regulatory matters;
5) take necessary action to protect and preserve the Debtors'
estates, including the prosecution of actions and
proceedings on their behalf, the defense of any actions and
proceedings commenced against those estates, negotiations
concerning all litigation in which the Debtors may be
involved and objections to claims filed against the estates;
6) prepare on behalf of the Debtors all motions, applications,
answers, orders, reports and papers necessary to the
administration of their estates, and advise the Debtors on
matters relating to the evaluation of the assumption,
rejection or assignment of unexpired leases and executory
contracts;
7) negotiate and prepare on the Debtors' behalf any plan or
plans of reorganization, plan or plans of liquidation,
disclosure statements and all their related agreements or
documents, and take any necessary action on to obtain
confirmation of that plan;
8) perform all other necessary legal services to the Debtors in
connection with their chapter 11 cases.
Lawrence E. Rifken, Esq., a member at McGuireWoods, discloses that
his Firm received a $280,000 retainer.
Mr. Rifken reports McGuireWoods' professionals bill:
Designation Hourly Rate
----------- -----------
Partners $325 - $500
Associates $195 - $300
Paralegals $145 - $195
McGuireWoods assures the Court that it does not represent any
interest materially adverse to the Debtors or their estates.
Headquartered in Fairfax, Virginia, Xybernaut Corporation,
develops and markets small, wearable, mobile computing and
communications devices and a variety of other innovative products
and services all over the world. The corporation never turned a
profit in its 15-year history. The Company and its affiliate,
Xybernaut Solutions, Inc., filed for chapter 11 protection on
July 25, 2005 (Bankr. E.D. Va. Case Nos. 05-12801 and 05-12802).
John H. Maddock III, Esq., at McGuireWoods LLP, represents the
Debtors in their chapter 11 proceedings. When the Debtors filed
for protection from their creditors, they listed $40 million in
total assets and $3.2 million in total debts.
* Alvarez & Marsal and Saint Joseph's Univ. Launch New Forum
------------------------------------------------------------
As organizations continue to look to identify new opportunities to
maximize financial performance in an increasingly competitive
global marketplace, Alvarez & Marsal Business Consulting and the
Pedro Arrupe Center for Business Ethics of Saint Joseph's
University have joined to launch the Delaware Valley Financial
Leaders' Network, a new membership organization designed to
facilitate increased communication among the region's top
executives and provide a unique peer-oriented forum to discuss
innovative strategies for improving financial management.
Led by Pat McCormick of Alvarez & Marsal Business Consulting and
Karen Hogan, Joe Ragan and David Steingard of Saint Joseph's
University, FLN will provide a rare opportunity for business
leaders to come together and share information and insights, build
knowledge, debate ethical issues and promote business leadership.
Core members are comprised of financial leaders from more than 20
prominent Delaware Valley organizations. The network spans
multiple industries including manufacturing and service companies,
global banking and risk management, public accounting, financial
executive recruitment, and the not-for-profit sector. The
diversity of the group will enable members to learn about the
challenges and opportunities faced by other industries in the area
and how businesses in those industries are approaching financial
leadership.
Each meeting is anchored by a keynote presentation on a critical
issue facing financial leaders, followed by a roundtable
discussion. The inaugural meeting is based on recent research
conducted by CFO Research Services aimed at understanding how
successful companies are balancing Sarbanes- Oxley related
requirements with addressing a broader financial management
improvement agenda. The report entitled: "From Talk to Action:
Perfecting the Basics of Finance is no Longer Optional" will be
debriefed and discussed in an active roundtable format. This will
be the first public presentation and forum on the research and
will be a unique opportunity for members to receive leading
insights- fast.
"The Delaware Valley is home to many successful organizations and
has a strong and diverse business community," said Mr. McCormick,
a managing director at Alvarez & Marsal. "The Financial Leaders'
Network is designed to bring together the region's business and
financial leaders and provide a high-level forum where members can
discuss pressing issues, gain insights from peers and form ties
that lead to the overall strengthening of the local community.
"Saint Joseph's University's Center for Business Ethics provides
the perfect partner for this initiative, particularly given the
increased focus being placed on ethics-related issues in today's
corporate environment," he added. "The partnership provides a
platform based on the independence and objectivity offered by both
organizations and will allow for the sharing of insights and the
discussion of difficult subjects in a largely non-competitive,
peer-oriented environment."
"We are pleased to be working with Alvarez & Marsal to provide an
innovative intellectual resource to the Delaware Valley business
community," said Joseph DiAngelo, dean of the Ervin Karl Haub
School of Business at Saint Joseph's University. "The diversity of
the network's members and their natural viewpoints will enrich
dialogue and help us all better understand and appreciate the
various points of view that are in play in today's financial
community."
