/raid1/www/Hosts/bankrupt/TCR_Public/050819.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, August 19, 2005, Vol. 9, No. 196
Headlines
AAIPHARMA INC: Creditors Have Until Today to File Proofs of Claim
ACCESS PHARMA: Looking for New Financing to Avert Defaults
ACCESS PHARMA: June 30 Balance Sheet Upside-Down by $12 Million
ACTIVANT SOLUTIONS: S&P Puts B+ Debt Rating on Watch Negative
AEGIS COMMS: June 30 Equity Deficit Widens to $20.9 Million
ALLIED HOLDINGS: Court Grants Injunction Against Utility Companies
ALLIED HOLDINGS: Court Okays Ordinary Course Professionals Hiring
ALLIED HOLDINGS: Hires Kekst and Co. as Communications Consultant
AMERISTAR CASINOS: Moody's Rates $1.2 Billion Facilities at Ba3
ARROW ELECTRONICS: Improved Performance Prompts Fitch's Upgrade
AVIA ENERGY: Case Summary & 10 Largest Unsecured Creditors
AVNET INC: Fitch Affirms BB Rating on Senior Unsecured Debt
BELDEN & BLAKE: Won't Buy Back Sr. Notes & Terminates Tender Offer
BEVERLY ENT: Inks $1.9 Bil. Merger Pact with North American Senior
BEVERLY ENT: Fitch Puts Low-B Rated Certs. on Watch Evolving
CENTURY ALUMINUM: Stockholders Authorize Issue of 100 Mil. Shares
CENTURY ALUMINUM: Shareholders Okay Stock Option & Incentive Plans
CENTURY ALUMINUM: $11.75 Million of Convertible Sr. Notes For Sale
CENTURY/ML: Bankruptcy Court Approves Disclosure Statement
CENVEO INC: Board Concludes Review of Strategic Alternatives
CHESAPEAKE ENERGY: Moody's Rates New $600 Million Notes at Ba3
CINCINNATI BELL: Moody's Rates $400 Million Facility at Ba3
CLARION TECHNOLOGIES: Equity Deficit Tops $77 Million at July 2
CLOVERLEAF TRANSPORTATION: Wants Staten Group as Special Counsel
COLLEGE PROPERTIES: Voluntary Chapter 11 Case Summary
COLLINS & AIKMAN: JPMorgan Arranges $150 Million Loan
COLLINS & AIKMAN: JPMorgan Objects to A&M and Chanin Retentions
COMPLETE PRODUCTION: Moody's Rates $530 Million Facilities at B2
CONSOLIDATED CONTAINER: S&P Affirms B- Corporate Credit Rating
COTT CORP: Increases Loans to Fund $135 Mil. Macaw Acquisition
D & K STORES: OceanFirst Bank's Secured Claim Reduced to $374,326
D & K STORES: Walks Away from Pennsylvania Lease
DIVERSIFIED REIT: Fitch Holds BB- Rating on $7.8 Mil. Certificates
DIVERSIFIED REIT: Fitch Holds Low-B Rating on Three Cert. Classes
EAGLEPICHER HOLDINGS: Plan Filing Period Stretched to Dec. 7
ENRON CORP: Court Okays $41.8 Million RBS Settlement Agreement
EURAMAX HOLDINGS: Moody's Reviews Single-B Ratings for Downgrade
EXIDE TECH: Resets Annual Stockholders' Meeting to Aug. 30
FALCON PRODUCTS: Files Plan & Disclosure Statement in Missouri
FALCON PRODUCTS: Ad Hoc Panel Wants Documents from Plan Proponents
FLEETWOOD ENT: Withdraws Proposed Securities Exchange Offer
FOAMEX INT'L: Has Until Sept. 30 to Pay Sr. Sub. Noteholders
GE COMMERCIAL: Fitch Affirms Low-B Rating on Five Cert. Classes
GENERAL BINDING: Stockholders Okay ACCO World Merger
GLOBALNET CORP: Names Thomas Dunn as Chief Financial Officer
GMACM MORTGAGE: Fitch Puts BB Rating on $1.8 Million Private Class
GRAHAM PACKAGING: Incurs $7.4 Million Net Loss for Second Quarter
HARVEST ENERGY: Adopts New Unitholder Reinvestment Plan
HIT ENTERTAINMENT: Moody's Rates $172 Million 2nd-Lien Loan at B2
HIT ENTERTAINMENT: S&P Junks Proposed $172 Million Loan Rating
HOLLINGER INC: Offering to Buy Back Notes for 101% of Face Value
HOLLINGER INC: Has $68.2 Million of Cash on Hand at Aug. 5
ISLE OF CAPRI: Earns $4 Million of Net Income in First Quarter
J.CREW GROUP: Names James Scully as Chief Financial Officer
J.CREW GROUP: Registers Shares for $200 Million IPO
JO-ANN STORES: Reports Second Quarter Financial Results
KB TOYS: Big Lots Agrees to Support Amended Joint Reorg. Plan
KEY ENERGY: Completing 2003 Financial Restatements
KEY ENERGY: Moody's Confirms $425 Mil. Sr. Unsec. Notes' B1 Rating
LAND O'LAKES: S&P Places B Corporate Credit Rating on CreditWatch
LEINER HEALTH: Moody's Junks $150 Million Sr. Subordinated Notes
MAGNATRAX CORP: Court Delays Entry of Final Decree to Nov. 14
MAJESTIC STAR: S&P Affirms B+ Rating & Says Outlook is Negative
MARKLAND TECH: Technest Acquires 100% of EOIR's Outstanding Stock
MCI INC: Verizon May Cut Merger Pay by $60.8M Due to Liabilities
MCSI INC: Committee Balks at Settlement Terms with Hartford Fire
MEGA BLOKS: S&P Rates $400 Million Bank Loan Facility at BB-
MERIT SECURITIES: Fitch Junks Class B-I Certificates
METRICOM INC: Wants Until Dec. 30 to Object to Claims
MIRANT CORP: Wells Fargo Wants Court to Compel Document Production
MIRANT CORP: Wants Court to Compel WPS Energy to Return Collateral
MIRANT CORP: Wants to Tap A&M Tax Advisory as Bankr. Professional
NATIONAL CENTURY: ING Groep Sues PricewaterhouseCoopers
NORTHLAKE DEVELOPMENT: Voluntary Chapter 11 Case Summary
NORTHWEST AIRLINES: Labor Talks Continue as Strike Deadline Nears
NRG ENERGY: Completes $950 Million Senior Debt Refinancing
OFFSHORE LOGISTICS: Noteholders Waive Previous Indenture Defaults
ORIGEN FINANCIAL: Fitch Lowers Rating on Five Certificate Classes
OTIS SPUNKMEYER: S&P Rates Proposed $192 Million Facility at B+
PACIFIC MAGTRON: Files Disclosure Statement in Nevada
PACIFIC MAGTRON: Micro Tech. Wants $200K Post-Petition Claim Paid
PALLAS RESOURCE: Case Summary & 20 Largest Unsecured Creditors
PONDEROSA PINE: Wants Government Units to Submit Claims by Aug. 31
POWERLINX INC: Posts $1 Million Net Loss in Second Quarter
QWEST COMMS: Inks Tentative Collective Bargaining Accord with CWA
REVLON CONSUMER: Consumer Completes $80MM Private Note Placement
RISK MANAGEMENT: Committee Brings-In Frost Brown as Counsel
RITE AID: Offering 4.6 Mil. Shares of Convertible Preferred Stock
RUSSELL WILLIAMS: Case Summary & 27 Largest Unsecured Creditors
SALOMON BROTHERS: Fitch Retains Low-B Rating on Four Cert. Classes
SCHOTT ALARM: Voluntary Chapter 11 Case Summary
STANDARD AERO: Restating Financials to Reflect Non-Cash Changes
S-TRAN HOLDINGS: Keeman Petroleum Wants Cases Converted to Ch. 7
SUNGARD DATA: Moody's Downgrades $500 Million Notes' Rating to B2
SUSSEX 1999: Voluntary Chapter 11 Case Summary
SYNBIOTICS CORP: Posts $604,000 Net Loss in Qtr. Ended June 30
TEXAS PETROCHEMICAL: Trustee Has Until July 7 to Object to Claims
TRUMP HOTELS: Suit Against Trump Capital Accumulation Plan Filed
TRUMP HOTELS: Schlossers Want to File Late Claim & Lift Stay
US AIRWAYS: Court Okays Aircraft Sale to Mountain Capital
US AIRWAYS: Aligns Policies with America West as Merger Nears
US AIRWAYS: New Officer Team for Merged Company Recommended
US AIRWAYS: Asks Court to OK Addendum to Seabury Advisory Accord
U.S. CAN: Balance Sheet Upside-Down by $413.7 Mil. at July 3
WACHOVIA BANK: Fitch Affirms Low-B Rating on Six Cert. Classes
WASHINGTON MUTUAL: Fitch Lifts Rating on Class CB-5 Certs. to BBB
ZEPHION NETWORKS: Mihlstin Approved as Ch. 7 Trustee's Accountant
* Alvarez & Marsal Expands Real Estate Advisory Services Group
* BOOK REVIEW: Calling A Halt to Mindless Change: A Plea for
Commonsense Management
*********
AAIPHARMA INC: Creditors Have Until Today to File Proofs of Claim
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware set today,
Aug. 19, 2005, at 5:00 p.m., as the deadline for all creditors
owed money by aaiPharma Inc. and its debtor-affiliates on account
of claims arising prior to May 10, 2005, to file written proofs of
claim.
Creditors must file proofs of claim on or before the claims bar
date and those forms must be sent either by mail or courier to:
Hand Delivery:
aaiPharma Inc.
Claims Processing Center
c/o Bankruptcy Creditors Services LLC
757 Third Avenue, 3rd Floor
New York, NY 10017
Mail:
AaiPharma Inc.
Claims Processing Center
P.O. Box 5011, FDR Station
New York, NY 10150-5011
Any proof of claim submitted by facsimile or e-mail will not be
accepted.
Headquartered in Wilmington, North Carolina, aaiPharma Inc.
-- http://aaipharma.com/-- provides product development services
to the pharmaceutical industry and sells pharmaceutical products
which primarily target pain management. AAI operates two
divisions: AAI Development Services and Pharmaceuticals Division.
The Company and eight of its debtor-affiliates filed for chapter
11 protection on May 10, 2005 (Bankr. D. Del. Case No. 05-11341).
Karen McKinley, Esq., and Mark D. Collins, Esq., at Richards,
Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan,
Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the
firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors
in their restructuring efforts. When the Debtors filed for
bankruptcy, they reported consolidated assets amounting to
$323,323,000 and consolidated debts totaling $446,693,000.
ACCESS PHARMA: Looking for New Financing to Avert Defaults
----------------------------------------------------------
Access Pharmaceuticals, Inc. (Amex: AKC) is in discussions with
several institutional investors and investment firms to
renegotiate the duration and terms of its short-term (convertible
debenture) obligations. The Company recently implemented plans to
provide the Company with cash needs over the intermediate term.
Asset Sale & Talks with Note Holders
The Company is currently in negotiations to sell certain assets to
provide additional liquidity. The Company is also in negotiations
with holders of its convertible notes due September 2005 to
restructure such notes. There can be no assurance, Access
Pharmaceuticals cautions, that it will be successful in its
efforts to sell its assets or that it will be able to successfully
restructure these notes.
"We are implementing steps to provide for our intermediate term
cash needs and we are pleased that our discussions with various
investors and investment groups are progressing," CEO Rosemary
Mazanet says. "We plan to share with our investors the results of
those discussions and at the appropriate time a conference call
will be held to more fully cover our progress. We appreciate the
patience that our shareholders have shown during this difficult
period. Management is optimistic that our efforts on behalf of
all [stake]holders will be successful."
At this time the Company is unable to draw funds from the Standby
Equity Distribution Agreement, due to the terms of the SEDA, in an
amount sufficient to repay its outstanding debt obligations when
they come due.
Likely Default
The Company said it may not generate the cash flow required to pay
its liabilities as they become due. The Company's outstanding
debt includes approximately:
* $8.03 million of its Convertible Subordinated Notes due in
September 2005 (plus interest due on such date of
$1,042,000),
* $5.5 million of our Convertible Subordinated Notes
due in September 2008, and
* $2,633,000 of our Secured Convertible Notes due in March
2006 with initial partial repayment commencing in November
2005.
Bankruptcy Warning
If cash flow is inadequate to meet these obligations, the Company
says it will default on the notes. Any default on the notes could
allow the noteholders to foreclose upon the Company assets, force
the Company into bankruptcy, or its secured note holders could
foreclose on the escrow and pledge of the Company's shares and
sell the shares on the open market, which is likely to cause a
significant drop in the price of the Company's stock.
The Company says that it may be unable to repay, repurchase or
restructure the Secured Convertible Notes due in March 2006 and
convertible subordinated notes due in September 2005 and September
2008 and be forced into bankruptcy. A default on its convertible
notes due Sept. 13, 2005, would cause a cross-default on its
convertible notes due March 2006 and September 2008. In the event
of a default, the holders of our secured convertible notes have
the right to foreclose on all of our assets, which could force us
to curtail or cease our business operations.
Standby Equity Distribution Agreement
On March 30, 2005, the Company executed a Standby Equity
Distribution Agreement with Cornell Capital Partners. Under the
SEDA, including without limitation limitations relating to timing
and amounts of draws and certain AMEX shareholder approval
requirements, the Company may issue and sell to Cornell Capital
Partners common stock for a total purchase price of up to a
maximum of $15,000,000.
The purchase price for the shares is equal to their market price,
which is defined in the SEDA as 98% of the lowest volume weighted
average price of the common stock during a specified period of
trading days following the date notice is given by the Company
that it desires to access the SEDA.
Further, the Company has agreed to pay Cornell Capital Partners,
L.P. 3.5% of the proceeds that it receives under the SEDA. The
amount of each draw down is subject to a maximum amount of
$1,000,000. The terms of the SEDA do not allow the Company to
make any draw downs if the draw down would cause Cornell Capital
to own in excess of 9.9% of the Company's outstanding shares of
common stock.
Based on the number of shares of common stock currently
outstanding, at volume weighted average price of $1.55, the
Company could sell to Cornell Capital approximately $2,700,000 of
its common stock subject to the 9.9% limitation. Thus, in order
for the Company to receive all the funding available under the
SEDA and have the financial resources it needs for operations and
debt service, Cornell Capital must sell through to the market a
significant portion of the shares it purchases under the
arrangement.
Upon closing of the transaction, Cornell Capital Partners received
a one-time commitment fee of 146,500 shares of the Company's
common stock. As of the same date, the Company entered into a
Placement Agent Agreement with Newbridge Securities Corporation, a
registered broker-dealer. Pursuant to the Placement Agent
Agreement, the Company paid a one-time placement agent fee of
3,500 shares of common stock. If the Company is unable to adhere
to the terms of the SEDA, it will not be able to make any draws
upon the SEDA.
Securities Purchase Agreement
In addition, as of March 30, 2005, the Company executed a
Securities Purchase Agreement with Cornell Capital Partners and
Highgate House Funds. Under the Securities Purchase Agreement,
Cornell Capital Partners and Highgate House Funds purchased an
aggregate of $2,633,000 principal amount of Secured Convertible
Notes from the Company (net proceeds to the Company of
$2,300,000).
The Secured Convertible Notes accrue interest at a rate of 7% per
year and mature 12 months from the issuance date with scheduled
monthly repayment commencing on Nov. 1, 2005, to the extent that
the Secured Convertible Note has not been converted to common
stock. The Secured Convertible Note is convertible into the
Company's common stock at the holder's option any time up to
maturity at a conversion price equal to $4.00.
The Secured Convertible Notes are secured by all of the assets of
the Company. The Company has the right to redeem the Secured
Convertible Notes upon three business days notice for 110% of the
amount redeemed. Pursuant to the Securities Purchase Agreement,
the Company issued to the holders an aggregate of 50,000 shares of
common stock of the Company.
Access Pharmaceuticals, Inc. is an emerging pharmaceutical company
focused on developing both novel low development risk product
candidates and technologies with longer-term major product
opportunities. Access markets Aphthasol(R) and is developing
products for other oral indications. Access is also developing
unique polymer platinates for use in the treatment of cancer and
has an extensive portfolio of advanced drug delivery technologies
including vitamin mediated targeted delivery, oral delivery, and
nanoparticle aggregates.
At June 30, 2005, Access Pharmaceuticals, Inc.'s balance sheet
showed a $12,285,000 stockholders' deficit, compared to a
$6,661,000 deficit at Dec. 31, 2004.
ACCESS PHARMA: June 30 Balance Sheet Upside-Down by $12 Million
---------------------------------------------------------------
Access Pharmaceuticals, Inc. (AMEX: AKC) reported results for the
second quarter ended June 30, 2005. The Company reported a net
loss of $3,786,000 for the second quarter and a $6,208,000 net
loss for the six-month period ended June 30, 2005. The company
posted losses in 2004 too.
Revenue in the second quarter of 2005 was $249,000 compared to
$68,000 in the same quarter of 2004, reflecting an increase of
$201,000 in product sales, offset by a $20,000 decrease in
licensing revenues. For the six month period, revenue increased
to $404,000 compared with $88,000 in the same period in 2004,
reflecting an increase of $318,000 in product sales and $11,000 in
royalty income, offset by a $13,000 decrease in licensing
revenues.
Other income (expense) for the second quarter of 2005 was a loss
of $435,000 compared with a loss of $377,000 in the same quarter
in 2004. Other income (expense) for the first six months of 2005
was a loss of $738,000 compared with a loss of $664,000 in the
same period in 2004. The increased loss was due to additional
interest and amortization of debt costs due to the Secured
Convertible Notes.
AMEX Noncompliance
The Company's common stock was not in compliance with the AMEX
stockholders' equity standard as of June 30, 2005. However, the
Company has until December 31, 2005 to become compliant with such
equity standard.
Commenting on the results, spokesperson Stephen B. Thompson, Vice
President & CFO of Access, stated, "We currently have liquid
assets to allow us to continue operations through August 31, 2005.
Operating expenses were higher than with our 2005 plan due to the
separation expenses with our former CEO and a one-time royalty
license expense.
During the remainder of this year we expect expenses to decrease
as a result of staff reductions in August 2005, the closing of our
Australia laboratory and reduction in non-critical project costs.
We have negotiations underway with holders of our Convertible
Notes which are due September 13, 2005. We are working to maintain
the Company's priority projects and protect the Company's assets.
We anticipate a conference call in the next few weeks to announce
new business developments."
Access Pharmaceuticals, Inc. is an emerging pharmaceutical company
focused on developing both novel low development risk product
candidates and technologies with longer-term major product
opportunities. Access markets Aphthasol(R) and is developing
products for other oral indications. Access is also developing
unique polymer platinates for use in the treatment of cancer and
has an extensive portfolio of advanced drug delivery technologies
including vitamin mediated targeted delivery, oral delivery, and
nanoparticle aggregates.
At June 30, 2005, Access Pharmaceuticals, Inc.'s balance sheet
showed a $12,285,000 stockholders' deficit, compared to a
$6,661,000 deficit at Dec. 31, 2004.
ACTIVANT SOLUTIONS: S&P Puts B+ Debt Rating on Watch Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' corporate
credit and senior unsecured debt ratings on Austin, Texas-based
Activant Solutions Inc. on CreditWatch with negative implications.
The CreditWatch listing follows the announcement that Activant
will acquire Prophet 21, a leading technology solutions provider
to the wholesale distribution market, for approximately $215
million.
"The CreditWatch listing reflects the increased pace of
acquisition activity by Activant, combined with uncertainty
surrounding the financing plans for this acquisition," said
Standard & Poor's credit analyst Ben Bubeck.
While S&P's ratings on Activant historically have incorporated its
expectation for acquisition activity, the acquisition of Speedware
Corporation for approximately $100 million in March 2005 consumed
much of Activant's debt capacity at the current rating. Pro forma
for the Speedware Acquisition, Activant had operating lease-
adjusted total debt to EBITDA in the mid-4x area as of June 2005.
Although the terms of the acquisition are not currently known,
leverage will increase to the mid-5x area following the
acquisition of Prophet 21, if largely debt financed and at a
similar cash flow multiple to Speedware. Activant filed for an
IPO in June, but has not followed through as of yet.
Standard & Poor's will meet with management to discuss financing
plans for the acquisition, Activant's operating performance,
integration plans and future acquisition strategy to resolve the
CreditWatch listing.
AEGIS COMMS: June 30 Equity Deficit Widens to $20.9 Million
-----------------------------------------------------------
Aegis Communications Group, Inc. (OTC Bulletin Board: AGIS)
reported its results for the second quarter of 2005.
For the quarter ended June 30, 2005, revenues from continuing
operations were $15,800,000 versus $26,300,000 in the second
quarter 2004, a decrease of $10,500,000 or 39.9%. For the six
months ended June 30, 2005, revenues from continuing operations
were $31,400,000, 43.8% lower than the $55,900 of revenues
generated by the Company in the prior year comparable period.
The decrease in revenues for the three and six months ended June
30, 2005 versus the prior year same period resulted from a number
of factors. First, the decision at the end of June 2004 by AT&T
to discontinue its outbound acquisition services accounted for 58%
of the decrease in revenue billings on their campaigns.
Additionally the call volumes for certain clients were impacted
due to a higher than usual attrition rates of our call center
agents at some of our sites during the second quarter 2005.
EBITDA loss for the second quarter of 2005 was $1,900,000 as
compared to our EBITDA loss of $5,600,000 in the prior year second
quarter. The Company's EBITDA loss of $1,900,000 for the second
quarter 2005 compares favorably with our EBITDA loss for the
first quarter 2005 of $2,200,000.
For the six months ended June 30, 2005, the Company generated an
EBITDA loss of $4,100,000 as compared to an EBITDA loss of
$7,000,000 for the six months ended June 30, 2004. Though
revenues were down during the first six months of 2005, the EBITDA
loss reduction is a result of the cost savings the Company has
accomplished through the reduction of staff and the outsourcing of
certain of its operations to lower-priced labor markets.
The Company has also shed its cash drain of severance expenses
paid to former management team members from prior years, which has
added a lift to the Company's current EBITDA picture. Though much
work still needs to be done in turning around the Company's
operations on the revenue side and growing our business, we are
optimistic that the Company has now bottomed out and that our
current business prospects point to an upward curve and EBITDA
profitability before the end of the 2005 fiscal year.
Regarding the Company's second quarter performance, Kannan
Ramasamy, the Company's President and Chief Executive Officer,
commented that "We have spent considerable time shoring up our
client relationships and revenue positions, as well as working to
bring variable costs in line with those stable revenue drivers,"
said Kannan Ramasamy, President and Chief Executive Officer of the
Company. "Not only have we moved certain quality assurance and
operational quality audits offshore, we are moving forward with
transitioning information technology services, finance,
accounting, human resource and payroll services offshore, allowing
us to gain further cost savings and provide us with a competitive
advantage within our industry."
Aegis Communications Group, Inc. -- http://www.aegiscomgroup.com/
-- is a worldwide transaction-based business process outsourcing
Company that enables clients to make customer contact programs
more profitable and drive efficiency in back office processes.
Aegis' services are provided to a blue chip, multinational client
portfolio through a network of client service centers employing
approximately 2,200 people and utilizing approximately 2,700
production workstations.
As of June 30, 2005, Aegis Communications' equity deficit widened
to $20,898,000 from a $12,061,000 deficit at Dec. 31, 2004.
ALLIED HOLDINGS: Court Grants Injunction Against Utility Companies
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The Honorable W. Homer Drake of the U.S. Bankruptcy Court for the
Northern District of Georgia grants Allied Holdings, Inc., and its
debtor-affiliates request to:
a) deem utilities adequately assured of payment for
postpetition services;
b) prohibit utilities from altering, refusing, or
discontinuing services to the Debtors on account of the
commencement of their bankruptcy cases or the non-payment
of prepetition invoices; and
c) establish certain procedures for resolving requests for
additional assurance.
Judge Drake rules that a Utility Company may make a written
request for additional adequate assurance on or before August 28,
2005. Any Utility Company that fails to submit a timely Request
will be deemed adequately assured of payment for postpetition
services.
For timely filed Requests that the Debtors believe are reasonable,
the Debtors will be entitled to comply and provide the additional
adequate assurance requested. But if the Debtors believe that the
Request is unreasonable and the parties can't consensually resolve
their dispute within 30 days, the Debtors will file a motion for
determination of adequate assurance of payment with the Court.
Section 366(a) of the Bankruptcy Code provides that a utility may
not alter, refuse, or discontinue service to, or discriminate
against, the trustee or the debtor solely on the basis of the
commencement of a Chapter 11 case or that a debt owed by the
debtor to the utility for service rendered before the order for
relief was not paid when due.
In the normal conduct of their businesses, the Debtors have
relationships with over 150 utility companies for the provision
of telephone, electric, gas, water, sewer, waste management, and
other services.
The Utility Companies are paid one of two ways -- either directly
by the Debtors or by C.C. Pace Resources, Inc., on the Debtors'
behalf pursuant to an energy trustee program agreement.
Regardless of whether the Utility Companies are paid directly by
them or by C.C. Pace, the Debtors are the entities, which receive
the benefit of the utility services being provided.
Pursuant to Section 366(b) of the Bankruptcy Code, utilities may
alter, refuse, or discontinue service if the debtor does not,
within 20 days after the date of the order for relief, furnish
adequate assurance payment, in the form of a deposit or other
security, for service after the date.
James C. Cifelli, Esq., at Lamberth Cifelli Stokes & Stout, P.A.,
Atlanta, Georgia, asserts that it is impracticable and entirely
unnecessary to require the Debtors to provide new security
deposits to the utility companies in light of the administrative
priority provided to the Utilities under Sections 503(b) and
507(a)(I) of the Bankruptcy Code and the circumstances of their
cases.
Postpetition utility charges are actual and necessary expenses of
preserving the Debtors' estates under Section 503(b)(1)(A), Mr.
Cifelli relates.
The large number of Utility Companies and their various locations
make it impracticable for the Debtors to contact all of the
Utility Companies within the 20-day period and to obtain
assurances that they will not discontinue services, Mr. Cifelli
argues.
"If the utility companies were permitted to terminate services
twenty days after the Petition Date, the Debtors might be forced
to cease doing business because continued, uninterrupted utility
service to the terminals throughout the United States and Canada,
from which all day-to-day business operations of the Debtors are
conducted, is absolutely necessary to continue such business
operations," Mr. Cifelli maintains.
Mr. Cifelli attests that the Debtors have a satisfactory history
of payment for prepetition utility invoices.
Mr. Cifelli adds that the Debtors have no defaults or arrearages
with respect to undisputed utility services, other than payment
interruptions that may have been inadvertently caused by the
commencement of their Chapter 11 cases.
The Debtors assure the Court that they will be able to continue
paying for all the postpetition utility services from the
proceeds of their operations, available cash on hand, and funds
generated under their proposed debtor-in-possession credit
facility.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case No. 05-12515). Jeffrey W. Kelley, Esq., at Troutman Sanders,
LLP, represents the Debtors in their restructuring efforts. When
the Debtors filed for protection from their creditors, they
estimated more than $100 million in assets and debts. (Allied
Holdings Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ALLIED HOLDINGS: Court Okays Ordinary Course Professionals Hiring
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia
gave Allied Holdings, Inc., and its debtor-affiliates permission
to continue employing ordinary course professionals.
The ordinary course professionals will render services including:
(a) routine litigation;
(b) collection services;
(c) acquisitions, divestitures, and other corporate services;
(d) counsel and representation regarding transportation
matters;
(e) counsel and representation regarding insurance matters;
(f) counsel and representation regarding labor and employment
matters;
(g) counsel and representation regarding real estate matters;
(h) actuarial services; and
(i) other matters requiring the expertise and assistance of
professionals.
The Debtors maintain substantial operations in various locations
within the United States and Canada. As a result, before the
Petition Date, the Debtors utilized a number of Ordinary Course
Professionals to provide the services required on a day-to-day
basis to manage their affairs.
The Debtors inform the Court that, in light of the costs
associated with the preparation of employment applications for
professionals who will receive relatively small fees, it is
impractical and cost inefficient for them to submit individual
applications and proposed retention orders for each of the
Ordinary Course Professionals.
Accordingly, the Debtors ask the Court to dispense with the
requirement of individual employment applications, fee
applications and retention orders with respect to each Ordinary
Course Professional. The Debtors further seek the Court's
authority to employ Ordinary Course Professionals from time to
time as their services are needed.
The Debtors propose that each Ordinary Course Professional be
required to file an affidavit setting forth that they do not
represent or hold any interest adverse to the Debtors or their
estates.
The Debtors assure the Court that they will not make any payment
to any Ordinary Course Professional until the professional has
filed a Retention Affidavit.
The Debtors also seek the Court's authority to pay each Ordinary
Course Professional, without a prior application to the Court
being filed by the professional, 100% of the fees and
disbursements incurred, upon the submission to, and approval by
the Debtors of an appropriate invoice setting forth in reasonable
detail the nature of the services rendered and the fees and
disbursements actually incurred.
The Debtors stress that if any professional's fees and
disbursements exceed $25,000 per month, then the payments to the
professional for the excess amounts will be subject to prior
Court approval in accordance with Sections 330 and 331 of the
Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the
Local Rules of the Bankruptcy Court and Court orders.
The Debtors further propose that every 60 days, they will file a
statement with the Court and serve the statement on the Office of
the United States Trustee for the Northern District of Georgia
and the attorneys for the Official Committee of Unsecured
Creditors, certifying their compliance with the terms of the OCP
Motion.
The statement will include the name of the Ordinary Course
Professional and the aggregate amounts paid as compensation for
services rendered and as reimbursement of expenses incurred by
them during the preceding 60 days, and a list of all additional
professionals that are retained or utilized after the Petition
Date.
The Debtors believe that although certain of the Ordinary Course
Professionals may hold unsecured claims against them in respect
of prepetition services rendered to them, those claims, if any
are relatively small and inconsequential to their reorganization
efforts.
The Debtors do not believe that any Ordinary Course Professional
has an interest materially adverse to the Debtors, their
creditors, or other parties-in-interest.
The Debtors point out that the proposed ordinary course retention
and payment procedures will not apply to those professionals for
whom the Debtors have filed separate applications for approval of
employment.
Furthermore, the Debtors insist that relieving the Ordinary
Course Professionals of the requirement of preparing and
prosecuting fee applications will save the estates from
additional professional fees and expenses. Likewise, the Debtors
note, the Court and the United States Trustee will be spared from
having to consider numerous fee applications involving relatively
modest amounts of fees and expenses.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case No. 05-12515). Jeffrey W. Kelley, Esq., at Troutman Sanders,
LLP, represents the Debtors in their restructuring efforts. When
the Debtors filed for protection from their creditors, they
estimated more than $100 million in assets and debts. (Allied
Holdings Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ALLIED HOLDINGS: Hires Kekst and Co. as Communications Consultant
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia
allowed Allied Holdings, Inc., and its debtor-affiliates to
retain, on an interim basis, Kekst and Company, Inc., as their
corporate communications consultant in accordance with a letter
agreement dated June 24, 2005.
Kekst is a corporate and financial communications firm serving
publicly traded and private enterprises around the world. Founded
in 1970, Kekst has more than three decades of experience advising
clients faced with complex and demanding business challenges and
opportunities in which effective communications planning and
execution are essential.
Kekst has developed and helped implement communications strategies
for a wide range of companies involved in restructurings,
recapitalizations and bankruptcy filings, including several of the
largest and most complex Chapter 11 cases in United States
history.
Specifically, the Debtors expect Kekst to:
(a) develop and implement a comprehensive communications
program designed to ensure:
* that all key constituents receive accurate, useful
and credible information;
* the maintenance of management's integrity and
credibility; and
* the preservation of the Company's value;
(b) assist them in the drafting or editing of any materials
for communications with internal and external
constituents, as well as serving, at their discretion, as
spokespersons with the media, investors and other parties;
and
(c) assist them in the orderly effectuation of their Chapter
11 cases as well as defining the reorganized Debtors'
identities.
Michael Freitag, an employee and shareholder of Kekst, tells
Judge Drake that his firm is a "disinterested person" as defined
in Section 101(14) of the Bankruptcy Code, in that, except as
otherwise disclosed, Kekst, its officers and employees:
(a) are not creditors, equity holders, or insiders of the
Debtors;
(b) are not and were not investment bankers for any
outstanding security of the Debtors;
(c) have not been, within three years before the Petition
Date, (i) investment bankers for a security of the
Debtors, or (ii) an attorney for an investment banker
in connection with the offer, sale, or issuance of a
security of the Debtors;
(d) are not and were not, within two years before the Petition
Date, a director, officer, or employee of the Debtors or
an investment banker; and
(e) have not represented any party in connection with matters
relating to the Debtors.
The Debtors have paid Kekst a $140,000 retainer to be maintained
during their Chapter 11 cases and applied in accordance with
future Court orders. Before the Petition Date, Kekst applied
prepetition fees and expenses against the retainer.
The current standard hourly rates of professionals in Kekst's
restructuring group range from $175 to $675 for certain senior
professionals.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case No. 05-12515). Jeffrey W. Kelley, Esq., at Troutman Sanders,
LLP, represents the Debtors in their restructuring efforts. When
the Debtors filed for protection from their creditors, they
estimated more than $100 million in assets and debts. (Allied
Holdings Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AMERISTAR CASINOS: Moody's Rates $1.2 Billion Facilities at Ba3
---------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Ameristar
Casinos, Inc.'s $1.2 billion senior secured credit facilities
comprised of an $800 million revolver due 2010 and a $400 million
term loan B due 2012. Moody's also affirmed Ameristar's existing
ratings, and revised the ratings outlook to positive from stable.
Proceeds from the new term loan will be used to refinance the
existing $353.1 million term loan B-1. The revolving portion of
the new credit facility will be undrawn at the close of the
transaction, however it is expected that a portion of the
availability will be used to redeem the company's outstanding $380
million 10.75% senior subordinated notes when the notes become
callable in February 2006.
The similarity between Ameristar's corporate family rating and
senior secured bank loan rating reflects the significant amount of
secured debt in the pro forma capital structure. Ameristar has
the ability to increase the credit facilities by an additional
$400 million throughout the life of the credit facilities.
Ameristar's ratings reflect its strong market share positions and
high consolidated EBITDA margin. The company has a:
a) leading market share in the:
* Kansas City, Missouri;
* Council Bluffs, Iowa; and
* Vicksburg, Mississippi gaming markets;
b) and a number two market position in the:
* St. Louis, Missouri gaming market.
This strong market position has contributed to the company's
relatively high EBITDA margins. EBITDA as a percent of net
revenues for the 12-month period ended June 30, 2005 was slightly
over 27%, approximately 2 to 3 percentage points higher than most
of its peer group. The ratings also consider Ameristar's
relatively low leverage. Debt/EBITDA for the most recent 12-month
period was about 3.0x.
Key credit concerns include Ameristar's significant concentration
in Missouri, which currently accounts for close to 60% of the
company's property-level EBITDA, and the expectation that leverage
will increase over the next 12-18 month period as the company
begins substantial expansion activities later this year in
Colorado and Vicksburg, which will be followed by a significant
expansion in St. Louis, the timing and amount of which have yet to
be determined. The rating also considers the likelihood that
Ameristar, like other gaming companies, will continue to pursue
growth through acquisition opportunities.
The revision of the ratings outlook to positive from stable
reflects continued improvement in Ameristar's overall operating
results and expectation that re-branding efforts in Colorado will
be successful. Additionally, the likely redemption of the
company's high coupon senior subordinated notes when they become
callable in February 2006, will significantly reduce the company's
overall cost of capital. These factors, coupled with a
continuation of the company's conservative financial policy, could
result in a ratings upgrade over the intermediate term.
These new ratings were assigned:
* $800 million senior secured revolver due 2010 - Ba3; and
* $400 million senior secured term loan B due 2012 - Ba3.
Ameristar Casinos, Inc. (NASDAQNM: ASCA) owns and operates seven
hotel/casinos in six markets. The company's portfolio of casinos
consists of :
* Ameristar St. Charles (St. Louis market);
* Ameristar Kansas City;
* Ameristar Council Bluffs (Omaha market);
* Ameristar Vicksburg;
* Mountain High Casino (Denver market); and
* Cactus Petes and the Horseshu in Jackpot, Nevada (Idaho
market).
For the 12-month period ended June 30, 2005, Ameristar reported
net revenues of $909.3 million.
ARROW ELECTRONICS: Improved Performance Prompts Fitch's Upgrade
---------------------------------------------------------------
Fitch Ratings has upgraded Arrow Electronics, Inc., senior
unsecured notes to 'BB+' from 'BB' and established a 'BB+' rating
for the company's senior unsecured bank credit facility. The
Rating Outlook is Stable. Fitch's action affects approximately
$1.3 billion of debt.
The upgrade and Stable Outlook reflect Arrow's stronger credit
protection measures from ongoing debt reduction and more
consistent and modestly improved operating performance. While
semiconductor market growth has clearly slowed from 2003-2004
levels, driving utilization rates lower over the past year,
operating margins remain at approximately 4% due to lower
operating expenses resulting from past restructuring activities.
At the same time, Arrow continues to reduce its working capital-
to-sales ratio, contributing to positive free cash flow during the
recent growth period. The company has reduced debt over the past
year by repurchasing approximately $180 million accreted value of
zero-coupon convertible debentures due 2021 (putable in February
2006) through a series of open market transactions. Fitch
believes further debt reduction is possible over the next two
years, as approximately $200 million accreted value of the
debentures are outstanding and $200 million of 7% senior notes
mature in 2007, which Fitch anticipates can be funded from free
cash flow. As a result, Fitch believes that Arrow's credit
protection measures will remain stable and may improve. Total
debt adjusted for rental expense to operating EBITDAR is expected
to remain below 4 times (x) and interest coverage above 5x.
The ratings still consider Arrow's exposure to the cyclical demand
patterns and volatile cash flows associated with the semiconductor
market (55%-60% of sales); the significant investment levels
required of Arrow to increase its share in the faster growing
Asia-Pacific region; Arrow's historical use of debt-financed
acquisitions to consolidate the North American components
distributor market; and thin operating margins for the components
distributors, which Fitch believes will remain below historical
levels in spite of ongoing efforts to expand higher margin service
offerings.
Positively, Arrow's ratings are supported by the company's leading
market positions; meaningfully improved working capital
management, as well as a demonstrated ability to generate
significant cash flow from working capital during a downturn; a
well diversified supplier and small- to medium-size customer base;
and continued growth of the more stable computer products segment.
In addition, Fitch believes the components distributors are
increasingly important to the electronics supply chain, as
suppliers have stated their intention to increase the percentage
of total sales through the distribution channel, thereby
efficiently reaching the highly profitable SMB market.
Fitch believes Arrow remains committed to its emphasis on organic
rather than inorganic growth, especially within overseas markets.
However, Fitch considers the significant investment levels
required of Arrow to increase its approximately 12% share of the
faster growing Asia-Pacific market, which may reduce cash
available for debt reduction. Furthermore, Fitch believes smaller
acquisitions, in either Asia-Pacific or Europe, are possible.
Nonetheless, Arrow has improved its free cash flow generation
profile by reducing working capital to sales to approximately
$0.20 for the latest 12 months ended July 1, 2005, from $0.22 for
the prior year.
Further improvements are possible, given that Avnet, Inc.'s,
Arrow's main competitor, working capital to sales ratio for the
fiscal year ended July 2, 2005, was approximately $0.18; however,
Fitch notes that Arrow's comparatively lower exposure to the
faster turning enterprise computing distribution business somewhat
limits opportunities for improvement. Due to higher funds from
operations and improved working capital management, Arrow
generated approximately $550 million of free cash flow for the LTM
ended July 1, 2005, supporting Fitch's belief that distributors
can grow up to 10% and still generate free cash flow. Given
expectations for a more muted semiconductor demand environment,
Fitch believes the company can also support smaller acquisitions
with free cash flow.
As of July 1, 2005, liquidity was solid and consisted of
approximately $616 million of cash and cash equivalents, an
undrawn $600 million senior unsecured bank credit facility
expiring in 2010, and an undrawn $550 million accounts receivable
securitization facility expiring in 2006. Consistent annual free
cash flow also supports liquidity, which Fitch anticipates will be
approximately $200 million for fiscal 2005. Total debt at July 1,
2005, was approximately $1.4 billion and consisted primarily of:
the aforementioned zero-coupon debentures; approximately $200
million 7% senior notes due 2007; approximately $200 million 9.15%
senior debentures due 2010; $350 million 6.875% notes due 2013;
approximately $200 million 6.875% senior debentures due 2018; and
approximately $200 million 7.5% senior debentures due 2027.
AVIA ENERGY: Case Summary & 10 Largest Unsecured Creditors
----------------------------------------------------------
Lead Debtor: Avia Energy Development, LLC
c/o James C. Musselman, President
8401 North Central Expressway, Suite 280
Dallas, Texas 75225
Bankruptcy Case No.: 05-39339
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Avia de Mexico S. de R.l. de CV 05-39342
Chapter 11 Petition Date: August 18, 2005
Court: Northern District of Texas (Dallas)
Judge: Barbara J. Houser
Debtors' Counsel: Kimberly A. Elkjer, Esq.
Scheef & Stone, LLP
5956 Sherry Lane, Suite 1400
Dallas, Texas 75225
Tel: (214) 706-4200
Fax: (214) 706-4242
-- and --
Marvin R. Mohney, Esq.