"The network will serve as a think tank for financial leaders - an
opportunity to stay on the leading edge of issues and to
understand their practical implications and impact on
organizations," added Karen Hogan, Ph.D., chair of the finance
department at Saint Joseph's University.
FLN members will have the opportunity to participate in frequent
workshops, during which they will debate ideas in an honest, fair
and tough-minded setting, and then be able to share insights and
best practices within their own organizations. Members will also
suggest and sponsor topics for research and discussion.
Alvarez & Marsal and Saint Joseph's University are recruiting a
limited number of additional members. Selected additional
members will be accepted into the network to round out the
diversity of the group in terms of industry representation. The
critical factor for membership is the ability to contribute
meaningful insights and experiences to the network at large.
About Saint Joseph's University
The Pedro Arrupe Center for Business Ethics at Saint Joseph's
University was founded to be an intellectual resource for the
application of business ethics both in academic and business
contexts. Acting on a mission to integrate ethics into every
aspect of business education, the center's interdisciplinary
approach capitalizes on the diverse expertise of Saint Joseph's
faculty.
About Alvarez & Marsal Business Consulting
Alvarez & Marsal Business Consulting LLC is comprised of a
dedicated team of senior consulting specialists who deliver
functional, process and technology skills to corporate management.
Building on Alvarez & Marsal's core operational and problem-
solving heritage, the team helps to improve the business processes
and performance of companies in good market and financial
positions. Alvarez & Marsal Business Consulting services include:
strategy and corporate solutions, finance and accounting
solutions, human resource solutions, information technology
solutions and supply chain solutions.
Alvarez & Marsal Business Consulting is part of Alvarez & Marsal,
a leading global professional services firm with expertise in
guiding companies and public sector entities through complex
financial, operational and organizational challenges. Founded in
1983, the firm's more than 500 seasoned professionals in locations
across the US, Europe, Asia and Latin America provide services
including turnaround management consulting, crisis and interim
management, performance improvement, creditor advisory, financial
advisory, dispute analysis and forensics, tax advisory, real
estate advisory and business consulting.
* Derek Pierce Joins Alvarez & Marsal's Healthcare Industry Group
-----------------------------------------------------------------
Alvarez & Marsal, a global professional services firm, announced
that Derek Pierce, who specializes in healthcare finance,
reimbursement and investigations, has joined the firm's Healthcare
Industry Group as a director. Mr. Pierce will be based in
Birmingham, Alabama and New York City.
With more than 15 years of experience, Mr. Pierce has investigated
allegations of fraud within several large healthcare provider
chains, negotiated with the Department of Justice and the Center
for Medicare & Medicaid Services, and assisted with ongoing
monitoring and compliance in conjunction with the chains'
Corporate Integrity Agreement required by the Office of Inspector
General. In addition to his extensive investigative experience,
Mr. Pierce has managed the reimbursement department for several
large academic medical systems, analyzed publicly available CMS
data for various types of Medicare patients, implemented
successful clinical education programs that improved physician
documentation in hospital medical records, and served as the
liaison between a large hospital chain and a regional Medicare
fiscal intermediary.
Prior to joining A&M, Mr. Pierce spent eight years at Arthur
Andersen in its healthcare consulting practice. Before that he
worked with a Medicare fiscal intermediary. Mr. Pierce earned a
Bachelor of Science degree in accounting from Samford University
and is a member of the Tennessee chapter of HFMA.
The Healthcare Industry Group at Alvarez & Marsal works with
management, boards of directors and stakeholders to improve the
performance of healthcare organizations across the full continuum
of care, from providers to payors and suppliers. The group's
dedicated professionals offer a diverse range of capabilities -
from helping CEOs and CFOs to develop and implement operational
and financial performance plans to working with boards of
directors and stakeholders during turnaround and crisis
situations. Services include: turnaround consulting and interim
management; crisis and restructuring management; operational
performance improvement; organizational assessment and
realignment; core business strategy and execution; financial,
clinical and business process improvement; mergers, acquisitions,
divestitures and integrations; and special investigations and
forensic accounting.
About Alvarez & Marsal
Alvarez & Marsal is a leading global professional services firm
with expertise in guiding companies and public sector entities
through complex financial, operational and organizational
challenges. Employing a unique hands-on approach, the firm works
closely with clients to improve performance, identify and resolve
problems and unlock value for stakeholders. Founded in 1983,
Alvarez & Marsal draws on a strong operational heritage in
providing services including turnaround management consulting,
crisis and interim management, performance improvement, creditor
advisory, financial advisory, dispute analysis and forensics, tax
advisory, real estate advisory and business consulting. A network
of more than 500 experienced professionals in locations across the
US, Europe, Asia and Latin America, enables the firm to deliver on
its proven reputation for leadership, problem solving and value
creation.