Law Office of Marvin Mohney
900 Jackson Street, Suite 120
Dallas, Texas 75202
Tel: (214) 698-3011
Fax: (214) 698-9207
Total Assets Total Debts
------------ -----------
Avia Energy Development, LLC $2,298,509 $4,169,640
Avia de Mexico S. de R.l. de CV $2,298,509 $11,768,065
Consolidated List of the Debtors' 10 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Michael Farmar Mexican promissory $2,938,616
5210 Meaders Lane note ("pagare")
Dallas, TX 75229 dated 4/2/2003
allegedly issued by
Carlos Navarro
without authority.
Thomas O. Hicks 75% owner of $1,575,000
c/o Lewis T. LeClair, Esq. $2 million note
McKool Smith, P.C. dated 9/11/1998
300 Crescent Court, Suite 1500 The note was used
to fund start-up.
Inocencio De Leon Perez Mexican promissory $579,500
[address currently not known] note ["pagare"]
dated 2/20/2003
allegedly issued by
Carlos Navarro
without authority.
Jack D. Furst 25% owner of $525,000
c/o Lewis T. LeClair, Esq. $2 million note
McKool Smith, P.C. dated 9/11/1998.
300 Crescent Court, Suite 1500 Note was used to
Dallas, TX 75201 fund start-up
Jenkens & Gilchrist, P.C. Attorney's fees $148,524
Attn: Managing Shareholder
1445 Ross Avenue, Suite 3200
Dallas, TX 75202-2799
Otto Hugo Sampogna Villarreal Mexican promissory $42,000
[address currently not known] note ("pagare")
dated 2/20/2003
allegedly issued by
Carlos Navarro
without authority.
Travelers Property Casualty Subrogation claim $24,000
1301 East Collins Boulevard related to alleged
Suite 340 balance owed for
Richardson, TX 75081 payment of
judgment to Clay
Tank Trucks.
Calpine Corporation Calpine Corp. is Unknown
50 West San Fernando Street believed to be the
San Jose, CA 95113 successor by
merger to Gaz
Natural de Miguel,
Inc. which held a
$1.5 million note
issued in 1998.
Carlos Francisco Navarro Litigation claimant Unknown
4514 Cole Avenue, Suite 910 in suit to enforce
Dallas, TX 75205 conditional
settlement
agreement and
seeking money
damages.
Michael Farmar claims to share an Unknown
5210 Meaders Lane interest with
Dallas, TX 75229 Calpine Corp. in
a $1.5 million
note dated 12/14/98
payable to Gaz
Natural de Miguel, Inc.
AVNET INC: Fitch Affirms BB Rating on Senior Unsecured Debt
-----------------------------------------------------------
Fitch Ratings has revised the Rating Outlook on Avnet, Inc., to
Positive from Stable. The company's senior unsecured notes are
affirmed at 'BB', and Fitch has assigned a 'BB' rating to the
company's senior unsecured bank credit facility. Fitch's action
affects approximately $1.2 billion of debt.
The change in the Rating Outlook reflects Avnet's continued
positive momentum in credit protection measures, driven primarily
by improved and more consistent operating performance over the
past two years and, to a lesser extent, debt reduction. While
recognizing that Avnet's operating performance continues to lag
that of its direct competitor, Arrow Electronics, Inc., Fitch
believes Avnet's ongoing successful cost-restructuring activities
and increasing share of sales from its technology solutions
segment should lower future earnings volatility.
The Positive Rating Outlook also considers Avnet's recent
refinancing of $250 million of 8% senior notes due Nov. 15, 2006,
which the company will fund primarily with net proceeds from its
$250 million issuance of 6% senior notes due 2015. Fitch believes
that meaningful debt reduction and the resultant further
improvement in credit metrics, as well as exhibiting greater
operational consistency through the semiconductor cycle, will
enable Avnet to maintain adjusted leverage below 4 times (x) and
could result in positive rating action.
The ratings continue to consider Avnet's exposure to the cyclical
demand patterns and volatile cash flows associated with the
semiconductor market (55%-60% of sales); the significant
investment levels required of Avnet to increase market share in
the faster growing Asia-Pacific region; Avnet's propensity for
acquisitions; and Fitch's belief that operating margins for the
components distributors will remain thin and be challenged to
meaningfully increase, despite efforts to expand into higher
margin services.
The ratings are supported by the company's leading positions in
each of the aforementioned markets; meaningfully improved working
capital management, as well as a demonstrated ability to generate
significant cash flow from working capital during a downturn; a
well diversified supplier and small- to medium-size customer base;
and continued growth of the more stable technology solutions
segment, which has some supplier concentration to IBM (15%-20% of
total sales).
While the strong semiconductor demand growth of 2003-2004 has
meaningfully slowed, Avnet's operating margins increased to 2.9%
for the latest 12 month ended July, 2, 2005, from 2.5% for the
prior year, and more than doubled from 1.3% for the LTM ended June
27, 2003. Still, Fitch believes that operating margins for
components distributors will remain thin and continue to follow
cyclical patterns. Credit protection measures have improved in
each of the past eight quarters and are expected to strengthen
further in fiscal 2006, driven in part by incremental sales and
higher operating margins related to Avnet's recent acquisition of
Memec Group Holdings. Total debt adjusted for rental expense to
operating EBITDAR was 3.8x for fiscal 2005, ended July 2, 2005,
versus 4.7x for 2004 and 7.2x for 2003. At the same time,
interest coverage increased to 4.6x for fiscal 2005, versus 3.4x
and 2.0x for 2004 and 2003, respectively.
Total pro forma debt at July 2, 2005, was approximately $1.2
billion and consisted primarily of: $150 million of 8% senior
notes due Nov. 15, 2006; $475 million of 9-3/4% senior notes due
Feb. 15, 2008; $300 million of 2% convertible senior debentures
due March 15, 2034 (putable March 15, 2009); and $250 million of
6% senior notes due Aug. 19, 2015. Pro forma the debt issuance
and successful completion of the tender offer, Avnet has $600
million of debt maturities over the next three years, which Fitch
believes the company is capable of funding with free cash flow and
current cash balances. Nonetheless, Fitch recognizes that the
significant investment levels required of Avnet to increase its
approximately 13% share of the faster growing Asia-Pacific market,
including the potential for additional acquisitions, could reduce
cash available for debt reduction.
As of July 2, 2005, liquidity was sufficient to meet near-term
maturities and consisted of approximately $638 million of cash and
cash equivalents, an undrawn $350 million senior unsecured bank
credit facility expiring June 2007, and an undrawn $350 million
A/R securitization facility expiring August 2005, which Fitch
expects the company will renew. Positive annual free cash flow
has also supported liquidity, as Avnet generated more than $430
million during the LTM ended July 2, 2005 and more than $2.0
billion since fiscal 2000.
Aside from higher profitability, Avnet has reduced the number of
working capital dollars required to support $1 of sales to a
Fitch-estimated $0.18 for fiscal 2005, down from $0.20 in 2003.
As a result, cash conversion cycle days declined to a Fitch-
estimated 64 days for the fiscal year ended July 2, 2005, from 68
and 72 days for fiscal years 2004 and 2003, respectively.
Due to up-front working capital investments related to the Memec
acquisition, Fitch anticipates free cash flow will be slightly
negative in fiscal 2006. However, given the relatively subdued
semiconductor demand outlook over the near- to intermediate-term
and assuming the successful integration of Memec, Avnet is
expected to be free cash flow positive again in fiscal 2007, as
Fitch continues to believe that the components distributors are
able to internally fund growth rates of up to 10%.
BELDEN & BLAKE: Won't Buy Back Sr. Notes & Terminates Tender Offer
------------------------------------------------------------------
Belden & Blake Corporation terminated its previously announced
tender and consent solicitation to purchase for cash any and all
of its outstanding $192,500,000 aggregate principal amount of
8.75% Senior Secured Notes due 2012 (CUSIP Number 077447AE0). The
tender offer period expired on Aug. 15 without a sufficient amount
of notes having been tendered to meet the consent condition.
Accordingly, the Company will purchase no notes pursuant to the
tender offer. All tendered notes will be released to tendering
holders.
The termination of the tender offer should not affect the expected
acquisition of the parent company of Belden & Blake by certain
institutional funds managed by EnerVest Management Partners, Ltd.,
a Houston-based privately held oil and gas operator and
institutional funds manager.
Belden & Blake engages in the exploitation, development,
production, operation and acquisition of oil and natural gas
properties in the Appalachian and Michigan Basins (a region which
includes Ohio, Pennsylvania, New York and Michigan). Belden &
Blake is a subsidiary of Capital C Energy Operations, LP, an
affiliate of Carlyle/Riverstone Global Energy and Power
Fund II, L.P.
* * *
As reported in the Troubled Company Reporter on Apr. 7, 2005,
Moody's downgraded Belden & Blake's senior implied rating from B3
to Caa1 and its note rating from B3 to Caa2. The outlook is
changed to negative. The downgrade, which concludes Moody's
review that commenced on December 28, 2004, is a result of Moody's
review of the company's 10-K which confirmed the credit
deterioration through a combination of:
* a greater than expected reserve revision;
* poor capital productivity evidenced by drillbit F&D of
$62.23/boe (excluding revisions) and only replacing 15% of
production through extensions and discoveries;
* very high leverage on the proved developed (PD) reserves of
$7.64/boe;
* B&B's very high full cycle costs that are unsustainable long-
term; and
* the free cash flow drain from currently out-of-the-money
hedging that could otherwise be used for debt repayment or
reinvestment.
The notes are notched down from the senior implied rating due a
combination of:
* asset deterioration which impacts the coverage for the
bondholders;
* the increased use of the credit facilities (including L/C's)
to support underwater hedging; and
* the carveouts in the indenture that could permit additional
secured debt to be layered in ahead of the notes.
BEVERLY ENT: Inks $1.9 Bil. Merger Pact with North American Senior
------------------------------------------------------------------
Beverly Enterprises, Inc., (NYSE: BEV) and North American Senior
Care, Inc., entered into a definitive merger agreement under which
Beverly Enterprises will be acquired by North American Senior Care
for $12.80 per share in cash.
On a fully diluted basis, the transaction is valued at
approximately $1.9 billion, including the repayment of Beverly
Enterprises' net debt.
The BEI Board of Directors approved the transaction following the
conclusion of its publicly announced auction process that began
last March.
North American Senior Care (NASC) is an entity formed specifically
to engage in this transaction. The parties participating with
NASC in this transaction have substantial experience in the
acquisition and financing of nationwide healthcare providers and
their real estate portfolios. In 2004 they acquired Mariner
Health Care, also a publicly traded company, with more than 250
skilled nursing facilities in 27 states. In 2003 they acquired
the real estate portfolio of more than 130 skilled nursing
facilities in 23 states, formerly operated by Integrated Health
Services.
William R. Floyd, BEI Chairman and Chief Executive Officer, said:
"The sale process we undertook was a robust one that elicited
interest from several parties - and the North American Senior Care
bid offered the best combination of price, terms and conditions.
We believe this transaction fairly reflects for our stockholders
the many improvements we have made throughout BEI in recent years,
as well as our strong operating and financial momentum. In
particular, this is demonstrated by the more than 40 percent
premium to our share price during December of last year, which was
prior to the fluctuations caused by an unsolicited expression of
interest."
Mr. Floyd continued: "The sponsors of North American Senior Care
have a proven track record in our sector, and have demonstrated
the financial and regulatory ability to complete large-scale
acquisitions. They also share our commitment to providing high
quality patient care and to continuing the profitable growth of
our skilled nursing and eldercare service operations. We believe
this transaction is also in the best interests of our patients and
their families, as well as our associates whose dedication and
hard work have built BEI into the successful company it is today."
During the auction process, which was overseen by BEI's
independent Directors, 47 parties were contacted, and 33 of them
submitted initial expressions of interest in acquiring either all
or parts of BEI. Based on those initial expressions of interest,
BEI entered into confidentiality agreements with 24 of the
parties, giving them access to a comprehensive virtual data room
to conduct due diligence. Ten parties provided first-round
indications of price.
Leonard Grunstein, speaking for North American Senior Care, said:
"We are pleased to participate in the acquisition of an
outstanding company like BEI. We commend Bill Floyd and his team
on the dramatic turnaround they have achieved, as well as on the
strong foundation they have built for continued success in the
years ahead. We intend to keep BEI's headquarters and support
functions in Fort Smith and to retain BEI's eldercare service
businesses. We also are hopeful that key members of BEI
management will be a part of the bright future we see for the next
phase of the company's growth and development."
North American Senior Care's obligations under the merger
agreement are subject to the satisfactory completion of limited
confirmatory due diligence relating to real estate valuations by
August 23, 2005. Completion of the transaction, which is expected
to occur in early 2006, also is subject to the approval of BEI
shareholders, as well as customary legal conditions - including
receipt of certain regulatory, governmental and licensing
approvals.
The agreement contemplates that the financing of the transaction
will consist of approximately $320 million in equity provided by a
private investor group, together with approximately $1.325 billion
in debt financing from Wachovia Bank and $550 million in operating
loans from CapitalSource Financing LLC.
BEI was assisted in this transaction by Lehman Brothers and
JPMorgan as financial advisors and by Latham & Watkins LLP as
legal advisor. Covington & Burling served as legal advisor to the
BEI Board. CIBC World Markets Corp. also provided financial
advisory services to the BEI Board of Directors in connection with
the transaction.
North American Senior Care was assisted in this transaction by
Wachovia Securities LLC as financial advisor and Troutman Sanders
LLP as legal advisor.
A full-text copy of the Merger Agreement is available for free at:
http://ResearchArchives.com/t/s?e2
North American Senior Care and the parties participating with it
in the transaction have acquired and financed the acquisition of
approximately 400 skilled nursing facilities in over 35 states,
which are net leased to several first-class healthcare operators.
Beverly Enterprises, Inc., and its operating subsidiaries are
leading providers of healthcare services to the elderly in the
United States. At July 31, 2005, BEI operated 345 skilled nursing
facilities, as well as 18 assisted living centers, and 64
hospice/home care centers. Through Aegis Therapies, the company
offers rehabilitative services on a contract basis to nursing
facilities operated by other care providers.
* * *
As reported in the Troubled Company Reporter on Mar. 28, 2005,
Standard & Poor's Ratings Services placed its ratings on Beverly
Enterprises Inc. on CreditWatch with negative implications. The
CreditWatch listing reflects the announcement that Beverly's board
of directors has voted to sell the company through an auction
process. This is in response to the possibility that an investor
group, the Whitman/Appaloosa group, may take control of the
company if it is successful at the upcoming board elections at the
company's shareholder meeting in April. The CreditWatch listing
reflects the apparent likelihood that a sale of the company will
take place. Regardless of who acquires Beverly, it is likely that
the company's credit profile will weaken.
As reported in the Troubled Company Reporter, on June 16, 2004,
Standard & Poor's Ratings Services assigned its 'B' rating to
Beverly's the $225 million senior subordinated notes due 2014.
The existing ratings on the company were affirmed. The company's
bank facility, which is rated 'BB', or one notch above the 'BB-'
corporate credit rating, has been assigned a recovery rating of
'1'.
As reported in the Troubled Company Reporter on Mar. 28, 2005,
Moody's Investors Service affirmed the ratings of Beverly
Enterprises, Inc., and changed the outlook to developing. This
action follows the announcement by Beverly that its Board of
Directors voted unanimously to pursue the sale of the company
through an auction process. This announcement follows the
expression of interest from and ensuing proxy battle with the
Whitman/Appaloosa investor group.
These ratings were affirmed:
* Senior implied rating, Ba3
* Senior unsecured issuer rating, B1
* $90 million senior secured revolving credit facility
due 2007, Ba3
* $135 million senior secured term loan B due 2008, rated Ba3
* $215 million 7.875% senior subordinated notes due 2014,
rated B2
* $115 million 2.75% convertible subordinated notes, rated B2
As reported in the Troubled Company Reporter on Mar. 24, 2005,
Fitch Ratings has placed Beverly Enterprises, Inc. on Rating Watch
Evolving. Beverly's Board of Directors announced they were
putting the company up for sale. Beverly is currently in the
midst of a Proxy contest with a group led by Formation Capital,
LLC, which includes a host of investors that have collectively
acquired 8.1% of BEV common shares. Formation has provided an
indication of interest of $11.50 per share of BEV common stock, or
approximately $1.8 billion.
Fitch's ratings on Beverly affected by this action include:
-- Secured bank facility 'BB';
-- Senior unsecured debt (indicative) 'BB-';
-- Senior secured subordinated notes 'B+';
-- Senior subordinated convertible notes 'B+'.
BEVERLY ENT: Fitch Puts Low-B Rated Certs. on Watch Evolving
------------------------------------------------------------
Fitch's ratings on Beverly Enterprises, Inc., will remain on
Rating Watch Evolving following the announcement that Beverly has
entered into a definitive merger agreement with North American
Senior Care for $12.80 per share.
On a fully diluted basis the transaction is valued at
approximately $1.9 billion including the expected repayment of
Beverly's net debt. The transaction is expected to be funded with
approximately $320 million in equity from a private investor
group, $1.325 billion in debt financing from Wachovia Bank, and
$550 million in operating loans from Capital Source Financing,
LLC.
Beverly's ratings will remain on Rating Watch Evolving as the
merger process unfolds, as the transaction remains contingent upon
Beverly shareholder approval, customary legal and regulatory
approvals, and the final securing of the intended financing. The
transaction is expected to close in early 2006. Assuming the
transaction is completed under the terms currently identified and
Beverly's debt is repaid as expected, Fitch would withdraw its
ratings on Beverly.
At June 30, 2005, Beverly's outstanding debt was $552 million and
cash was $213 million.
Beverly's ratings include:
-- Secured bank facility 'BB';
-- Senior unsecured debt (indicative) 'BB-';
-- Senior secured subordinated notes 'B+';
-- Senior subordinated convertible notes 'B+'.
CENTURY ALUMINUM: Stockholders Authorize Issue of 100 Mil. Shares
-----------------------------------------------------------------
Century Aluminum Company's shareholders approved the proposal to
amend the Company's Restated Certificate of Incorporation.
The number of shares of Century Aluminum's common stock authorized
for issuance is now increased from 50 million to 100 million with
a par value of $0.01 per share.
As of June 29, 2005, there were 32,149,154 shares of common stock
issued and outstanding, 728,566 shares reserved for issuance upon
the exercise of outstanding stock options and the vesting of
performance shares units awarded under the Company's 1996 Stock
Incentive Plan and the Non-Employee Directors' Stock Option Plan.
In addition, 1,097,732 shares remained available for issuance
under the Company's 1996 Stock Incentive Plan and the Non-Employee
Directors' Stock Option Plan. As a result, as of June 29, 2005, a
total of 33,975,452 shares of common stock had been issued or
reserved for issuance and only 16,024,548 authorized shares
remained available.
A full-text copy of the Restated Certificate of Incorporation is
available for free at http://ResearchAarchives.com/t/s?dd
Century Aluminum Co. owns 615,000 metric tons per year (mtpy) of
primary aluminum capacity. The company owns and operates a
244,000-mtpy plant at Hawesville, Kentucky, a 170,000-mtpy plant
at Ravenswood, West Virginia, and a 90,000-mtpy plant at
Grundartangi, Iceland. Century also owns a 49.67-percent interest
in a 222,000-mtpy reduction plant at Mt. Holly, South Carolina.
Alcoa Inc. owns the remainder and is the operating partner.
Century's corporate offices are located in Monterey, California.
* * *
As reported in the Troubled Company Reporter on Dec. 7, 2004,
Moody's Investors Service assigned a B1 rating to Century Aluminum
Company's $175 million senior unsecured convertible notes due
2024.
These ratings were affirmed:
* The Ba3 rating for Century's $100 million senior secured
revolving credit facility,
* The B1 rating for Century's $250 million 7.5% senior notes
due 2014
* Century's B1 senior implied rating, and
* Century's B3 senior unsecured issuer rating.
As reported in the Troubled Company Reporter on Nov. 9, 2004,
Standard & Poor's Ratings Services raised its rating on Century
Aluminum Company's $150 million 1.75% convertible notes due 2024
to 'BB-' from 'B' and removed it from CreditWatch. At the same
time, Standard & Poor's affirmed its 'BB-' corporate credit rating
on the Monterey, California-based company.
CENTURY ALUMINUM: Shareholders Okay Stock Option & Incentive Plans
------------------------------------------------------------------
Century Aluminum Company's shareholders approved these matters
during their annual meeting of stockholders held on Aug. 10, 2005:
* proposals to amend and restate the Company's 1996 Stock
Incentive Plan; and
* proposals to amend and restate the Company's Non-Employee
Directors' Stock Option Plan.
Restated 1996 Plan
Under the terms of the Restated 1996 Plan, Century Aluminum is
authorized to make awards of performance share units and to grant
stock options that qualify as incentive stock options (ISOs) under
Section 422 of the Code and nonqualified stock options (NQSOs) to
salaried officers and other salaried key employees of the Company
and its subsidiaries who are in a position to affect materially
the profitability and growth of the Company and its subsidiaries.
The Company has in the past used, and intends in the future, to
use stock options and performance share units as incentives to
motivate and compensate its salaried officers and other salaried
key employees. Non-employee directors are also eligible for
awards under the Restated 1996 Plan, which enables the Company to
attract and retain outside directors of the highest caliber and
experience and to provide an incentive for such directors to
increase their proprietary interest in the Company's long-term
success.
Restated Directors' Plan
The Restated Directors Plan:
* permits options granted to non-employee directors to be
exercised in any legally permissible manner set forth by the
Board of Directors;
* permits options to be exercised after an option holder ceases
to be director until the earlier of:
(i) three years after the date on which the option holder
ceases to be a director,
(ii) 10 years after the date of the option grant, and
(iii) the expiration date of the option;
* permits any options that are outstanding on or after
December 31, 2004, to continue to vest up to one full year
after an option holder ceases to be a director if the option
holder ceases to be a director after reaching "normal
retirement age," as defined under the Company's employee
retirement plan;
* removes a provision that was required under previous law, but
no longer required, prohibiting the amendment of the
Directors' Plan more than once within six months;
* permits the number of shares available for grant under the
Directors' Plan to be increased by the number of shares that
are not issued upon the exercise of an option for any reason,
including in connection with a net exercise to pay the
exercise price (to the extent permitted by the Board; and
* provides the Board of Directors with greater flexibility in
determining which transactions or events constitute a "Change
of Control".
A full-text copy of the Restated and Amended 1996 Stock Incentive
Plan is available for free at http://ResearchArchives.com/t/s?de
A full-text copy of the Restated and Amended Non-Employee
Directors Stock Option Plan is available for free at
http://researcharchives.com/t/s?df
Century Aluminum Co. owns 615,000 metric tons per year (mtpy) of
primary aluminum capacity. The company owns and operates a
244,000-mtpy plant at Hawesville, Kentucky, a 170,000-mtpy plant
at Ravenswood, West Virginia, and a 90,000-mtpy plant at
Grundartangi, Iceland. Century also owns a 49.67-percent interest
in a 222,000-mtpy reduction plant at Mt. Holly, South Carolina.
Alcoa Inc. owns the remainder and is the operating partner.
Century's corporate offices are located in Monterey, California.
* * *
As reported in the Troubled Company Reporter on Dec. 7, 2004,
Moody's Investors Service assigned a B1 rating to Century Aluminum
Company's $175 million senior unsecured convertible notes due
2024.
These ratings were affirmed:
* The Ba3 rating for Century's $100 million senior secured
revolving credit facility,
* The B1 rating for Century's $250 million 7.5% senior notes
due 2014
* Century's B1 senior implied rating, and
* Century's B3 senior unsecured issuer rating.
As reported in the Troubled Company Reporter on Nov. 9, 2004,
Standard & Poor's Ratings Services raised its rating on Century
Aluminum Company's $150 million 1.75% convertible notes due 2024
to 'BB-' from 'B' and removed it from CreditWatch. At the same
time, Standard & Poor's affirmed its 'BB-' corporate credit rating
on the Monterey, California-based company.
CENTURY ALUMINUM: $11.75 Million of Convertible Sr. Notes For Sale
------------------------------------------------------------------
Man Mac I Limited and SG Americas Securities, LLC are reselling
Century Aluminum Co.'s 1.75% Convertible Senior Notes due
August 1, 2024. Man Mac is reselling $3 million of Convertible
Senior Notes, and SG Americas is reselling $9.75 million of
Convertible Senior Notes.
Century Aluminum issued $175 million aggregate principal amount of
the notes in a private offering on August 9, 2004. Century
Aluminum will pay interest on the notes on February 1 and August 1
of each year. Century Aluminum made the first interest payment on
February 1, 2005.
Century Aluminum may redeem some or all of the notes for cash at
any time on or after August 6, 2009, at a price equal to 100% of
the principal amount of the notes being redeemed, plus accrued and
unpaid interest, if any.
The notes are convertible at any time at an initial conversion
rate of 32.7430 shares of common stock per $1,000 principal amount
of notes, subject to adjustments for certain events. The initial
conversion rate is equivalent to a conversion price of
approximately $30.5409 per share of common stock.
Holders may require Century Aluminum to repurchase all or part of
their notes for cash on each of August 1, 2011, August 1, 2014,
and August 1, 2019 at a price equal to 100% of the principal
amount of the notes being repurchased, plus accrued and unpaid
interest, if any.
Holders also may require Century Aluminum to repurchase their
notes for cash upon the occurrence of a fundamental change at a
price equal to 100% of the principal amount of the notes being
repurchased, plus accrued and unpaid interest, if any, plus the
make whole premium, if any.
Any such make whole premium will be payable solely in shares of
Century Aluminum's common stock or in the same form of
consideration into which our common stock has been converted or
exchanged in connection with such fundamental change. No such
make whole premium will be payable if the fundamental change
occurs on or after August 6, 2009.
The notes are senior unsecured obligations and rank, in right of
payment, the same as all of Century Aluminum's existing and future
senior unsecured indebtedness. The notes rank senior in right of
payment to all of our subordinated indebtedness and are
effectively subordinated to any secured indebtedness. Century
Aluminum's obligations under the notes are guaranteed by all of
our substantial existing and future domestic restricted
subsidiaries.
Century Aluminum's common stock trades on The NASDAQ Stock
Market(R) under the symbol "CENX." Century Aluminum's share price
fluctuated between $24.75 and $27.49 per share this past month.
A full-text copy of the Prospectus and its Supplement is available
for free at:
http://ResearchArchives.com/t/s?db
-- and --
http://ResearchArchives.com/t/s?dc
Century Aluminum Co. owns 615,000 metric tons per year (mtpy) of
primary aluminum capacity. The company owns and operates a
244,000-mtpy plant at Hawesville, Kentucky, a 170,000-mtpy plant
at Ravenswood, West Virginia, and a 90,000-mtpy plant at
Grundartangi, Iceland. Century also owns a 49.67-percent interest
in a 222,000-mtpy reduction plant at Mt. Holly, South Carolina.
Alcoa Inc. owns the remainder and is the operating partner.
Century's corporate offices are located in Monterey, California.
* * *
As reported in the Troubled Company Reporter on Dec. 7, 2004,
Moody's Investors Service assigned a B1 rating to Century Aluminum
Company's $175 million senior unsecured convertible notes due
2024.
These ratings were affirmed:
* The Ba3 rating for Century's $100 million senior secured
revolving credit facility,
* The B1 rating for Century's $250 million 7.5% senior notes
due 2014
* Century's B1 senior implied rating, and
* Century's B3 senior unsecured issuer rating.
As reported in the Troubled Company Reporter on Nov. 9, 2004,
Standard & Poor's Ratings Services raised its rating on Century
Aluminum Company's $150 million 1.75% convertible notes due 2024
to 'BB-' from 'B' and removed it from CreditWatch. At the same
time, Standard & Poor's affirmed its 'BB-' corporate credit rating
on the Monterey, California-based company.
CENTURY/ML: Bankruptcy Court Approves Disclosure Statement
----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved the Disclosure Statement explaining Century/ML Cable
Venture's Plan of Reorganization dated Aug. 9, 2005.
The Court determined that the Disclosure Statement contains
adequate information -- the right amount of the right kind of
information -- for creditors to make an informed decision about
the Plan.
The Debtor is now authorized to transmit the Disclosure
Statement to creditors and to solicit acceptances of its Plan.
About the Plan
The Plan will implement the sale of the ownership of ML Media and
Century Communications to San Juan Cable, LLC, for $520 million,
pursuant to an Interest Acquisition Agreement dated June 3, 2005.
MidOcean Partners LP, Crestview Capital Partners, LP, and other
investors will be members as of the closing date of the
transaction.
The Plan provides that all allowed third-party claims will either
be paid in full or assumed by the Purchaser under the terms set
forth in the Interest Acquisition Agreement. Upon the effective
date of the Plan, cash sufficient to pay all allowed claims in all
Classes in full will be placed in the Plan Funding Reserve and
then distributed to creditors in accordance with the terms of the
Plan.
The sole equity interest holders, ML Media and Century, are
impaired under the Plan. These creditors will receive
distributions after disputed claimholders will get paid. Each
creditor will equally share in whatever's left of the Sellers
Escrow Account and the Plan Funding Reserve of an amount not more
than $70 million.
The cash necessary to fund the Plan will come from:
(i) cash on hand in the Debtor's accounts;
(ii) cash to be generated from operations through the
Effective Date of the Plan; and
(iii) approximately $520 million of sales proceeds to be paid
by the Buyer.
At present, the Debtor estimates that the aggregate total of all
allowed and disputed claims is approximately $415 million -- less
than the sales proceeds to be received under the Acquisition
Agreement. This amount is comprised of:
* ML Media's $370 million claim;
* Adelphia's $30 million claim;
* Highland Holdings' $10 million claim;
* Daniels' $1.7 million claim; and
* the balance of administrative and other claims.
The Plan, if consummated, would not resolve the outstanding
litigation between Century and ML Media concerning the Debtor's
management, the buy-sell rights of ML Media and various other
matters, but would permit the continued litigation of the dispute.
Consummation of the plan is subject to the approval of the
Bankruptcy Court and other conditions, including the concurrent
sale of the Century/ML interests. Consummation of the sale is
subject to bankruptcy court approval, the receipt of financing by
the Purchaser and other customary conditions, many of which are
outside the control of the sellers and the Debtor.
A full-text copy of Century/ML Cable Venture's Plan of
Reorganization is available at no charge at:
http://ResearchArchives.com/t/s?b6
A full-text copy of Century/ML Cable Venture's Disclosure
Statement is available at no charge at:
http://ResearchArchives.com/t/s?b7
Objections to the Plan, if any, must be filed and served by
Sept. 1, 2005.
All ballots must be returned by 4:00 p.m. Eastern Time on Sept. 6,
2005, to the Debtor's balloting agent:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, N.Y. 10178
Attn: Neil E. Herman, Esq.
Tel: 212-309-6000
Fax: 212-309-6001
The Court will convene a hearing on Sept. 7, 2005, at 2:00 p.m. to
consider confirmation of the Plan.
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.
CENVEO INC: Board Concludes Review of Strategic Alternatives
------------------------------------------------------------
The Board of Directors for Cenveo, Inc. (NYSE: CVO) concluded that
the best alternative to maximize value for all stockholders at
this time is to follow the strategic plan of initiatives to:
-- reduce operating expenses,
-- streamline management functions, and
-- increase top-line revenue growth,
now being implemented under the leadership of James R. Malone,
Cenveo's newly appointed chief executive officer. The decision
came after a careful and thorough review of its strategic
alternatives, including expressions of interest from potential
transaction partners.
In reaching this conclusion, the Board noted that the Company has
made significant progress on its strategic plan in a short amount
of time, particularly in reducing operating costs. The Board also
noted that it considered expressions of interest for the Company
as a whole and for its various businesses from potential
transaction partners of up to but not exceeding nine dollars per
share.
Cenveo said its Board remains open to exploring all value creating
alternatives that may be available to Cenveo in the future. "The
industry is a consolidating industry and at the right time, the
Company plans to be part of that consolidation," said Jim Malone.
"I joined Cenveo in June with the commitment to see that Cenveo is
restored to profitability," said Mr. Malone. "We have put in
place an aggressive strategic plan and I am pleased to say that
our plan is working. We have already identified $55 million in
annualized cost savings that will be in place by Jan. 1, 2006,
which we believe will put us on an EBITDA run rate of
$190 million. And, we continue to identify additional areas for
improvement.
"Cenveo has established considerable momentum in just a short
period. All of us look forward to continuing that momentum and
doing everything we can to maximize value for our stockholders."
Cenveo, Inc. (NYSE: CVO) -- http://www.cenveo.com/-- is one of
North America's leading providers of visual communications with
one-stop services from design through fulfillment. The company is
uniquely positioned to serve both direct customers through its
commercial segment, and distributors and resellers of printed
office products through its Quality Park resale segment. The
company's broad portfolio of services and products include e-
services, envelopes, offset and digital printing, labels and
business documents. Cenveo currently has approximately 9,400
employees and more than 80 production locations plus five advanced
fulfillment and distribution centers throughout North America. In
2004 and 2005, Cenveo was voted among Fortune Magazine's Most
Admired Companies in the printing and publishing category and has
consistently earned one of the highest Corporate Governance
Quotients by Institutional Shareholder Services. The company is
headquartered in Englewood, Colorado.
* * *
As reported in the Troubled Company Reporter on Aug. 18, 2005,
Standard & Poor's Ratings Services revised its CreditWatch listing
on ratings on Cenveo Inc., including its 'B+' corporate credit
rating, to negative implications from developing following the
company's announcement it had concluded its review of strategic
alternatives.
The ratings were originally placed on CreditWatch on April 18,
2005, following the company's announcement it was exploring
strategic alternatives, which could have included a sale of the
company. The Englewood, Colorado-based commercial printer had
more than $850 million in lease-adjusted debt outstanding as of
June 2005.
"Cenveo's announcement removes potential upside pressure on
ratings stemming from an acquisition by a higher-rated entity,"
said Standard & Poor's credit analyst Emile Courtney.
CHESAPEAKE ENERGY: Moody's Rates New $600 Million Notes at Ba3
--------------------------------------------------------------
Moody's assigned a Ba3 rating to Chesapeake Energy's (CHK) new
$600 million issue of 12 year 6.5% senior unsecured notes and to
CHK's existing $600 million issue of 13 year 6.25% senior
unsecured notes. Moody's affirmed CHK's Ba3 corporate family
rating, existing Ba3 senior unsecured note ratings, and B3
preferred stock rating. The outlook remains positive.
The new note proceeds will be used to repay outstanding borrowings
under the revolving bank credit facility (unrated) which was
partially tapped to fund four recent transactions costing $410
million. CHK had approximately $455 million of bank debt
outstanding as of June 2005.
While the rating outlook remains positive, it is heavily dependent
upon CHK doing ample common equity by the end of Q3 to
considerably reduce leverage on a proved developed reserves basis
pro-forma for any recent acquisitions and on its ability to
further improve the ratio through organic year-end bookings. The
positive outlook reflects CHK's capacity and Moody's expectation
to de-lever. The company's increasing scale, geographic
diversification, durable reserve life, large drilling inventory,
strong price outlook, and strong margins before reserve
replacement costs underwrite that capacity.
CHK, largely through debt-financed acquisitions, has positioned
itself into a large, relatively diversified exploration and
production company with a competitive cost structure and a durable
reserve life. This, along with a comparative low reinvestment
risk profile and ample internal cash flow with which to fund its
drilling program, satisfactorily mitigates reserve replacement
risk. CHK's expansion effort has both intensified its holdings
and basin knowledge in the mid-Continent while adding other
regions of potential growth. The total PD reserve life
approximates 8 years. An upgrade of ratings would depend upon
strong equity issuance to reduce leverage and strong year-end 2005
reserve growth through the drillbit.
While the higher price environment has supported full leverage at
the existing ratings, the ratings outlook could move to stable if
CHK does not reduce leverage on PD reserves to well below $7.00/PD
Boe within the next quarter or two. In Moody's view, CHK's
strategy of pursuing such a proportionally large, historically
expensive up-cycle acquisition program requires both very strong
prices and sustained future drilling success on historically high
proportions of undrilled locations to justify its acquisition
economics. This strategy apparently has not yet yielded
sufficiently strong equity response to induce CHK to issue more
common equity to finally definitively reduce leverage. CHK's
acquisition funding and leverage policy continues to restrain its
ratings. Recent acquisition activity confirms again that CHK's
equity policies, its broader financial strategy, and historically
expensive acquisitions containing low proportions of PD reserves
will likely continue to sustain full leverage, punctuated by
acquisition leverage spikes.
Under the circumstances, Moody's believes that front-end reliance
on convertible preferred stock for acquisition funding, in lieu of
sufficient common stock, is an insufficient catalyst to drive
CHK's advance up Moody's rating scale. This reflects:
1) CHK's already high leverage;
2) the secular, cyclical, technical, and company-specific
forces at work on an exploration and production company's
share price;
3) CHK's view that it still cannot offer more common equity
without incurring unacceptable dilution;
4) its ongoing aggressively acquisitive posture;
5) the high historic up-cycle costs of the sector's reserve
acquisition market; and
6) the often high proportions of unfunded, still unproductive,
and higher risk proven undeveloped and reserves in those
reserve acquisition packages.
In the newly announced acquisitions, CHK is paying a high
$74,545/boe per daily unit of acquired production, a high
$14.24/boe for proven reserves, and an extremely high $47.70/boe
of PD reserves. CHK's subsequent drilling and completion results
and development costs on the high proportion of acquired proven
undeveloped and probable results will drive whether CHK can
achieve its desired acquisition economics. Given aggressive
capital spending and depending on the results, Moody's believes
organic finding and development costs may be significantly higher
by year-end.
The large debt funding has pushed pro-forma leverage on pro-forma
PD reserves back to roughly $7.74/boe of PD reserves. Similarly,
pro-forma debt plus 50% of pro-forma convertible preferred stock,
divided by pro-forma PD reserves, is approximately $8.39/Boe
(including preferreds converted to common since quarter end).
Both are far higher than recent past.
Chesapeake Energy Corporation is headquartered in Oklahoma City,
Oklahoma.
CINCINNATI BELL: Moody's Rates $400 Million Facility at Ba3
-----------------------------------------------------------
Moody's Investors Service today affirmed the corporate family
(formerly known as the senior implied), bank credit facility and
other ratings of Cincinnati Bell Inc. Moody's also assigned a Ba3
rating to the proposed $400 million senior secured term loan B
facility, proceeds of which will be used to refinance the high
interest 16% subordinate notes outstanding. Moody's also affirmed
the company's speculative grade liquidity rating of SGL-2. The
ratings outlook remains stable.
The affected ratings are:
Cincinnati Bell Inc.:
* corporate family rating affirmed at Ba3
* Liquidity rating affirmed at SGL-2
* $250 million senior secured revolving credit facility
affirmed Ba3
* $400 million senior secured (pending) term loan B credit
facility assigned Ba3
* $50 million 7.25% Senior Secured Notes due 2023 affirmed
at Ba3
* $250 million 7% Senior Notes due 2015 affirmed at B1
* $500 million 7.25% Senior (unsecured) Notes due 2013 affirmed
at B1
* 16% Senior Subordinated Discount Notes due 2009 withdrawn
* $640 million 8.375% Senior Subordinated Notes due 2014
affirmed at B3
* 6.75% Convertible Preferred Stock affirmed at Caa1
The ratings affirmation takes into account Cincinnati Bell's
continued debt reduction strategy since Moody's assigned a
positive rating outlook in June 2003, and its stable operating
performance in an increasingly competitive environment. The
refinancing of the high interest rate 16% senior subordinate notes
completes, six months ahead of schedule, the company's previously
delineated refinancing plans. Going forward, Moody's expects
Cincinnati Bell to continue to use its free cash flow to reduce
debt, even after accommodating the acquisition of Cingular's 19.9%
interest in the company's wireless subsidiary, for $85 million,
during the first half of 2006.
The Ba3 corporate family rating reflects the stable operating and
financial performance of the company, and its commitment to, and
track record of, utilizing substantially all of its material free
cash flow to reduce debt. Over the last four quarters ended 2Q05,
Cincinnati Bell generated over $300 million in cash provided by
operations, spent approximately $144 million on capital
expenditures and $10 million on preferred stock dividends to yield
free cash flow of approximately $154 million. This represents
roughly 7% of total debt outstanding at 2Q05 as well as pro forma
for the refinancing transaction. Moody's expects Cincinnati Bell
to maintain or improve this level of free cash flow generation and
to continue to dedicate free cash flows to the reduction of debt,
aside from the $85 million investment to purchase the 19.9% stake
in the company's wireless subsidiary from Cingular.
The Ba3 rating on the new $400 million senior secured term loan B
facility reflects the strong position of these obligations, with
upstream guarantees from the company's subsidiaries, with the
notable exceptions of CBT and CBW, as well as a pledge of the
assets and stock of those subsidiaries and the stock of CBT. The
deficiency of the security and guarantee package, due to the lack
of upstream guarantees and collateral from CBT and CBW, constrain
these ratings.
Cincinnati Bell is a fully integrated telecommunications provider
in southwestern Ohio, and adjacent portions of Kentucky and
Indiana. The company is the incumbent local exchange carrier in
the Greater Cincinnati area and has expanded its local wireline
services into neighboring counties. Like all local exchange
carriers, Cincinnati Bell has been losing local access lines in
its incumbent territory, with a 4.7% year-over-year in-territory
access line loss in 2Q05. This erosion could increase due to
competitive threats from cable television companies that offer
telephony services over their own networks.
To defend its franchise, Cincinnati Bell offers a bundle of
telecommunications services, including:
* local,
* long distance,
* DSL, and
* wireless.
Cincinnati Bell's wireless offering has suffered through a
difficult technology transition from TDMA to GSM and recent
wireless subscriber growth is below Moody's expectations.
Nonetheless, the ability to offer a more complete
telecommunications service bundle (due to the inclusion of
wireless) on a currently more reliable telephone network (due to
cable telephony's less robust backup power capabilities and far
shorter service history) provides Cincinnati Bell a solid position
from which to meet competitive threats and to defend its
franchise.
Still, Moody's expects competition will accelerate the pace of
local in-territory access line losses and slowly erode Cincinnati
Bell's consolidated revenues, making cost control even more
important to driving continued positive free cash flows.
Fortunately, Cincinnati Bell's relatively concentrated service
territory helps drive efficiencies, and should keep returns fairly
high (EBIT/Average Assets 15% or better).
The stable ratings outlook reflects Moody's opinion that:
* Cincinnati Bell will be successfully to combat competitive
threats to its franchise;
* deliver stable operating results over the upcoming 12 to 18
months; and
* continue to use its cash flow for modest de-leveraging even
with the completion of the refinancing of the high yield
notes.
Factors that could negatively affect the ratings include
accelerating revenue declines, or continued weakness in the
company's wireless operations that could lead to reduced free cash
flow generation. Should free cash flow fall closer to 5% of total
debt, the ratings would likely fall. Also, should the company
change its financial philosophy and begin to divert free cash flow
from debt reduction to return capital to shareholders, the ratings
are likely to be negatively affected. The ratings could be
positively affected if free cash flow growth accelerates and/or
debt reduces more rapidly to where free cash flow raises above 10%
of total debt.
The pending refinancing comes about six months ahead of schedule
and will reduce the company's liquidity in the near term, but
enhances longer term metrics as yearly savings due to lower total
interest expense are expected to be in the $40 million range and
cash interest expense in the $25 million range. Moody's expects
the $212 million revolver capacity at end of 2Q05, cash and
equivalent, and free cash flow generation will be ample to cover
the company's liquidity needs, including minimal mandatory
amortization requirements, during the next 12 months.
Therefore, Cincinnati Bell's liquidity profile can continue to be
characterized as "good", meriting an SGL-2 rating. Moody's expects
Cincinnati Bell to comfortably comply with covenants even as the
senior leverage test cushion will be reduced due to the 16% senior
subordinate notes refinancing with the senior secured debt. The
company expects to use $48M of its revolving credit facility for
the refinancing with a total of $80 million outstanding on a pro
forma basis as of 2Q05, but Moody's expects outstanding balance
for the next 12 months to stay within this level even as the
company buys the Cingular's 19.9% stake in CBW.
Cincinnati Bell Inc. is a fully integrated telephone company with
operations in Ohio, Kentucky, and Indiana. Revenue for last
twelve months ending June 30, 2005 was approximately $1.2 billion.
CLARION TECHNOLOGIES: Equity Deficit Tops $77 Million at July 2
---------------------------------------------------------------
Clarion Technologies, Inc., (OTCBB: CLAR.OB) reported financial
results for the quarterly period ended July 2, 2005.
Clarion's 2005 sales for the second quarter were $39 million
versus $28.1 million in the second quarter of 2004. Sales for the
first six months of 2005 were $71.3 million versus $57.7 million
for the same period of 2004. The 23% increase in revenue was
driven primarily by sales of new products with existing customers.
Net loss attributable to the common shareholder for the first six
months of 2004 was $9.5 million versus $3.2 million for the same
period of 2003. The increase in net loss attributable to common
shareholder was primarily driven by the increase in accrued
dividends.
Clarion Technologies' President, Bill Beckman, commented, "We are
pleased with the growth in sales over the last year. We added
additional products and continue to be awarded new opportunities.
We also completed the transition of moving from two facilities in
Pella, Iowa to one larger facility in Ames, Iowa. In addition, we
are nearly complete with consolidating the products in the South
Haven operation to the Caledonia facility. These consolidations
are an investment in our future. These investments are necessary
for our future growth."
President Beckman further commented, "We still have one major
investment yet to be done. That is in Mexico. We are preparing
to move a large portion of our production in our Greenville
facilities to a facility in Juarez Mexico. This movement will
begin in the third quarter of 2005 and extend into the beginning
of 2006. This investment will build a solid foundation for our
company to build on."
Clarion Technologies, Inc., operates four manufacturing facilities
in Michigan, one in South Carolina, and one in Iowa with
approximately 170 injection molding machines ranging in size from
55 to 1500 tons of clamping force. The Company's headquarters are
located in Grand Rapids, Michigan.
As of July 2, 2005, Clarion Technologies' balance sheet has a
$77,048,000 equity deficit compared to a $67,543,000 deficit at
Dec. 25, 2004.
CLOVERLEAF TRANSPORTATION: Wants Staten Group as Special Counsel
----------------------------------------------------------------
Cloverleaf Transportation, Inc., asks the Honorable Cecelia G.
Morris of the U.S. Bankruptcy Court for the Southern District of
New York for permission to employ Staten Group, Inc., as its
special corporate, regulatory and litigation counsel, nunc pro
tunc to Aug. 16, 2005.
Staten is a boutique advisory firm specializing in bringing
leadership, financial, and board-level advisory services to
underperforming companies.
Staten is expected to, inter alia:
(1) assist the Debtor in negotiating and documenting
arrangements and agreements with its lenders, suppliers,
landlords and other parties relating to general corporate,
real estate and other non-bankruptcy related matters;
(2) provide regulatory advice to the Debtor and consult with
the Debtor on health care and other non-bankruptcy related
matters;
(3) assist in the preparation and prosecution of non-bankruptcy
administrative and litigation matters relative to the
Debtor's business;
(4) provide continuing legal advice in connection with health
care, corporate, real estate and other non-bankruptcy
related issues;
(5) provide a historical base of information relative to, and
assist in the review and objections to claims;
(6) assist in providing non-bankruptcy, corporate and
commercial assistance as may relate to the sale, lease or
other disposition of estate assets; and
(7) perform such other non-bankruptcy related legal services
and assistance desirable and necessary to the efficient and
economic administration of the Debtor's case.
Bruce E. Rogoff, Esq., a principal and founder of Staten Group,
Inc., discloses that the Firm received a $50,000 prepetition
retainer and a $10,000 retainer for its current work. The firm's
professionals will bill $500 per hour.
Mr. Rogoff is a member of the board of directors of a portfolio
company of Exeter Equities, L.P., which is unrelated to the
debtor. Exeter Equities is a stockholder and creditor of the
debtor.
Mr. Rogoff assures the Court that Staten Group, Inc., is
disinterested as that term is defined in Section 101(14) of the
U.S. Bankruptcy Code.
Headquartered in Chester, New York, Cloverleaf Transportation,
Inc. -- http://www.cloverleaftransport.com/-- is known as the
premier shorthaul carrier in the Northeast. The Debtor is a dry
van truckload carrier. It also offers refrigerated equipment and
trailers to handle temperature-controlled products. The Debtor
filed for chapter 11 protection on August 16, 2005 (Bankr.
S.D.N.Y. Case No. 05-37287). Lawrence M. Klein, Esq., at Drake,
Sommers, Loeb, Tarshis, Catania, PLLC, represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $1,387,574 in assets and $7,344,386
in debts.
COLLEGE PROPERTIES: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: College Properties II
100 West Camelback, Suite 106
Phoenix, Arizona 85013
Bankruptcy Case No.: 05-15155
Chapter 11 Petition Date: August 17, 2005
Court: District of Arizona (Phoenix)
Debtor's Counsel: John T. Ryan, Esq.
3440 North 16th Street, Suite 5
Phoenix, Arizona 85016
Tel: (602) 264-6928
Fax: (602) 279-0758
Total Assets: Unknown
Total Debts: Unknown
The Debtor's List of its 20 Largest Unsecured Creditors is not
available at press time.
COLLINS & AIKMAN: JPMorgan Arranges $150 Million Loan
-----------------------------------------------------
JPMorgan Chase & Co. has arranged a $150 million DIP financing for
Collins & Aikman Corporation, Harris Rubinroit at Bloomberg News
reports, citing a person familiar with the transaction.
The financing consists of $120 million term loan and $25 million
in revolving credit at interest of 3 percentage points more than
the London interbank offered rate, the source told Mr. Rubinroit.
JPMorgan initially arranged a $300 million DIP financing for
Collins & Aikman. In July 2005, JPMorgan decided not to fund
more than $150 million under the DIP credit agreement.
Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). When the Debtors filed for protection from their
creditors, they listed $3,196,700,000 in total assets and
$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,
Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: JPMorgan Objects to A&M and Chanin Retentions
---------------------------------------------------------------
JPMorgan Chase Bank, NA, as agent for the Debtors' DIP Credit
Agreement, objects to the retention of Alvarez & Marsal and Chanin
Capital Partners as financial advisors to the Official Committee
of Unsecured Creditors in Collins & Aikman Corporation and its
debtor-affiliates' chapter 11 case.
"The Debtors are in a state of great financial distress and
uncertainty, are continuing to lose tens of millions of dollars
every week, and lack access even to conventional debtor-in-
possession financing. Under the circumstances, the unsecured
creditors whose claims are represented by the Official Committee
of Unsecured Creditors may very well be out-of-the-money," Ronald
L. Rose, Esq., at Dykema Gossett PLLC, in Detroit, Michigan,
asserts, on behalf of JPMorgan.
Mr. Rose points out that the Committee is proposing to burden the
Debtors' estates with not one, but two, financial advisors at
enormous duplicative expense -- A&M and Chanin Capital Partners.
The Committee proposes to have the Debtors pay A&M alone -- in
addition to the hundreds of thousands of dollars a month that the
Committee doubtless will seek to have the Debtors pay Chanin -- a
fixed monthly fee of $200,000 per month for three months, and
$150,000 per month indefinitely thereafter.
The Application further seeks to have A&M retained nunc pro tunc
to June 1, 2005, even though it provides no explanation for the
50-day delay is seeking Court authorization for the retention.
Moreover, the Application seeks the right for the Committee to
ask that the Court later approve a "Success Fee" in an
unspecified amount.
It is already apparent that the proposed roles of A&M and Chanin,
if approved, would be overlapping and duplicative, Mr. Rose
notes. Both are full-service restructuring firms, each of which
offers a similar array of distressed financial advisory and
investment banking services.
JPMorgan would have no objection to the Committee's retention of
a single financial advisor on reasonable terms and conditions
that are commensurate with the unsecured creditors' true economic
state in the Debtors' Chapter 11 cases.
Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). When the Debtors filed for protection from their
creditors, they listed $3,196,700,000 in total assets and
$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,
Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000)
COMPLETE PRODUCTION: Moody's Rates $530 Million Facilities at B2
----------------------------------------------------------------
Moody's assigned a first time Corporate Family Rating (formerly
the senior implied rating) of B2 to Complete Production Services,
Inc. and assigned a B2 rating to the new senior secured credit
facilities which consists of a $130 million 5-year revolver and a
$400 million 7-year term loan B. The ratings outlook is stable.
Complete is a niche oilfield services company that is being formed
through the combination of three small oilfield services
companies:
* Complete Energy Services,
* I.E. Miller, and
* Integrated Production Services.
The new company will be focused in North America and operates in:
* the Rocky Mountains,
* Barnett Shale,
* Oklahoma,
* Western Canadian Sedimentary Basin, and
* Gulf Coast Regions.
The B2 ratings reflect:
* the lack of a track record as a consolidated company and the
need for the company to demonstrate that it is meeting its
earnings and cash flow projections through the cycles given
the young history and highly acquisitive nature of the
individual companies;
* event and integration risk resulting from its highly
acquisitive history and aggressive growth strategy which may
lead to sustained high leverage;
* the large, debt funded dividend being paid to shareholders
instead of reinvestment into the company;
* the company's relatively small scale, particularly compared
to the much larger and better capitalized peers that hold
dominant market positions and better pricing power;
* the company's focus in the mature North American basins; and
* the volatility and cyclicality of the oil and gas exploration
and production industry.
The ratings are supported by:
* the current upcycle conditions of the oilfield services
market;
* the company's niche focus in a few regions;
* the added equipment and product diversification from the
combination of the three companies;
* solid near-term liquidity pro forma for the new financing;
and
* an experienced management team.
The stable outlook reflects the favorable outlook for the oilfield
services sector into 2006. The stable outlook also assumes that
the company will not increase leverage (debt/EBITDA) beyond 4.5x,
particularly while sector conditions remain supportive for cash
flow and debt reduction. The outlook also assumes no additional
distributions/ dividends are made before the company's debt is
materially reduced.
The ratings and/or outlook would be pressured by:
* debt funded acquisitions that drive leverage materially
above 4.5x;
* the company makes shareholder distributions before debt is
materially reduced;
* or if management fails to demonstrate sufficient flexibility
and discipline in its capital spending program in the event
of sector downturn.
A positive outlook would be considered upon significant debt
reduction, and the ability to maintain leverage (debt/EBITDA)
under 3.0x and debt/Capitalization of less than 60%, particularly
ahead of the next sector downturn; a clear demonstration that the
company is at least meeting management's projected earnings and
cash flow levels over the next twelve months without an increase
in debt.
The outlook could also face an upward bias in the event of a
significant equity infusion that is used to reduce debt, fund the
aggressive capital spending program over the next twelve to 18
months, or fund a significant acquisition.
The credit facilities are not notched up from the Corporate Family
Rating given fairly weak asset coverage provided to the lenders.
The revolver and term loan B facilities are pari passu and are
secured by essentially all of the assets of the company. The
fixed assets have a net book value of approximately $331 million
at close of the transaction, which is insufficient to cover the
lenders, particularly in a downcycle.
Including pro forma working capital of about $85 million to $90
million, asset coverage would just about provide coverage for the
funded $430 million of debt but remains insufficient to cover the
total $530 million of credit facilities. In addition, the fixed
asset values are based on upcycle conditions and multiples and
Moody's believes there would be significant deterioration even in
a midcycle market.
Further, the revolver does not contain a borrowing base mechanism,
which would otherwise ensure asset coverage relative to
outstanding debt and therefore does not require periodic debt
reduction if assets (working capital) are liquidated in the normal
course of business. While the facilities do include an excess
cash flow sweep it is only required if debt/ EBITDA is greater
than 3.0x. The facilities also contain a Greenshoe feature, which
if exercised, could put additional debt on the company without the
requirement of additional assets, thus further straining asset
coverage.
Complete is being formed through the combination of three separate
companies coming under one management. While this combination
provides the company additional scale and a degree of
diversification, the oldest of three, IPS has only existed in its
current form since 2001 and itself was formed through the
combination of three companies.
In addition, all three companies have been highly acquisitive,
completing more than a dozen acquisitions of existing companies
over the past two and half years combined, making it difficult to
assess the sustaining earnings power and cash flow generation
capabilities, especially in a downcycle.
At close of the transaction, pro forma outstanding debt will be
$426 million which will fund approximately $274 million of
existing debt, a $150 million shareholder dividend, and about $2.0
million of fees and expenses. Based on the company's pro forma
consolidated 2004 EBITDA of about $100 million (about 80% of which
went through a year-end audit), the company's debt/EBITDA was a
high 4.26x. On a debt/capitalization measure, pro forma leverage
is a very high 72.3%.
While the company's pro forma six month debt/EBITDA is improved to
about 3.0x, Complete still needs to demonstrate that it can and
will maintain leverage in this range. Moody's estimates that in a
downcycle, the company's leverage (debt/EBITDA) would be in excess
of 5.0x at current debt levels.
Despite the added product and geographic capabilities afforded the
company, it still remains fairly small relative to the larger
peers that tend to hold fairly dominant positions in most markets
and also have better capitalization to withstand sector cycles.
Complete is a niche player that has a presence in a few basins.
Further, approximately 20% of 2004 pro forma EBITDA was generated
from the drilling related services and the proportion of pro forma
2005 EBITDA could grow to 25%. In addition, a portion of its
completion business is also tied to the drilling cycle and is
exposed to higher volatility than its production related business.
The company is currently benefiting from very strong sector
fundamentals that could likely last into 2006. This has led to a
spike in demand for oilfield services that is outpacing capacity
in many markets. Drillers and Services companies like Complete
have been able to increase pricing across most of its products and
services lines resulting in increased earnings and cash flows.
However, in response to this rise in demand, Complete is planning
to reinvest the large majority of its cash flows for additional
equipment and services products, which will limit debt reduction
over the near term.
Though Complete is a relatively small niche drilling and services
company, the amalgamation of the three companies will add a degree
of geographic diversification as well as a fuller suite of
products and services which is often necessary to compete with
some of the larger peers. The combined company will provide
drilling services, completion and re-completion services and
production related services and products. The company will also
be in about 8 regions/markets, though there are some
concentrations with the Rockies (about 28%), North/East Texas
(about 28%) and Canada (about 14%) of pro forma 2004 EBITDA.
Pro forma liquidity will be solid as the company will have
approximately $100 million of undrawn revolver capacity at close
of the facilities. Management is estimating that it will be able
to fund its capital spending of approximately $100 million,
working capital and estimated interest expense of $38 million to
$40 million over the next twelve months with internal cash flow,
leaving the $100 million revolver available for acquisitions and
other general corporate purposes.
Complete Production Services, Inc. is headquartered in Houston,
Texas.
CONSOLIDATED CONTAINER: S&P Affirms B- Corporate Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services said today that it revised its
outlook on Consolidated Container Co. LLC to stable from positive
and affirmed its 'B-' corporate credit rating and other ratings on
the company.
"The outlook revision reflects challenging industry conditions
which have forestalled the expected trend of improvement to the
company's financial profile," said Standard & Poor's credit
analyst Liley Mehta.
Credit statistics have reflected a modest increase to debt levels
and limited cash flow generation in recent quarters, resulting in
a ratio of total debt (adjusted to capitalize operating leases) to
EBITDA above 7x as of June 30, 2005. Atlanta, Georgia-based
Consolidated Container had about $576 million of debt outstanding
at June 30, 2005.
The ratings on Consolidated Container Co. LLC and its wholly owned
subsidiary, Consolidated Container Capital Inc., reflect the
company's very aggressive financial leverage, which overshadows
its weak business position in the relatively stable beverage and
consumer product packaging markets. With annual revenues of about
$781 million, Consolidated Container is a domestic producer of
rigid plastic containers for:
* dairy products;
* water;
* juice and other beverages;
* food;
* household and agricultural chemicals; and
* motor oil.
About 58% of the company's revenues are derived from dairy, water,
and juice packaging, which are relatively commodity-type products
and have mature demand patterns.
The stable outlook is supported by sufficient liquidity and
prospects of slight improvement in operating results for the rest
of 2005. However, the company continues to face meaningful
operating challenges including weak demand in key product segments
and higher raw-material costs (namely plastic resins) that have
forestalled the expected improvement in credit quality.
Operating results for the remainder of 2005 and 2006 are expected
to benefit from additional cost reductions, and new business
contracts, which should partially mitigate the impact of lower
volumes and previously completed plant closures. While not
expected based on current information, the ratings could be
lowered if elevated raw-material costs, disappointing volume
trends or a delay in the ramp up of new business contracts leads
to further deterioration in operating results or pressures
liquidity in the next few quarters.
COTT CORP: Increases Loans to Fund $135 Mil. Macaw Acquisition
--------------------------------------------------------------
Cott Corporation and its lenders amended a Mar. 31, 2005, Credit
Agreement:
* increasing the Lenders' revolving commitments from
$100 million to $225 million;
* increasing the maximum facility amount (including a
$125 million uncommitted portion) from $250 million to
$350 million;
permitting the acquisition of Macaw (Holdings) Limited.
Macaw (Soft Drinks) Limited is also added as a borrower under the
facilities, and Holdings as a guarantor of the facilities.
Wachovia Bank, National Association, serves as the Administrative
Agent and Trustee for the lenders:
* HSBC Mexico, S.A.,
* Institution de Banca Multiple, and
* Grupo Financiero HSBC.
A full-text copy of the First Amendment to the Credit Agreement is
available for free at http://ResearchArchives.com/t/s?e1
U.K. Subsidiary Buys Macaw for $135 Mil.
Cott's U.K. subsidiary, Cott Beverages had acquired 100% of the
shares of Holdings Limited, the parent company of Soft Drinks, a
manufacturer of, among other types of beverages, retailer brand
carbonated soft drinks, for EUR75.7 million (approximately
$135 million) cash.
CBL acquired all of the shares of Holdings pursuant to an Aug. 10,
2005, Agreement, among Andrew Cawthray, Martyn Rose and CBL.
On August 10, 2005, CBL acquired 100% of the shares of Holdings
from Andrew Cawthray and the other shareholders of Holdings.
A full-text copy of the Purchase Agreement is available for free
at http://ResearchArchives.com/t/s?e0
Cott Corporation is the world's largest retailer brand soft drink
supplier, with the leading take home carbonated soft drink market
shares in this segment in its core markets of the United States,
Canada and the United Kingdom.
* * *
As reported in the Troubled Company Reporter on Aug. 15, 2005,
Moody's Investors Service affirmed the ratings for Cott
Corporation following the company's announcement that it has
acquired 100% of the shares of Macaw (Holdings) Limited, the
parent company of Macaw (Soft Drinks) Limited, the largest
privately-owned manufacturer of retailer brand carbonated soft
drinks in the U.K., for approximately US$135 million (GBP75.7
million) in cash.
Moody's affirmed these ratings:
Cott Corporation:
-- Ba2 corporate family rating
Cott Beverages, Inc.:
-- Ba3 rating on the $275 million 8% senior subordinated notes,
due 2011
Moody's says the rating outlook is stable.
As reported in the Troubled Company Reporter on Aug. 12, 2005,
Standard & Poor's Ratings Services revised its outlook
on the leading supplier of retailer-branded soft drinks
Cott Corp., to negative from stable. At the same time,
Standard & Poor's affirmed its 'BB' long-term corporate
credit and 'B+' subordinated debt ratings on
the company.
D & K STORES: OceanFirst Bank's Secured Claim Reduced to $374,326
-----------------------------------------------------------------
The Honorable Kathryn C. Ferguson of the U.S. Bankruptcy Court for
the District of New Jersey granted D & K Stores, Inc.'s request to
approve a consent order reducing OceanFirst Bank's secured claim
from $455,188 to $374,326.
As of Apr. 8, 2005, the Debtor owed OceanFirst Bank on account of
a credit facility consisting of a line of credit secured by a
security interest in the Debtor's equipment, inventory and
accounts receivable.
OceanFirst filed a secured claim (claim number 63) in the amount
of $455,188.46, comprised of $355,588 in principal and $101,600.46
in interest as of Apr. 8, 2005.
The Debtor objected to the interest component of OceanFirst's
Claim and has negotiated a consensual reduction of the claim from
$455,188.46 to $374,325.81 -- a reduction of $80,862.65.
Timothy P. Neumann, Esq., at Broege, Neumann, Fischer & Shaver,
LLC, tells the Court that the Debtor, OceanFirst and the Official
Committee of Unsecured Creditors have been consulted and have
agreed that the reduction of OceanFirst's claim is in the best
interest of the Debtor's estate.
Headquartered in Eatontown, New Jersey, D & K Stores, Inc., filed
for chapter 11 protection on April 8, 2005 (Bankr. D. N.J.
Case No. 05-21445). Timothy P. Neumann, Esq., at Broege, Neumann,
Fischer & Shaver, LLC, represents the Debtor. When the Debtor
filed for protection from its creditors, it estimated assets and
debts from $10 million to $50 million.
D & K STORES: Walks Away from Pennsylvania Lease
------------------------------------------------
D & K Stores, Inc., sought and obtained permission from the U.S.
Bankruptcy Court for the District of New Jersey to reject the
unexpired lease of its Franklin Village Shop Center located at 19A
Route 422 in Kittanning, Pennsylvania.
The Debtor tells the Court that the lease is unnecessary to its
continued operations. It assures the Court that it has concluded
an agreement with the landlord, Laurel of Kittaning, for the
rejection of the lease.
Headquartered in Eatontown, New Jersey, D & K Stores, Inc., sold
retail merchandise from 80 locations in New Jersey, Pennsylvania,
Maryland, New York, West Virginia and Ohio. The company filed for
chapter 11 protection on April 8, 2005 (Bankr. D.N.J. Case No. 05-
21445). Timothy P. Neumann, Esq., at Broege, Neumann, Fischer &
Shaver, LLC, represents the Debtor. When the Debtor filed for
protection from its creditors, it estimated assets and debts from
$10 million to $50 million.
DIVERSIFIED REIT: Fitch Holds BB- Rating on $7.8 Mil. Certificates
------------------------------------------------------------------
Fitch Ratings upgrades three classes and affirms seven classes of
notes issued by Diversified REIT Trust 1999-1 Ltd. /Corp. These
rating actions are effective immediately:
-- $138,750,000 class A-1 affirmed at 'AAA';
-- $223,507,200 class A-2 affirmed at 'AAA';
-- $31,125,600 class B upgraded to 'AAA' from 'AA+';
-- $31,125,600 class C upgraded to 'AAA' from 'AA';
-- $41,500,800 class D upgraded to 'A+' from 'A-';
-- $23,344,200 class E affirmed at 'BBB-';
-- $5,187,600 class F affirmed at 'BB';
-- $7,781,400 class G affirmed at 'BB-';
-- $5,187,600 class H affirmed at 'B';
-- $507,510,000 class X (interest only) affirmed at 'AAA'.
DIRT 1999-1 is a collateralized debt obligation that closed May
26, 1999. DIRT 1999-1 is composed of a static pool of 100% senior
unsecured real estate investment trust securities.
Fitch has reviewed the credit quality of the individual assets
comprising the portfolio. The rating upgrades reflect the reduced
weighted average life due to seasoning of the portfolio, as well
as improved credit enhancement and an overall positive rating
migration. The credit enhancement is provided to each class by
subordination, reflecting payment priority and loss allocation
sequence.
Since the last rating action, the collateral has continued to
perform while becoming increasingly seasoned. The weighted
average rating factor continues to be in the 'BBB-' range. Since
the last rating affirmation, 11.1% of the collateral has been
upgraded and 3.7% has been downgraded. The seasoning of the
collateral can be illustrated by the declining weighted average
life. The WAL of the portfolio declined to 2.5 years as of the
March 2005 payment date, compared to 8.7 years at closing and 4.0
years since the last rating affirmation. The weighted average
coupon remains virtually unchanged, and assets rated 'BB+' or
lower represent 7.6% of the collateral.
The notes pay in principal in sequential order, and there are no
overcollateralization or interest coverage tests.
Fitch will continue to monitor and review this transaction for
future rating adjustments. 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/
DIVERSIFIED REIT: Fitch Holds Low-B Rating on Three Cert. Classes
-----------------------------------------------------------------
Fitch Ratings upgrades four classes and affirms six classes of
notes issued by Diversified REIT Trust 2000-1 Ltd./Corp. These
rating actions are effective immediately:
-- $35,000,000 class A-1 affirmed at 'AAA';
-- $145,836,000 class A-2 affirmed at 'AAA';
-- $18,090,000 class B upgraded to 'AAA' from 'AA+';
-- $26,992,000 class C upgraded to 'AA' from 'A+';
-- $21,249,000 class D upgraded to 'A' from 'BBB+';
-- $11,343,000 class E notes upgraded to 'BBB' from 'BBB-';
-- $4,307,000 class F affirmed at 'BB';
-- $5,025,000 class G affirmed at 'BB-';
-- $4,308,000 class H affirmed at 'B';
-- $272,150,000 class X (interest-only) affirmed at 'AAA'.
DIRT 2000-1 is a collateralized debt obligation that closed April
13, 2000. DIRT 2000-1 is composed of a static pool of 100% senior
unsecured real estate investment trust securities.
Fitch has reviewed the credit quality of the individual assets
constituting the portfolio. The rating upgrades reflect the
reduced weighted average life due to seasoning of the portfolio
and improved credit enhancement. The credit enhancement is
provided to each class by subordination, reflecting payment
priority and loss allocation sequence.
Since the last rating action, the collateral has continued to
perform while becoming increasingly seasoned. The weighted
average rating factor has improved to 6.1 from 6.5 but continues
to be in the 'BBB' to 'BBB-' range. The seasoning of the
collateral is illustrated by the declining weighted average life
of the collateral. As of the May 2005 payment date, the WAL of
the portfolio declined to 3.4 years compared with 7.9 years at
closing and 4.1 years since the last rating action. The weighted
average coupon remains relatively unchanged, and assets rated
'BB+' or lower represent 7.2% of the collateral.
The notes pay in principal in sequential order, and there are no
overcollateralization or interest coverage tests.
Fitch will continue to monitor and review this transaction for
future rating adjustments. For more information on the Fitch
VECTOR Model, see 'Global Rating Criteria for Collateralized Debt
Obligations,' dated Sept. 13, 2004, available on Fitch's web site
at http://www.fitchratings.com/
EAGLEPICHER HOLDINGS: Plan Filing Period Stretched to Dec. 7
------------------------------------------------------------
The Honorable J. Vincent Aug, Jr., of the U.S. Bankruptcy Court
for the Southern District of Ohio, Western Division, extended
until December 7, 2005, the time within which EaglePicher
Holdings, Inc., and certain of its debtor-affiliates have the
exclusive right to file a plan of reorganization and disclosure
statement. The Debtors' exclusive period to solicit plan
acceptances is extended through February 6, 2006.
The Debtors tell the Court that they have devoted their time and
effort since the Petition Date to stabilizing their diversified
yet complex business operations and completing the transition to
operations in chapter 11. As a result, they have been unable to
develop and finalize their plan of reorganization or finalize
negotiations with their multiple creditor constituencies.
The Debtors say that the progress in administering their chapter
11 cases justifies the extension of the exclusive periods. Since
the start of their bankruptcy proceedings, the Debtors have worked
to secure a permanent post-petition financing facility and conduct
a review of their executory contracts and leases. The debtors
report progress in the:
a) preparation and evaluation of financial projections;
b) preparation for and attendance at their section 341 meeting
with creditors;
c) preparation and filing of schedules of assets and
liabilities and statements of financial affairs;
d) distribution of substantial due diligence material to the
Committee and professionals retained by the Committee and
to the DIP Lenders and their professionals;
e) regular meetings with the Committee and its professionals
and the DIP Lenders and their professionals to assist them
in the course of their due diligence;
f) negotiation and filing of a stipulation among the Debtors,
Office of the U.S. Trustee, United States Government,
Committee and the DIP Lenders concerning the use of
confidential information concerning EaglePicher
Technologies; and
The Debtors add that the extension to the Exclusive Periods will
permit the Plan process to move forward in an orderly, efficient
and cost-effective manner in order to maximize the value of the
their assets.
Headquartered in Phoenix, Arizona, EaglePicher Incorporated
-- http://www.eaglepicher.com/-- is a diversified manufacturer
and marketer of innovative advanced technology and industrial
products for space, defense, automotive, filtration,
pharmaceutical, environmental and commercial applications
worldwide. The company along with its affiliates filed for
chapter 11 protection on April 11, 2005 (Bankr. S.D. Ohio Case No.
05-12601). When the Debtors filed for protection from their
creditors, they listed $535 million in consolidated assets and
$730 in consolidated debts.
ENRON CORP: Court Okays $41.8 Million RBS Settlement Agreement
--------------------------------------------------------------
The Hon. Arthur Gonzalez of the U.S. Bankruptcy Court for the
Southern District of New York approves in its entirety, the
Settlement Agreement between Reorganized Enron Corporation and its
debtor-affiliates and The Royal Bank of Scotland Group plc, and
nine other RBS Entities. All objections that have not been
withdrawn, waived or settled, including reservations of rights,
are overruled.
Pursuant to the approved Settlement, the RBS Settling Entities
will pay Enron Corp. $41,800,000. In exchange, Enron will pay
$20,000,000 to the RBS Entities for the subordination or transfer
of claim proceeds.
Judge Gonzalez directs the parties to perform their obligations
under the Settlement.
According to the terms of the agreement, RBS will pay Enron
$41.8 million in cash. In addition, RBS will subordinate or
assign to Enron approximately $329 million of claims filed by RBS
in the Enron bankruptcy in return for a $20 million cash payment
from the estate. This agreement resolves all open issues between
Enron and RBS.
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.
156; Bankruptcy Creditors' Service, Inc., 15/945-7000)
EURAMAX HOLDINGS: Moody's Reviews Single-B Ratings for Downgrade
----------------------------------------------------------------
Moody's Investors Service has placed the ratings of Euramax
Holdings, Inc. (borrowers include Euramax Holdings, Inc. (a U.S.
wholly-owned subsidiary of Euramax International, Inc.) and
various European subsidiaries on review for possible downgrade.
The review is based on management's plans to seek an amendment to
the company's current senior secured bank credit facilities, which
would permit it to refinance its $190 million 2nd lien bank loan
and $110 million of holding company PIK notes with senior
subordinate debt at the operating subsidiary.
Ratings on review for possible downgrade include:
Euramax Holdings, Inc. (co-issuer is Euramax International
Holdings B.V.):
* B1 -- Corporate Family Rating
* B1 - Guaranteed first lien senior secured term loan,
$332 million due 2012
* B3 - Guaranteed second lien senior secured term loan,
$190 million due 2012
Euramax Netherlands B.V. (co-issuers are Euramax Holdings Limited
(UK), Euramax Europe B.V.):
* B1 - Guaranteed first lien senior secured term loan,
$118 million due 2012
Euramax Holdings, Inc., (co-issuers are Euramax International
Holdings B.V., Euramax Holdings Limited (UK), Euramax Europe B.V.,
Euramax Netherlands B.V.):
* B1 - Guaranteed first lien senior secured revolving credit
facility, $80 million due 2011
Moody's review will focus on the potential increase in operating
company financial leverage given the $110 million holding company
PIK notes, which Moody's viewed essentially as common equity, will
now be refinanced with cash-pay operating company debt. In
addition, Moody's will assess management's tolerance for increased
financial leverage and the potential constraints on the company's
financial flexibility.
Euramax's ratings, which were initially assigned on June 13,
reflected Moody's expectation that Euramax's debt to EBITDA
(excluding the senior unsecured PIK notes) would decline below 5.0
times over the next year and that the company would generate free
cash flow to debt of at least 5%. During the review process,
should Moody's ascertain that financial leverage will increase to
6.0x and free cash flow to debt below 5% it is likely the
company's ratings will be downgraded.
Moody's hopes to conclude the review process prior to the
conclusion of the amendment process.
Headquartered in Norcross, Georgia, Euramax International Inc. is
an international producer of value-added aluminum, steel, vinyl,
and fiberglass products. The company reported revenues of $1.0
billion for the LTM ended April 1, 2005.
EXIDE TECH: Resets Annual Stockholders' Meeting to Aug. 30
----------------------------------------------------------
As previously reported, Exide Technologies' shareholders will
elect nine directors to serve a one-year term if the elimination
of a classified Board is approved. The nine nominees currently
serving as directors of Exide are:
1. Michael R. D'Appolonia -- Director since 2004
Mr. D'Appolonia, 56, is principal and president of
Nightingale & Associates, LLC, a global management
consulting firm providing financial and operational
restructuring services to both publicly and privately held
middle-market companies. In his consulting capacity, Mr.
D'Appolonia is currently the president of Reorganized Cone
Mills Corporation and from October 2003 to May 2005 served
as Chief Restructuring Officer of Cone Mills Corporation.
From September 2002 to October 2003, he was president and
director of Moll Industries, Inc. Mr. D'Appolonia
previously served as president and chief executive officer
of McCulloch Corporation, Ametech, Inc., Halston Borghese,
Inc., and Simmons Upholstered Furniture Inc. He is also a
member of the board of directors of The Washington Group
International, Inc., and of Reorganized Cone Mills
Corporation. Mr. D'Appolonia is a member of the Audit
Committee and is a Class III director.
2. Mark C. Demetree -- Director since 2005
Mr. Demetree, 48, is chairman and CEO of US Salt Holdings,
LLC, a producer of inorganic chemicals. From 1993 to 1997,
he was president of North American Salt Company. From 1983
to 1987, Mr. Demetree was president of Demetree Brothers,
Inc., an investment group involved in real estate
investment, venture capital investments and corporate
acquisitions. He is non-executive chairman of the board of
Texas Petrochemical, Inc., and is a director of American
Italian Pasta Company, where he is chairman of the
Compensation Committee. Mr. Demetree is also a director
and non-executive chairman of the Board of Pinnacle
Properties Holdings. He is a member of the Nominating and
Corporate Governance Committee and is a Class II director.
3. David S. Ferguson -- Director Nominee
Mr. Ferguson, 60, is the principal of his own retail
consulting business, DS Ferguson Enterprises, LLC, based in
Atlanta, Georgia. He is the retired president and chief
executive officer of Wal-Mart Europe. He served in that
capacity from September 2000 through July 2003. Prior to
that, he was president and chief executive Officer of Wal-
Mart Canada from February 1996 to September 2000. Mr.
Ferguson was president and chief operating officer as well
as on the Board of Directors of Stuarts Department Stores
in Franklin, Massachusetts from August 1994 through October
1995. He has over 30 years experience in the retail
business and is currently vice chairman of the Board of
Advisors of Miller Zell.
4. Phillip M. Martineau -- Director since 2004
Mr. Martineau, 57, is currently an independent business
advisor. Most recently, he was president and CEO of High
Voltage Engineering Corporation from December 2004 through
February 2005. Prior to that, Mr. Martineau was executive
vice president and group president for HON Industries from
2000 to 2003. From 1996 through 1999, he was CEO and
president of ITW-Arcsmith. He was a senior executive for
Pacific Dunlop Ltd., from 1988 to 1994, as president of
Ansell Industrial from 1994 to 1996, and CFO and Vice
President Finance for GNB Technologies from 1988 to 1994.
Mr. Martineau is a member of the board of directors of the
Minnesota Parks and Trails Council. He is also a member of
the Audit Committee and is a Class II director.
5. John P. Reilly -- Director since 2004
Mr. Reilly, 61, is the retired chairman, president and
chief executive officer of Figgie International. He has
more than 30 years of experience in the automotive
industry, where he has served as president and CEO of a
number of automotive suppliers, including Stant Corporation
and Tenneco Automotive. He has also held leadership
positions at the former Chrysler Corporation and Navistar,
and has served as President of Brunswick Corporation. Mr.
Reilly is currently on the board of directors of Material
Sciences Corporation and Marshfield Door Systems. He
currently serves as chairman of the Board, a member of the
Compensation Committee, and is a Class I director.
6. Michael P. Ressner -- Director since 2004
Mr. Ressner, 56, is a retired Nortel Networks executive
who, between 1981 and 2003, served in a number of senior
financial and operational management positions. He was an
adjunct professor of Applied Financial Management at North
Carolina State University between 2002 and 2004. He is
currently an adviser within the College of Management at
North Carolina State University. Mr. Ressner currently
serves as a member of the board of directors for these
companies: Arsenal Digital Solutions, Entrust, Magellan
Health Services, Proxim Corporation and Riverstone
Networks. He is Chairman of the Audit Committee and a
member of the Nominating and Corporate Governance
Committee, and is a Class II director.
7. Carroll R. Wetzel -- Director Nominee
Mr. Wetzel, 62, most recently served as chairman of the
Board of Safety Components International, Inc., a supplier
of automotive airbag fabric and cushions and technical
fabrics from 2000 to 2005. From 1988 until the merger with
Chase Manhattan Bank, Mr. Wetzel was the head of the
Mergers and Acquisition Group of Chemical Banks, and
Co-Head of the Group following that merger. He currently
serves as a member of the board of directors of Laidlaw
International, Inc.
8. Jerome B. York -- Director since 2005
Mr. York, 67, is chief executive officer of Harwinton
Capital Corporation, a private investment company that he
founded in 2000. From 2000 until 2003, he was chairman,
president and chief executive officer of MicroWarehouse
Inc. Earlier, Mr. York served as vice chairman of Tracinda
Corporation and as senior vice President and chief
financial officer of IBM Corporation. Prior to joining
IBM, he was executive vice president for finance and chief
financial officer of Chrysler Corporation. He currently
serves on the board of directors of Apple Computer Inc.,
and Tyco International Ltd. Mr. York is chairman of the
Nominating and Corporate Governance Committee, and is a
Class III director.
9. Gordon A. Ulsh -- Director since 2005
Mr. Ulsh, 59, is Exide's president and chief executive
officer. He was appointed to his current position in April
2005. From 2001 until March 2005, Mr. Ulsh was chairman,
president and CEO of Texas-based FleetPride Inc., the
nation's largest independent aftermarket distributor of
heavy-duty truck parts. Prior to joining FleetPride in
2001, he worked with Ripplewood Equity Partners, providing
analysis of automotive industry segments for investment
opportunities. Earlier, he served as president and chief
operating officer of Federal-Mogul Corporation in 1999 and
as head of its Worldwide Aftermarket Division in 1998.
Prior to Federal-Mogul, he held a number of leadership
positions with Cooper Industries, including Executive Vice
President of its automotive products segment. Mr. Ulsh
joined Cooper's Wagner Lighting business unit in 1984 as
Vice President of Operations, following 16 years in
manufacturing and engineering management at Ford Motor
Company, and is a Class I director.
The Board has determined that each of the director nominees,
except Mr. Ulsh, is an "independent director" as defined in the
listing standards of The Nasdaq Stock Market.
If the elimination of a classified Board is not approved by the
shareholders, the Class I directors standing for reelection,
Messrs. Reilly and Ulsh, as well as director nominee Mr. Wetzel,
will be nominees for election to serve a term set to expire at
the annual meeting in 2008 and until their successors are duly
elected and qualified. Eugene I. Davis has decided not to seek
reelection to the Board.