* Lauren Sheridan Joins Alvarez & Marsal as Senior Director
-----------------------------------------------------------
Alvarez & Marsal, a global professional services firm, announced
that Lauren Sheridan has joined the firm's Dispute Analysis and
Forensics group as a senior director in the New York office.
Ms. Sheridan specializes in post-closing purchase-price disputes,
fraud and forensic accounting investigations and litigation-
related financial analyses across various industries. She has
assisted parties in several post-closing purchase price adjustment
disputes by analyzing complex issues of fact and interpretation of
contract clauses and accounting procedures, drafting arbitration
submissions, investigating potential objections to closing balance
sheets and assisting neutral arbitrators with the resolution of
disputes. She has also performed intellectual property licensing
compliance inspections and has assisted clients in settlement
negotiations.
Prior to joining A&M, Ms. Sheridan was a senior manager in the
financial advisory services practice of Deloitte & Touche. Prior
to that, she was in the audit practice of Deloitte & Touche,
specializing in the audit of investment management companies.
Ms. Sheridan holds a bachelor of accounting from Fordham
University and is a Certified Public Accountant licensed in the
state of New York. She is also a member of the American Institute
of Certified Public Accountants and the New York State Society of
Certified Public Accountants.
Alvarez & Marsal's Dispute Analysis and Forensics group (DA&F)
provides a range of analytical and investigative services to major
law firms, corporate counsel and management involved in complex
legal and financial disputes. DA&F provides sophisticated
financial and economic analysis to assist clients in resolving
high-stakes issues ranging from internal matters to litigation.
The group also conducts corporate and technology investigations to
help companies identify and mitigate risks and properly address
internal or external financial inquiries.
About Alvarez & Marsal
Alvarez & Marsal is a leading global professional services firm
with expertise in guiding companies and public sector entities
through complex financial, operational and organizational
challenges. Employing a unique hands-on approach, the firm works
closely with clients to improve performance, identify and resolve
problems and unlock value for stakeholders. Founded in 1983,
Alvarez & Marsal draws on a strong operational heritage in
providing services including turnaround management consulting,
crisis and interim management, performance improvement, creditor
advisory, financial advisory, dispute analysis and forensics, tax
advisory, real estate advisory and business consulting. A network
of more than 500 experienced professionals in locations across the
US, Europe, Asia and Latin America, enables the firm to deliver on
its proven reputation for leadership, problem solving and value
creation.
* Shannon Gracey Adds Partners in New Austin & Houston Offices
--------------------------------------------------------------
The law firm of Shannon, Gracey, Ratliff & Miller, L.L.P.,
disclosed the opening of offices in Austin and Houston. C. Mark
Stratton has joined the firm as partner in charge of the firm's
new office in Austin at 98 San Jacinto, Suite 300, and Peter
Blomquist has joined the firm as a partner in charge of the firm's
new Houston office at 2920 Fulbright Tower, Houston Center, 1301
McKinney.
"The opening of Shannon Gracey's new offices in Austin and Houston
is another step forward in the firm's goal of deliberate growth
and expansion in order to better serve existing clients and
provide our services to new ones," said R. H. Wallace, Jr.,
Shannon Gracey's managing partner, who is based in Fort Worth. "We
are very fortunate that Mark and Peter are the type of attorneys
who provide a solid foundation for the future growth of those
offices."
Mark Stratton, who will head the firm's new Austin office, has
practiced for 16 years in the areas of securities litigation,
arbitration, professional liability defense, insurance agents'
errors and omissions, product liability, and transportation. Prior
to joining Shannon Gracey, he was a partner in another Austin law
firm.
Peter Blomquist, who will head the firm's Houston office, has been
practicing law for ten years in the areas of personal injury
defense, including premises, automobile and product liability,
general, civil and commercial litigation, and professional
liability and construction disputes. Prior to joining Shannon
Gracey, he was a partner in another Houston law firm.
Shannon Gracey -- http://www.shannongracey.com/-- a full-service
law firm with 63 attorneys, is one of the Southwest's most
recognized and trusted law firms with offices in Alliance,
Arlington, Austin, Dallas, Fort Worth, and Houston. Its civil
practice encompasses appellate law, bankruptcy, construction,
corporate, e-commerce, environmental, estate and probate,
financial institutions, government, healthcare, insurance, labor
and employment, litigation, mergers and acquisitions, oil and gas,
real estate, securities, and tax. Its criminal law practice
principally involves federal "white collar" defense work.
* Senate Approves Pension Relief for Airlines
---------------------------------------------
According to published reports, the Senate Finance Committee gave
its approval for airline companies to fund their retirement plans
for 14 years. Delta Air Lines and Northwest Airlines lobbied for
a 25-year pension funding period to conserve cash and avoid
bankruptcy. Pension funding is currently at four years.
Delta's pension plans are underfunded by approximately $5.3
billion while Northwest's plans are short by $3.8 billion.