Other Issues
In consultation with major shareholders, Exide's Board has agreed
on five more proposals to shareholders at the 2005 annual
meeting:
A. Amendment of the Exide's Certificate Of Incorporation to
Eliminate The Classified Board of Directors
Exide's Certificate of Incorporation currently provides that the
Board is divided into three classes -- Class I, Class II and
Class III -- with each class as evenly divided in number as
possible and with each class serving a three-year term.
The term of the Class I directors is set to expire in 2005, the
term of the Class II directors is set to expire in 2006, and the
term of the Class III directors is set to expire in 2007.
Recent corporate governance reforms initiated by The Nasdaq Stock
Market place heavy emphasis on the independence of directors and,
in certain circumstances, may require corporations to adjust the
composition of their boards of directors and committees of the
board to comply with independence requirements.
The Board believes that eliminating the Classified Board of
Directors will allow the shareholders to elect directors on an
annual basis and exercise influence over a corporation and
encourage proxy contests in which shareholders have an
opportunity to vote for a competing slate of nominees.
B. Amendment of Exide's Certificate of Incorporation to
Remove the Limitation on the Maximum Number of Directors that
can Serve on the Board
Exide's Certificate of Incorporation currently provides that the
number of directors on the Board will be not less than seven and
not more than nine.
The Board believes that removing the limitation on the maximum
number of directors on the Board will provide flexibility for the
addition of future director candidates whose background and
skills would prove beneficial to the Company and its
shareholders.
C. Amendment of Exide's Certificate of Incorporation to
Permit Holders of Outstanding Shares Representing at Least 15%
of the Voting Power of Exide Capital Stock to Call Special
Meetings of Shareholders
Exide's Certificate of Incorporation currently provides that
meetings of shareholders may be called only by the Chairman of
the Board, the Chief Executive Officer, the Secretary or the
Board pursuant to a resolution adopted by a majority of the
Board, and explicitly denies shareholders the ability to call
special meetings among themselves.
The Board believes that, in certain circumstances, shareholders
should have the ability to call special meetings. However, the
Board is concerned that granting shareholders holding only a
nominal amount of the voting power of Exide capital stock the
ability to call special meetings could result in an unnecessary
number of meetings which would be of little or no benefit to the
shareholders as a whole and which would impose significant
administrative and financial burdens on the Company.
Accordingly, to strike an appropriate balance, the Board wants to
permit holders of outstanding shares representing at least 15% of
the voting power of Exide capital stock to call special meetings
of shareholders.
D. Approval of the 2004 Stock Incentive Plan
The Board of Directors recommends that shareholders approve
Exide's 2004 Stock Incentive Plan. Based on the Compensation
Committee's recommendation, on September 7, 2004, the Board
unanimously approved the 2004 Plan, subject to shareholder
approval.
The 2004 Plan provides for grants of stock options, restricted
shares and performance awards to select key management employees,
directors and consultants of Exide. The 2004 Plan is intended to
assist Exide in attracting and retaining valuable executive
leadership while providing long-term value to Exide's
shareholders.
E. Ratification of PricewaterhouseCoopers' Appointment
as Exide's Independent Auditors for Fiscal Year 2006
The Audit Committee selects Exide's independent auditors.
However, the Board believes that the proposal is a good corporate
practice to seek shareholder ratification of the Audit
Committee's appointment of the independent auditors.
The Board informs the shareholders that if the appointment of
PricewaterhouseCoopers, LLP, is not ratified, the Audit Committee
will evaluate the basis for the shareholders' vote when
determining whether to continue the firm's engagement, but may
ultimately determine to continue the engagement of the firm or
another audit firm without re-submitting the matter to the
shareholders.
Thus, even if the appointment of PricewaterhouseCoopers is
ratified, the Audit Committee may in its sole discretion
terminate the engagement of the firm and direct the appointment
of another independent auditor at any time during the year.
PricewaterhouseCoopers rendered these services for the audit of
Exide's annual financial statements and internal control:
Fiscal 2005 Fiscal 2004
----------- -----------
Audit fees $7,418,229 $3,473,522
Audit-related fees 436,404 77,732
Tax fees 11,163 23,160
All other fees 19,083 27,746
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.
FALCON PRODUCTS: Files Plan & Disclosure Statement in Missouri
--------------------------------------------------------------
Falcon Products, Inc., delivered its Joint Plan of Reorganization
and accompanying Disclosure Statement to the U.S. Bankruptcy Court
for the Eastern District of Missouri, Eastern Division.
The Plan is co-proposed by OCM Principal Opportunities Fund II,
LP, and Whippoorwill Associates, Inc.
The Court will convene a hearing to review the adequacy of the
disclosure statement on August 24, 2005, at 9:00 a.m.
Business Consolidation
The Reorganized Debtors' profitability is dependent on the success
of its consolidation plan. The plan is designed to increase their
responsiveness to customers, add value through reduced costs and
reliability, improve efficiency and financial performance. These
steps include:
a) consolidation and reduction of administrative overhead
along with elimination of redundancies and inefficiencies
throughout the entire company;
b) alignment of sales, marketing and customer service
functions with the manufacturing and product development
functions in order to improve responsiveness and quality;
c) continued growth of the Debtors' international design and
sourcing capabilities;
d) creation of partnership network with high quality suppliers
who provide superior value;
e) improvement of customer service by exceeding expectations
in product quality and designs, and improving the
timeliness of deliveries in order to provide maximum value
and satisfaction;
f) consolidation of product lines by eliminating low-margin,
low-volume wood chairs, conference tables, metal stack
chairs and other product lines;
g) downsizing of facilities in the United States and
relocation of support services, accounting, field service,
and customer service functions to Tennessee; production
will be concentrated in the Morristown and Newport
facilities;
h) outsourcing product and reducing material costs;
i) process improvement in plants and improvement in support
functions;
j) implementing a pricing strategy which will maximize
profitability in the future; a tiered-pricing based on
standards will be introduced to customers;
k) quality improvements; and
l) disposition of subsidiaries and other assets:
-- transition of employees to the Morristown facility;
-- downsizing the St. Louis headquarters;
-- sale of the Phillocraft product lines;
-- closure of the Epic offices in Florida; and
-- sale of Sellers & Josephson, Inc., the Mimon facility in
the Czech Republic and excess inventory.
Plan Structure
Under the Plan, these claims will be fully paid in cash:
-- allowed administrative claims;
-- allowed administrative tax claims;
-- DIP facility; and
-- priority claims.
General unsecured creditors and noteholders won't get anything
under the Plan. However, these creditors will be given the right
to purchase shares of the New Common Stock of Reorganized Falcon.
A portion of the New Common Stock of Reorganized Falcon will be
issued to the Term B Secured Lenders in exchange for their $45.7
million claims, subject to dilution by the Rights Offering and the
Management Incentive Plan. The Rights Offering is expected to
infuse $30 million in cash into Reorganized Falcon.
OCM POF II, OCM POF III, OCM POF III-A, Whipporwill and Dalton
will lend $20 million to the Reorganized Debtors pursuant to the
Term B secured loan.
Proceeds from the Rights Offering and the Term B secured loan will
be used to pay down $25 million of what's owed to the Term A
secured lenders. The $45 million balance will be reinstated in
accordance with the Amended Term A Loan Agreement.
The $37.8 million DIP loan will be paid by $20 million from the
proceeds of the Rights Offering and the Term B secured loan, and
then will be refinanced and replaced by an exit facility of at
least $45 million.
Shareholders won't get anything under the Plan.
The Debtors will emerge as a private company and the New Common
Stock to be issued will be restricted securities that are not
publicly traded and will have limited liquidity.
Headquartered in Saint Louis, Missouri, Falcon Products, Inc.
-- http://www.falconproducts.com/-- designs, manufactures, and
markets an extensive line of furniture for the food service,
hospitality and lodging, office, healthcare and education segments
of the commercial furniture market. The Debtor and its eight
debtor-affiliates filed for chapter 11 protection on January 31,
2005 (Bankr. E.D. Mo. Lead Case No. 05-41108). Brian Wade
Hockett, Esq., and Mark V. Bossi, Esq., at Thompson Coburn LLP
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$264,042,000 in assets and $252,027,000 in debts.
FALCON PRODUCTS: Ad Hoc Panel Wants Documents from Plan Proponents
------------------------------------------------------------------
The Ad Hoc Committee of Unsecured Creditors of Falcon Products,
Inc., and its debtor-affiliates asks the Honorable Barry S.
Schermer of the U.S. Bankruptcy Court for the Eastern District of
Missouri for permission to examine, pursuant to Rule 2004 of the
Federal Rules of Bankruptcy Procedure, the co-proponents of the
Debtors' Joint Plan of Reorganization, dated July 20, 2005. The
Ad Hoc Committee wants to talk to:
(1) the Debtors;
(2) Oaktree Capital Management, LLC; and
(3) Whippoorwill Associates, Inc.
Oaktree and Whippoorwill are the Debtors' largest unsecured
creditors, collectively holding 62.75% of the Debtors' unsecured
bond debt. Oaktree also holds 5% or more of Falcon's voting
stock.
The Ad Hoc Committee wants to get its hands on these documents:
(a) financial information determined by Saybrook Capital, LLC
-- the Committee's financial advisor -- to be reasonably
necessary for the Ad Hoc Committee to test the contention
that unsecured creditors are "out-of-the-money";
(b) the negotiation and documentation of the original plan
outlined on the Petition Date, the Plan being prosecuted,
and any other plans that have been proposed or discussed
among the Debtors, Oaktree, and Whippoorwill;
(c) communications among the Debtors and their preferred
creditor constituencies;
(d) the Debtors' selection and employment of turn-around
management and professionals;
(e) minutes of Debtor board meetings;
(f) potential estate causes of action that may be retained by
the reorganized company (i.e., value for Oaktree and
Whippoorwill) or waived under the Plan; and
(g) potential transactions that the Debtors, Oaktree, and
Whippoorwill may have in mind post-consummation.
The Committee is also concerned that the Debtors propose exiting
Chapter 11 at this point in time when:
(a) the Debtors have virtually no long-term senior management
in place, only turnaround managers;
(b) the Debtors did not disclose in their Disclosure Statement
who will run the business post-consummation;
(c) the Debtors have not yet stabilized operations and continue
to run on a negative cash flow, as reported by their most
recent operating report;
(d) the Debtors just received their business plan that outlines
the Debtors' operational restructuring, most of which is
supposed to be implemented postconsummation;
(d) the Debtors remain under investigation by the United States
Attorney, Securities & Exchange Commission, and the
Missouri Department of Securities for pre-petition
accounting errors and irregularities pertaining to
financial disclosures concerning the Debtors' inventory
levels;
(e) despite the on-going investigations, the Debtors still do
not have internal controls and an integrated inventory
system; and
(f) the Debtors purportedly have not yet investigated the value
of estate causes of action to be retained by the Debtors or
waived under the Plan, including claims arising from the
"accounting errors and irregularities" or sounding in
preferences or fraudulent conveyance.
No rational debtor acting without outside influence would want to
exit the protections of Chapter 11 under such circumstances.
Rather, timing suggests there may be an effort to ascribe an
artificially depressed value to the estates.
First Joint Plan
On Jan. 31, 2005, the Debtors filed with the SEC a press release
outlining the terms of a plan of reorganization co-sponsored by
Oaktree and Whippoorwill. The plan contemplated:
(a) the conversion of $100 million of the Debtors' unsecured
notes into common stock;
(b) no impairment to the Debtors' trade creditors"; and
(c) that the holders of the Debtors' junior convertible
securities, existing common stock and outstanding warrants
to purchase common stock will receive 2.5% of the common
stock of the restructured Company.
Second Joint Plan
On July 20, 2005, the Debtors submitted another Plan and
identified Oaktree and Whippoorwill as co-proponents. Under the
Plan:
(a) Term A secured debt is to receive a large cash payment and
reinstatement of the remaining debt.
(b) Term B secured debt is to receive 100% of the stock of the
reorganized company, subject to dilution via a rights
offering backstopped by Oaktree and Whippoorwill and
an incentive plan for management.
(c) Unsecured creditors receive nothing.
The reorganized company retains all estate causes of action and
claims, including those arising from the accounting errors and
irregularities and sounding in avoidance but all estate
and third-party claims against Oaktree and Whippoorwill (as well
as certain other lenders riding on their coattails) are released
under the Plan.
On Feb. 14, 2005, Oaktree and Whippoorwill acquired the secured
Term B debt. Spencer P. Desai, Esq., at Polsinelli Shalton Welte
Suelthaus PC tells the Court that 14 days before the Term B debt
acquisition, the Debtors filed with the Court a statement valuing
their estates at $264 million. But 21 days after the Term B
acquisition, the Debtors filed another statement valuing their
assets at only $85.4 million. The Disclosure Statement does not
adequately explain how the Debtors lost $178.6 million (or 68%
of their asset base) in just five weeks.
Turnaround Consultants
On Feb. 18, 2005, John S. Sumner, Jr., of TRG Turnaround and
Crisis Management was brought in to replace Alvarez & Marsal LLC
-- at Oaktree and Whippoorwill's behest. A few months later, Mr.
Jacobs resigned from the company and Mr. Sumner assumed his role
as Chief Executive Officer.
Spencer P. Desai, Esq., and Sherry K. Dreisewerd, Esq., at
Polsinelli Shalton Welte Suelthaus PC and Robert J. Stark, Esq.,
at Brown Rudnick Berlack Israels LLP represent the Ad Hoc
Committee of Unsecured Creditors.
Headquartered in Saint Louis, Missouri, Falcon Products, Inc. --
http://www.falconproducts.com/-- designs, manufactures, and
markets an extensive line of furniture for the food service,
hospitality and lodging, office, healthcare and education segments
of the commercial furniture market. The Debtor and its eight
debtor-affiliates filed for chapter 11 protection on January 31,
2005 (Bankr. E.D. Mo. Lead Case No. 05-41108). Brian Wade
Hockett, Esq., and Mark V. Bossi, Esq., at Thompson Coburn LLP
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$264,042,000 in assets and $252,027,000 in debts.
FLEETWOOD ENT: Withdraws Proposed Securities Exchange Offer
-----------------------------------------------------------
Fleetwood Enterprises, Inc. (NYSE: FLE) is submitting a request to
the Securities and Exchange Commission for the withdrawal of its
proposed exchange offer relating to its 6% convertible trust
preferred securities.
On July 22, 2005, the Company filed a registration statement with
the SEC regarding a proposed exchange offer and consent
solicitation relating to all the outstanding 6% convertible trust
preferred securities. Fleetwood proposed to exchange new
convertible senior subordinated debentures for up to the
outstanding liquidation amount of $201 million of the trust
preferred securities. Since that filing, the market value of the
trust preferred securities has increased while the market values
of the Company's common stock and its 5% senior subordinated
debentures have declined, making the exchange economically
unattractive to Fleetwood.
"Based on the market value relationships of our various securities
at the time of the filing," Chief Financial Officer Boyd R.
Plowman said, "we believed we would be able to reduce our
outstanding liabilities, eliminate all or a substantial portion of
the existing deferred distributions on the trust preferred
securities, reduce interest expense and improve our capital
structure and credit statistics through an accretive exchange.
The change in the relationships of the market values has placed
this goal out of reach."
The Company will continue to explore its alternatives regarding
the deferred distributions on the trust preferred securities.
Fleetwood Enterprises, Inc. -- http://www.fleetwood.com/-- is a
leading producer of recreational vehicles and manufactured homes.
This Fortune 1000 company, headquartered in Riverside, California,
is dedicated to providing quality, innovative products that offer
exceptional value to its customers. Fleetwood operates facilities
strategically located throughout the nation, including
recreational vehicle, manufactured housing and supply subsidiary
plants.
* * *
As reported in the Troubled Company Reporter on July 22, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Fleetwood Enterprises Inc. to 'B+' from 'BB-'. S&P said
the outlook is negative. At the same time, the rating assigned to
the company's convertible senior subordinated debentures is
lowered to 'B-' from 'B'. The rating assigned to Fleetwood
Capital Trust's convertible trust preferred securities remains
'D', as Fleetwood continues to defer payment of related dividends.
FOAMEX INT'L: Has Until Sept. 30 to Pay Sr. Sub. Noteholders
------------------------------------------------------------
Foamex L.P., the primary operating subsidiary of Foamex
International Inc., executed amendments to its Senior Secured
Credit Facility and Secured Term Loan that waive through
September 30, 2005, the default caused by the failure to remit
payment to the holders of the 13-1/2% Senior Subordinated Notes.
In addition, the amendments waive compliance with the fixed charge
coverage ratio covenant for the quarter ended July 3, 2005, and
permit Foamex to utilize additional proceeds from the sale of the
previously announced rubber and felt carpet cushion businesses for
working capital and other corporate purposes.
If Foamex commences a Chapter 11 case, Foamex's senior lenders
have committed to provide debtor-in-possession facilities, subject
to court approval. The lenders under the Senior Secured Credit
Facility have also agreed to a commitment for exit financing upon
Foamex's emergence from Chapter 11, subject to an acceptable plan
of reorganization.
Headquartered in Linwood, Pa., Foamex International Inc. --
http://www.foamex.com/-- is the world's leading producer of
comfort cushioning for bedding, furniture, carpet cushion and
automotive markets. The Company also manufactures high-
performance polymers for diverse applications in the industrial,
aerospace, defense, electronics and computer industries.
At Apr. 3, 2005, Foamex International's balance sheet showed a
$369.2 million stockholders' deficit, compared to a $358.3 million
deficit at Jan. 2, 2005.
* * *
As reported in the Troubled Company Reporter on Aug. 17, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Foamex L.P./Foamex Capital Corp. to 'D' from 'CCC+',
following the company's failure to make a $51.6 million principal
payment on its 13.5% subordinated notes that mature Aug. 15, 2005.
The rating was removed from CreditWatch with negative
implications, where it was placed on July 11, 2005, on concerns
that Foamex's leveraged financial profile and liquidity would
continue to deteriorate.
At the same time, Standard & Poor's lowered its rating on the
13.5% notes to 'D' from 'CCC-' and removed the rating from
CreditWatch with negative implications. The ratings on the $300
million senior secured second lien notes due 2009 and the $150
million senior subordinated notes due 2007 were also lowered, to
'C' from 'CCC-', and remain on CreditWatch with negative
implications. The CreditWatch listing will be resolved and the
ratings lowered to 'D' after the company concludes negotiations to
restructure the obligations or if a scheduled interest or
principal payment is missed. Standard & Poor's notes that
Foamex's restructuring could be implemented by means of a Chapter
11 Bankruptcy filing, possibly including a prepackaged
restructuring plan.
As reported in the Troubled Company Reporter on July 15, 2005,
Moody's Investors Service has lowered the ratings for Foamex L.P.
and Foamex Capital Corporation and their outstanding debt
obligations. Moody's says the outlook remains negative.
Ratings lowered:
* $148.5 million of 9.875% senior subordinated notes, due
2007, from Caa2 to Ca
* $51.6 million of 13.5% senior subordinated notes, due 2005,
from Caa2 to Ca
* $300.1 million of 10.75% senior secured notes, due 2009,
from B3 to Caa2
* Corporate family rating, from B3 to Caa2
GE COMMERCIAL: Fitch Affirms Low-B Rating on Five Cert. Classes
---------------------------------------------------------------
Fitch Ratings affirms GE Commercial Mortgage Corporation, series
2003-C2 certificates:
-- $45.8 million class A-1 at 'AAA';
-- $165.1 million class A-2 at 'AAA';
-- $54.3 million class A-3 at 'AAA';
-- $406.1 million class A-4 at 'AAA';
-- $277.4 million class A-1A at 'AAA';
-- Interest-only class X-1 at 'AAA';
-- Interest-only class X-2 at 'AAA';
-- $35.5 million class B at 'AA';
-- $14.8 million class C at 'AA-';
-- $26.6 million class D at 'A';
-- $14.8 million class E at 'A-';
-- $14.8 million class F at 'BBB+';
-- $14.8 million class G at 'BBB';
-- $14.8 million class H at 'BBB-';
-- $19.2 million class J at 'BB+';
-- $7.4 million class K at 'BB';
-- $8.9 million class L at 'BB-';
-- $4.4 million class M at 'B+';
-- $7.4 million class N at 'B';
-- $3 million class O at 'B-';
-- $3.3 million class BLVD-1 at 'A';
-- $2.5 million class BLVD-2 at 'A-';
-- $4.5 million class BLVD-3 at 'BBB+';
-- $3.5 million class BLVD-4 at 'BBB';
-- $8 million class BLVD-5 at 'BBB-'.
Fitch does not rate $20.7 million class P certificates.
The rating affirmations reflect the stable pool performance and
minimal paydown since issuance. As of the July 2005 distribution
date, the pool's aggregate certificate balance has decreased 2.3%
to $1.18 billion from $1.21 billion at issuance. To date, there
have been no loan payoffs or realized losses within the
transaction.
One loan (0.42%) is currently 90 days delinquent and in special
servicing. The loan is secured by a retail property in Hurst, TX.
A forbearance agreement is being negotiated.
Fitch has reviewed credit assessments of the DDR Portfolio (6.3%),
The Boulevard Mall (4.0%), and Wellbridge Portfolio (1.9%) loans.
The debt service coverage ratio for each loan is calculated using
borrower-provided net operating income less required reserves
divided by debt service payments based on the current balance
using a Fitch stressed refinance constant. Based on their stable-
to-improved performance, all loans maintain investment grade
credit assessments.
The DDR Retail portfolio, the largest loan in the pool (6.3%), is
secured by seven retail properties, with a total of 1.8 million
square feet. The properties are located in IN, OH, CA, VA, and
FL. The combined year-end 2004 DSCR, based on the A-Note only, was
1.81 times (x) compared to 1.92x at issuance. The average
occupancy was 92% vs. 99% during the same period.
The Boulevard Mall (4.0%) is secured by a 1.2 million sf regional
mall in Las Vegas, NV, of which 587,170 sf represents collateral.
The A-Note has been divided into two pari-passu notes: A-1 ($47.8
million) in this trust, and A-2, which is securitized in GMAC
2003-C2. The B-Note, a $21.8 million non-pooled portion of the
loan, is also in this trust and collateralizes classes BLVD-1
through BLVD-5. The YE 2004 DSCR, based on the A-Note only, was
1.64x, compared to 1.74x at issuance. The occupancy was 97% as of
YE 2004, up from 93% at issuance.
The Wellbridge portfolio is secured by high-end health and fitness
clubs in Minnesota and New Mexico totaling 1.6 million sf. The A-
Note of this credit assessment has been divided into three notes:
A-1, A-2, and A-3 (22.4 million), which is in this trust. As of
YE 2004, the Fitch stressed DSCR, for the A-Note only, has
increased to 3.39x from 2.85x at issuance.
GENERAL BINDING: Stockholders Okay ACCO World Merger
----------------------------------------------------
General Binding Corporation's (NASDAQ: GBND) stockholders voted to
approve the Company's previously announced merger with ACCO World
Corporation, the office products unit of Fortune Brands, Inc.
(NYSE:FO), at the special meeting of stockholders held on Aug. 15
at the Company's headquarters.
Upon completion of Fortune Brands' spin-off of ACCO World
Corporation and ACCO World's merger with General Binding
Corporation, transactions that are expected to be completed very
shortly, the combined company will be known as ACCO Brands
Corporation, with its common stock traded on the New York Stock
Exchange.
"The Company and its Board of Directors are excited about the
potential for the merged company," said Mr. Dennis Martin, GBC's
Chairman, President and CEO. "This transaction, which creates a
unified, larger and stronger company, is the next appropriate step
after GBC's transformation over the past four years. The
efficiencies created by this combination will make ACCO Brands
Corporation more competitive and create more value for our
customers. At the same time, the capital structure of the
combined company will provide increased liquidity for GBC's
shareholders, while the size and growth potential of the new ACCO
Brands Corporation will create more opportunity for our
employees."
O August 17, 2005, GBC common and Class B common stockholders
received the right to receive one share of ACCO Brands Corporation
common stock for each GBC common or Class B common share they own.
As a result of the transaction, GBC common stock no longer traded
on The NASDAQ Stock Market after the completion of trading on
August 16, 2005.
ACCO Brands Corporation common stock began trading on the New York
Stock Exchange beginning August 17, 2005 under the ticker symbol
ABD.
Documents relating to the Merger are available for free at
http://ResearchArchives.com/t/s?ba
Fortune Brands, Inc. is a $7 billion leading consumer brands
company. Its operating companies have premier brands and leading
market positions in home and hardware products, spirits and wine,
golf equipment and office products. Home and hardware brands
include Moen faucets, Aristokraft, Schrock, Diamond and Omega
cabinets, Therma-Tru door systems, Master Lock padlocks and
Waterloo tool storage sold by units of Fortune Brands Home &
Hardware, Inc. Major spirits and wine brands sold by units of Jim
Beam Brands Worldwide, Inc., include Jim Beam and Knob Creek
bourbons, DeKuyper cordials, The Dalmore single malt Scotch, Vox
vodka and Geyser Peak and Wild Horse wines. Acushnet Company's
golf brands include Titleist, Cobra and FootJoy. Office brands
include Swingline, Wilson Jones, Kensington and Day-Timer sold by
units of ACCO World Corporation. Fortune Brands, headquartered in
Lincolnshire, Illinois, is traded on the New York Stock Exchange
under the ticker symbol FO and is included in S&P 500 Index and
the MSCI World Index.
The ACCO World Corporation unit of Fortune Brands is a world
leader in branded office products. With leading brands including
Swingline, Wilson Jones, Kensington, Day-Timer, Boone, Apollo and
Rexel, the company's innovative products help people work more
efficiently, more comfortably and more productively than ever
before. ACCO's annual sales exceed $1.1 billion. The company is
headquartered in Lincolnshire, Illinois.
General Binding Corporation (GBC) is a world leader in products
that bind, laminate, and display information enabling people to
accomplish more at work, school and home. GBC's products are
marketed in over 100 countries under the GBC, Quartet, and Ibico
brands. These products are designed to help people enhance
printed materials and organize and communicate ideas. The company
is headquartered in Northbrook, Illinois.
* * *
As reported in the Troubled Company Reporter on Apr. 1, 2005,
Standard & Poor's Ratings Services affirmed its ratings on General
Binding Corp., including its 'B+' corporate credit rating.
At the same time, Standard & Poor's removed the ratings from
CreditWatch, where they had been placed on March 16, 2005. S&P
says the outlook is stable.
As reported in the Troubled Company Reporter on Mar. 29, 2005,
Moody's Investors Service affirmed the ratings of General Binding
Corporation and changed the outlook from positive to stable.
Moody's affirmed these ratings:
* $73 million senior secured revolving credit facility due
2008, rated B2;
* $112 million senior secured term loan due 2008, rated B2;
* $150 million 9.375% senior subordinated notes due 2008,
rated Caa1;
* Senior implied, rated B2; and
* Senior unsecured issuer rating (non-guaranteed exposure),
rated B3.
GLOBALNET CORP: Names Thomas Dunn as Chief Financial Officer
------------------------------------------------------------
The Board of Directors for GlobalNet Corporation (Pink Sheets:
GLBT appointed Thomas P. Dunn as CFO replacing Tom Seifert who
resigned to pursue other business opportunities.
"Mr. Dunn brings tremendous financial and accounting experience to
GlobalNet and we are fortunate to have him join our team," said
Mark T. Wood, Chairman and CEO of GlobalNet. "He will begin
working with the Company's new auditors and focus his time towards
completing GlobalNet's prior announced on-going financial analysis
so we can complete our 2004 audit and filings," continued Mr.
Wood.
"I am very pleased to be joining GlobalNet at this stage in its
corporate restructuring," added Mr. Dunn. "This is a new
opportunity in what I believe to be a growing market. I look
forward to joining the Company's team and contributing to the
growth and success of GlobalNet," said Mr. Dunn.
Mr. Dunn was most recently president of First Wave Marine, Inc.
where, in various officer capacities, he helped the shipbuilding
and repair company successfully emerge from bankruptcy protection.
Dunn has also worked for international telecommunications
companies and has experience in the areas of restructurings and
mergers and acquisitions.
Mr. Dunn has held corporate controller and other executive
positions with private and publicly listed NYSE and NASDAQ
companies. Mr. Dunn holds a Masters Degree in Accounting from the
University of Virginia and is a Certified Public Accountant.
"Tom performed an important role in our corporate development and
restructuring," In commenting on Seifert's resignation, Mr. Wood
"said. His leadership contributed to our ability to raise capital
in a difficult environment and weather existing telecom market
realities." Mr. Wood continued, "We wish Tom great success in his
future endeavors."
Headquartered in New York, New York, GlobalNet International LLC
is engaged in the wholesale global telecommunications business.
The Company filed for chapter 11 protection on June 30, 2004
(Bankr. S.D.N.Y. Case No. 04-14480). Scott S. Markowitz, Esq.,
at Todtman, Nachamie, Spizz & Johns, P.C., represented the Debtor
in its chapter 11 case. When the Debtor filed for protection from
its creditors, it did not disclose its assets but listed
$1,823,799,468 in total debts.
As reported in the Troubled Company Reporter on June 30, 2005, the
Court dismissed the Debtor's chapter 11 case with the Debtor's
primary creditors supporting the dismissal.
GlobalNet Corporation -- http://www.gbne.net/-- is one of the top
ten U.S. service providers of outbound traffic to Latin America
and counts among its customers more than 30 Tier 1 and Tier 2
carriers. GlobalNet provides international voice, data, fax and
Internet services on a wholesale basis over a private IP network
to international carriers and other communication service
providers in the U.S. and internationally. GlobalNet's state-of-
the-art IP network, utilizing the convergence of voice and data
networking, offers customers economical pricing, global reach and
an intelligent platform that guarantees fast delivery of value-
added services and applications.
GMACM MORTGAGE: Fitch Puts BB Rating on $1.8 Million Private Class
------------------------------------------------------------------
Fitch rates GMACM Mortgage pass-through certificates, 2005-AR5:
-- $571,793,100 classes 1-A-1, 1-A-2, 2-A-1, 2-A-2, 3-A-1, 3-
A-2, 4-A-1, 4-A-2, 5-A-1, and R certificates (senior
certificates) 'AAA';
-- $11,940,000 class M-1 'AA';
-- $5,375,000 class M-2 'A';
-- $2,985,000 class M-3 'BBB';
-- $1,790,000 privately offered class B-1 'BB'.
The privately offered class B-2 ($1,795,000) and class B-3
($1,496,549) are not rated by Fitch.
The 'AAA' rating on the senior certificates reflects the 4.25%
subordination provided by the 2.00% class M-1, the 0.90% class M-
2, the 0.50% class M-3, the 0.30% class B-1, the 0.30% class B-2,
and the 0.25% class B-3.
Fitch believes the above credit enhancement will be adequate to
support mortgagor defaults as well as bankruptcy, fraud, and
special hazard losses in limited amounts. In addition, the
ratings reflect the quality of the mortgage collateral and the
strength of the legal and financial structures and GMAC Mortgage
Corporation's capabilities as servicer. Fitch currently rates
GMAC Mortgage Corporation an 'RPS1' as a primary servicer for
prime residential mortgage loans.
The total mortgage pool consist of 1,411 hybrid adjustable-rate
mortgage loans with an aggregate principal balance of
approximately $597,174,649.20 as of the cut-off date, secured by
first liens on one- to four-family residential properties. The
weighted-average original loan-to-value ratio was 72.32%. Cash-
out and rate/term refinance loans represent 26.99% and 14.75%,
respectively, of the mortgage pool. Second homes and investor
property account for 5.61% and 1.73%, respectively, of the pool.
The average loan balance is $423,227. The weighted average FICO
credit score is approximately 737. The three states that
represent the largest portion of mortgage loans are California
(36.88%), Massachusetts (7.70%), and New Jersey (6.13%).
None of the mortgage loans are 'high cost' loans as defined under
any local, state, or federal laws. For additional information on
Fitch's rating criteria regarding predatory lending legislation,
see the press release 'Fitch Revises Rating Criteria in Wake of
Predatory Lending Legislation,' dated May 1, 2003, available on
the Fitch Ratings web site at http://www.fitchratings.com/
The loans were sold by GMACM to Residential Asset Mortgage
Products, the depositor. The depositor, a special purpose
corporation, deposited the loans in the trust, which then issued
the certificates. For federal income tax purposes, election will
be made to treat the trust fund as one or more real estate
mortgage investment conduits.
GRAHAM PACKAGING: Incurs $7.4 Million Net Loss for Second Quarter
-----------------------------------------------------------------
Graham Packaging Holdings Company, the parent company of Graham
Packaging Company, L.P., reported a 130.2% gain in net sales and a
19.8% gain in operating income for the second quarter of 2005, as
compared to the second quarter of 2004.
Chairman and CEO Philip R. Yates said net sales for the three
months ended June 30, 2005, totaled $644.7 million, an increase of
$364.6 million, or 130.2 percent, from net sales of $280.1 million
for the three months ended June 27, 2004.
Mr. Yates attributed the increase primarily to Graham Packaging's
acquisition last October of OIPC, the plastic blow-molded
container business of O-I, and an increase in resin pricing.
Graham Packaging essentially doubled in size as a result of the
$1.2 billion acquisition of OIPC, with combined pro forma sales of
$2.2 billion in 2004.
Overall in the second quarter, the number of container units sold
increased 79 percent as compared to the second quarter of 2004.
On a geographic basis, second-quarter net sales in North America
were up $332.1 million, or 142.3 percent, over the second quarter
of 2004. The increase was due primarily to the acquisition of
OIPC and increases in resin pricing. Net sales were up 70.4
percent in Europe and 65.6 percent in South America. These
increases were credited to the acquisition of OIPC and favorable
changes in exchange rates.
"We are at the nine-month point following the acquisition of OIPC,
and the integration of the two organizations is proceeding well,
but with the normal set of challenges in closing and consolidating
plants, moving lines, and starting new equipment," Yates said.
"During the second quarter," he added, "we relocated and
re-installed equipment across our plant network and installed five
new high-speed blowmolders to boost our productivity. This
resulted in a one-time increase in project start-up costs of
$7.4 million when compared to the second quarter 2004. We are
managing this elevated level of integration and restructuring
activity while also working to reduce excess costs at a few key
plants. As we move from the peak of our integration and
restructuring work, our combined resources will drive the
operations improvements and technological developments that were
the basis for the acquisition."
Mr. Yates said that although shipments in a couple of product
areas were softer than expected, net sales for the six months
ended June 30, 2005, totaled $1,265.3 million, an increase of
$724.9 million, or 134.1 percent, over net sales of $540.4 million
for the six months ended June 27, 2004.
Chief Financial Officer John E. Hamilton said operating income
for the second quarter of 2005 increased by $7.6 million, or
19.8 percent, as compared to the second quarter of 2004.
Operating income from the additional sales was partially offset by
expenses related to the acquisition of OIPC, an increase in
restructuring expenses of $12 million, and a net increase in
project costs of $7.4 million as noted above. Without these
additional costs, operating income would have increased by
$27 million, or 70 percent.
Mr. Hamilton said net income for the second quarter of 2005
totaled $4.1 million, a decrease of $11.8 million, or 74 percent,
as compared to the second quarter of 2004, which increased by
$23.2 million, or 114.3 percent, to $43.5 million. This increase
in net interest was primarily related to higher debt levels
following the refinancing completed in connection with the OIPC
acquisition.
Operating income for the six-month period ended June 30, 2005,
grew by $17.0 million, or 23.7 percent, compared to the six-month
period ended June 27, 2004. Again, as with the quarter, operating
income from the additional sales was partially offset by expenses
related to the acquisition of OIPC, an increase in restructuring
expenses of $19.3 million, and a net increase in project costs of
$8.4 million. Without these additional costs, operating income
would have increased by $44.7 million, or 62 percent.
The net loss for the six-month period ended June 30, 2005, was
$7.4 million, a drop of $33.9 million, or 128 percent, from net
income of $26.5 million in the comparable period last year, which
increased $45.0 million, or 109 percent, to $86.2 million. This
increase in net interest was primarily related to higher debt
levels following the refinancing completed in connection with the
OIPC acquisition.
Mr. Hamilton said covenant compliance EBITDA (earnings
before interest, taxes, depreciation, and amortization) was
$133.5 million for the three months ended June 30, 2005; $253.1
million for the six months ended June 30, 2005; and $463.3 million
for the four quarters ended June 30, 2005.
Graham Packaging, currently operating with 88 plants worldwide, is
a leader in the design, manufacture and sale of technology-based,
customized blow-molded plastic containers for the branded food and
beverage, household, personal care/specialty, and automotive
lubricants product categories.
The company is a leading U.S. supplier of plastic containers for
hot-fill juice and juice drinks, sports drinks, drinkable yogurt
and smoothies, nutritional supplements, wide-mouth food,
dressings, condiments, and beers; the leading global supplier of
plastic containers for yogurt drinks; and the number-one supplier
in the U.S., Canada, and Brazil of one-quart/one-liter plastic
HDPE (high-density polyethylene) containers for motor oil.
The Blackstone Group of New York is the majority owner of Graham
Packaging.
* * *
As reported in the Troubled Company Reporter on Sept. 15, 2004,
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit ratings on Graham Packaging Holdings Co. and its 100%-owned
operating subsidiary, Graham Packaging Co., and removed the
ratings from CreditWatch where they were placed on July 29, 2004.
S&P says the outlook is positive.
HARVEST ENERGY: Adopts New Unitholder Reinvestment Plan
-------------------------------------------------------
Harvest Energy Trust (TSX:HTE.UN)(NYSE:HTE) intends to replace its
previously announced distribution reinvestment plan and optional
trust unit purchase plan with a Premium Distribution(TM),
Distribution Reinvestment and Optional Trust Unit Purchase Plan,
subject to regulatory approval.
Harvest expects to receive the required regulatory approval within
the next few days, which will allow eligible unitholders to
participate in the Plan in respect of the distributions payable on
Sept. 15, 2005, to unitholders of record on Aug. 25, 2005.
Harvest will make a further announcement upon receiving this
regulatory approval. Registered and beneficial unitholders who
are not resident in Canada are not eligible to participate in the
Plan.
The Plan allows eligible unitholders to direct that their monthly
cash distributions be reinvested in additional trust units at 95%
of the average market price (as defined in the Plan) on the
applicable distribution date, as is the case under the existing
distribution reinvestment plan.
The Plan now includes a unique feature which allows eligible
unitholders to elect, under the Premium Distribution(TM) component
of the Plan, to have these additional trust units delivered to a
designated broker in exchange for a premium cash distribution
equal to 102% of the cash distribution that such unitholders would
have otherwise been entitled to receive on the applicable
distribution date (subject to a proration in certain events under
the Plan). Canaccord Capital Corporation has been designated as
the plan broker under the Premium Distribution(TM) component of
the Plan.
In addition, the Plan allows those unitholders who participate in
either the distribution reinvestment component or the Premium
Distribution(TM) component of the Plan to participate in the
optional trust unit purchase component of the Plan. This allows
unitholders to purchase additional trust units from treasury for
cash at a purchase price equal to the average market price (with
no discount) in minimum amounts of $5,000 per remittance and up to
$100,000 aggregate amount of remittances by a unitholder in any
calendar month, all subject to an overall annual limit of 2% of
the outstanding trust units.
Generally, no brokerage fees or commissions will be payable by
participants for the purchase of trust units under the Plan, but
unitholders should make inquiries with their broker, investment
dealer or financial institution through which their trust units
are held as to any policies of such party that would result in any
fees or commissions being payable.
Harvest reserves the right to limit the amount of new equity
available under the Plan on any particular distribution date.
Accordingly, participation may be prorated in certain
circumstances.
To participate in the Plan, registered unitholders must fax or
otherwise deliver their properly completed and signed enrolment
forms to Valiant Trust Company at the fax number or address
specified in the enrolment forms no later than 3:00 p.m. (Calgary
time) on the business day immediately preceding a distribution
record date in order for the distribution to which such record
date relates to be reinvested under the Plan.
Unitholders who wish to participate in the Plan in conjunction
with the recently announced distribution payable on Sept. 15,
2005, must deliver their properly completed and signed enrolment
forms no later than 3:00 p.m. (Calgary time) on Aug. 24, 2005.
Harvest reserves the right to accept enrolment forms that are
delivered after this time. Participants in Harvest's existing
distribution reinvestment plan will automatically be enrolled in
the distribution reinvestment component of the new Plan.
Participants in Harvest's existing distribution reinvestment plan
who wish to participate in the Premium Distribution(TM) component
of the new Plan may do so by delivering properly completed and
signed enrolment forms by the aforementioned deadline.
Beneficial unitholders (i.e., owners of trust units that are held
through a nominee such as a broker or custodian) who wish to
participate in the Plan should contact their broker, investment
dealer, financial institution, or nominee through which their
Harvest trust units are held to inquire about the applicable
enrolment deadline and to request enrolment in the Plan.
Participation in the Plan does not relieve unitholders of any
liability for taxes that may be payable on distributions.
Unitholders should consult their own tax advisors concerning the
tax implications of their participation in the Plan having regard
to their particular circumstances.
Monthly Cash Distribution Increase
The Board of Directors of Harvest Operations Corp. has authorized
an increase in monthly cash distributions to $0.35 per Trust Unit
commencing with the August distribution payable on Sept. 15, 2005,
to Unitholders of record on Aug. 25, 2005. This distribution
amount represents Distributable Cash earned in the month of August
2005. Harvest Trust Units are expected to commence trading on an
ex-distribution basis on August 23rd, 2005.