The two struggling carriers posted quarterly losses of $382
million for Delta and $225 million for Northwest.
The Senate also allowed airline companies to use their own
actuarial assumptions when calculating liabilities rather than the
standard actuarial assumptions imposed on underfunded pension
plans. For airlines, this translates to the freezing of any
future benefits to accrue.
But not everybody's happy with the bill.
Joe Leonard told the Atlanta Journal that the legislation amounts
to "a windfall to two airlines. "If you give Delta an interest-
free loan, what are they going to do with that?" Mr. Leonard asks.
"The government ought not be trying to decide who the winners and
losers are." Mr. Leonard believes that the struggling airlines
need to put up collateral or equity in exchange for pension
relief.
* BOOK REVIEW: Taking America: How We Got from the First
Hostile Takeover to Megamergers, Corporate
Raiding, and Scandal
--------------------------------------------------------------
Author: Jeffrey G. Madrick
Publisher: Beard Books
Softcover: 320 pages
List Price: $34.95
Order your personal copy at
http://amazon.com/exec/obidos/ASIN/158798217X/internetbankrupt
As the subtitle reveals, the title "Taking America" connotes the
indiscriminate buying up of the nation's assets of large
corporations by the investment bankers, insider stock traders,
arbitrageurs, and the like. This occurred in the mid 1970s, when
low stock prices made many large corporations attractive as
takeover targets. At the time, they were not ready for what was
going to hit them. This was the business era when the term
"hostile takeover" came into use. The names Ivan Boesky, Carl
Icahn, and T. Boone Pickens became household names for their
inconceivable, bold attempts to buy out corporations. In doing
so, they would stand to make hundreds of millions of dollars as
the stock of the company taken over rose. But in most cases, such
a stock rise would come at the cost of breaking up the newly-
acquired company by selling off its most prized and valuable
operations and assets or by drastically reducing its work force to
save on wage and benefits costs. In many ways, this wave of
buyouts and mergers fundamentally changed the way corporations did
business; and it changed the way corporations were seen by
businesspersons and the public. Corporations came to be seen not
mainly as businesses relating to a particular business sector or
making a particular product or product line. Such considerations
as operations and growth within a particular or closely-related
sector, employee security, and long-term strategic planning were
swept aside by the single-minded aim of using a corporation's cash
and other assets as leverage to takeover vulnerable, and often
unsuspecting, corporations for quick, huge profit. Running a
corporation became like playing the stock market. Madrick's
"Taking America" was originally published in 1987, just after this
wave of takeovers and mergers waned. But it waned not from any
restoration of rationality or temperance, but mainly from having
succeeded so well. There were scarcely any big companies worth
taking over left after the takeover frenzy, as it was described by
many.
Madrick follows this unprecedented, transformational takeover
spree occurring over the decade of the mid 1970s to the mid 1980s
mainly by following the activities of the key individuals driving
it, and as much as possible getting into their thinking, the
scheming, and the strategies. "Most of the participants in the
takeover movement who are referred to in this book were
interviewed by the author." Most of the book's content is based
on these interviews. Other recognizable names in the author's
long listing of individuals he interviewed besides those mentioned
above are Peter Drucker, Richard Cheney, Robert Rubin, and Felix
Rohatyn.
While offering a wide-ranging, comprehensive account of this 10-
year period of major business activity, Madrick consistently,
though unobtrusively, makes his perspective known. During this
period, "men who wanted, and knew how to make, money" were
myopically and heedlessly engaged in deals in such a way that
"making deals took precedence over doing real business." These
deal-makers, takeover specialists, investment bankers, and such
"were rarely dreamers, or builders, or even men who could run a
business." Looking back over this period, Madrick sees that "what
surely became clear as this takeover movement progressed, and what
is its final criticism, is that it lost touch with business's
first principles." These principles take into consideration broad
economic well-being for employees and the public, not quickly-
gained riches for a few.
Although Boesky and some of the others who gained prominent media
coverage for their takeover activities were heavily fined or
imprisoned for illegal conduct, their view of business and
business activity was taken in by the business field. The "dot-
com bubble" of the 1990's, when many young entrepreneurs in the
field of computer technology tried to create businesses with the
hope of soon being taken over by larger companies, is one instance
of the legacy of this takeover era. The Enron approach to
business is another; as are the business activities, particularly
the financial legerdemain, of WestCom, Tyco, and Adelphi, to name
a few. In "Taking America," in taking the reader back to the now
infamous decade of the takeover frenzy, Madrick at the same time
sheds much light on the origins of widespread problems in today's
business world.
Jeff Madrick has been a reporter for NBC News and the Finance
Editor of "Business Week." He is currently an economic columnist
for the "New York Times" and editor of "Challenge Magazine." He
also teaches at Cooper Union and New School University, and is the
author of "The End of Affluence."
*********
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 ***