The Board of Harvest Operations approved the increase after
considering the current low ratio of distributions to funds flow
from operations (payout ratio), the accretive effect of the
recently completed Hay River acquisition, the potential for Trust
taxability that could arise from sustaining a low payout ratio,
and the significant extent to which Harvest has mitigated the
possible impact of downward movements in commodity prices with its
hedging program. Harvest believes that following this
distribution increase, its payout ratio will be approximately 50
to 55% given current commodity prices.
Harvest Energy Trust -- http://www.harvestenergy.ca/-- is a
Calgary-based energy trust actively managed to deliver stable
monthly cash distributions to its Unitholders through its strategy
of acquiring, enhancing and producing crude oil, natural gas and
natural gas liquids. Harvest trust units are traded on the Toronto
Stock Exchange (TSX) under the symbol "HTE.UN" and on the New York
Stock Exchange (NYSE) under the symbol "HTE".
* * *
As reported in the Troubled Company Reporter on July 28, 2005,
Standard & Poor's Ratings Services affirmed its 'B+' long-term
corporate credit on Harvest Energy Trust and 'B-' senior unsecured
debt rating on Harvest Operations Corp., a wholly owned subsidiary
of Calgary, Alberta-based Harvest Energy, and removed the ratings
from CreditWatch with negative implications, where they were
placed June 24, 2005, following the company's announcement of a
C$260 million property acquisition in conjunction with an increase
in monthly unit distributions. S&P said the outlook is stable.
HIT ENTERTAINMENT: Moody's Rates $172 Million 2nd-Lien Loan at B2
-----------------------------------------------------------------
Moody's assigned HIT Entertainment's $172 million second lien loan
a B2 rating and affirmed the company's B1 corporate family and
first lien ratings. The company's ratings continue to reflect its
high leverage and competitive operating environment offset by its
strong brand value and anticipated growth. In Moody's view, the
reapportionment of the debt from senior subordinated to second
lien does not impact the corporate family rating. The rating
outlook remains stable.
These rating has been assigned:
* $172 million of second lien loan -- B2
These ratings have been affirmed:
* Corporate Family Rating -- B1
* $376 million First lien Term Loan --B1
* $77 million First Lien Revolving Credit -- B1
These rating has been withdrawn:
* $172 million senior subordinated notes -- (P)B3
Moody's notes that since the announcement of the transaction, HIT
has somewhat modified downward its estimated year end revenues and
adjusted EBITDA, by 4% and 3.5%, respectively, mostly as a result
of higher home entertainment returns from Wal-Mart. While this
will not impact the company's corporate family rating today it
highlights our concerns regarding customer concentration,
particularly to a distributor as dominant as Wal-Mart.
Notwithstanding these pressures, management has projected growth
of about 7% between LTM April 2005 and year end and double digits
between 2005 and 2006. Greater US exposure should drive these
improvements although Moody's believes they will be tempered by
the negative growth environment of the toy sector.
The B1 ratings on the $453 million of first lien senior secured
bank credit facilities reflect the senior-most position of this
class of debt and the debt protection measures provided by the
credit agreement. The facilities are secured by all of the stock
and substantially all of the assets of the borrower and its
material subsidiaries and benefit from guarantees of material
subsidiaries. The first lien debt ratings are the same as the
corporate family rating given the preponderance of debt is at this
level.
Moreover, the term sheet provides for a $150 million incremental
term loan. Moody's also notes the collateral does not include the
Sprout joint venture but benefits from HIT's valuable characters,
film library and licensing agreements. The B2 rating on the $172
million second lien loan (which also benefit from guarantees of
material subsidiaries) reflects its contractual subordination to
all the outstandings under the first lien credit facilities as
well as the limitations on credit protection measures including an
intercreditor agreement which requires "silent" second lien status
for the collateral.
Moody's also highlights that while the ratings are supported by
the sizable cash contribution from Apax (approximately 50% of the
capital structure), the sponsor equity has significant debt-like
characteristics despite the fact that interest and dividends are
exclusively PIK. Additionally, Apax does not intend to receive
management fees. Moody's believes it is the very junior nature of
these facilities that provides some cushion for both the first and
second lien investors.
HIT Entertainment, with offices in London, Dallas and New York, is
a leading pre-school entertainment company with a portfolio of
properties including:
* Bob the Builder,
* Thomas the Tank Engine, and
* Barney the Dinosaur.
The company has operations in the:
* UK,
* US,
* Canada,
* Japan, and
* Germany.
Business segments include home entertainment, consumer products
television and live events as well as a recently announced US
digital pre-school channel.
HIT ENTERTAINMENT: S&P Junks Proposed $172 Million Loan Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' bank loan
rating and a recovery rating of '5' to a proposed $172 million
second-lien term loan due 2013 of HIT Entertainment Inc. The
recovery rating of '5' indicates an expectation of negligible
recovery of principal (0%-25%)in the event of a payment default.
At the same time, Standard & Poor's affirmed its 'B' corporate
credit rating on U.S.-based HIT and its holding company, HIT
Entertainment Ltd.
Standard & Poor's also affirmed its 'B' bank loan rating and a
recovery rating of '3' on HIT's $453 million first-lien credit
facilities due 2011. The proposed second-lien term loan replaces
the previously proposed $172 million senior subordinated notes
offering. The outlook is negative. Pro forma for the
transaction, total debt outstanding at April 30, 2005, was
$305 million.
"The ratings reflect HIT's significant content distribution risk
relating to its broadcast partners, its narrow base of operation,
its participation in a mature and competitive industry with
limited internal growth prospects, and its aggressive financial
policy," said Standard & Poor's credit analyst Andy Liu. These
factors are only partially offset by the company's strong brand
properties.
HIT is a preschool children's programming and entertainment
company. Its portfolio of properties includes:
* Bob the Builder,
* Thomas the Tank Engine,
* Barney the Dinosaur,
* Angelina Ballerina,
* Pingu,
* Guiness World Records, and
* others.
The company's programming is broadcast by the Public Broadcasting
Service and will start in the fall on Sprout, a digital-tier
preschool children's channel being launched by Comcast Corp.
(BBB+/Stable/A-2) (40% equity stake), HIT (30%), PBS (15%), and
Sesame Workshop (15%).
For the most part, HIT is not compensated by its broadcast
partners, but the broadcast of its programs generates demand for
home entertainment videos and license fees for toys sold by
outside entities responsible for the manufacturing process. These
two revenue sources account for more than 85% of the company's
revenues.
Content distribution represents a significant risk for the
company. Any adverse programming decision by a channel operator,
such as shifting program showtimes or reducing showings per week,
can have a material negative effect. HIT's long-term contract
with PBS (covering Bob the Builder, Barney the Dinosaur, and
Thomas the Tank Engine) and the launch of Sprout should ensure the
continued distribution of the company's programs in the U.S., but
any changes in programming philosophy by broadcast partners could
still have a material impact on HIT.
HOLLINGER INC: Offering to Buy Back Notes for 101% of Face Value
----------------------------------------------------------------
Hollinger Inc. (TSX: HLG.C)(TSX:HLG.PR.B) commenced a change of
control offer to purchase any and all of its outstanding senior
secured notes. The offer was prompted by a filing made with
applicable Canadian securities regulatory authorities by the court
appointed receiver and manager, RSM Richter Inc., of The Ravelston
Corporation Limited and related entities pursuant to which the
Receiver stated that it had obtained possession and control of the
shares of Hollinger directly or indirectly held by Ravelston.
Although it is the position of Hollinger that the Receiver Action
did not result in a Change of Control of Hollinger, as defined by
the indentures governing Hollinger's senior secured notes,
Hollinger determined to make the change of control offer that
would be required by the Indentures in that event.
Accordingly, Hollinger commenced a change of control offer to
purchase for cash any and all of its outstanding 11.875% Senior
Secured Notes due 2011 and 11.875% Second Priority Secured Notes
due 2011 for US$1,010 per US$1,000 principal amount of Notes plus
accrued and unpaid interest to the settlement date.
The Change of Control Offer has been made pursuant to the
Indentures. The occurrence of a Change of Control, as defined by
the Indentures, is a necessary precondition to Hollinger's
obligation to make the Change of Control Offer. If it is
determined that a Change of Control has not occurred, the Change
of Control Offer will terminate automatically prior to its expiry
without any action on Hollinger's part. The Change of Control
Offer expires at 5:00 p.m. (Eastern Daylight Time) on Sept. 6,
2005, unless extended or earlier terminated. The Change of
Control Offer is unconditional, unless terminated, subject to the
proper tender of the Notes.
Outstanding Notes
As previously announced, as a result of the Receivership Order,
the CCAA Order and the related insolvency proceedings respecting
the Ravelston Entities, an Event of Default has occurred under the
terms of the Indentures governing the Notes. With respect to the
Notes, the relevant trustee under the Indentures or the holders of
at least 25 percent of the outstanding principal amount of the
relevant Notes has the right to accelerate the maturity of the
Notes. Until the Event of Default is remedied or a waiver is
provided by holders of the Notes, the terms of the Indentures
prevent Hollinger from, among other things, honouring retractions
of its Series II Preference Shares.
Hollinger's principal asset is its approximately 66.8% voting and
17.4% equity interest in Hollinger International, which is a
newspaper publisher, the assets of which include the Chicago Sun-
Times, a large number of community newspapers in the Chicago area
and a portfolio of news media investments. Hollinger also owns a
portfolio of revenue-producing and other commercial real estate in
Canada, including its head office building located at 10 Toronto
Street, Toronto, Ontario.
* * *
Litigation Risks
Hollinger, Inc., faces various court cases and investigations:
(1) a consolidated class action complaint filed in Chicago,
Illinois;
(2) a class action lawsuit that was filed in the Saskatchewan
Court of Queen's Bench on September 7, 2004;
(3) a US$425,000,000 fraud and damage suit filed in the State
of Illinois by International;
(4) a lawsuit seeking enforcement of a November 15, 2003,
restructuring proposal to uphold a Shareholders' Rights
Plan, a declaration that corporate by-laws were invalid and
to prevent the closing of a certain transaction;
(5) a lawsuit filed by International seeking injunctive relief
for the return of documents of which it claims ownership;
(6) a US$5,000,000 damage action commenced by a lessor of an
aircraft lease, in which Hollinger was the guarantor;
(7) an action commenced by the United States Securities and
Exchange Commission on November 15, 2004, seeking
injunctive, monetary and other equitable relief; and
(8) investigation by the enforcement division of the OSC.
Court-Ordered Inspection
On Sept. 3, 2004, Mr. Justice Colin Campbell of the Ontario
Superior Court of Justice ordered the appointment of an Inspector
of the affairs of Hollinger pursuant to section 229 of the CBCA
upon the application of Catalyst Fund General Partner I Inc. The
Order broadly requires an investigation into the affairs of
Hollinger and, specifically, into related party transaction and
non-competition payments for the period January 1, 1997, to the
present. It is estimated that the Inspector's future costs will
average $1,000,000 per month. The remaining duration of the
Inspection is uncertain though it is presently anticipated to
continue for at least an additional 4 months.
Litigation Costs
Hollinger has incurred legal expense in the defense of various
actions brought against it and others in both the United States
and Canada. Hollinger has in turn advanced a claim against its
directors' and officers' liability insurers asserting that, under
the terms and conditions of the policy of insurance, these
insurers are required to indemnify Hollinger in respect of this
legal expense incurred in connection with some of the actions
brought against Hollinger. The claims made total approximately
$3,700,000. However, the actual amount of recovery is not
determinable at the present time.
Default
As reported in the Troubled Company Reporter on Apr. 25, 2005,
Hollinger is in default under the terms of the indentures
governing Hollinger's US$78 million principal amount of 11.875%
Senior Secured Notes due 2011 and US$15 million 11.875% Second
Priority Secured Notes due 2011 due to Ontario Superior Court of
Justice's appointment of RSM Richter Inc. as receiver of all of
The Ravelston Corporation Limited's and Ravelston Management
Inc.'s assets (except for certain shares held directly or
indirectly by them, including shares of Hollinger Inc. and RMI).
HOLLINGER INC: Has $68.2 Million of Cash on Hand at Aug. 5
----------------------------------------------------------
Hollinger Inc. (TSX: HLG.C)(TSX:HLG.PR.B) reported that as of the
close of business on Aug. 5, 2005, the Company and its
subsidiaries (other than Hollinger International and its
subsidiaries) had approximately US$68.2 million of cash or cash
equivalents on hand, including restricted cash.
At that date, Hollinger owned, directly or indirectly, 782,923
shares of Class A Common Stock and 14,990,000 shares of Class B
Common Stock of Hollinger International. Based on the August 5,
2005 closing price of the shares of Class A Common Stock of
Hollinger International on the New York Stock Exchange of US$9.74,
the market value of Hollinger's direct and indirect holdings in
Hollinger International was US$153,628,270.
All of Hollinger's direct and indirect interest in the shares of
Class A Common Stock of Hollinger International are being held in
escrow in support of future retractions of its Series II
Preference Shares.
All of Hollinger's direct and indirect interest in the shares of
Class B Common Stock of Hollinger International are pledged as
security in connection with the Notes. In addition to the cash or
cash equivalents on hand, Hollinger has previously deposited:
(a) approximately C$8.5 million in trust with the law firm of
Aird & Berlis LLP, as trustee, in support of Hollinger's
indemnification obligations to six former independent
directors and two current officers; and
(b) approximately US$5.5 million in cash with the trustee under
the Indenture governing the Senior Notes as collateral in
support of the Senior Notes (which cash collateral is also
collateral in support of the Second Secured Notes, subject
to being applied to satisfy future interest payment
obligations on the outstanding Senior Notes).
Hollinger has received the C$3 million previously held in trust
with the law firm of Goodmans LLP and used C$1.2 million of such
funds to satisfy its severance obligations under paragraph 6 of
the Order of Mr. Justice Campbell dated July 8 2005 to two of its
then directors. There is currently in excess of US$151.5 million
aggregate collateral securing the US$78 million principal amount
of the Senior Notes and the US$15 million principal amount of the
Second Secured Notes outstanding.
Hollinger's principal asset is its approximately 66.8% voting and
17.4% equity interest in Hollinger International, which is a
newspaper publisher, the assets of which include the Chicago Sun-
Times, a large number of community newspapers in the Chicago area
and a portfolio of news media investments. Hollinger also owns a
portfolio of revenue-producing and other commercial real estate in
Canada, including its head office building located at 10 Toronto
Street, Toronto, Ontario.
* * *
Litigation Risks
Hollinger, Inc., faces various court cases and investigations:
(1) a consolidated class action complaint filed in Chicago,
Illinois;
(2) a class action lawsuit that was filed in the Saskatchewan
Court of Queen's Bench on September 7, 2004;
(3) a US$425,000,000 fraud and damage suit filed in the State
of Illinois by International;
(4) a lawsuit seeking enforcement of a November 15, 2003,
restructuring proposal to uphold a Shareholders' Rights
Plan, a declaration that corporate by-laws were invalid and
to prevent the closing of a certain transaction;
(5) a lawsuit filed by International seeking injunctive relief
for the return of documents of which it claims ownership;
(6) a US$5,000,000 damage action commenced by a lessor of an
aircraft lease, in which Hollinger was the guarantor;
(7) an action commenced by the United States Securities and
Exchange Commission on November 15, 2004, seeking
injunctive, monetary and other equitable relief; and
(8) investigation by the enforcement division of the OSC.
Court-Ordered Inspection
On September 3, 2004, Mr. Justice Colin Campbell of the Ontario
Superior Court of Justice ordered the appointment of an Inspector
of the affairs of Hollinger pursuant to section 229 of the CBCA
upon the application of Catalyst Fund General Partner I Inc. The
Order broadly requires an investigation into the affairs of
Hollinger and, specifically, into related party transaction and
non-competition payments for the period January 1, 1997, to the
present. It is estimated that the Inspector's future costs will
average $1,000,000 per month. The remaining duration of the
Inspection is uncertain though it is presently anticipated to
continue for at least an additional 4 months.
Litigation Costs
Hollinger has incurred legal expense in the defense of various
actions brought against it and others in both the United States
and Canada. Hollinger has in turn advanced a claim against its
directors' and officers' liability insurers asserting that, under
the terms and conditions of the policy of insurance, these
insurers are required to indemnify Hollinger in respect of this
legal expense incurred in connection with some of the actions
brought against Hollinger. The claims made total approximately
$3,700,000. However, the actual amount of recovery is not
determinable at the present time.
Default
As reported in the Troubled Company Reporter on Apr. 25, 2005,
Hollinger is in default under the terms of the indentures
governing Hollinger's US$78 million principal amount of 11.875%
Senior Secured Notes due 2011 and US$15 million 11.875% Second
Priority Secured Notes due 2011 due to Ontario Superior Court of
Justice's appointment of RSM Richter Inc. as receiver of all of
The Ravelston Corporation Limited's and Ravelston Management
Inc.'s assets (except for certain shares held directly or
indirectly by them, including shares of Hollinger Inc. and RMI).
ISLE OF CAPRI: Earns $4 Million of Net Income in First Quarter
--------------------------------------------------------------
Isle of Capri Casinos, Inc. (Nasdaq: ISLE) reported first quarter
financial results for the quarter ended July 24, 2005. For the
first quarter, the Company reported net income of $4 million,
compared with net income of $10.6 million for the same quarter
last year. During the quarter ended July 24, 2005, Isle of Capri
Casinos had net revenues of $281.5 million, compared with
$278.7 million for the same period in fiscal 2005, and Adjusted
EBITDA of $53.5 million (after a deduction of $4.0 million for the
Singapore project), compared to $60.0 million for the same period
in fiscal 2005.
"This past quarter the Isle began wrapping up several renovation
and expansion projects. The new products have brought state-of-
the-art amenities and updated accommodations to our properties.
We remain committed to developing our brands and product offerings
to meet the growing demands of today's gaming customer," according
to Bernard Goldstein, Isle of Capri Casinos, Inc.'s chairman and
chief executive officer.
Highlights
* The Isle-Biloxi hotel grand opening was held in June, adding
400 hotel rooms to the Biloxi property. The Company expects
to open a spa in early fall of 2005, and a new casino
currently under construction offsite will add significantly
expanded gaming space, new entertainment venues, restaurants
and other amenities later this year.
* In mid-June, additional parking, a new Kitt's Kitchen
restaurant and the sky bridges connecting the Isle-Black
Hawk and the Colorado Central Station- Black Hawk were
completed. The new 162-room Colorado Central Station hotel
is currently ahead of schedule and expected to be completed
by end of this calendar year. Construction on the extension
of Main Street to Colorado Route 119 is expected to be
completed in spring 2006.
* In June, the Company and the City of Davenport agreed to a
$43.0 million project that has the Isle building a 180-room
hotel and rooftop restaurant, and the City constructing a
500+ space parking ramp and providing funding to realign the
casino with the new hotel facility. This project is
scheduled to open 18-20 months after all permits and
approvals are received.
* The Company continues to deploy the IGT Advantage(TM) Casino
System to replace the existing systems in six of its
casinos. The Company rolled out the system at the Isle-Lula
this quarter, making it the fourth Isle property, along with
Colorado Central Station, Isle-Biloxi and Isle-Vicksburg, to
be upgraded. After implementation, these properties will
feature the NexGen(TM) Interactive Display, supporting
loyalty-building Bonusing(TM) tools, which will allow the
Company to enhance its uniquely branded marketing programs.
"The benefits of our completed projects were impacted by two
weather- related events, as well as a rock slide this quarter.
Despite these events, the new accommodations and amenities have
been well received by our customers," Timothy M. Hinkley, Isle of
Capri Casinos, Inc. president and chief operating officer, said.
"I look forward to continued evolution of our products and
brands."
Isle of Capri Casinos, Inc., a leading developer and owner of
gaming and entertainment facilities, operates 16 casinos in 14
locations. The company owns and operates riverboat and dockside
casinos in Biloxi, Vicksburg, Lula and Natchez, Mississippi;
Bossier City and Lake Charles (two riverboats), Louisiana;
Bettendorf, Davenport and Marquette, Iowa; and Kansas City and
Boonville, Missouri. The company also owns a 57 percent interest
in and operates land-based casinos in Black Hawk (two casinos) and
Cripple Creek, Colorado. Isle of Capri's international gaming
interests include a casino that it operates in Freeport, Grand
Bahama, and a two-thirds ownership interest in casinos in Dudley,
Walsal and Wolverhampton, England. The company also owns and
operates Pompano Park Harness Racing Track in Pompano Beach,
Florida.
* * *
Isle of Capri Casinos' 7% senior subordinated notes due 2014 carry
Moody's Investors Service and Standard & Poor's single-B ratings.
J.CREW GROUP: Names James Scully as Chief Financial Officer
-----------------------------------------------------------
J.Crew Group appointed James S. Scully Executive Vice President,
Chief Financial Officer, effective Sept. 7, 2005. He will report
to Millard Drexler, Chairman and CEO. Mr. Scully, 40, brings
extensive financial, retail and management experience to his new
position. Prior to joining J.Crew, Mr. Scully spent over eight
years with Saks Incorporated.
At Saks Inc., Mr. Scully was Vice President, Treasurer from 1997
through 1999 and then was named Senior Vice President of Strategic
and Financial Planning. In 2004, Mr. Scully was appointed to his
most recent post as Executive Vice President, Strategic Planning
and Human Resources.
"We're pleased to have Jim join our leadership team," said Mr.
Drexler. "His financial talents and management experience will be
invaluable as our company continues to grow and looks toward the
future."
Mr. Scully began his career in 1989 in the banking industry at
Shawmut Bank in Connecticut and joined NationsBank in 1994 as
Senior Vice President, Corporate Finance. Mr. Scully received his
undergraduate degree from Siena College in Loundonville, N.Y.
J.Crew Group is a nationally recognized retailer of men's and
women's apparel, shoes and accessories. The Company operates 157
retail stores, the J.Crew catalog business --
http://www.jcrew.com/-- and 43 factory outlet stores.
At Apr. 30, 2005, J.Crew Group, Inc.'s balance sheet showed a
$580,000,000 stockholders' deficit, compared to a $495,000,000
deficit at Mar. 31, 2004.
J.CREW GROUP: Registers Shares for $200 Million IPO
---------------------------------------------------
J.Crew Group delivered a registration statement on Form S-1 to the
U.S. Securities and Exchange Commission this week relating to the
proposed initial public offering of its common stock to raise $200
million.
The shares will be offered by a group of underwriters led by
Goldman, Sachs & Co. and Bear, Stearns & Co. Inc.
The retailer expects to use the net proceeds of the offering,
along with the proceeds of a sale of $73.5 million of its common
stock to Texas Pacific Group, its majority shareholder, and
borrowings under a new term loan that the Company expects to enter
into, to redeem its outstanding cumulative preferred stock and
some of its outstanding debt and to pay related costs. The sale
of common stock to Texas Pacific Group is contingent upon the
completion of the initial public offering and the redemption of
the Company's preferred stock. The common stock to be sold to
Texas Pacific Group will not be registered under the Securities
Act of 1933, and may not be offered or sold in the United
States absent registration or an applicable exemption from
registration requirements.
A full-text copy of the registration statement is available at no
charge at http://ResearchArchives.com/t/s?e5
J.Crew Group is a nationally recognized retailer of men's and
women's apparel, shoes and accessories. The Company operates 157
retail stores, the J.Crew catalog business --
http://www.jcrew.com/-- and 43 factory outlet stores.
At Apr. 30, 2005, J.Crew Group, Inc.'s balance sheet showed a
$580,000,000 stockholders' deficit, compared to a $495,000,000
deficit at Mar. 31, 2004.
JO-ANN STORES: Reports Second Quarter Financial Results
-------------------------------------------------------
Jo-Ann Stores, Inc. (NYSE: JAS) reported financial results for
its fiscal 2006 second quarter ended July 30, 2005. Net loss for
the quarter was $5.1 million, compared with net income of
$0.3 million in fiscal 2005.
Net sales for the second quarter increased 3.5% to $383.8 million
from $371 million in the prior year. Same-store sales decreased
0.5% versus a 3.1% same-store sales increase for the same period
last year.
Net sales for the six-month period ended July 30, 2005, were
$804.5 million versus $775.9 million in the same period in the
prior year. Year-to-date same-store sales grew 0.1%, compared to
a same-store sales increase of 4.9% in the same period a year ago.
Review of Operating Results
Operating loss for the second quarter was $5.7 million, or 1.5% of
net sales, versus an operating profit of $3.9 million, or 1.1% of
net sales, in the prior year's second quarter.
Gross margins for the quarter decreased to 48.2% of net sales from
49% in the second quarter last year, due to a more promotional
environment that resulted in reduced selling margins.
Selling, general and administrative expenses, excluding other
expenses separately identified in the statement of operations,
increased to 45.9% of net sales in the second quarter from 43.1%
in the same quarter last year. The increase in percentage is due
to the lack of leverage from same-store sales results, coupled
with an increase in advertising and distribution costs.
Alan Rosskamm, chairman and chief executive officer commented, "We
expected the second quarter to be challenging. It is historically
our lowest-volume quarter of the year, which makes it difficult to
cover our fixed costs. Soft store traffic, coupled with ongoing
industry-wide weakness in the home-related retail sector, resulted
in a sales performance that did not meet our targets for the
quarter. Additionally, we responded to the softer traffic
patterns with more aggressive promotions that negatively impacted
gross margin performance for the quarter."
Operating profit for the six-month period was $3.1 million, versus
$18.4 million in operating profit for the first half of the prior
year.
The Company opened six superstores and one traditional store in
the second quarter and closed nine traditional stores. Subsequent
to the end of the second quarter, the Company has opened an
additional four superstores. Year-to-date, the Company has opened
21 superstores and two traditional stores, and closed 27
traditional stores. For the balance of the year, the Company
expects to open 19 superstores, two traditional stores, and close
25 to 30 traditional stores.
Mr. Rosskamm continued, "Macro trends aside, we have been working
diligently on fresh merchandising and marketing programs aimed at
our fall and holiday selling seasons that should translate into
improved sales trends for the second half. In addition, we will
have the benefit of 40 additional superstores as we enter the
fourth quarter. Consequently, I am confident that we can deliver
improved earnings in the second half of this year, while also
preparing the Company for our next phase of accelerated growth in
the years beyond."
Fiscal 2006 Outlook
The Company expects full-year fiscal 2006 earnings to range from
$1.65 to $1.75 per diluted share. Earnings for the second half
are estimated to be in the range of $1.70 to $1.80 per diluted
share versus a $1.70 per diluted share for the comparable period
of the prior year. This guidance is based on same-store sales
growth of 3% to 4% for the second half of the year, with stronger
same-store sales anticipated in the third quarter. Second half
earnings guidance includes the estimated impact of incremental
store pre-opening and closing costs resulting from the increased
number of expected store openings year-over-year, which the
Company estimates will negatively impact second half estimated
results by approximately $4 to $5 million, pre-tax, or $0.12 per
diluted share.
Jo-Ann Stores, Inc. -- http://www.joann.com-- the leading
national fabric and craft retailer with locations in 47 states,
operates 712 Jo-Ann Fabrics and Crafts traditional stores and
135 Jo-Ann superstores.
* * *
As reported in the Troubled Company Reporter on July 18, 2005,
Standard & Poor's Ratings Service raised its ratings on Hudson,
Ohio-based specialty retailer Jo-Ann Stores Inc. The corporate
credit rating was raised to 'BB-' from 'B+' and the subordinated
debt rating was raised to 'B' from 'B-'. The ratings were removed
from CreditWatch, where they were placed with positive
implications on March 14, 2005. S&P says the outlook is stable.
KB TOYS: Big Lots Agrees to Support Amended Joint Reorg. Plan
-------------------------------------------------------------
Big Lots, Inc. (NYSE: BLI) entered into a stipulation and agreed
order with KB Toys, Inc., and its debtor-affiliates and the
Official Committee of Unsecured Creditors to support their First
Amended Joint Plan of Reorganization. Under the plan, the Company
expects to receive approximately $900,000 from its unsecured claim
related to a $45 million note taken by the Company in connection
with the sale of the KB Toys business in December of 2000.
Based upon this agreement and a current net book value of
$7.3 million related to the $45 million note, Big Lots has
recorded a $3.8 million charge (net after a $2.6 million tax
benefit) related to the partial charge-off of the note in the
second quarter of fiscal 2005.
One of the largest toy retailers in the United States, KB Toys,
Inc. -- http://www.kbtoys.com/-- (which once boasted 1,200
stores) operates about 650 stores under four formats:
* KB Toys mall stores,
* KB Toy Works neighborhood stores,
* KB Toy Outlets and KB Toy Liquidator, and
* KB Toy Express (in malls during the holiday season).
The company along with its affiliates filed for chapter 11
protection on January 14, 2004 (Bankr. Del. Case No. 04-10120).
The chapter 11 filing resulted in nearly 600 store closures and
4,000 layoffs. In March 2004, KB Toys sold its KBToys.com
Internet business to an affiliate of D. E. Shaw, which renamed the
company eToys Direct. Joel A. Waite, Esq., at Young, Conaway,
Stargatt, & Taylor, represents the toy retailer. When the Debtors
filed for protection from its creditors, they listed consolidated
assets of $507 million and consolidated debts of $461 million.
KEY ENERGY: Completing 2003 Financial Restatements
--------------------------------------------------
As previously reported, Key Energy Services, Inc. (OTC Pink
Sheets: KEGS) received a notice of default from the holders of its
6-3/8% senior notes and 8-3/8% senior notes on June 7, 2005. The
action came after the Company failed to file its Annual Report on
Form 10-K for the year ended Dec. 31, 2003, by the May 31, 2005
deadline
Under the terms of the notice, the Company had until Aug. 6, 2005,
to cure the default by filing its 2003 Annual Report. As a result
of the Company's failure to file its Form 10-K, the noteholders
have the right to accelerate the notes at any time. As of
Aug. 17, 2005, Key Energy said it has not received any notice of
acceleration from the noteholders or the trustee. On July 29,
2005, the Company entered into a new credit facility which
provides the Company with the ability to repay the senior notes,
if necessary.
Financial Restatements
The Company disclosed that it continues to make progress on the
restatement and believes that it has substantially completed its
financial statements for the fiscal year ending Dec. 31, 2003, and
prior periods covered by the restatement. The Company and its
auditors are currently reviewing the financial statements for
accuracy and completeness.
While the auditors are completing their work, the Company will,
among other things, finalize its income tax computations for the
restatement periods and finalize supporting documentation for a
number of the accounting treatments in the restatement. The
Company cannot estimate how long it will take its auditors to
complete their review of the Company's financial statements and
for the Company to file its Annual Report on Form 10-K for 2003.
The timing for filing could be affected by adjustments resulting
from the work of the Company's auditors.
Key Energy Services, Inc., is the world's largest rig-based well
service company. The Company provides oilfield services including
well servicing, contract drilling, pressure pumping, fishing and
rental tools and other oilfield services. The Company has
operations in all major onshore oil and gas producing regions of
the continental United States and internationally in Argentina.
* * *
As reported in the Troubled Company Reporter on July 11, 2005,
Standard & Poor's Ratings Services revised the CreditWatch
implications on its 'B-' corporate credit rating on Key Energy
Services Inc. to developing from negative.
Houston, Texas-based Key has about $450 million of total debt
outstanding as of June 8, 2005.
As reported in the Troubled Company Reporter on June 17, 2005,
Moody's Investors Service continues to leave Key Energy Services'
ratings on review for downgrade pending the filing of its 2003,
2004 and 2005 financial statements. Though receiving a notice of
default on June 7, 2005, from the trustees on behalf of both the
6.375% and the 8.375% noteholders, Moody's is currently not taking
any ratings action as the company has procured a commitment for a
new financing package from Lehman Brothers which, combined with
the company's cash balances, appears sufficient to refinance
essentially all of Key's existing debt.
The notice of default stems from the company not meeting its
recent waiver from the bondholders and bank lenders to file its
2003 Form 10-K by May 31, 2005. Under the terms of the indenture,
the company now has 60 days to cure the default (by August 5,
2005, at which time the trustee or 25% of each class of
noteholders will have the right to accelerate each series of
notes.
However, the company announced on June 1, 2005 that it had
received a commitment from Lehman Brothers to provide $550 million
in loan facilities in the event it elects to refinance its
existing bank debt and/or senior notes. The facilities are
comprised of a $400 million term loan, a $65 million revolving
credit facility, and an $85 million Letter of Credit facility.
The commitment expires December 31, 2005 and is subject to pre-
funding conditions such as meeting a trailing twelve month EBITDA
test of $175 million and that no new material developments
transpire that have not been already disclosed. These facilities,
together with the more than $100 million of cash on hand, gives
the company the capacity to refinance all of the existing debt.
In the meantime, the cash is more than sufficient to cover ongoing
operating needs and coupon payments.
These ratings for Key remain under review for downgrade:
1) B1 -- Key's senior implied rating
2) B2 -- Key's senior unsecured issuer rating
3) B1 -- $150 million 6.375% Sen. Unsec. notes due 2013
4) B1 -- $175 million 8.375% Sen. Unsec. notes due 2008
5) B1 -- $100 million add-on to 8.375% Sen. Unsec notes, due
2008
KEY ENERGY: Moody's Confirms $425 Mil. Sr. Unsec. Notes' B1 Rating
------------------------------------------------------------------
Moody's Investors Service confirmed Key Energy Services' B1
Corporate Family Rating (formerly the senior implied rating), the
B1 rating on the $275 million of 8.375% senior unsecured notes,
and the B1 rating on the $150 million of 6.375% senior unsecured
notes. The outlook is changed to developing. The ratings
confirmation reflects the significantly reduced refinancing risk
to the bondholders following the company recent announcement that
it closed on its new Senior Credit Facilities arranged by Lehman
Brothers with an aggregate availability of $547.3 million. The
new facilities will allow the company to refinance all of its
existing debt obligations as well as meet ongoing liquidity needs.
The developing outlook also reflects the ongoing restatement
process that began in March 2004, and in Moody's view could take
at least a few more months to complete. Though the process is
very far along, there are still important steps that remain to be
completed including final approval from the auditors and
subsequently the SEC.
The ratings confirmation is supported by strong fundamentals
across Key's markets. Continued upcycle conditions have led to
increased pricing power and the supportive commodity price outlook
provides visibility for continued strength in Key's markets into
2006. In particular, the exceptional growth in the North American
pumping services market is far out pacing capacity and is leading
to more rapid price escalation for regional players like Key. The
confirmation also reflects the stabilization of the capital
structure from the new financing and removes the redemption
uncertainty for bondholders and gives the company the flexibility
to provide audited financial statements by March 2007.
The ratings could be pressured if the company is unable to
complete the restatement process and file its delayed 2003 and
2004 financial statements by the end of 2005, or if a material
unexpected development occurs during the remainder of the process.
To move the outlook to stable the company must be up to date on
all of its filings and demonstrate that the process is behind them
and the underlying fundamentals of the business haven't
deteriorated.
The Senior Credit Facilities include:
* a seven-year Delayed Draw $400 million Term Loan B Facility;
* a five-year $82.25 million Synthetic Letter of Credit
Facility; and
* a five-year $65 million Revolving Credit Facility (including
a $25 million sub-limit for additional letters of credit).
The company now has the ability call the $275 million of 8.375%
notes (callable at 104%) which it could and may do at anytime.
Though the $150 million 6.375% notes are not in the call period,
it is possible that if the 8.375% notes are called by Key, the
6.375% note holders may accelerate their notes given they are
still in default and that funding under the new credit facility
would put these notes in a subordinate position and if left
outstanding, would likely result in a notching down from the
Corporate Family Rating.
Key Energy Services, Inc. is headquartered in Houston, Texas.
LAND O'LAKES: S&P Places B Corporate Credit Rating on CreditWatch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B' corporate credit
and other ratings on Land O'Lakes Inc. and Land O'Lakes Capital
Trust I on CreditWatch with positive implications.
At June 30, 2005, the Arden Hills, Minnesota-based dairy and
agricultural cooperative had total debt (adjusted for operating
leases and the accounts receivable securitization) outstanding of
$1.1 billion.
The CreditWatch placement follows the completion of CF Industries
Inc.'s IPO, which will result in Land O'Lakes receiving more than
$300 million in proceeds that will likely be used to repay
outstanding debt. In addition, the company repaid the $118.4
million term loan B during the first six months of fiscal 2005.
Also, operating performance has stabilized and there has been a
related stabilization in credit protection measures.
Standard & Poor's will discuss with management its plans to
strengthen the company's financial profile in the near term.
LEINER HEALTH: Moody's Junks $150 Million Sr. Subordinated Notes
----------------------------------------------------------------
Moody's Investors Service lowered the long and short-term ratings
of Leiner Health Products Inc. by one notch and placed the long-
term ratings on review for further possible downgrade. The rating
action follows the sharp decline in first quarter profits that has
resulted in negative free cash flow and has forced the company to
seek an amendment to its bank credit agreement. Credit measures
and liquidity have weakened beyond levels consistent with the
previous ratings, and could be further constrained by ongoing
industry and cost pressures or by the company's planned
acquisition of Pharmaceutical Formulations Inc.
These ratings were downgraded and placed under review for further
possible downgrade:
* Corporate family rating (formerly called "senior implied
rating"), to B2 from B1;
* $50 million senior secured revolving credit facility
due 2009, to B2 from B1;
* $240 million senior secured term loan facility due 2011,
to B2 from B1;
* $150 million 11% senior subordinated notes due 2012, to Caa1
from B3.
These rating was downgraded:
* Speculative grade liquidity rating, to SGL-4 from SGL-3.
The rating actions reflect the expectation that credit measures
and liquidity will remain under pressure due to continuing
industry challenges, including:
* the lingering effects of adverse Vitamin E publicity;
* cost and competitive pressures in certain product lines; and
* a cautious retail environment.
These factors resulted in a $10.5 million erosion in Leiner's bank
EBITDA (from $19.7 million to $9.2 million) for the first quarter
ended June 2005, leaving LTM debt-to-EBITDA close to the maximum
5.25x required in the bank credit agreement. Leverage would be
even higher excluding a $5.7 million add-back for returns and
write-downs related to an unsuccessful branded product launch in
prior periods. Leiner was free cash flow negative for the
quarter, causing the company to utilize a significant portion of
its fiscal year-end cash balances to meet the shortfall.
Management is seeking an amendment to loosen financial covenants
going forward, especially considering the step-down in the
leverage covenant to 5.0x scheduled at the end of the current
quarter. The amendment will also need to consider Leiner's
agreement to purchase PFI, a private-label maker of over-the-
counter pharmaceuticals currently in bankruptcy protection, for
around $23 million.
The downgrade of Leiner's speculative grade liquidity rating to
SGL-4 primarily reflects the company's challenged covenant
compliance, as well as its weakened profit and cash flow profile
and modest cash balances ($6.2 million). Importantly, Moody's
policies regarding speculative grade liquidity ratings for all
companies do not assume that lenders will provide waivers or
amendments in the event of a covenant breach. To a lesser extent,
the SGL rating is further constrained by Leiner's limited
alternative liquidity sources, as the vast majority of the
company's assets are pledged to the senior secured credit
facilities.
Excluding covenant-related availability concerns, Leiner's $50
million revolving credit facility (undrawn with around $39 million
available after letter of credit usage) is viewed as adequately
sized to meet anticipated cash shortfalls and modest scheduled
debt amortization ($2.4 million per annum).
Moody's review will focus on Leiner's prospective liquidity and
financial position, including the incremental effects of the PFI
acquisition, with a heightened focus on Leiner's ability to
generate free cash flow and repay debt. A largely debt-financed
PFI acquisition and/or ongoing cash flow burn would likely result
in a further ratings downgrade. Ratings could be affirmed at the
B2 corporate-family level if Moody's assessment of future earnings
prospects shows the ability to cover interest, taxes, and capital
expenditures from operating profits and repay at least a modest 3-
5% of debt through annual operating cash flows (after capex).
Such factors, along with a resetting of covenants to more
comfortable cushions could also positively impact the SGL rating.
In addition to financial considerations, ongoing rating restraints
include the potential for sales and margin variability due to
industry risks such as high competition, reliance on potentially
faddish new products, and potential adverse regulatory or
publicity developments. Further, Leiner's highly-concentrated
customer base presents concerns due to the potential unfavorable
effects of merchandising changes, inventory de-stocking, or price
and service concessions.
Ongoing rating strengths include the company's strong market
positions in store-branded nutritional supplement and over-the-
counter categories, with a track-record of successful new product
offerings and well-established relationships with leading
retailers. Long-term industry fundamentals are likely to be
favorable, including an aging population, broader increases in
consumer health consciousness, and acceptance of herbal and other
non-prescription solutions. The industry's largely non-seasonal
and recurring sales patterns provide further rating support.
Leiner Health Products, headquartered in Carson, California is a
manufacturer of store brand vitamins, minerals and nutritional
supplements and is a supplier of store brand OTC pharmaceuticals.
It also provides contract manufacturing services to consumer
products and pharmaceutical companies. Revenues for the 12-month
period ended June 2005 were approximately $675 million.
MAGNATRAX CORP: Court Delays Entry of Final Decree to Nov. 14
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware delayed the
entry of final decree closing Magnatrax Corporation and its
debtor-affiliates' chapter 11 cases to Nov. 14, 2005, to allow the
Reorganized Debtors to continue to prosecute or resolve pending
claims objections.
Joel A. Waite, Esq., at Young Conaway Stargatt Taylor, LLP, in
Wilmington, Delaware informed the Court the Reorganized Debtors
have made significant progress in prosecuting claim objections
since plan confirmation. While the Reorganized Debtors continue
to prosecute and resolve objectionable claims, to date, certain
claim objections and other issues remain unresolved.
Magnatrax Corporation is a leading manufacturer and supplier of
metal buildings and components to builders and the commercial
construction market. The Company and its affiliates filed for
chapter 11 protection on May 12, 2003 (Bankr. Del. Case No.
03-11402). The Debtors' Plan of Reorganization became effective
on Nov. 17, 2003.
MAJESTIC STAR: S&P Affirms B+ Rating & Says Outlook is Negative
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on casino
owner and operator The Majestic Star Casino LLC to negative from
stable.
At the same time, Standard & Poor's affirmed its ratings on the
Las Vegas, Nevada-based company, including its 'B+' corporate
credit rating. Total debt outstanding at June 30, 2005, was
$326 million.
"The outlook revision follows weaker-than-expected second quarter
financial performance due in part to marketing programs and
promotions implemented by the company, particularly at the
Majestic Star facility, that were unsuccessful in generating
anticipated increases in casino revenues and EBITDA," said
Standard & Poor's credit analyst Peggy Hwan. Also, the closure
of the primary access road into Black Hawk affected operating
results at its Colorado property.
Consolidated adjusted EBITDA during the quarter ended June 30,
2005, declined about 16% year-over-year, leading six-month EBITDA
to be down about 5% year-over-year. Although the company has
indicated that trends for its Indiana and Tunica properties are
positive in the third quarter of fiscal 2005, the Black Hawk
facility will likely be down about 20% compared with the prior-
year period due to the ongoing roadwork.
MARKLAND TECH: Technest Acquires 100% of EOIR's Outstanding Stock
-----------------------------------------------------------------
Technest Holdings, Inc. (OTC BB: TCNH.OB), a majority-owned
subsidiary of Markland Technologies, Inc. (OTC BB:MRKL.OB),
acquired all of the outstanding stock of Markland's wholly owned
subsidiary, EOIR Technologies Inc. Pursuant to this transaction,
EOIR became a wholly owned subsidiary of Technest.
As consideration for this reorganization, Technest issued to
Markland 12 million additional shares of Technest common stock.
After giving effect to the reorganization, Markland's ownership of
Technest on a primary basis increased from 85% to approximately
98% and on a fully diluted basis (assuming the conversion of all
of Technest's fixed price convertible securities and the exercise
of all warrants to purchase Technest common stock) increased from
39% to approximately 82%. Markland's total holdings of Technest
common stock will increase to approximately 14 million shares.
This reorganization did not result in a change of control of EOIR.
Common Stock Dividend
In connection with the reorganization, Markland declared a stock
dividend to the holders of our common stock of $10 million worth
of shares of Technest common stock that it currently owns, up to a
maximum of 2.5 million shares of Technest common stock. The
record date for the stock dividend is May 1, 2006 and the
distribution date for the stock dividend is July 5, 2006.
The actual number of shares of Technest common stock to be
distributed will be calculated based on a per share price equal to
the average closing price of the Technest Stock as reported by the
National Association of Securities Dealers Automatic Quotations
service for the ten trading days ending June 30, 2006. However in
no event shall the number of shares of the Technest common stock
distributed exceed 2.5 million nor will Markland deliver
fractional shares of the Technest common stock.
"Due to Markland's current equity structure, we believe that the
company's stock is undervalued," Robert Tarini, Markland Chairman
and CEO said. "We have undertaken this reorganization and the $10
million Technest stock dividend in an effort to allow the market
and our stockholders to capture what we believe to be the
company's real market value. We have worked very hard to try to
re-negotiate with the holders of our convertible notes and Series
D preferred securities to institute conversion floor prices and
other changes which would be beneficial to Markland common stock
shareholders. Management efforts in this regard will continue.
We presently have approximately 14M shares of Technest Holdings
Inc common stock which as of yesterday's market close was priced
at $14 per share. This is a market capitalization figure which we
believe much more accurately reflects the true value of this
corporate enterprise and it is management's intention to return as
much of this value as we can to Markland common shareholders over
time."
Technest will file a registration statement registering these
shares prior to the distribution date. This is not an offer to
sell these shares, and these shares may not be offered or sold in
any state or jurisdiction in which such offer or sale would be
unlawful prior to the registration or qualification of such shares
under the laws of such state or jurisdiction.
Technest Holdings, Inc. (OTC BB:TCNH.OB), is a provider of
intelligent surveillance and advanced 3D imaging technology
solutions to the defense and homeland security marketplaces.
Technest is committed to setting next-generation standards in
defense and security through the provision of innovative emerging
technologies and expert services.
Technest's solutions support military, law enforcement and
homeland security personnel. Through strategic development,
Technest focuses on the creation of dual-use technology and
products with applications in both the defense market and civilian
homeland security and law enforcement fields.
Markland Technologies, Inc., is committed to setting next-
generation standards in defense and security through the provision
of innovative emerging technologies and expert services. The
Company is engaged in the identification of advanced technologies
currently under development in laboratories, universities and in
private industry, and in the transformation of those technologies
into next-generation products. Markland's solutions support
military, law enforcement and homeland security personnel to
protect the nation's citizens, borders and critical infrastructure
assets from the threat of terrorism and other dangers. Through
strategic development, Markland focuses on the creation of dual-
use technology and products with applications in both the defense
market and civilian homeland security and law enforcement fields.
The Company is a Board Member of the Homeland Security Industries
Association, and is a featured Company on
HomelandDefenseStocks.com
* * *
Going Concern Doubt
In its Form 10-Q for the quarterly period ended March 31, 2005,
filed with the Securities and Exchange Commission, Markland
reported net losses of $20,954,843 for the nine months ended
March 31, 2005, and $6,243,618 for the same period in 2004.
Markland has limited finances and may require additional funding
in order to market and license its products. During the nine
months ended March 31, 2005, Markland issued secured convertible
promissory notes with a face value of $6,955,000 which, if not
converted, are repayable between September and November 2005.
"There is no assurance that Markland can reverse its operating
losses, or that it can raise additional capital to allow it to
continue its planned operations," the Company said in its
quarterly filing.
"These factors raise substantial doubt about Markland's ability to
continue as a going concern," the Company added, echoing doubts
expressed by WOLF & COMPANY, P.C., Boston, Massachusetts, when it
audited Markland's financial statements for the fiscal year ending
June 30, 2004. Auditors at MARCUM & KLIEGMAN LLP had similar
doubts when they looked at Markland's 2003 financial statements.
MCI INC: Verizon May Cut Merger Pay by $60.8M Due to Liabilities
----------------------------------------------------------------
Verizon Communications, Inc., may reduce the amount it pays to MCI
Inc. in consideration of the merger due to MCI's liabilities.
Michael D. Capellas, MCI, Inc.'s Chief Executive Officer,
disclosed the probable decrease in consideration amount in a
preliminary proxy statement and prospectus it filed to the
Securities and Exchange Commission. The Prospectus is a document
to be distributed to shareholders explaining the deal and
soliciting their approval to the transaction.
The possible reduction would be as much as 21 cents a share, or
$60.8 million. The purchase price adjustments are based on
specific MCI liabilities, including:
* bankruptcy claims,
* tax claims, as well as
* certain international tax liabilities.
The merger agreement provides for a $20.40 per share consideration
if there are no upward or downward adjustments. The merger
consideration may be increased by up to $5.60 per share to the
extent MCI has not paid MCI stockholders a special cash dividend
of $5.60 per share prior to the closing of the merger.
MCI accepted Verizon's $9.7 billion offer and junked Qwest
Communications International Inc.'s bid. MCI will hold a
shareholder meeting in September to approve the Verizon
acquisition.
With more than $71 billion in annual revenues, Verizon
Communications Inc. (NYSE:VZ) -- http://www.verizon.com/-- is one
of the world's leading providers of communications services.
Verizon has a diverse work force of more than 214,000 in four
business units: Domestic Telecom provides customers based in 28
states with wireline and other telecommunications services,
including broadband. Verizon Wireless owns and operates the
nation's most reliable wireless network, serving 47.4 million
voice and data customers across the United States. Information
Services operates directory-publishing businesses and provides
electronic commerce services. International includes wireline and
wireless operations and investments, primarily in the Americas and
Europe.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on
October 31, 2003, and on April 20, 2004, the company formally
emerged from U.S. Chapter 11 protection as MCI, Inc.
* * *
As reported in the Troubled Company Reporter on May 5, 2005, Fitch
Ratings has maintained the Rating Watch Negative status of Verizon
Global Funding's outstanding long-term debt securities, which are
rated 'A+', and has maintained the senior unsecured debt rating of
MCI, Inc., which is rated 'B', on Rating Watch Positive. The
securities of both companies were placed on Rating Watch on Feb.
14, 2005, following the announcement that Verizon Communications,
Inc., planned to acquire MCI. Verizon and MCI have entered into
an amended agreement and plan of merger dated May 1, 2005,
following a protracted bidding process in which Qwest
Communications International, Inc., also pursued MCI.
As reported in the Troubled Company Reporter on March 1, 2005,
Standard & Poor's Ratings Services placed its ratings on Denver,
Co.-based diversified telecommunications carrier Qwest
Communications International, Inc., and subsidiaries, including
the 'BB-' corporate credit rating, on CreditWatch with negative
implications. This follows the company's counter bid to Verizon
Communications, Inc., for long-distance carrier MCI, Inc., for
$3 billion in cash and $5 billion in stock. MCI also has about
$6 billion of debt outstanding.
The ratings on MCI, including the 'B+' corporate credit rating,
remain on CreditWatch with positive implications, where they were
placed Feb. 14, 2005 following Verizon's announced agreement to
acquire the company. The positive CreditWatch listing for the MCI
ratings reflects the company's potential acquisition by either
Verizon or Qwest, both of which are more creditworthy entities.
However, the positive CreditWatch listing of the 'B+' rating on
MCI's senior unsecured debt assumes no change to the current MCI
corporate and capital structure under an assumed acquisition by
Qwest, such that this debt would become structurally junior to
other material obligations.
"The negative CreditWatch listing of the Qwest ratings reflects
the higher business risk at MCI if its bid is ultimately
successful," explained Standard & Poor's credit analyst Catherine
Cosentino. As a long-distance carrier, MCI is facing ongoing
stiff competition from other carriers, especially AT&T Corp.
Moreover, MCI is considered to be competitively disadvantaged
relative to AT&T in terms of its materially smaller presence in
the enterprise segment and fewer local points of presence -- POPs.
The latter, in particular, results in higher access costs relative
to AT&T. Qwest also faces the challenge of integrating and
strengthening MCI's operations while improving its own
underperforming, net free cash flow negative long-distance
business. These issues overshadow the positive aspects of Qwest's
incumbent local exchange carrier business that were encompassed in
the former developing outlook.
As reported in the Troubled Company Reporter on Feb. 22, 2005,
Moody's Investors Service has placed the long-term ratings of MCI,
Inc., on review for possible upgrade based on Verizon's plan to
acquire MCI for about $8.9 billion in cash, stock and assumed
debt.
These MCI ratings were placed on review for possible upgrade:
* B2 Senior Implied
* B2 Senior Unsecured Rating
* B3 Issuer rating
Moody's also affirmed MCI's speculative grade liquidity rating at
SGL-1, as near term, MCI's liquidity profile is unchanged.
As reported in the Troubled Company Reporter on Feb. 22, 2005,
Standard & Poor's Ratings Services placed its ratings of Ashburn,
Virginia-based MCI Corp., including the 'B+' corporate credit
rating, on CreditWatch with positive implications. The action
affects approximately $6 billion of MCI debt.
As reported in the Troubled Company Reporter on Feb. 16, 2005,
Fitch Ratings has placed the 'A+' rating on Verizon Global
Funding's outstanding long-term debt securities on Rating Watch
Negative, and the 'B' senior unsecured debt rating of MCI, Inc.,
on Rating Watch Positive following the announcement that Verizon
Communications will acquire MCI for approximately $4.8 billion in
common stock and $488 million in cash.
MCSI INC: Committee Balks at Settlement Terms with Hartford Fire
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of MCSi, Inc., and
its debtor-affiliates objects to the Debtors' proposed settlement
and compromise of claims with Hartford Fire Insurance Company.
The Committee tells the U.S. Bankruptcy Court for the District of
Maryland in Baltimore that it has not received any information
about the proposed settlement, and it can't make a valid
assessment of its merits. The Committee adds that the Debtors
need to prove that the settlement is fair, reasonable and in the
best interest of creditors.
Hartford Settlement
The settlement agreement resolves all claims and counter-claims
arising between the Debtors and Hartford Fire in connection with
certain pre-petition and post-petition insurance premium payments.
The Debtors filed an adversary proceeding in February 2004 to
recover preferential transfers, totaling $113,935, made to
Hartford Specialty Company. In response to the adversary
proceeding, Hartford Specialty asserted subsequent new value,
contemporaneous exchange for new value and ordinary course of
business affirmative defenses.
In May 2005, Hartford Fire drew a total of $973,899 against
Letters of Credit securing the Debtors' insurance liabilities.
Hartford fire availed of the Letters of Credit pursuant to a
retrospective rating and deductible provision embodied in the
Debtors' insurance policies. The provision required the Debtors
to reimburse Hartford Fire for certain amounts paid under the
policies.
To resolve the issues related to the adversary proceeding and the
Letters of Credit, Hartford Fire agrees to pay the Debtors
$273,899. In exchange for the settlement amount, the Debtor
agrees to dismiss the adversary proceeding against the insurer.
The Debtors tell the Court that the settlement is in the best
interest of their Estates and unsecured creditors because it will
provide immediate resolution of the dispute and provide additional
funds at minimal cost.
The Committee asks the Court to deny the settlement or refrain
from conducting a hearing so it can make a formal inquiry into the
settlement.
Headquartered in Dayton, Ohio, MCSi, Inc., was a leading provider
of state-of-the-art presentation, broadcast and supporting network
technologies for businesses, churches, government agencies and
educational institutions. The Company, along with its affiliates,
filed for chapter 11 protection on June 3, 2003, (Bankr. D.
Maryland Case No. 03-80169). On February 23, 2004, the Bankruptcy
Court allowed the Debtors to wind-down their operations and
liquidate their assets. Aryeh E. Stein, Esq., Paul Nussbaum,
Esq., Martin T. Fletcher, Esq., and Dennis J. Shaffer, Esq., at
Whiteford, Taylor & Preston LLP represent the Debtors in their
bankruptcy cases. When the Debtors filed for protection from its
creditors, they reported assets of $181,058,000 and liabilities
totaling $155,590,000.
MEGA BLOKS: S&P Rates $400 Million Bank Loan Facility at BB-
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' long-term
corporate credit rating to Montreal, Quebec-based Mega Bloks Inc.
At the same time, Standard & Poor's assigned its 'BB-' rating to
the company's US$400 million bank loan facility, with a '2'
recovery rating, indicating that the asset values provide lenders
with the expectation of substantial recovery of principal (80%-
100%) in a payment default scenario. The outlook is stable.
"The ratings reflect our analysis of Mega Bloks, a leading toy
manufacturer, and its acquisition of New Jersey-based leading arts
and crafts manufacturer Rose Art Industries Inc. for about US$350
million," said Standard & Poor's credit analyst Lori Harris.
The transaction was financed with both debt and equity, and closed
on July 26, 2005. Proceeds from the new bank term loans, together
with an equity issue, were used to fund Mega Bloks' purchase
of 100% of the shares of Rose Art.
In an effort to expand into new product categories, reduce its
reliance on construction toys, and increase economies of scale,
Mega Bloks' management completed the acquisition of Rose Art.
"The transaction will give Mega Bloks an immediate entrance into
the growing U.S. arts and crafts market, while also strengthening
its position in other toy categories," added Ms. Harris.
The ratings on Mega Bloks also reflect:
* the integration risk resulting from the transaction;
* customer concentration;
* seasonal sales; and
* challenging toy industry fundamentals, including a very
competitive operating environment and reliance on successful
new product introductions.
These factors are partially offset by:
* the company's modest debt leverage;
* good market position within its categories; and
* brand equity.
The merger will enhance Mega Bloks' business position by
broadening its product offerings across new age groups and more
heavily into the girls market. The U.S. is the company's core
geographic market, generating about 70% of revenues. The
remaining sales are generated in Canada, Europe, and Latin
America, representing an opportunity to leverage Mega Bloks
international distribution network with certain Rose Art products.
The stable outlook reflects the expectation that:
* Mega Bloks will maintain its leading position in its core
markets;
* that Rose Art will be successfully integrated; and
* that credit measures will remain in line with the ratings
category in the medium term.
The outlook could be revised to positive if the company
strengthens its business risk profile through building its market
position and/or improves its financial profile meaningfully. A
negative outlook could result if the company fails to meet
expectations, resulting in weakening of Mega Bloks' credit
measures and liquidity position.
MERIT SECURITIES: Fitch Junks Class B-I Certificates
----------------------------------------------------
Fitch Ratings has taken rating actions on the following Merit
Securities Corporation (Merit) manufactured housing (MH) issues:
Series 12-1
-- Class A-3 affirmed at 'AAA';
-- Class M-1 downgraded to 'BBB-' from 'A';
-- Class M-2 downgraded to 'B' from 'BB-';
-- Class B-1 downgraded to 'CC' from 'CCC'.
Series 13
-- Class A-3 affirmed at 'AAA';
-- Class A-4 affirmed at 'AA-';
-- Class M-1 downgraded to 'BB-' from 'BBB-';
-- Class M-2 downgraded to 'B-' from 'B';
-- Class B-1 remains at 'C'.
All of the MH loans in the aforementioned transactions were
originated by Dynex Financial, Inc. In 1999, the servicing and
origination platforms of Dynex were acquired by Bingham Financial
Services. In 2001, Dynex changed its name to Origen, and, in
2003, converted to a publicly traded real estate investment trust.
Origen continues to service the loans from a national servicing
center in Fort Worth, Texas.
The affirmations of the senior classes reflect a stable
relationship between credit enhancement and future loss
expectations and affect approximately $227.1 million of
outstanding certificates. The negative rating actions on the
subordinate classes, which affect approximately $142.9 million of
outstanding certificates, are taken due to the continued poor
performance of the underlying collateral.
Merit 12-1 and 13 were both issued in 1999. Merit 12-1 included
loans that were called from a previous transaction, Merit 9.
Merit 13 included loans that were called from Merit 10. Merit 12-
1 benefits from an additional credit enhancement feature. On the
closing date, Merit deposited additional MH loans into a separate
collateralization fund with an original principal balance of $11.3
million ($4.7 million currently outstanding). The interest and
principal payments from this fund are available to cover
shortfalls and losses on the pool. However, monthly losses in the
series 12-1 transaction have exceeded this supplemental cash flow
and resulted in the continued reduction of overcollateralization.
Merit 13 benefits from two additional credit enhancement features.
On the closing date, Merit deposited additional MH loans into a
separate collateralization fund with an original principal balance
of $15.1 million ($5.8 million currently outstanding). The
interest and principal payments from this fund are available to
cover shortfalls and losses on the pool. Additionally, as losses
occur, interest payments to classes B-2 and B-3 will be redirected
as part of a principal payment amount to the transaction.
However, monthly losses in the series 13 transaction have exceeded
this supplemental cash flow and resulted in the write-down of
classes B-3 and B-2, which were privately placed.
Fitch will continue to closely monitor these transactions.
Further information regarding current delinquency, loss, and
credit enhancement statistics is available on the Fitch Ratings
web site at http://www.fitchratings.com/
METRICOM INC: Wants Until Dec. 30 to Object to Claims
-----------------------------------------------------
Reorganized Metricom, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Northern District of California, San Jose
Division, for more time to object to claims filed against their
bankruptcy estates. The Reorganized Debtors want until Dec. 30,
2005, to object to the claims.
Reorganized Metricom believes that it has resolved substantially
all of the disputed claims and postpetition claims and notices
filed by state taxing authorities. The Reorganized Debtors say
they are requesting this extension out of an abundance of caution.
Metricom, Inc. is a high-speed wireless data Company. With its
high-speed Ricochet mobile access, Metricom is making "information
anytime" possible-at home, at the office, on the road, and on many
devices. The company filed for chapter 11 protection July 1, 2001
(Bankr. N.D. Calif. Case No. 01-53291). Joshua M. Fried, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC, represents
the Debtor. When the Company filed for protection from its
creditors, it listed $1,047,859,000 in assets and $967,561,000 in
debts. The Debtor's chapter 11 Plan became effective on Sept. 14,
2002.
MIRANT CORP: Wells Fargo Wants Court to Compel Document Production
------------------------------------------------------------------
Wells Fargo Bank, National Association, as Successor Trustee
under an Indenture dated May 1, 2001, between Mirant Americas
Generation, LLC, and Bankers Trust Company, asks the U.S.
Bankruptcy Court for the Northern District of Texas to compel
Mirant Corporation and its debtor-affiliates to produce certain
documents in connection with its Objection to the Disclosure
Statement.
Wells Fargo also asks Judge Lynn to compel the Debtors to provide
a proper privilege log.
Tracy L. Treger, Esq., at Gardner Carton & Douglas LLP, Chicago,
Illinois, notes that the Debtors' plan of reorganization
contemplates, among others, the reinstatement of the Long Term
Notes so that when MAGi emerges from bankruptcy, it will remain
obligated under those Notes until 2031. "The Trustee's primary
concern with the Plan and Disclosure Statement is that they
contemplate transactions affecting the Holders of the Notes
without providing adequate information to determine precisely how
their rights and claims will be affected, and whether and to what
extent the transactions in the Plan may create defaults under the
Indenture [and] cure existing Indenture defaults."
In particular, Ms. Treger says, Wells Fargo sought more thorough
disclosures with respect to, among others:
-- the formation of New MAG Holdco and the disposition of
MAGi's stock in its existing subsidiaries in connection
therewith;
-- New MAG Holdco's incurrence of new debt and the granting
of liens on its assets;
-- the basis for separate classification and treatment of the
Long Term Notes and Short Term Notes and the related basis,
if any, for concluding that the treatment is feasible and
will lead to full repayment; and
-- the impact of the release of intercompany claims.
Concluding that the Plan and the Disclosure Statement were
deficient in many of these respects, Wells Fargo provided the
Debtors with both informal and formal objections, and propounded
the Discovery, Ms. Treger points out. "The Debtors failed to
adequately respond to the majority of the Trustee's Discovery."
The Trustee has made numerous attempts to solicit the Debtors'
cooperation in obtaining the Discovery, yet, to date, the Debtors
have refused to comply, Ms. Treger tells the Court. "[I]t
appears that the Debtors are withholding information that the
Trustee needs to evaluate the Plan and the Disclosure Statement,
and are unwilling to avoid needless duplication of efforts by
responding to Discovery that relates to both issues of
confirmation and adequacy of the Disclosure Statement."
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)
MIRANT CORP: Wants Court to Compel WPS Energy to Return Collateral
------------------------------------------------------------------
Jeff P. Prostok, Esq., at Forshey & Prostok, LLP, in Fort Worth,
Texas, relates that WPS Energy Services, Inc., and Mirant
Americas Energy Marketing, LP, were parties to a Confirmation
Agreement dated December 17, 2002, which incorporated into its
terms:
* the Western Systems Power Pool Agreement, effective
March 1, 2002; and
* a Letter Agreement for Transactions under the WSPP
Agreement, executed July 5, 2000.
The Confirmation Agreement, Mr. Prostok says, required MAEM to
provide WPS Energy with collateral to secure its obligations. In
compliance with the requirement, MAEM obtained a letter of credit
with WPS Energy as the beneficiary. Wachovia Bank, N.A., issued
the Letter of Credit for the benefit of WPS Energy, amounting to
$3.2 million.
On May 21, 2004, WPS Energy drew down $3.2 million against the
Letter of Credit. WPS Energy has held the $3.2 million as cash
collateral securing MAEM's obligations under the Agreement.
As of June 17, 2005, WPS Energy has paid MAEM for all energy
delivered by MAEM to WPS pursuant to the Confirmation Agreement.
"[WPS Energy] is currently in the process of reconciling and
closing the account with MAEM and determining whether [WPS
Energy] is entitled to any offsets or charges against the
Collateral," Mr. Prostok informs the Court. "MAEM's books and
records show that no amounts related to the [Confirmation]
Agreement or otherwise are owed to [WPS Energy], and to date,
[WPS Energy] has failed to provide MAEM with any evidence to
support its claims of offsets, charges or reconciliation amounts
due it."
Notwithstanding, WPS Energy has refused to turn the collateral
over to the estate based on a dispute between the Debtors and the
issuers of the letters of credit, Wachovia and Credit Suisse
First Boston, related to which party has a reversionary interest
in the letter of credit proceeds.
Interpleader Action
On July 8, 2005, WPS Energy commenced an interpleader action
against MAEM, Wachovia and CSFB, whereby WPS Energy:
(i) stated that the Debtors and the Letter of Credit Issuers
have asserted multiple, mutually exclusive claims against
the Collateral; and
(ii) asked the Court to (x) determine the appropriate treatment
of the Collateral and (y) release WPS Energy from all
liability relating to the Collateral.
On July 21, 2005, the Court determined that Wachovia and CSFB
"may not assert a reversionary interest in [the Letter of Credit]
proceeds."
Thus, Mr. Prostok asserts, WPS Energy has no basis whatsoever to
refuse in turning over the Collateral to the Debtors. "In fact,
there never was any basis for [WPS Energy] to withhold the
collateral and the Interpleader was wholly unnecessary."
By this motion, the Debtors ask the Court to:
(1) compel WPS Energy to turn over the Collateral to them
immediately;
(2) provide that, in the event that it is later determined
that WPS Energy would have been entitled to offset the
collateral against amounts owing pursuant to the
Confirmation Agreement, MAEM will pay WPS Energy the
amount equal to the offset or charge pursuant to Section
503(b) of the Bankruptcy Code;
(3) release WPS Energy from any liability that might arise
from the turnover of the Collateral; and
(4) order WPS Energy to pay its own attorneys' fees and costs.
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. 73; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MIRANT CORP: Wants to Tap A&M Tax Advisory as Bankr. Professional
-----------------------------------------------------------------
Mirant Corporation and its debtor-affiliates seek to modify the
employment of Alvarez & Marsal Tax Advisory Services, LLC, as
their tax advisors, from ordinary course professional status to
professionals employed under Section 327(a) of the Bankruptcy
Code, effective as of June 10, 2005.
According to Ian T. Peck, Esq., at Haynes and Boone, LLP, in
Dallas, Texas, Alvarez has been rendering tax advice to the
Debtors since March 2005. Due to the firm's familiarity with the
Debtors' operations, as well as its recognized national
reputation and expertise, the Debtors believe that the firm is
uniquely qualified to assist them.
Alvarez will provide:
a. state and local tax services associated with:
1. reviewing the transaction steps related to the legal
entity restructuring; and
2. preparing and reviewing amended state income tax
returns; and
b. other services that the firm and the Debtors may agree.
Alvarez will be paid based on its hourly rates, which currently
range from $175 to $490.
Mr. Peck notes that in its first monthly fee request, Alvarez
will seek payment of amounts billed to the Debtors in excess of
the $50,000 monthly cap for the month of June 2005 through the
month in which the Court approves the application.
J. Mark McCormick, a Managing Director at Alvarez, attests that
the firm is a disinterested person pursuant to Section 327 of the
Bankruptcy Code.
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. 72; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
NATIONAL CENTURY: ING Groep Sues PricewaterhouseCoopers
-------------------------------------------------------
The Associated Press reports that Dutch financial-services
provider ING Groep NV has filed a lawsuit against
PricewaterhouseCoopers LLP in the United States District Court for
the Southern District of New York.
In the suit, ING alleges that PwC made misrepresentations. The
auditing firm, according to ING, should have known that
receivables purchased from healthcare providers by National
Century Financial Enterprises Inc. and NPF VI were overvalued,
unlikely to be collected or nonexistent, and the reserve accounts
weren't maintained at required levels, the AP relates.
The lawsuit seeks an unspecified judgment against PwC for ING's
losses over the investment it made in the bankrupt companies'
receivables, the AP reports. PwC was National Century's outside
auditors from 1995 to 1998.
Headquartered in Dublin, Ohio, National Century Financial
Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB
Claims Trust, the Litigation Trust, the VI/XII Collateral Trust,
and the Unencumbered Assets Trust, is in the midst of liquidating
estate assets. The Company filed for Chapter 11 protection on
November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court
confirmed the Debtors' Fourth Amended Plan of Liquidation on April
16, 2004. Paul E. Harner, Esq., at Jones Day, represents the
Debtors. When it filed for bankruptcy, National Century listed
$3,800,000,000 in assets and $3,600,000,000 in debts.
NORTHLAKE DEVELOPMENT: Voluntary Chapter 11 Case Summary
--------------------------------------------------------
Debtor: Northlake Development, L.L.C.
403 Towne Center Boulevard, Suite D-2
Ridgeland, Mississippi 39157
Bankruptcy Case No.: 05-04348
Chapter 11 Petition Date: August 18, 2005
Court: Southern District of Mississippi (Jackson)
Judge: Edward Ellington
Debtor's Counsel: Michael E. Earwood, Esq.
Earwood & Childers PLLC
403 Town Center Boulevard, Suite D-2
Ridgeland, Mississippi 39157
Tel: (601) 898-0808
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $500,000 to $1 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
NORTHWEST AIRLINES: Labor Talks Continue as Strike Deadline Nears
-----------------------------------------------------------------
National Mediation Board-hosted negotiations between Northwest
Airlines and the Aircraft Mechanics Fraternal Association are once
again underway. Northwest wants to reach a consensual agreement,
in advance of the Aug. 20 deadline, that provides wage and benefit
levels that are fair to its AMFA employees while allowing
Northwest to stem its record operating losses.
Northwest Airlines received a new proposal from AMFA late during
the evening of Wednesday, Aug. 17. It appears to fall far short
of the $176 million in annual cost savings that the company needs
from its AMFA-represented employees.
"Our preliminary estimate of the value of AMFA's August 17
proposal is $100 million annually, and only for a two-year
period," the Company said.
"Northwest has guaranteed a strike because their proposal is so
extreme," Steve MacFarlane, the labor group's assistant national
director, told John Crawley of Reuters.
Union members have already authorized an Aug. 20 strike if no
agreement is reached by that time.
Northwest must realize at least $1.1 billion in annual labor cost
savings in order to restructure successfully. In addition to
negotiations with AMFA, Northwest is in federal mediation with The
International Association of Machinists and Aerospace Workers and
The Professional Flight Attendants Association. In addition, the
airline is in discussions with representatives of its other
unions.
Bankruptcy Warning
The Company warned that it may be forced to consider filing a
chapter 11 petition if:
-- it is unsuccessful in achieving the necessary labor cost
savings;
-- it suffers significant operational disruptions as a result
of a strike or other workforce actions;
-- it does not secure a freeze of the defined benefit plans for
the contract workforce;
-- it fails to obtain legislative relief of its pension funding
obligations in the near future; or
-- it is unable to access the capital markets to meet current
and future obligations.
Aircraft Mechanics Fraternal Association --
http://www.amfanatl.org/-- represents more aircraft technicians
than any other union. AMFA's craft union represents aircraft
maintenance technicians and related support personnel at Alaska
Airlines, ATA, Horizon Air, Independence Airlines, Mesaba
Airlines, Northwest Airlines, Southwest Airlines and United
Airlines. AMFA's credo is "Safety in the air begins with quality
maintenance on the ground."
Northwest Airlines Corp. is the world's fifth largest airline with
hubs in Detroit, Minneapolis/St. Paul, Memphis, Tokyo and
Amsterdam, and approximately 1,600 daily departures. Northwest is
a member of SkyTeam, an airline alliance that offers customers one
of the world's most extensive global networks. Northwest and its
travel partners serve more than 900 cities in excess of 160
countries on six continents.
At June 30, 2005, Northwest Airlines' balance sheet showed a
$3,752,000,000 stockholders' deficit, compared to a $3,087,000,000
deficit at Dec. 31, 2004.
* * *
As reported in the Troubled Company Reporter on June 23, 2005,
Moody's Investors Service downgraded the debt ratings of Northwest
Airlines Corporation and its primary operating subsidiary,
Northwest Airlines, Inc. The Corporate Family Rating (previously
called the Senior Implied rating) was lowered to Caa1 from B2, and
the Senior Unsecured rating was downgraded to Caa3 from Caa1.
Ratings assigned to Enhanced Equipment Trust Certificates were
downgraded.
In addition, the company's Speculative Grade Liquidity Rating was
downgraded to SGL-3 from SGL-2. The rating actions complete a
review of Northwest's ratings initiated April 8, 2005. Moody's
said the outlook is negative.
NRG ENERGY: Completes $950 Million Senior Debt Refinancing
----------------------------------------------------------
On Aug. 5, 2005, NRG Energy, Inc., and NRG Power Marketing
Inc., as borrowers, obtained an amendment to their Credit
Agreement dated December 23, 2003, with Credit Suisse First
Boston, acting through its Cayman Islands Branch, and Goldman
Sachs Credit Partners L.P.
NRG has committed to repurchase $250 million of its outstanding
common stock from a Credit Suisse affiliate. NRG will fund the
planned repurchase with existing cash balances. To enable this
share repurchase under NRG's high yield debt indenture, NRG will
issue simultaneously in a private transaction, $250 million of
perpetual preferred stock.
The Amendment allows NRG to use cash proceeds from the preferred
issuance to repurchase approximately $229 million of the
company's 8% high yield notes at 108% of par.
Credit Suisse and Goldman Sachs serve as joint lead book runners,
joint lead arrangers and co-documentation agents under the Credit
Agreement. Credit Suisse also serves as administrative agent and
collateral agent. Goldman Sachs also serves as syndication
agent.
A full-text copy of the Amended Agreement is available for free
at http://ResearchArchives.com/t/s?e3
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.
OFFSHORE LOGISTICS: Noteholders Waive Previous Indenture Defaults
-----------------------------------------------------------------
Offshore Logistics, Inc. (NYSE: OLG) successfully completed its
previously announced consent solicitation. As of 5:00 p.m., New
York City time, on Aug. 15, 2005, the Company had received the
requisite consents from holders of its 6-1/8% Senior Notes due
2013 to waive defaults under and make amendments to the indenture
under which the Notes were issued.
The Noteholders waived any past defaults under the indenture
relating to the Notes in connection with the Company's failure to
timely file and deliver its Form 10-K for the fiscal year ended
March 31, 2005, and other financial reports and related documents.
In addition, the indenture has been amended to extend until
Nov. 15, 2005 (or, at the election of the Company and upon payment
of an additional fee, until Dec. 15, 2005 or Jan. 16, 2006, as
applicable) the period in which the Company must file and deliver
its financial reports and related documents.
Goldman, Sachs & Co., was the Solicitation Agent for the consent
solicitation and Global Bondholder Services Corporation was the
Information Agent for the consent solicitation.
Offshore Logistics, Inc., is a major provider of helicopter
transportation services to the oil and gas industry worldwide.
Through its subsidiaries, affiliates and joint ventures, the
Company provides transportation services in most oil and gas
producing regions including the United States Gulf of Mexico and
Alaska, the North Sea, Africa, Mexico, South America, Australia,
Russia, Egypt and the Far East. The Company's Common Stock is
traded on the New York Stock Exchange under the symbol OLG.
* * *
As reported in the Troubled Company Reporter on June 21, 2005,
Moody's placed the ratings for Offshore Logistics, Inc., under
review for possible downgrade following the company's inability to
file its March 31, 2005, Form 10-K by the June 15, 2005,
requirement and as a result it's in violation of the financial
reporting covenant under the senior notes indenture. Though the
underlying business appears to be largely unaffected by this
event, the filing delay is the result of the company's previously
disclosed Board of Directors' and SEC investigation into payments
made in a foreign country. The Audit Committee of the Board of
Directors has retained outside counsel to fully investigate this
matter as well as to expand the investigation to other foreign
offices of OLG.
The initial impact to the company has been the termination of the
former president of its Air Logistics affiliate and the
resignation of the CFO, both of whom have been replaced. While
the company has previously disclosed it findings thus far had not
had a material impact on reported financial statements, the
investigation is still ongoing, and therefore prevents the company
from filing its 10-K.
ORIGEN FINANCIAL: Fitch Lowers Rating on Five Certificate Classes
-----------------------------------------------------------------
Fitch Ratings has performed a review of Origen Financial, Inc.,
Manufactured Housing contracts, series 2001-A. Based on the
review, these rating actions have been taken:
-- Class A-4 affirmed at 'AAA';
-- Class A-5 downgraded to 'A+' from 'AA';
-- Classes A-6 and A-7 downgraded to 'BBB- from 'A';
-- Class M-1 downgraded to 'CCC' from 'BB';
-- Class M-2 remains at 'C'.
Credit enhancement has continued to decline due to an elevated
rate of defaulted loans. Cumulative losses of over 18% of the
original collateral balance have caused writedowns of the
subordinate classes and have increased the credit risk to the
senior classes. The senior classes will receive principal in
sequential order. Fitch deems those senior classes which are
expected to pay-off sooner to be of lower credit risk than those
which will be outstanding for a longer period of time.
Origen is a real estate investment trust based in Southfield,
Michigan, with significant operations in Ft. Worth, Texas. Origen
is a national consumer manufactured home lender and servicer.
Further information regarding current delinquency, loss, and
credit enhancement statistics is available on the Fitch Ratings
web site at http://www.fitchratings.com/.
OTIS SPUNKMEYER: S&P Rates Proposed $192 Million Facility at B+
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned a 'B+' rating and a
recovery rating of '3' to Otis Spunkmeyer Inc.'s proposed $192.5
million senior secured credit facility, indicating the expectation
of a meaningful recovery of principal (50% to 80%) in a payment
default or bankruptcy scenario. The facility is rated the same as
the corporate credit rating.
At the same time, Standard & Poor's revised the outlook on the
frozen and pre-baked goods manufacturer to stable from negative.
Standard & Poor's also affirmed its 'B+' corporate credit rating
on the company. San Leandro, California-based Otis Spunkmeyer
will have about $229 million in lease-adjusted total debt
outstanding at closing.
"The outlook revision incorporates the company's successful
integration of its debt-financed acquisitions in 2004, combined
with modest improvement in EBITDA operating margins at 15.0% over
the 12 months ended June 30, 2005," said Standard & Poor's credit
analyst Ronald Neysmith.
For the same period in fiscal 2004, EBITDA operating margins were
14.2%. In addition, the company's credit protection measures,
leverage, and liquidity are consistent with the current ratings
and other similarly rated consumer product companies.
Proceeds from the new credit facility will be used to refinance
the company's existing credit facility, which has about $132
million outstanding, and finance potential acquisitions. The
rating on the proposed credit facility is based on preliminary
offering statements and is subject to review upon final
documentation.
PACIFIC MAGTRON: Files Disclosure Statement in Nevada
-----------------------------------------------------
Pacific Magtron International, Corp., and its debtor-affiliates
delivered a Disclosure Statement explaining their Joint
Liquidating Plan of Reorganization to the U.S. Bankruptcy Court
for the District of Nevada.
The Plan treats the assets and debts of PMIC and its debtor-
affiliates, namely, Pacific Magtron, Inc., Pacific Magtron (GA),
Inc. and Livewarehouse, Inc., separately.
The Debtors will dispose of their respective assets to fund the
payments proposed under the Plan. These assets are:
a) Pacific Magtron, Inc.
- outstanding pre-petition receivables totaling $852,000
with a net value of approximately $200,000 and $144,444
in outstanding post-petition receivables.
- Inventory recorded at $99,278, with a fair market value
of approximately $30,000;
- Cash totaling $621,806;
- PM(GA) ownership with a net worth of approximately
$75,000;
- Milpitas Building valued by the Debtor between $2.9
million to $3.6 million;
- proceeds from an anticipated breach of contract suit
against Micro Technology; and
- recoveries from preferential transfers.
b) Pacific Magtron (GA), Inc.
- $112,000 in outstanding pre-petition accounts receivable
with an estimated value of approximately $56,000; and
- cash totaling $190,000;
c) Livewarehouse, Inc.
- cash totaling $73,000
d) Pacific Magtron International, Corp.
- Livewarehouse ownership with a net worth of
approximately $70,000; and
- a possible tax refund of $73,500.
Pursuant to the Plan, assets remaining after the full payment of
PM(GA)'s creditors will be credited to its parent, PMI. Likewise,
assets remaining after the full payment of Livewarehouse's
creditors will be distributed to its parent, PMIC.
Treatment of Claims
PMI's unsecured creditors, including Micro Technology's unsecured
claim, will be paid in full from the liquidation of PMI's assets.
Proceeds from the liquidation of inventory, equipment and accounts
receivable will be applied first to Textron Financial Corporation
which has a first priority lien on the assets and next to Micro
Technology. Any residual amount will be distributed, on a pro
rated basis, to the other unsecured creditors.
The proceeds from the sale of the Milpitas Building, net of the
$2,323,224 mortgage obligation to Wells Fargo Bank's and the
$759,479 mortgage obligation to SBA, will be distributed to PMI's
unsecured creditors. Recoveries from the proposed suit against
Micro Technology and the preferential transfers will also be
distributed for the benefit of the unsecured creditors.
Textron's fully secured pre-petition claim against PMI, amounting
to $350,000, will be paid pursuant to a court-approved
stipulation. The stipulation provides for the full payment of the
claim by Oct. 20, 2005.
The secured portion of Micro Technology's claim against PMI will
be paid from cash remaining after the payment to Textron. Micro
Technology does not have a lien and has no claim against the other
debtor-affiliates.
Wells Fargo's secured claim, plus any post-petition interest and
charges, will be paid from the proceeds of the sale of the
Milpitas Office building and from a restricted bank account with
approximately $206,000. Wells Fargo will be permitted to
foreclose on the property if the sale does not close within six
months of the effective date of the Plan.
SBA's secured claim will be paid from the proceeds of the sale of
the Milpitas Building.
Livewarehouse's unsecured creditors will be paid in full from its
own funds.
PM(GA)'s unsecured creditors, with an aggregate claim of
approximately $163,000, will be paid in full from its own funds
and accounts receivables.
75% of PMIC's unsecured creditors' claims will be paid from
Livewarehouse's residual assets plus a contribution from Advanced
Communications Technologies, Inc. PMIC owes its unsecured
creditors approximately $105,000.
PMIC's shareholders will retain their shares if its unsecured
creditors are paid 75% of their claims and if the creditors vote
to accept the Plan.
Shareholders of PM(GA), Livewarehouse and PMI will get nothing
under the Plan.
Headquartered in Milpitas, California, Pacific Magtron
International Corp. -- http://www.pacificmagtron.com/--
distributes some 1,800 computer hardware, software, peripheral,
and accessory items that it buys directly from 30 manufacturers
like Creative Labs, Logitech, and Yamaha. The Company, along with
its subsidiaries, filed for chapter 11 protection on May 11, 2005
(Bankr. D. Nev. Case No. 05-14326). As of Dec. 31, 2004, the
Company reported $11,740,700 in total assets and $11,105,200 in
total debts.
PACIFIC MAGTRON: Micro Tech. Wants $200K Post-Petition Claim Paid
-----------------------------------------------------------------
Micro Technology Concepts, Inc., asks the U.S. Bankruptcy Court
for the District of Nevada to compel Pacific Magtron, Inc., to pay
approximately $209,710 in secured post-petition debt. Micro
Technology further asks the court to convert the Debtor's chapter
11 case to a chapter 7 liquidation proceeding.
Post-Petition Claim
Micro Technology is a secured creditor in the Debtor's bankruptcy
case, holding a $679,846 pre-petition claim. This claim is
secured by a junior lien on the Debtor's inventory, accounts and
accounts receivable.
Pursuant to a post-petition Interim Management Agreement with the
Debtor, Micro Technology is authorized to sell inventory to the
Debtor at its discretion. Inventory sold to the Debtor under the
terms of the management agreement is secured by a purchase money
security interest. Since the petition date, Micro Technology has
sold approximately $209,710 in inventory to the Debtor.
Micro-Technology has repeatedly asked the Debtor to pay-off its
post-petition obligations. The Debtor, however, refuses to pay
the debt.
According to Stuart I. Koenig, Esq., Micro Technology's counsel,
the Debtor insists that an order to use cash collateral is
required before it can pay the obligation. Mr. Koenig says that
this is untrue because the debt arose in the ordinary course of
business and is therefore payable in the ordinary course.
In its response to the payment request, the Debtor stated that it
is withholding payments on the grounds that any post-petition debt
owed to Micro Technology is more than offset by the damages
wrought by Micro Technology's breach of the interim management
agreement and destruction of its ability to rehabilitate its
business.
The Debtor also questions the accuracy of Micro Technology's
inventory costing and has asked for schedules supporting the
purported costs of the inventory.
The Debtor assures the Court that proceeds from the sale of Micro
Technology's inventory is being held in a separate account. The
Debtor wants to hold on to the inventory proceeds pending the
resolution of an adversary proceeding it has filed against Micro
Technology.
In an adversary proceeding, the Debtor seeks to recover forecasted
profits from a proposed joint venture agreement with Micro
Technology. The Debtor expected a $1 to 3.5 million profit from
the joint venture.
Chapter 7 Conversion
Micro Technology says, the Debtor's failure to pay its post-
petition obligations and alleged history of acting in bad-faith
are reasons supporting a conversion to chapter 7.
Mr. Koenig states that Micro Technology had mistakenly believed
that the Debtor was truly concerned about the best interests of
its creditors when it entered into the interim management
agreement. The Debtor's unwillingness to reduce its costs and
payroll to meet it operational needs and anticipated income proves
that the Debtor is not acting with the best interest of its
creditors in mind, says Mr. Koenig. He further claims that the
Debtor's only concern at this point is to retain the public shell
of Pacific Magtron International Corp., its parent and debtor-
affiliate.
The Debtor refutes Micro Technology's allegations and assures the
Court that it has the ability to reorganize its operations. In
its response, the Debtor accuses Micro Technology of seeking to
eliminate its management, which had initiated the adversary
proceeding. The Debtor says that the elimination of the
management and the adversary proceeding will diminish the chances
of unsecured creditors for a meaningful dividend.
Headquartered in Milpitas, California, Pacific Magtron
International Corp. -- http://www.pacificmagtron.com/--
distributes some 1,800 computer hardware, software, peripheral,
and accessory items that it buys directly from 30 manufacturers
like Creative Labs, Logitech, and Yamaha. The Company, along with
its subsidiaries, filed for chapter 11 protection on May 11, 2005
(Bankr. D. Nev. Case No. 05-14326). As of Dec. 31, 2004, the
Company reported $11,740,700 in total assets and $11,105,200 in
total debts.
PALLAS RESOURCE: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Pallas Resource Corporation
P.O. Box 6795
Reno, Nevada 89513
Bankruptcy Case No.: 05-52562
Chapter 11 Petition Date: August 18, 2005
Court: District of Nevada (Reno)
Debtor's Counsel: Nancy L. Allf, Esq.
Parsons Behle & Latimer
415 South Sixth Street, Suite 200-A
Las Vegas, Nevada 89101
Tel: (702) 307-5001
Estimated Assets: Less than $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
State Of Nevada 2005 Brownfields $350,000
Department of Conservation & Grant For
National Resources Gooseberry Study
Division of Environmental
Protection
333 West NYE Lane, Room 138
Carson City, NV 89706
State of Nevada $269,195
Department of Business & Industry
Division of Minerals
Attn: Alan Coyner
400 West King Street, Suite 106
Carson City, NV 89710
Storey County Real Property Taxes $78,180
Doreen Bacus
Clerk treasurer
Drawer D
Virginia City, NV 89440
Woodburn & Wedge $27,201
6100 Neil Road
Reno, NV 89511
Department of the Treasury $19,134
Internal Revenue Service
Ogden, UT 84201
US Treasury Department $13,405
Internal Revenue Service
Special Procedures Function
4750 West Oakey Boulevard
Las Vegas, NV 89102
Whitewing Financial Group, Inc. $9,490
1710 S. Dairy Ashford, Suite 207
Houston, TX 77077
Brian Sandoval, AG Legal Fees $7,400
Attorney General Of Nevada
100 N. Carson Street
Carson City, NV 89701
RKS/York Insurance Services $6,743
PO Box 20577
Reno, NV 89515
David Guinan $5,718
Hoffman, Test, Guinan & Collier
429 West Plumb Lane
Reno, NV 89509
Sierra Pacific Power Co., Inc. Account Numbers: $3,849
P.O. Box 30065 621684-412577,
Reno, NV 89520 641655-424168,
641653-424167,
641653-424167,
64165142-4166
Office Depot $2,198
P.O. Box 8004
Layton, UT 84041
J.W. Welding $1,999
P.O. Box 1416
Fallon, NV 89407
State of Nevada $1,971
Department of Taxation
1550 E. College Parkway, Suite 115
Carson City, NV 89706
Petroleum Distributors $1,640
P.O. Box 2883
Reno, NV 89505
Business & Professional $1,341
Collection Service
816 South Center Street
Reno, NV 89504
Transecurities $1,304
International, Inc.
2510 North Pines Road, Suite 202
Spokane, WA 99206
Storey County Assessor Fees $578
P.O. Box 494
Virginia City, NV 89440
AAL Environmental $522
1500 Glendale Avenue
Sparks, NV 89431
Storey County Assessor Fees $386
P.O. Box 494
Virginia City, NV 89440
PONDEROSA PINE: Wants Government Units to Submit Claims by Aug. 31
------------------------------------------------------------------
Ponderosa Pine Energy, LLC, and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of New Jersey to set 5:00 p.m.
on Aug. 31, 2005, as the deadline for all governmental units owed
money on account of claims arising prior to April 14, 2005, to
file their proofs of claim.
The bankruptcy Court directs that all governmental units must file
written proofs of claim on or before August 31 and those forms
must be delivered to:
Clerk of Court
U.S. Bankruptcy Court for the District of New Jersey
50 Walnut Street, 3rd Floor
Newark, NJ 07102
Headquartered in Morristown, New Jersey, Ponderosa Pine Energy,
LLC, and its affiliates are utility companies that supply
electricity and steam. The Company and its debtor-affiliates
filed for chapter 11 protection on April 14, 2005 (Bankr. D. N.J.
Case No. 05-22068). Mary E. Seymour, Esq., and Sharon L. Levine,
Esq., at Lowenstein Sandler PC represent the Debtor in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed estimated assets and debts of more
than $100 million.
POWERLINX INC: Posts $1 Million Net Loss in Second Quarter
----------------------------------------------------------
Powerlinx, Inc., reported financial results for the quarter ended
June 30, 2005. The Company had a net loss of $1,175,603 for the
quarter ended June 30, 2005, compared with a net loss of $958,446
for the quarter ended June 30, 2004.
The Company also reported incurred operating losses, including
discontinued operations, of $3,199,654, for the six months ended
June 30, 2005, and $1,751,810 for the six months ended June 30,
2004. In addition, during that period, the Company has used cash
of $1,621,261 and $1,519,208 in its operating activities.
The Company has devoted significant efforts in the further
development and marketing of products in its Security and DC
Transportation Products Segments, which, while now showing
improved revenues, cannot yet be considered as sufficient to fund
operations for any sustained period of time.
The Company's ability to continue as a going concern is dependent
upon:
(i) raising additional capital to fund operations;
(ii) the further development of the Security and DC
Transportation Products Segment products; and
(iii) ultimately the achievement of profitable operations.
During the six months ended June 30, 2005, the Company raised
$400,000 from issuance of two separate notes payable, and
$1,081,100 from the sale of common stock. Management is currently
addressing several additional financing sources to fund operations
until profitability can be achieved. However, there can be no
assurance that additional financing can be obtained on conditions
considered by management to be reasonable and appropriate, if at
all.
The Company operates in three identifiable industry segments. The
Marine Products Segment markets and sells underwater video
cameras, lighting and accessories principally to retail sporting
goods businesses throughout the United States. The Security
Products Segment develops, markets, licenses, and sells
proprietary power line video security devices and consumer
electronic products to retailers, governmental agencies,
commercial businesses, and original equipment manufacturers,
throughout the United States. The DC Transportation Products
Segment develops and sells power line rear and side vision systems
for all classes of vehicles in the transportation industry to
distributors and original equipment manufacturers throughout the
United States. The Company operated a fourth segment, the
Hotel/MDU (Multi-dwelling unit) Products Segment which was
discontinued during the quarter ended March 31, 2005 after
commencing in the second quarter of 2004.
The Company is uncertain whether current financing commitments
will provide enough working capital to fund operations until
profitability is achieved, and may have to pursue additional
financing sources during the current year.
Notes Payable
On March 7, 2005, the Company executed a 90-day note payable with
an institution in the amount of $200,000. The note bears an
annual interest rate of 8% and was due on June 5, 2005. The
institution subsequently extended the due date of the note to
September 30, 2005. The note is collateralized by the Company's
finished goods and raw material inventory held at its Clearwater,
Florida distribution center. The Company has received
notification from the lender that it desires to convert the note
to common stock at a price to be negotiated upon the due date of
the note.
On Feb. 18, 2005, the Company executed a 30-day note payable with
an individual in the amount of $200,000. Under the terms, the
lender will receive 100,000 shares of the Company's restricted
stock, along with registration rights, in lieu of any cash
interest payments. The Company repaid $100,000 of the note prior
to the March 17, 2005 due date, and the lender extended the due
date on the remaining principal until April 16, 2005. The Company
repaid the note in full on April 12, 2005.
Accrued Severance Payable
During the period ending March 31, 2005, the Company incurred
severance expenses related to the departure of two officers of the
Company. The total amount payable amounts to $551,000 and is
comprised of payments of both cash and common stock. Under the
separation agreements, the Company issued a total of 2.5 million
shares of restricted common stock to the two former officers. The
stock was valued at $275,000 or $.11 per share, the closing market
price of the Company's common stock on March 31, 2005; the date at
which the liability was probable.
Cash payments totaling $276,000 will be paid to the two former
officers over a two year period; $132,000 of which is due during
2005, and $144,000 due during 2006. Severance costs and related
legal fees have been recorded as restructuring charges for the
three months ended March 31, 2005.
During the three months ended June 30, 2005, the liability was
reduced by $324,500; consisting of the issuance of the 2.5 million
shares of common stock, valued at $275,000, and cash payments of
$49,500.
Going Concern Doubt
Aidman, Piser & Company, P.A. expressed substantial doubt about
Powerlinx Inc.'s ability to continue as a going concern after it
audited the Company's financial statements for the year ended Dec.
31, 2004. The auditing firm points to the Company's recurring
losses and use of significant cash in its operating activities.
Powerlinx Inc. -- http://www.power-linx.com/-- develops,
manufactures, and markets, among other devices, products and
applications developed to transmit voice, video, audio and data
either individually or any and all combinations over power lines,
twisted pair wires and coax in AC and DC power environments, on
any and all power grids. The Company also develops, manufactures
and markets underwater video cameras, lights and accessories for
the marine, commercial and consumer retail markets.
QWEST COMMS: Inks Tentative Collective Bargaining Accord with CWA
-----------------------------------------------------------------
Qwest Communications Inc. (NYSE:Q) has tentatively agreed with the
Communications Workers of America to terms of a new three-year
contract, covering approximately 25,000 Qwest employees, that
meets the future needs of the company and the union. Terms of the
pact includes:
* 7.5% pay hike;
* continuance of an eight-hour limit on mandatory overtime per
week;
* provision of health benefits.
"We're pleased that once again the Communications Workers of
America (CWA) and Qwest have worked together to successfully find
solutions to the issues facing our industry," the company said.
Union members will consider ratification of the pact in a vote
next month.
On Aug. 5, 2005, at the bargaining table, the CWA bargaining team
delivered petitions from more than 10,000 active and retired
workers calling on the company to maintain health care benefits.
It was the first full contract bargaining session since 1998. Two
contract extensions were approved by CWA members in 2001 and 2003
as an investment in the company's future in the wake of Qwest's
serious financial difficulties caused by the previous management
team headed by Joseph Nacchio. Mr. Nacchio and other executives
have been charged with fraud and illegal business practices by the
Securities and Exchange Commission; the current management team
took over in July 2002.
The Communications Workers of America represents Qwest workers in
13 states: Arizona, Colorado, Iowa, Idaho, Minnesota, Nebraska,
New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington
and Wyoming.
Qwest Communications International Inc. (NYSE:Q) --
http://www.qwest.com/-- is a leading provider of high-speed
Internet, data, video and voice services. With approximately
40,000 employees, Qwest is committed to the "Spirit of Service"
and providing world-class services that exceed customers'
expectations for quality, value and reliability.
At June 30, 2005, Qwest Communications' balance sheet showed a
$2,663,000 stockholders' deficit, compared to a $2,612,000 deficit
at Dec. 31, 2004.
REVLON CONSUMER: Consumer Completes $80MM Private Note Placement
----------------------------------------------------------------
Revlon, Inc.'s (NYSE: REV) wholly owned subsidiary, Revlon
Consumer Products Corporation, has completed its previously
announced private placement of $80 million principal amount of
additional 9 1/2% Senior Notes due 2011, which priced at 95.25% of
par. The Notes constitute a further issuance of, are the same
series as, and will vote on any matters submitted to noteholders
with, the $310 million principal amount of 9 1/2% Senior Notes due
2011 previously issued by RCPC under an indenture dated as of
March 16, 2005.
The net proceeds from the private placement are expected to be
used:
(1) to help fund the Company's previously-announced strategic
growth initiatives and for general corporate purposes, and
(2) to pay fees and expenses incurred in connection with this
private placement.
Revlon Consumer Products Corporation is a wholly owned subsidiary
of Revlon, Inc., a worldwide cosmetics, skin care, fragrance, and
personal care products company. The Company's vision is to become
the world's most dynamic leader in global beauty and skin care.
The Company's brands, which are sold worldwide, include Revlon(R),
Almay(R), Ultima(R), Charlie(R), Flex(R), and Mitchum(R).
* * *
As reported in the Troubled Company Reporter on March 10, 2005,
Moody's Investors Service assigned a Caa2 rating to the proposed
$205 million senior notes offering by Revlon Consumer Products
Corporation. In addition, Moody's affirmed Revlon's existing
ratings and its negative rating outlook.
The affirmation and assignment of long-term ratings reflect the
company's continued operational and financial progress, including
the prospective improvement in Revlon Consumer's near-term
liquidity profile as proceeds from the notes are used to refinance
bonds maturing as early as February 2006. However, the
continuation of a SGL-4 speculative grade liquidity rating and a
negative long-term rating outlook reflect the company's ongoing
negative free cash flow profile and ongoing liquidity concerns
beyond the near term.
The ratings affected by this action are:
* New $205 million senior notes due 2011, assigned at Caa2;
* Senior implied rating, affirmed at B3;
* $160 million senior secured revolving credit facility due
2009, affirmed at B2;
* $800 million senior secured term loan facility due 2010,
affirmed at B3;
* $116 million 8.125% senior notes due 2006, affirmed at Caa2;
* $76 million 9% senior notes due 2006, affirmed at Caa2;
* $327 million 8.625% senior subordinated notes due 2008,
affirmed at Caa3;
* Speculative grade liquidity rating, affirmed at SGL-4;
* Senior unsecured issuer rating, affirmed at Caa2.
At the same time, Standard & Poor's Ratings Services affirmed its
ratings on Manhattan-based cosmetics manufacturer Revlon Consumer
Products Corp., including its 'B-' corporate credit rating.
At the same time, Standard & Poor's assigned a 'CCC' senior
unsecured debt rating to Revlon's planned $205 million senior
unsecured note offering due 2011. S&P says the outlook is
negative.
RISK MANAGEMENT: Committee Brings-In Frost Brown as Counsel
-----------------------------------------------------------
The Official Committee of Unsecured Creditors of Risk Management
Alternatives, Inc., and its debtor-affiliates, asks the U.S.
Bankruptcy Court for the Northern District of Ohio, Eastern
Division, for authority to retain Frost Brown Todd LLC as its
local counsel.
Frost Brown is expected to:
a) advise the Committee with respect to its powers, duties and
responsibilities in these cases;
b) provide assistance in the Committee's investigation of the
acts, conduct, assets, liabilities and financial condition
of the Debtors, the operation of the Debtors' businesses
and desirability of the continuance of such businesses, and
any other matters relevant to these cases or to the
negotiation and formulation of a plan;
c) prepare on behalf of the Committee all necessary pleadings
and other documentation;
d) advise the Committee with respect to the Debtors'
formulation of a plan, the Debtors' proposed plans with
respect to the prosecution of claims against various
third parties and any other matters relevant to these cases
or to the formulation of a plan in these cases;
e) provide assistance, advice and representation, if
appropriate, with respect to the employment of a Trustee or
Examiner, should such action become necessary, or any other
legal decision involving interests represented by this
Committee;
f) represent the Committee in hearings and proceedings
involving the Committee; and
g) perform such other legal services as may be necessary and
in the interest of the creditors and this Committee.
Frost Brown's professionals' current hourly billing rates are:
Designation Rate
----------- ----
Members $375
Associates $175
Paralegals $125
Ronald E. Gold, Esq., assures the Court that Frost Brown is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Duluth, Georgia, Risk Management Alternatives,
Inc. -- http://www.rmainc.net/-- provides consumer and commercial
debt collections, accounts receivable management, call center
operations, and other back-office support to firms in the
financial services, telecommunications, utilities, and healthcare
sectors, as well as government entities. The Company and ten
affiliates filed for chapter 11 protection on July 7, 2005 (Bankr.
N.D. Ohio Case Nos. 05-43959 through 05-43969). Shawn M. Riley,
Esq., at McDonald, Hopkins, Burke & Haber Co., LPA, represents the
Debtors in their chapter 11 proceedings. When the Debtors filed
for protection from their creditors, they estimated more than $100
million in assets and between $50 million to $100 million in
debts.
RITE AID: Offering 4.6 Mil. Shares of Convertible Preferred Stock
-----------------------------------------------------------------
Rite Aid Corporation is offering 4,600,000 shares of its Series I
mandatory convertible preferred stock.
The Company will receive all of the net proceeds from this
offering. The Company will pay annual dividends on each share of
our mandatory convertible preferred stock.
Dividends will be cumulative from the date of issuance and payable
to the extent that assets are legally available to pay dividends
and our board of directors or an authorized committee of our board
declares a dividend payable.
The Company may pay dividends in cash, shares of its common stock,
or any combination of cash and common stock, in its sole
discretion, after every quarter.
Shares of its common stock used to pay dividends will be delivered
to the transfer agent to be sold, resulting in net cash proceeds
to be distributed to the holders in an amount equal to the cash
dividends otherwise payable. The first dividend payment, if
declared, will be made on November 1, 2005.
On November 17, 2008, each share of our mandatory convertible
preferred stock will automatically convert, subject to certain
adjustments, depending on the then-prevailing market price of its
common stock. At any time prior to November 17, 2008, holders may
elect to convert each share of their mandatory convertible
preferred stock, subject to certain adjustments into
shares of its common stock.
The mandatory convertible preferred stock will not be listed or
traded on any securities exchange or trading market.
The underwriters may also purchase up to 600,000 shares of our
mandatory convertible preferred stock from us at the public
offering price, less underwriting discounts and commissions,
within 30 days of the date of this prospectus supplement. The
underwriters may exercise this option only to cover over-
allotments, if any.
Citigroup and JPMorgan are the joint book-running managers of the
offer.
A full-text copy of the Prospectus is available for free at:
http://ResearchArchives.com/t/s?da
Rite Aid Corporation -- http://www.riteaid.com/-- is one of the
nation's leading drugstore chains with annual revenues of
$16.8 billion and approximately 3,400 stores in 28 states and the
District of Columbia.
* * *
As reported in the Troubled Company Reporter on Aug. 15, 2005,
Standard & Poor's Ratings Services revised its outlook on Rite Aid
Corp. to negative from stable. Ratings on the Harrisburg,
Pennsylvania-based drug retailer, including the 'B+' corporate
credit rating, were affirmed.
As reported in the Troubled Company Reporter on Jan. 7, 2005,
Fitch Ratings assigned a 'B' rating to Rite Aid Corporation's 7.5%
$200 million senior secured notes due 2015. The proceeds from the
issue will be used to repay the $170.5 million 7.625% senior
unsecured notes due April 2005 and the $38.1 million 6% senior
notes due December 2005. These notes rank pari passu with the
company's outstanding secured notes. Fitch rates Rite Aid:
-- $1.7 billion senior unsecured notes 'B-';
-- $800 million senior secured notes 'B';
-- $1.4 billion bank facility 'B+.'
Fitch says the rating outlook is stable.
RUSSELL WILLIAMS: Case Summary & 27 Largest Unsecured Creditors
---------------------------------------------------------------
Debtors: Russell R. Williams & Catherine S. Williams
dba C&R Farms
dba Williams Farms
4444 Lightsville Road
Leaf River, Illinois 61047
Bankruptcy Case No.: 05-74220
Type of Business: The Debtors operate a farm and sell seeds.
Chapter 11 Petition Date: August 18, 2005
Court: Northern District of Illinois (Rockford)
Debtors' Counsel: John S. Biallas, Esq.
3N918 Sunrise Lane
Saint Charles, Illinois 60174
Tel: (630) 513-7878
Fax: (630) 513-7880
Total Assets: $4,702,750
Total Debts: $2,817,338
Debtor's 27 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Amcore Bank $660,000
101 West First Street
Dixon, Il 61021
Adler Seeds $270,000
6085 West 550 North
Sharpsville, IN 46068
Jackson Seed Sales $29,533
4613 Old State Road
Byron, Il 61010
Curtiss Farm Seeds $22,542
Farmer's Crop Insurance $11,648
I Corn $11,434
Citicard $9,639
GM Card $9,639
FerrellG1 $6,435
Russell Martinek $5,000
Discover Card $4,504
Saint Anthony Medical Center $4,497
Farmer's Crop Insurance $3,889
Saint Anthony Medical Center $2,919
Chase $2,885
CNH Capital America, LLC $2,485
Williams & McCarthy $1,154
NicorGas $1,010
BP Amoco $555
Rockford Anesthesiologists Associated $512
Capital One $460
Chase $455
Orthopedic Arthritis Clinic $421
Mobil $222
Camelot Radiology Associates $117
Capital One $100
David Tess, Esq. $0
SALOMON BROTHERS: Fitch Retains Low-B Rating on Four Cert. Classes
------------------------------------------------------------------
Fitch Ratings affirms Salomon Brothers Mortgage Securities VII,
Inc.'s commercial mortgage pass-through certificates, series 1999-
C1:
--$50.0 million class A-1 'AAA';
--$355.7 million class A-2 'AAA';
--Interest-only class X 'AAA';
--$38.6 million class B 'AAA';
--$38.6 million class C 'AAA';
--$11.0 million class D 'AA+';
--$27.6 million class E 'A+';
--$11.0 million class F 'A';
--$14.7 million class G 'BBB';
--$20.2 million class H 'BB+';
--$9.2 million class J 'BB';
--$16.5 million class K 'B';
--$7.3 million class L 'B-'.
Fitch does not rate the $7.6 million class M certificates.
The ratings affirmations reflect limited paydown since previous
review and relatively stable loan performance. As of the July
2005 distribution date, the pool's collateral balance has been
reduced 17.3% to $608.0 million from $734.9 million at issuance.
Realized losses in the pool total $8.9 million or 1.2% of the
original principal balance.
Currently, three loans (1.6%) are in special servicing and 90 days
delinquent. The largest specially serviced loan (1.1%) is secured
by a multifamily property in Houston, TX. The property, which is
currently 83% occupied, has mold and termite infestation. As a
result, the value of the property has declined substantially, and
the special servicer is evaluating workout options. Meanwhile,
the special servicer has stopped advancing.
The second specially serviced loan (0.29%) is secured by an office
property in Greece, NY. The loan has been transferred into
special servicing due to a monetary default, and a new appraisal
has been ordered. The next specially serviced loan (0.18%) is
secured by an office property in Rogers, AR. The property is
currently 46% occupied and a foreclosure sale is scheduled for the
end of the month.
SCHOTT ALARM: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Lead Debtor: Schott Alarm Co., Inc.
1026 Ann Arbor Street
Flint, Michigan 48503
Bankruptcy Case No.: 05-34166
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Alliance Security Network, Inc. 05-34167
Type of Business: The Debtor sells security products and
offers security services.
See http://www.alliance-network.com/
Chapter 11 Petition Date: August 17, 2005
Court: Eastern District of Michigan (Flint)
Judge: Walter Shapero Flint
Debtors' Counsel: Dennis M. Haley, Esq.
Winegarden, Haley, Lindholm &
Robertson, P.L.C.
G-9460 South Saginaw Street, Suite A
Grand Blanc, Michigan 48439
Tel: (810) 579-3600
Total Assets Total Debts
------------ -----------
Schott Alarm Co., Inc. Unknown Unknown
Alliance Security Network, Inc. Unknown Unknown
The Debtors' lists of their 20 largest unsecured creditors are not
available as of press time.
STANDARD AERO: Restating Financials to Reflect Non-Cash Changes
---------------------------------------------------------------
Standard Aero Holdings, Inc., will restate and reclassify its
audited consolidated financial statements for the period from
Aug. 25, 2004, to Dec. 31, 2004, and as of Dec. 31, 2004, and for
the interim unaudited financial information for the first quarter
of 2005 to reflect the non-cash effect of changes in the recorded
amount of the Company's foreign deferred tax liabilities.
For the 2004 period, the restatement and the reclassification will
result in an increase in the Company's net losses as well as an
increase in the Company's income from operations and Adjusted
EBITDA. For the first quarter of 2005, the restatement and
reclassification will result in an increase in the Company's net
income and a decrease in the Company's income from operations and
Adjusted EBITDA.
The Audit Committee of the Board of Directors, at the
recommendation of the management of the Company, concluded that
the financial statements included in the registration statement on
Form S-4 should no longer be relied upon because of the need to
restate the financial statements set forth therein as a result of
the error described below. The restatement will not affect the
Company's business operations or its liquidity in either past
periods or going forward, nor will these adjustments affect the
Company's compliance with the financial covenants governing its
indebtedness.
The Company and its subsidiaries conduct the majority of their
respective transactions in U.S. dollars, and, therefore, use the
U.S. dollar to measure their transactions. At the time of the
Company's acquisition of the maintenance, repair and overhaul
business of Dunlop Standard Aerospace Group Limited, certain
deferred tax liabilities were established.
Since the closing of the acquisition, the deferred tax liabilities
attributable to certain of the Company's Canadian operations and
the Company's Dutch operations were recorded as if the liabilities
were in U.S. dollars but should have been recorded as being in
Canadian dollars and euros, respectively, and then converted into
U.S. dollars.
As the value of these currencies fluctuate versus the U.S. dollar,
there is a foreign exchange gain or loss that should have been
recorded in the income statements for the periods ending December
31, 2004 and March 31, 2005. The Company also determined that
certain tax rates used to compute deferred income tax balances
should be changed, resulting in a reduction of the deferred tax
liabilities primarily affecting goodwill reported as of Dec. 31,
2004.
The financial statements at and for the period ending Dec. 31,
2004 and March 31, 2005 will be restated to correct these items.
In addition, the Company has decided to reclassify for all periods
presented the foreign exchange gain or loss on income taxes from
the selling, general and administrative line item to the benefit
or provision for income taxes line item.
In order to correct the errors, the Company will recompute the
subject deferred tax liabilities using the appropriate tax rates
in Canadian dollars and euros, as appropriate, at December 31,
2004 and Mar. 31, 2005 and convert those local currency deferred
tax liabilities into U.S. dollars. Accordingly, the Company will
restate its consolidated balance sheets as of December 31,
2004 and March 31, 2005 to reflect changes in the U.S. dollar
recorded amount of deferred tax liabilities and to restate its
consolidated statements of operations for the 2004 period and the
first quarter of 2005 to reflect the resulting changes.
Based on preliminary calculations, the Company estimates that
during the 2004 period, the U.S. dollar recorded amount of the
Canadian and Dutch deferred tax liabilities decreased by
$7.5 million, or 8.9%, from $84.1 million to $76.5 million. The
Company also estimates that during the first quarter of 2005, the
U.S. dollar recorded amount of the Canadian and Dutch deferred tax
liabilities decreased by $7.8 million, or 9.4%, from $83.3 million
to $75.5 million.
In connection with the restatement, the Company will also
reclassify certain other foreign deferred tax liabilities
(unrelated to those that are the subject of the restatement) from
the selling, general and administrative expense line item to the
benefit or provision for income taxes line item in its
consolidated statements of income for all periods presented. The
Company estimates that the amount of that reclassification will be
$1.4 million during the 2004 period and $0.1 million during the
first quarter of 2005.
The Company estimates that the combined effect of the restatement
and the reclassification during the 2004 period will result in:
-- an increase in income from operations of $1.4 million, or
19.5%, from $7.4 million to $8.8 million;
-- an increase in net loss of $1.5 million, or 45.9%, from
$3.2 million to $4.7 million; and
-- an increase in Adjusted EBITDA of $1.4 million, or 3.5%,
from $40.8 million to $42.3 million.
The Company estimates that the combined effect of the restatement
and the reclassification during the first quarter of 2005 will
result in:
-- a decrease in income from operations of $0.1 million, or
0.3%, from $18.2 million to $18.1 million;
-- an increase in net income of $0.3 million, or 4.6%, from
$6.2 million to $6.5 million; and
-- a decrease in Adjusted EBITDA of approximately $50,000, or
0.2%, from approximately $25,300,000 to approximately
$25,250,000.
The Company expects to file a post-effective amendment to the
registration statement on Form S-4 with the Securities and
Exchange Commission to reflect the restatement. The expiration of
the exchange offer will be extended until after the post-effective
amendment becomes effective.
Material Weakness in Internal Control
The Company's management believes that the restatement may
indicate a material weakness in the Company's internal control
over financial reporting. A material weakness is a significant
deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will
not be prevented or detected.
The Company is committed to maintaining effective internal control
over financial reporting to provide reasonable assurance regarding
the reliability of our financial reporting and the preparation of
financial statements for external purposes in accordance with
GAAP.
In order to improve the process and to enhance the Company's
internal control over financial reporting, the Company's
management has hired the former Senior Manager for U.S. and
Cross-Border Tax from a major public accounting firm to act as the
Company's director of tax accounting beginning Aug. 15, 2005.
Internal control over financial reporting cannot provide absolute
assurance of achieving financial reporting objectives due to its
inherent limitations because internal control involves human
diligence and compliance and is subject to lapses in judgment and
breakdowns from human failures. Nonetheless, these inherent
limitations are known features of the financial reporting process,
and it is possible to design into the process safeguards to
reduce, though not eliminate, this risk.
Standard Aero Holdings Inc., -- http://www.dunlopstandard.com/--
is a leading supplier of services to the global aerospace, defense
and energy industries. The Company has over 2,500 employees in
six different countries, with its main operations located in the
United States, Canada and the Netherlands.
S-TRAN HOLDINGS: Keeman Petroleum Wants Cases Converted to Ch. 7
----------------------------------------------------------------
Keeman Petroleum Co., Inc., asks the U.S. Bankruptcy Court for the
District of Delaware to convert the bankruptcy cases of S-Tran
Holdings, Inc., and its debtor-affiliates to chapter 7 liquidation
proceedings.
Keeman tells the Court that it supplied the Debtors petroleum
goods and didn't receive payment.
The supplier wants the Debtors' businesses liquidated because
Keeman believes that there is no reasonable likelihood of
rehabilitation for them. The Debtors, according to Keeman,
stopped their business operations on May 5, 2005.
Keeman asserts that the only parties who benefit from the chapter
11 proceedings are the Debtors' secured creditors -- LaSalle
Business Credit, LLC, and ACAS.
Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc.,
provides common carrier services and specialized in less-than-
truckload shipments and also supplies overnight and second-day
service to shippers in 11 states in the Southeast and Midwestern
United States. The Company and its debtor-affiliates filed for
chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No. 05-
11391). Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub P.C. represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed total assets of $22,508,000 and total
debts of $30,891,000.
SUNGARD DATA: Moody's Downgrades $500 Million Notes' Rating to B2
-----------------------------------------------------------------
Moody's Investors Service has downgraded the rating for $500
million existing senior notes of SunGard Data Systems, Inc. to B2
from Baa3, concluding a review for possible downgrade initiated on
April 19, 2005. Concurrently, Moody's has withdrawn the rating
for the company's former $600 million bank credit facility (old
SunGard Data Systems).
In addition, Moody's has removed the provisional designation of
SunGard's B2 corporate family rating and B1 senior secured bank
credit facility rating, and has affirmed the company's B3 senior
unsecured rating and Caa1 senior subordinated rating. Moody's
also assigned an SGL-2 speculative grade liquidity rating. These
actions follow the completion of the acquisition of SunGard by a
consortium of private equity investors on August 11, 2005. The
outlook is stable.
The downgrade of the existing $500 million notes to B2 reflects
the effective subordination of the notes to the sizable amount of
bank debt. The B2 rating also considers the value of the security
collateral granted to the note holders, which consists of tangible
assets as well as capital stock of subsidiaries. However, the
collateral package for the new bank facilities consists of the
collateral securing the existing notes as well as intangible
assets. In Moody's opinion, SunGard's intangible assets have
value on a going concern basis and provide a technical advantage
to the collateral package covering the existing notes.
SunGard's ratings reflects:
1) significant debt to EBITDA leverage approximating 7x
(including off-balance sheet securitization);
2) challenges to improve and sustain the rate of organic
revenue growth in Availability Services and Financial
Systems businesses;
3) exposure to financial services clients and competitors which
continue to develop rival in-house services and systems.
These risks are mitigated by the company's:
1) leading market positions in business continuity services as
well as in broad sectors of financial institution, higher
education, and public sector software and processing systems
markets;
2) recurring revenue base from processing fees and multi-year
outsourcing contracts; and
3) widely diversified customer base.
In addition, the existing notes, the new bank facilities, the
newly issued senior unsecured notes and the subordinated notes
receive upstream guarantees (the subordinated notes guaranteed on
a subordinated basis) from an identical set of U.S. operating
subsidiaries. As a group, the U.S. guarantor subsidiaries exclude
broker dealer subsidiaries, non-wholly owned subsidiaries, and
subsidiaries of the company's proposed A/R securitization
facility. For fiscal year 2004, U.S. subsidiaries represented
approximately 73% of total assets, 70% of revenues, and 79%, or
$954 million, of EBITDA.
Moody's also assigned a SGL-2 speculative grade liquidity rating.
The rating recognizes the company's liquidity provided by its $1
billion revolving credit facility ($149 million drawn at closing).
Moody's expects internal cash flows and cash balances to cover
capital expenditures, mandatory debt prepayments, and smaller
acquisition spending (relative to the company's historic appetite)
over the coming year. Moody's also expects the company to
maintain room under the financial covenants of its bank facilities
through the year. The SGL-2 rating incorporates SunGard's limited
alternative liquidity sources, with the preponderance of its
assets being pledged to the secured facilities.
As part of the rating process, Moody's considered:
1) Market Position. SunGard has market leading positions
across broad areas of financial services software and
systems, business continuity, and is a leading provider of
IT solutions to higher education institutions and the public
sector. In Financial Systems, approximately 80% of EBITA is
generated by sector leading positions in the various
divisions, calculated as at least one times revenues of the
second largest competitor. However, Moody's believes the
company faces ongoing competition from large financial
institutions, which continue to develop systems in
competition with FS solutions.
2) Recurring Versus Non-Recurring Revenue. SunGard has an
extensive portfolio of businesses with substantial recurring
revenue. Over 80% of the company's total revenues,
excluding FS' software licenses and professional service
fees, is recurring. Over 90% of Availability Services
revenue, provided by monthly subscription and software
maintenance fees, is recurring. In Availability Services,
the company signs multi year contracts with onerous
termination fees for early termination in excess of contract
investment.
3) Internal Revenue Growth. The Company faces a challenge to
improve and sustain its internal revenue growth in its
Availability Services and FS businesses. For fiscal year
2004, excluding benefits from foreign exchange, AS' internal
revenue growth was flat and FS' growth approximated 0.5%.
For the first half of fiscal year 2005 and excluding
benefits from foreign exchange, internal revenue growth for
AS and FS improved to growth of about 2% and 6%,
respectively. Moody's notes that FS has shown steadily
improving internal revenue growth momentum beginning with
the third fiscal quarter of 2004. About 50% of internal
growth in the first half of fiscal year 2005 is due to an
improvement in professional services fee revenue and an
increase in license fees, both of which Moody's does not
view as recurring revenue sources.
4) Client Concentration. SunGard has a highly diversified
customer base. The company serves over 20,000 customers,
including the world's 50 largest financial services firms,
with no customer representing more than 2% of revenues in
2004. Nonetheless, the company's FS business is exposed to
a consolidating financial services industry. In addition,
the AS business has a financial services sector business
concentration, excluding insurance companies, approximating
20% of its revenues. Large financial service firms have
taken their business continuity systems in-house in recent
years and Moody's believes SunGard AS remains vulnerable to
further in-housing by the financial services sector.
However, Moody's anticipates the negative effects of further
in-housing will be mitigated by SunGard's breadth of clients
as no AS client represents more than approximately 3% of AS
revenues.
5) Acquisition Strategy. SunGard has been an acquisitive
company, achieving growth primarily through acquisitions in
recent years. Moody's anticipates Sungard's prospective
acquisition appetite will approximate $150 million to $200
million per year. If pursued, this appetite may conflict
with the company's plans for optional debt repayment. Since
fiscal year 2002, SunGard's cash spending for acquisitions
has ranged between $236 million and $800 million per year.
6) Debt Leverage. SunGard's debt to trailing twelve month June
2005 EBITDA, excluding negative EBITDA of the divested BRUT
business, is very high at roughly 7x (including A/R
securitization).
7) Liquidity. At closing, the company had approximately $200
million in cash balances as well as access to $1 billion
revolving credit facilities (at closing $149 million drawn).
As a condition of any borrowing under the revolving credit
facility, the company must re-represent no material adverse
effect has occurred. The company has cushion under the
facilities' financial covenants and therefore availability
from this revolver. Moody's expects SunGard to generate
free cash flow approximating $200 million or more per year,
subsequent to mandatory debt repayment of about $40 million
per year and prior to cash acquisition spending. In
addition, SunGard's $375 million fully drawn accounts
receivable securitization facility supports its liquidity
needs.
These ratings have been downgraded:
-- $250 million senior unsecured notes due 2009 to B2 from Baa3
-- $250 million senior unsecured notes due 2014 to B2 from Baa3
These new ratings have been assigned:
-- B2 corporate family rating
-- B1 rating on proposed $1 billion senior secured revolving
credit facility due 2011
-- B1 rating on proposed $4 billion senior secured term loan
due 2013
-- SGL-2 speculative grade liquidity rating
These ratings have been affirmed:
-- B3 rating for $2 billion senior unsecured notes due 2013
-- Caa1 rating for $1 billion subordinated notes due 2015
These ratings have been withdrawn for SunGard Data Systems (Old):
-- Baa3 rating on $600 million senior unsecured bank credit
facility due 2009
Headquartered in Wayne, Pennsylvania, SunGard Data Systems
provides business continuity and business processing services.
SUSSEX 1999: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Sussex 1999 Ltd.
22 Waugh Drive
Houston, Texas 77007
Bankruptcy Case No.: 05-42773
Type of Business: The Debtor's president and general partner,
Mohamed Shaffin Ali, filed for chapter 11
protection on Aug. 15, 2005, and the case is
pending before the Hon. Wesley Steen
(Bankr. S.D. Tex. Case No. 05-42695). Mr. Ali's
petition was reported on the Troubled Company
Reporter on Aug. 18, 2005.
Chapter 11 Petition Date: August 16, 2005
Court: Southern District of Texas (Houston)
Judge: Karen K. Brown
Debtor's Counsel: Dean W. Ferguson, Esq.
Adams & Reese, LLP
1221 McKinney, Suite 4400
Houston, Texas 77010
Tel: (713) 308-0385
Fax: (713) 652-5152
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Credtitors.
SYNBIOTICS CORP: Posts $604,000 Net Loss in Qtr. Ended June 30
--------------------------------------------------------------
Synbiotics Corporation reported results for the quarter ended
June 30, 2005.
The Company incurred a net loss of $604,000 for the three months
ended June 30, 2005, compared with a net income of $357,000 for
the same period in 2004. For the six months ended June 30, 2005,
the Company incurred a net loss of $545,000 compared with a net
loss of $138,000 for the six months ended June 30, 2004. At June
30, 2005, the Company had an accumulated deficit of $46,716,000.
As of June 30, 2005, Synbiotics had working capital of $4,327,000,
including a cash balance of only $509,000. There is the $1,000,000
contractual obligation due in July 2005, and the other $1,500,000
contractual obligation, to the same party, due in July 2006.
Contractual Obligations Due
The Company had a $1,000,000 contractual obligation due in July
2005, and another $1,500,000 contractual obligation, to the same
party, due in July 2006.
These contractual obligations are unsecured and are recorded at
their accreted value in the Company's consolidated balance sheet
under other current liabilities and other liabilities. The
Company's cash position is not sufficient to fund its operations
and service its secured debt for the next twelve months if it also
paid the $1,000,000 contractual obligation when it became due in
July 2005. The Company did not make the payment when it came due,
and the $1,500,000 due in July 2006 became immediately due, and
the entire $2,500,000 will began bearing interest at 10.5%.
The remaining unaccreted portion of the 2006 contractual
obligation totaling $130,000 will be charged to interest expense
in July 2005. The Company is in the process of renegotiating this
unsecured debt; however, there can be no assurance that any such
renegotiation will be successful. These factors raise substantial
doubt about the Company's ability to continue as a going concern
for a reasonable period of time.
Litigation Expense
The profitability of Synbiotics' canine heartworm diagnostic
products has diminished due to competition from new entrants to
the in-clinic canine heartworm diagnostics market, Heska and Agen.
Management believes their products infringed Synbiotics U.S.
patent in this area, and the Company separately sued them for
patent infringement. Although Synbiotics incurred significant
litigation costs, the final settlements of these cases in 2003 and
2004 did not include barring their products from the market.
Agen's U.S. distributor appears to be following a price-cutting
strategy, so this new competition is adversely affecting both
Synbiotics market share and its average selling price. In any
event, the Company's U.S. patent in this area expires in December
2005, and after then the Company would be unable to prevent any
further additional competitors from entering this market.
Management believes the Company's results in 2005 and thereafter
will benefit if it can avoid the heavy patent litigation expense
experienced in 2002, 2003 and, particularly, 2004. Currently the
Company is not involved in any litigation.
Going Private
As reported in the Troubled Company Reporter on Apr. 25, 2005, the
Company will seek shareholder approval for Synbiotics to "go
private." Specifically, Synbiotics is proposing a 1-for-2,000
reverse split of its common stock, with a payment in lieu of
issuing fractional shares, followed by a 2,000-for-1 forward split
of its common stock. The cash payment in lieu of fractional
shares will be at the rate of $0.13 per pre-reverse split share
traceable to the fractional shares.
Synbiotics Corporation -- http://www.synbiotics.com/-- develops,
manufactures and markets veterinary diagnostics, instrumentation
and related products for the companion animal, large animal and
poultry markets worldwide. Headquartered in San Diego,
California, Synbiotics manufactures and distributes its products
through its operations in San Diego, Calif., and Lyon, France.
* * *
Going Concern Doubt
After reviewing Synbiotics Corporation's 2004 financial
statements, LEVITZ, ZACKS & CICERIC, says it has substantial doubt
about the company's ability to continue as a going concern. The
auditing firm points to the Company's $46,113,000 accumulated
deficit, the fact that $1,000,000 of contractual obligations are
coming due in July and another $1,500,000 contractual obligation,
to the same party, comes due in July 2006. Synbiotics has told
the auditing firm that it doesn't believe its cash position will
be sufficient to fund its operations and service its debt for the
next twelve months if it also pays the $1,000,000 due in July
2005.
TEXAS PETROCHEMICAL: Trustee Has Until July 7 to Object to Claims
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
extended the Liquidating Trust's Plan Trustee's deadline to object
to proofs of claim filed by creditors in Texas Petrochemical
Holdings, Inc., and TPC Holdings L.L.C. fka TPC Holding Corp.'s
chapter 11 proceedings. The Trustee has until July 7, 2006, to
object to those claims.
The Court also confirmed Mr. Cohn's appointment as Plan Trustee.
Mr. Cohn told the Court he needs more time to evaluate and pursue
litigation claims that may result in significant recoveries to the
Debtors' estates.
At this time, Mr. Cohn said he does not believe that there are
sufficient funds to make any distribution to unsecured creditors.
The bankruptcy estate does have litigation claims that may result
in future income to the estate and funds to distribute to
unsecured creditors. Unless and until there are funds to
distribute, however, the Plan Trustee does not believe the expense
of evaluating and objecting to unsecured claims will benefit the
unsecured creditors.
As previously reported, Jack B. Fishman resigned as the
Liquidating Trustee appointed pursuant to the Modified Amended
Joint Plan of Liquidation for the Debtors on June 16, 2005.
On that same day, Huff Alternative Income Fund, L.P., as the
Plan's proponent, and the primary beneficiary of the trust, named
H. Miles Cohn to be the successor trustee of the Liquidating
Trust.
Texas Petrochemical, L.P. produced C4 chemical products widely
used as chemical building blocks for synthetic rubber, nylon
carpets, adhesives, catalysts and additives used in high-
performance polymers. The company has manufacturing facilities in
the industrial corridor adjacent to the Houston Ship Channel and
operates product terminals in Baytown, Texas and Lake Charles,
Louisiana. After filing for chapter 11 protection on July 20,
2003 (Bankr. S.D. Tex. Case No. 03-40258), the parent company
emerged from bankruptcy in May 2004. The Court confirmed the
Plan filed by Huff Alternative Income Fund LP for Texas
Petrochemical Holdings, Inc., and TPC Holdings LLC on April 24,
2005. When the Debtors filed for protection from their creditors,
they listed $512,417,000 in total assets and $448,866,000 in total
debts on a consolidated basis. Mark W. Wege, Esq., at Bracewell &
Patterson, LLP represents the Debtors.
TRUMP HOTELS: Suit Against Trump Capital Accumulation Plan Filed
----------------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission, Trump Entertainment Resorts, Inc., Trump
Entertainment Resorts Holdings, L.P., and Trump Entertainment
Resorts Funding, Inc., disclose that on Feb. 8, 2005, certain
individuals filed a complaint in the U.S. District Court for the
District of New Jersey, Camden Division, against certain entities
that included members of the Trump Capital Accumulation Plan
Administrative Committee.
The plaintiffs alleged that those responsible for managing the
Trump Capital Accumulation Plan breached their fiduciary duties
owed to the plan participants when Old Common Stock held in
employee accounts was allegedly sold without participant
authorization if the participant did not willingly sell the
shares by a specified date in accordance with the plan.
Francis X. McCarthy, Jr., Trump Entertainment's executive vice
president of corporate finance and chief financial officer,
relates that the litigation was brought under the Employee
Retirement Income Security Act of 1974, as amended, by certain
plan participants and beneficiaries, on behalf of themselves and
others similarly situated. The plaintiffs want the District
Court to certify their claims as a class action. They also seek
payment for damages for losses suffered by accounts of affected
plan participants and reasonable costs and attorneys' fees.
The Litigation, Mr. McCarthy notes, is in its initial phase with
discovery anticipated to be commenced in September 2005.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc., nka Trump Entertainment Resorts, Inc. --
http://www.thcrrecap.com/-- through its subsidiaries, owns and
operates four properties and manages one property under the Trump
brand name. The Company and its debtor-affiliates filed for
chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No.
04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A.
Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and
Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N.
Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano,
P.A., represent the Debtors in their successful chapter 11
restructuring. When the Debtors filed for protection from their
creditors, they listed more than $500 million in total assets and
more than $1 billion in total debts. The Court confirmed the
Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005,
and the plan took effect on May 20, 2005. (Trump Hotels
Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
TRUMP HOTELS: Schlossers Want to File Late Claim & Lift Stay
------------------------------------------------------------
Michael P. Hobbie, Esq., at Hobbie, Corrigan, Bertucio & Tashjy
PC, in Eatontown, New Jersey, relates that in September 2004,
Clifford Schlosser was an invitee of Casbah Nightclub at Trump
Taj Mahal, in Atlantic City, New Jersey. Casbah Nightclub was
owned by Trump Taj Mahal Casino Resort.
While Mr. Schlosser was on the premises, he allegedly slipped and
fell on the dance floor which was covered with alcoholic liquids,
bottles of beer as well as broken glass that were negligently,
recklessly and carelessly maintained in the Nightclub.
Casbah Nightclub had a duty to inspect, supervise and maintain
the premises, including the dance floor, in a reasonably safe
condition, to prevent an unreasonable risk of injury to those on
the premises, Mr. Hobbie asserts.
The Nightclub, Mr. Hobbie continues, negligently and carelessly
breached its duty in that it:
a. had actual and constructive notice of a hazardous condition
on its floor;
b. failed to properly inspect and supervise the sidewalk and
the maintenance company hired to maintain the floors;
c. failed to provide reasonable and necessary lighting and
security;
d. did not exercise proper care;
e. caused and allowed a dangerous and hazardous condition to
exist on its floor;
f. failed to provide proper safeguards and warnings to the
hazardous condition;
g. failed to provide safe access for the floors;
h. failed to observe and enforce applicable municipal
ordinances and laws relating to its floors;
i. failed to enforce its own safety rules and regulations;
j. failed to provide proper training and supervision to its
agents, employees and representatives who were responsible
for inspecting, supervising and maintaining the floors; and
k. was otherwise negligent in maintaining, supervising and
inspecting the floors.
As a result of the Nightclub's negligence, Mr. Schlosser
sustained severe and permanent physical injury, psychological and
emotional trauma, grief and torment, and will be prevented from
engaging in his usual pursuits and occupations, Mr. Hobbie tells
the Court. Accordingly, Mr. Schlosser, with wife Louisa
Schlosser, filed a civil action in the Superior Court of New
Jersey, in Union County, Law Division.
The Schlossers demand a judgment against the Nightclub for
damages, together with interest and cost, and a trial by jury on
all issues in the action.
By this motion, the Schlossers ask the U.S. Bankruptcy Court for
the District of New Jersey for permission to file a late proof of
claim relating to the accident. The Schlossers also ask the Court
to lift the automatic stay so they can pursue their claims in the
Civil Action.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc., nka Trump Entertainment Resorts, Inc. --
http://www.thcrrecap.com/-- through its subsidiaries, owns and
operates four properties and manages one property under the Trump
brand name. The Company and its debtor-affiliates filed for
chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No.
04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A.
Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and
Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N.
Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano,
P.A., represent the Debtors in their successful chapter 11
restructuring. When the Debtors filed for protection from their
creditors, they listed more than $500 million in total assets and
more than $1 billion in total debts. The Court confirmed the
Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005,
and the plan took effect on May 20, 2005. (Trump Hotels
Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
US AIRWAYS: Court Okays Aircraft Sale to Mountain Capital
---------------------------------------------------------
Judge Stephen S. Mitchell of the U.S. Bankruptcy Court of the
Eastern District of Virginia cleared the way for US Airways Group,
Inc. to sell four of its Boeing 767 aircraft and one spare engine
to Mountain Capital Partners LLC, an affiliate of Goldman Sachs
Group, Inc., as part of a new sale-leaseback agreement with
Mountain Capital.
The sale-leaseback agreement will provide US Airways with
$30.8 million initially upon completion of the sale, and another
$10 million after recurrent maintenance checks through 2009. US
Airways has been operating under a month-to-month agreement with
Mountain Capital, enabling the company to return planes and the
spare engine as it takes delivery of new aircraft.
ATSB Cash Collateral Extension
Judge Mitchell also approved an agreement between US Airways and
the Air Transportation Stabilization Board (ATSB) that extends
through Oct. 25, 2005, the company's authorization to use the cash
collateral that secures the ATSB's federally guaranteed loans.
The agreement also will allow US Airways to retain approximately
40 percent of the proceeds from the sale of certain assets on
which the ATSB holds liens.
"Both of these transactions are key steps in our plans to provide
additional liquidity and move us closer to emergence from Chapter
11 and completion of our merger with America West Airlines," said
Ron Stanley, US Airways executive vice president finance and chief
financial officer.
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: Aligns Policies with America West as Merger Nears
-------------------------------------------------------------
In preparation for its anticipated merger with America West
Airlines, US Airways has aligned three of its policies so that the
combined carrier will be better able to offer seamless service to
its customers when the merger is completed. The changes are
consistent with existing policies at America West and other
low-cost airlines.
These changes are scheduled to take effect Oct. 1, 2005:
* Children ages 5 to 14 who are traveling as unaccompanied
minors will be accepted by US Airways for travel only on
nonstop flights. The fee for unaccompanied minor travel
will be reduced to $40.
US Airways will make an exception for unaccompanied minors
with ticketed reservations made prior to Aug. 17, 2005.
They may travel on connecting flights through Nov. 1, 2005.
Reservations for unaccompanied minor travel on connecting
flights made after Aug. 17, 2005, will be honored through
Sept. 30, 2005.
* Passengers needing supplemental oxygen will no longer be
able to purchase it on US Airways flights. However, the
airline is working to implement new policies as a result of
the FAA's recent approval of Portable Oxygen Concentrators.
* Live animals will no longer be accepted for travel as
checked baggage or cargo. US Airways will make an exception
for ticketed reservations made before Aug. 17, 2005, to
carry pets as checked baggage, which will be honored through
Nov. 1, 2005. The policy change does not apply to the
transportation of service animals.
"We have made these policy changes as part of our strategy to
simplify the new airline's business while retaining service
elements that are important to our customers. These changes are
more in line with other low-cost competitors," said US Airways
Executive Vice President of Operations Al Crellin.
A small number of US Airways customers who already hold
reservations for travel after Oct. 1, 2005, will be affected by
these policy changes. In order to minimize any inconvenience,
beginning, US Airways will contact all affected customers and
assist them in making alternate arrangements.
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: New Officer Team for Merged Company Recommended
-----------------------------------------------------------
America West Chairman, President and CEO Doug Parker and US
Airways President and CEO Bruce Lakefield announced the officer
team that will be recommended to the new airline's board of
directors. These officers would assume their new roles in the
combined company at the merger's close date, which is expected in
late September.
Doug said, "We welcome these talented individuals to the new US
Airways and we are confident that they have the right skills to
navigate our merged company through the challenging transition.
In addition, we are grateful for the efforts of both teams and to
members of both teams who will not remain with the new airline. It
took the entire officer teams of both airlines to make the initial
discussion of a merger a reality and we appreciate the diligent
efforts of those individuals."
Bruce added, "When Doug and I began discussing this merger, we set
a goal to build the best team in the airline industry. This
combination of leaders from US Airways and America West certainly
accomplishes that goal. I add my deep appreciation to all of the
officers who have worked tirelessly throughout our initial
discussions and who will continue to do so until the merger is
completed."
America West and US Airways currently have a combined 52 officer
positions, including two positions that are responsible for the
US Airways Express operations of PSA and Piedmont. There are
34 officers being named today for the new airline (including Doug
Parker and his direct reports), which will result in a 35 percent
reduction in overhead expenses. In addition, a few of the new
positions are transition roles designed to integrate specific
areas, which should phase out as the merger is completed.
Doug continued, "There is a lot of work to be accomplished over
the next 18 months. We have to move to one operating certificate
and create single systems for areas such as revenue management,
revenue accounting and other technical functions. This work will
require extraordinary efforts, and I am pleased we have put the
right team in place to get that work accomplished."
The officer team will be comprised of:
* Administration
Led by Executive Vice President and Chief Administrative
Officer Jeff McClelland
-- Derek Kerr, Senior Vice President, Chief Financial Officer
Reporting to Derek:
a. Mike Carreon, Vice President, Controller
b. Dion Flannery, Vice President, Financial Analysis
c. Kara Gin, Vice President, Financial Planning
d. Tom Weir, Vice President, Treasurer
-- Jim Walsh, Senior Vice President/General Counsel
Reporting to Jim:
a. Janet Dhillon, Vice President/Deputy General Counsel
b. John Hedblom, Vice President, Human Resources
c. Al Hemenway, Vice President, Labor Relations
d. Steve Farrow, President/CEO, Piedmont
e. Keith Houk, President/CEO, PSA
* Marketing
Led by Executive Vice President, Sales and Marketing Scott
Kirby
-- Joe Beery, Senior Vice President/CIO
Reporting to Joe:
a. Paul Lambert, Vice President, Facilities
b. Andrew Nocella, Senior Vice President, Scheduling,
Planning and Alliances
c. Kerry Carstairs, Vice President, Reservations
d. Travis Christ, Vice President, Sales & Marketing
e. Randy Richards, Vice President, Cargo
f. Open, Vice President, Revenue Management
* Operations
Led by Executive Vice President, Operations Al Crellin
-- Ed Bular, Vice President, Flight Operations
Reporting to Ed:
a. Dave Seymour, Vice President, Operations Control and
Planning
b. Joe Chronic, Vice President, Flight Operations Integration
c. Hal Heule, Senior Vice President, Safety & Regulatory
Compliance
-- Anthony Mule, Senior Vice President, Customer Service
Reporting to Anthony:
a. Ron Cole, Vice President, Inflight Services
b. Donna Paladini, Vice President, Customer Service West
c. Open, Vice President, Customer Service East
-- John Prestifilippo, Senior Vice President, Maintenance and
Engineering
Reporting to John:
a. Rick Oehme, Vice President, Engineering & Quality
* Public, Government, and Community Affairs
Led by Senior Vice President, Public Affairs C.A. Howlett
-- Rosemary Murray, Vice President, Government Affairs
* Corporate Communications
Led by Vice President, Corporate Communications Elise
Eberwein
-- Larry LeSueur, Vice President, Culture Integration
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: Asks Court to OK Addendum to Seabury Advisory Accord
----------------------------------------------------------------
US Airways, Inc., and its debtor-affiliates ask Judge Mitchell of
the U.S. Bankruptcy Court for the Eastern District of Virginia to
approve an addendum to their August 17, 2004, Aircraft Advisory
Agreement with Seabury Aviation Advisors Inc.
The parties entered into the Aircraft Advisory Agreement as part
of Seabury's employment as the Debtors' aviation, financial and
restructuring advisor. The Aircraft Advisory Agreement provides
that Seabury is the exclusive agent for providing certain
aircraft advisory services.
The Addendum dated July 28, 2005, sets forth the parties'
agreement for compensation with respect to certain aircraft
advisory services.
The Debtors agree to pay Seabury an Aircraft Advisory Success Fee
on the closing of each regional jet aircraft financing deal.
Seabury, however, agrees to defer 50% of the fees associated with
the GECAS single-investor lease financing of RJs into USAir --
but not Republic Airlines -- until USAir emerges from bankruptcy.
Seabury will provide support for negotiating large jet aircraft
purchase agreements, for no charge, including negotiating:
-- a purchase agreement for 20 Airbus A350 widebody aircraft;
-- the Airbus financing support agreement for the A350
aircraft; and
-- a $250,000,000 term loan liquidity facility from Airbus as
partial exit debt financing for USAir's reorganization.
Seabury will also provide restructuring advisory services, like
restructuring GECAS single-investor leases for RJs as part of the
GE Memorandum of Understanding, at no additional charge to USAir,
by extending the June 30, 2005 sunset date set forth in the
Agreement to December 31, 2005.
The firm will also provide supplemental services at or below the
15% discount market rate. USAir will pay to Seabury out of the
net proceeds of each sale/leaseback transaction associated with
used mainline jet aircraft owned by USAir an Aircraft Transaction
Success Fee equal to 50 basis points of the sale proceeds at the
closing of the S/L Transaction.
Seabury will also receive for each refinancing of an enhanced
equipment trust certificate debt issue an Aircraft Transaction
Success Fee equal to 75 basis points of principal amount of each
EETC Refinancing Transaction, with the EETC Refinancing Success
Fees payable at closing of each transaction.
All fees earned by the firm under the Agreement through the
emergence date will be capped at $10,500,000.
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. 101; Bankruptcy Creditors' Service, Inc., 215/945-7000)
U.S. CAN: Balance Sheet Upside-Down by $413.7 Mil. at July 3
------------------------------------------------------------
U.S. Can reported net sales of $230.4 million for its second
quarter ended July 3, 2005 compared to $211.8 million for the
corresponding period of 2004, an 8.8% increase. For the first six
months of 2005, net sales increased to $460.9 million from
$425.3 million for the same period in 2004.
The quarter and year-to-date sales increase is primarily due to
volume increases of U.S. Aerosol and Plastics products, increased
prices due to higher raw material costs, which were passed on to
customers, and the positive foreign currency impact on sales made
in Europe, partially offset by volume decreases in the Company's
International and Custom Specialty business segments.
For the second quarter, U.S. Can reported gross profit of
$23.2 million or 10.1% to sales, compared to $18.9 million or
8.9% to sales in 2004. For the six months ended July 3, 2005,
gross profit increased to $55.2 million from $38.3 million (9.0%
to sales) for the first six months of 2004. The second quarter
and year-to-date improvement in 2005 gross profit dollars and
gross profit percentage to sales over 2004 reflects the benefit of
increased Aerosol and Plastics products volume, improved pricing
due to higher raw material costs, product mix, improved
International operating performance and financial benefits
associated with the 2004 closing of the Company's New Castle, Pa.
lithography and the Elgin, Ill. (Olive Can) Custom & Specialty
plants. On a year-to-date basis, all business segments reported
improved gross profit dollars versus the same period in 2004.
Selling, general and administrative expenses for the second
quarter of 2005 were $9.5 million or 4.1% of sales compared to
$10.4 million or 4.9% of sales in the second quarter of 2004.
Selling, general and administrative expenses for the first six
months of 2005 were $20.4 million or 4.4% of sales compared to
$20.2 million or 4.8% of sales for the first half of 2004. The
decrease in the second quarter of 2005 primarily relates to
severance payments recorded in the second quarter of 2004 to be
made over time to the Company's former Chief Executive Officer.
During the first half of 2005, the Company recorded restructuring
charges of $2.0 million. A $0.5 million charge was recorded in
the first quarter of 2005 and a $1.5 million charge was recorded
in the second quarter of 2005. During the first quarter of 2005,
the Company recorded charges for position elimination costs
related to the continuation of an early termination program in one
European facility and a product line profitability review program
in our German food can business. The second quarter charges were
for European headquarters position elimination costs, as well as a
reassessment of previously recorded reserves for ongoing facility
costs related to our closed Olive Can Custom & Specialty plant.
Other income of $0.2 million was recorded in the first half of
2005, compared to $0.4 million in 2004. The other income
represents the Company's share of the net income of its joint
venture equity investment in Argentina. The first half of 2004
also included dividends related to an investment in operations
that were formerly owned by the Company.
Second quarter 2005 interest expense was $13.9 million as compared
to $12.9 million for the second quarter of 2004. Interest expense
in the first half of 2005 increased $1.3 million versus the first
half of 2004 to $26.9 million. The increase in 2005 interest
expense is due to higher average interest rates and higher average
borrowings.
Bank financing fees for the second quarter of 2005 were
$0.7 million as compared to $1.2 million for the second quarter of
2004. For the first half of 2005, bank financing fees were
$1.5 million compared to $2.6 million for the same period in 2004.
The decrease in bank financing fees is due to lower fees and
expenses associated with the Company's new Credit Facility entered
into in June 2004, which are being amortized over the life of the
applicable borrowings, versus the fees and expenses previously
being amortized in conjunction with the Company's former Senior
Secured Credit Facility.
In the second quarter of 2004, the Company recorded a loss from
early extinguishment of debt of $5.5 million associated with the
termination of the Company's former Senior Secured Credit
Facility. The loss represented the unamortized deferred financing
costs related to the Senior Secured Credit Facility.
Income tax expense was $0.6 million for the second quarter of 2005
versus an income tax benefit of $2.3 million for the second
quarter of 2004. For the first half of 2005, the Company recorded
income tax expense of $1.7 million versus an income tax benefit of
$1.9 million for the first half of 2004. Prior to 2005, the
Company recorded valuation allowances as it could not conclude
that it was "more likely than not" that all of the deferred tax
assets of its domestic operations and certain of its foreign
operations would be realized in the foreseeable future.
Accordingly, the Company did not record income taxes related to
the second quarter or first half of 2005 and 2004 for the
applicable operations.
The net loss before preferred stock dividends was $3.0 million for
the second quarter of 2005, compared to a net loss before
preferred stock dividends of $9.8 million for the second quarter
of 2004. For the first half of 2005, the Company recorded net
income before preferred dividends of $3.0 million, compared to a
net loss before preferred dividends of $14.8 million in 2004.
At July 3, 2005, $9.7 million had been borrowed under the
$65.0 million revolving loan portion of the Credit Facility.
Letters of Credit of $15.1 million were also outstanding securing
the Company's obligations under various insurance programs and
other contractual agreements. In addition, the Company's reported
cash balance was $2.6 million.
U.S. Can Corporation is a leading manufacturer of steel containers
for personal care, household, automotive, paint and industrial
products in the United States and Europe, as well as plastic
containers in the United States and food cans in Europe.
As of July 3, 2005, U.S. Can posted a $413,743,000 equity deficit
compared to a $398,429,000 deficit at Dec. 31, 2004.
WACHOVIA BANK: Fitch Affirms Low-B Rating on Six Cert. Classes
--------------------------------------------------------------
Fitch Ratings affirms all classes of Wachovia Bank Commercial
Mortgage Trust, series 2004-C12:
-- $42.6 million class A1 at 'AAA';
-- $114.5 million class A1-A at 'AAA';
-- $199.0 million class A2 at 'AAA';
-- $82.0 million class A3 at 'AAA';
-- $474.9 million class A4 at 'AAA';
-- Interest-only class IO at 'AAA';
-- $25.2 million class B at 'AA';
-- $9.3 million class C at 'AA-';
-- $22.6 million class D at 'A';
-- $10.6 million class E at 'A-';
-- $12.0 million class F at 'BBB+';
-- $12.0 million class G at 'BBB';
-- $13.3 million class H at 'BBB-';
-- $4.0 million class J at 'BB+';
-- $2.7 million class K at 'BB';
-- $5.3 million class L at 'BB-';
-- $4.0 million class M at 'B+';
-- $2.7 million class N at 'B';
-- $2.7 million class O at 'B-';
-- $13.6 million class MAD at 'BBB-'.
Fitch does not rate the $16.0 million class P.
The affirmations are due to the stable pool performance and
minimum paydown since issuance. As of the July 2005 distribution
date, the pool's aggregate principal balance has decreased 0.7% to
$1.07 billion from $1.08 billion at issuance.
Four loans (24.7% of the pool) maintain investment grade credit
assessments. Fitch reviewed operating statement analysis reports
and other performance information provided by Wachovia. The debt
service coverage ratio for the loans are calculated based on a
Fitch adjusted net cash flow and a stressed debt service based on
the current loan balance and a hypothetical mortgage constant.
Ernst & Young Plaza (11.0%) is secured by a 1.2 million square
foot office building and retail center as well as a portion of an
adjacent parking garage in the downtown submarket of Los Angeles,
CA. As of March 31, 2005, the total occupancy is 87.9%, with
office 93.9% occupied and retail 71.2% occupied. At issuance,
total occupancy was 86.7%, with office 92.4% occupied and retail
71.1% occupied. The DSCR as of year-end 2004 is 1.45 times (x)
compared to 1.54x at issuance.
11 Madison Avenue (8.9%) is secured by a 2.3 million SF office
building in Manhattan. The $82 million trust amount represents
the pooled component of the A-3 note in a total senior note of
$430 million and an aggregate mortgage debt of $515 million. The
A-1, A-2, and A-4 notes are not included in this trust but are
pari-passu with the A-3 note. There is also a $13.6 million non-
pooled subordinate companion loan that collateralizes class MAD in
this transaction. In addition to the pari-passu notes, there are
three subordinate notes that are not included in the trust. The
property is 99.71% occupied as of July 2005, compared to 98.6% at
issuance. The DSCR as of YE 2004 is 1.17x compared to 1.20x at
issuance.
Eastdale Mall (3.0%) is secured by a 485,772 SF regional mall
located in Montgomery, AL. The mall is anchored by Dillard's
(177,427 SF) and JC Penney (98,542 SF), which are not part of the
collateral, Parisian (127,938 SF), and Sears (143,504 SF). At
issuance, the collateral was 96.5% occupied with 89.1% in-line
occupancy. As of August 10, 2005, the collateral was 93.7%
occupied with 85.8% in-line occupancy. YE 2004 in-line sales
improved 5.6% from issuance. The DSCR as of YE 2004 is 1.33x
compared to 1.34x at issuance.
Highland Pinetree Apartments (1.7%) is secured by 320 multifamily
units located in Fullerton, California. As of March 31, 2005, the
property was 95.0% occupied compared to 97.8% at issuance. The
DSCR as of YE 2004 increased to 1.35x from 1.31x at issuance.
WASHINGTON MUTUAL: Fitch Lifts Rating on Class CB-5 Certs. to BBB
-----------------------------------------------------------------
Fitch Ratings has taken rating actions on these Washington Mutual
residential mortgage-backed certificates:
Washington Mutual Mortgage pass-through certificates, series
2000-3
-- Class A affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AA+';
-- Class M-3 affirmed at 'A+'.
Washington Mutual Mortgage pass-through certificates,
series 2001-MS15 pool 1
-- Classes IA, IIA, and IIIA affirmed at 'AAA';
-- Class CB-1 affirmed at 'AAA';
-- Class CB-2 upgraded to 'AAA' from 'AA';
-- Class CB-3 upgraded to 'AA' from 'A';
-- Class CB-4 upgraded to 'A' from 'BBB';
-- Class CB-5 upgraded to 'BBB' from 'B'.
WAMMS pass-through certificates, series 2001-MS15 pool 2
-- Classes IVA, VA affirmed at 'AAA';
-- Class DB-1 affirmed at 'AAA';
-- Class DB-2 upgraded to 'AAA' from 'AA+';
-- Class DB-3 upgraded to 'AA+' from 'A+';
-- Class DB-4 upgraded to 'A+' from 'A-';
-- Class DB-5 upgraded to 'BBB' from 'BB'.
WAMMS pass-through certificates, series 2002-MS1
-- Classes IA, IIA, and IIIA affirmed at 'AAA';
-- Class CB-1 affirmed at 'AAA';
-- Class CB-2 affirmed at 'AAA';
-- Class CB-3 upgraded to 'AAA' from 'AA';
-- Class CB-4 upgraded to 'AA' from 'A';
-- Class CB-5 upgraded to 'A' from 'BBB'.
WAMU pass-through certificates, series 2003-S2
-- Class A affirmed at 'AAA';
-- Class B-3 upgraded to 'A-' from 'BBB-';
-- Class B-4 upgraded to 'BBB-' from 'BB-';
-- Class B-5 upgraded to 'BB' from 'B'.
WAMU pass-through certificates, series 2003-S5 groups 1 and 3
-- Classes IA, IIIA affirmed at 'AAA'.
WAMU pass-through certificates, series 2003-S5 group 2
-- Class IIA affirmed at 'AAA';
-- Class II-B-2 affirmed at 'A-';
-- Class II-B-5 affirmed at 'B'.
The affirmations, affecting approximately $932 million of the
outstanding balances, are due to credit enhancement consistent
with future loss expectations. The upgrades, affecting
approximately $20.5 million of the outstanding balances, are being
taken as a result of low delinquencies and losses, as well as
increased credit support levels. Above deals suffered no to
minimal losses since the last rating action dates, and the
upgraded classes experienced an increase in credit enhancement
percentage as much as 20 times the original.
The collateral of all the above WAMU and WAMMS deals, except for
WAMU 2000-3, primarily consists of 15- to 30-year fixed-rate
mortgages secured by first liens on one- to four-family
residential properties. WAMU 2000-3 has collateral that consists
of jumbo negatively amortizing 30-year MTA-indexed adjustable rate
mortgages, also secured by first liens on one- to four-family
residential properties.
The pool factors (i.e. current mortgage loans outstanding as a
percentage of the initial pool) for these deals range from 7%
(WAMMS 2001-MS15) to 57% (WAMU 2003-S5). Further information
regarding current delinquency, loss, and credit enhancement
statistics is available on the Fitch Ratings web site at
http://www.fitchratings.com/
ZEPHION NETWORKS: Mihlstin Approved as Ch. 7 Trustee's Accountant
-----------------------------------------------------------------
As previously reported, Michael B. Joseph, Esq., the chapter 7
Trustee overseeing the liquidation of Zephion Networks, Inc., and
its debtor-affiliates, asked the U.S. Bankruptcy Court for the
District of Delaware for permission to employ Steven W. Mihlstin,
C.P.A., as his accountant.
Mr. Mihlstin will prepare tax returns to preserve the Debtors'
assets and comply with the Trustee's statutory duties.
Mr. Mihlstin disclosed that he will bill in accordance with his
normal hourly rates:
Designation Hourly Rate
----------- -----------
Accountants $175
Administrative Support $45
Mr. Mihlstin assuree the Court that he does not represent an
interest adverse to the estate and is a "disinterested person" as
that term is defined in Section 101(14) of the Bankruptcy Code.
The Court approved Mr. Mihlstin's retention as the Chapter 7
Trustee's accountant.
Zephion Networks, Inc. was an Internet access solutions and
network services provider. Zephion filed for chapter 11
protection on June 25, 2001 (Bankr. Del. Case No. 01-2111). The
case was converted to Chapter 7 Liquidation under the Bankruptcy
Code on February 22, 2002, and Michael B. Joseph was appointed as
the Chapter 7 Trustee. Maribeth L. Minella, Esq., and John D.
Mclaughlin, Jr., Esq., at Young Conaway Stargatt & Taylor, LLP,
represent the Chapter 7 Trustee as he winds down the Debtors'
estates.
* Alvarez & Marsal Expands Real Estate Advisory Services Group
--------------------------------------------------------------
Alvarez & Marsal, a global professional services firm, has
expanded its Real Estate Advisory Services group with the addition
of several top real estate industry professionals. Dirk Aulabaugh
has joined the firm as a senior director in the Los Angeles office
and Brian Kish and Edison Jinn have joined as directors in the
Washington, D.C. and New York offices, respectively.
Mr. Aulabaugh specializes in providing strategic real estate
counseling advice to a national client base including
corporations, real estate investors/developers and major REITs.
Over the course of his 14-year career, he has advised on sale-
leaseback opportunities, performed disposition management
services, conducted due diligence in preparation of purchase
negotiations and advised debtors and creditors on a variety of
real estate issues. Prior to joining A&M, Mr. Aulabaugh was a
director with Huron Consulting Group, where he was responsible for
real estate services on the west coast. His experience spans
several years working in the real estate consulting practice of a
Big Six accounting firm, as well as several years working in the
investment banking arena on REITs. Mr. Aulabaugh holds a
bachelor's and master's degree in business administration in
finance and real estate, respectively, from The University of
Florida.
With more than 15 years of experience in the real estate industry,
Mr. Kish specializes in corporate real estate services including
strategic occupancy planning, portfolio planning, business process
improvement, operational cost reduction, facilities management,
capital program management, site selection, and financial
analysis. Prior to joining A&M, Mr. Kish served as director of
consulting for Gensler Architecture, Design & Planning Worldwide.
He also served as manager in the corporate real estate strategy
and engineering/construction practices of PricewaterhouseCoopers.
Mr. Kish earned a bachelor's and master's degree in architecture
from the Georgia Institute of Technology, and a master's degree in
business administration from the Goizueta Business School at Emory
University.
Mr. Jinn has more than 10 years of diverse commercial real estate
finance experience and has advised REITs, opportunity funds,
private equity groups, investment banks, financial institutions,
Fortune 500 companies and national and local developers. He
specializes in real estate transactions, financings and advisory
services including acquisitions, dispositions, due diligence,
distressed real estate assets, lease valuations, development and
credit analyses. Prior to joining A&M, Mr. Jinn spent four years
in the investment sales group of Rockwood Realty Associates, a New
York-based real estate advisory group, primarily working on
institutional real estate transactions, debt and equity placements
and bankruptcy/restructuring engagements. Previously he worked in
the real estate advisory group of Ernst & Young and in the
acquisition and development group of Lincoln Property Company.
Mr. Jinn earned his bachelor's degree in business administration
from Longwood University and a master's degree in accounting from
George Mason University.
Alvarez & Marsal's Real Estate Advisory Services group provides a
range of services including: transaction advisory services for
real estate buyers, sellers, investors and lenders; restructuring
and real estate litigation services, including consulting and
expert witness services related to real estate matters; strategy
and operations services, including executive management consulting
to institutional owners, investors, lenders and users of real
estate; and owner advisory services, including financial
strategies and execution for private companies and institutional
owners of real estate.
About Alvarez & Marsal
Alvarez & Marsal -- http://www.alvarezandmarsal.com/-- 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 nearly 400 seasoned
professionals in locations across the US, Europe, Asia and Latin
America, enables the firm to deliver on its proven reputation for
leadership, problem solving and value creation.
* BOOK REVIEW: Calling A Halt to Mindless Change: A Plea for
Commonsense Management
------------------------------------------------------------
Author: John MacDonald
Publisher: Beard Books
Softcover: 244 pages
List Price: $34.95
Order your personal copy at
http://amazon.com/exec/obidos/ASIN/1587982218/internetbankrupt
MacDonald is not against change. He is not a reactionary or
ideologue in the political sense. Nor is he dogmatic. He doesn't
have ideas he is trying to persuade business leaders to adopt and
follow. He does have a sense of urgency, however, in arguing that
change for the sake of change because it is in vogue or because a
group of much-publicized business "gurus" advocates it is wrong-
headed; and such thoughtless change prompted by external sources
is in fact disruptive and usually unproductive for the large
majority of American businesses. This is the "mindless change"
MacDonald criticizes. And he not only criticizes it, but also
introduces principles and advice on how to be aware of change and
respond to it continually, substantively, and productively. Such
response is never-ending; it's a way of life, the modus operandi
for a business concerned about its survival. Appropriate change
is necessary for a business to keep up with the market for its
products or services, satisfy and thus keep its customers, and
provide security for its employees. Just as with individuals or
cultures, businesses that don't change inevitably wither and die
away.
In urging his main topic of sensible change -- as opposed to
change because it is fashionable, for example -- this author
freely goes out of the "box" of typical business guide books. At
the front of each chapter are three or four quotes on time in
general or its parts of past, present, and future. These quotes
are from eclectic, mostly literary sources, including the Bible,
poets, and British essayists. Although there are some from
prominent social thinkers, and one from Groucho Marx. Examples
are "The most reliable way to anticipate the future is by
understanding the present," by John Naisbitt. This insightful
quote by this social thinker whose outlook has influenced many
businesspersons is expressed somewhat differently in the quoted
lines from a poem by T. S. Eliot, "Time present and time past/Are
both perhaps present in time future/And time future contained in
time past." While such quotes indicate how engrossing MacDonald's
book is for the unpredictable, stimulating thoughts found
throughout it, "Calling a Halt to Mindless Change" is meant to be
relevant and useful to businesses in their daily operations,
relationships with both customers and employees, long-term
strategies, and their vision. MacDonald's thrust is persuading
business readers of the relevance of the views and insights on
time in the quotes and also -- equally -- relating means and
conceptions for continually nurturing these within a business
organization. To this aim, in places the author employs the
useful, instructive charts and graphs found in many business
books.
Although organization -- i.e., structure -- does have a part in
nurturing the proper grasp of time in a business, such a grasp is
not based on organization. Its primary basis is a business's
relationship with its employees. While change has always been a
part of the business world, this relationship with employees is
particularly important in today's business world where more
highly-educated and highly-skilled "people...demand a share in
determining or at least influencing their own destiny." The
enlightened companies of today "are already demonstrating that
open communications, empowerment, and education and training of
their people are decisive factors in their success."
MacDonald points to Toyota and Proctor and Gamble as two companies
that have been successful over a long period of time without
engaging in the "reengineering" and other fancily-named
"revolutionary changes" called for by the faddish business
"gurus." The author sees this as evidence that these companies
that have consistently been leaders in their industries are
continually changing naturally and productively to continually
changing consumer markets, the latest generation of employees, and
the normal, ceaseless, ups and downs of both domestic and
international economic events. In "Calling a Halt to Mindless
Change," MacDonald teaches how such companies are successful
without undergoing wrenching periods of change by having an
evolutionary approach to business. First published in 1998,
MacDonald's book is timeless in its wisdom about time which
business's could benefit from and for its expertise on how a
company can reflect such wisdom to its strength and advantage.
Author of many books, the Englishman John MacDonald has an
international reputation in the area of business management.
*********
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 ***