/raid1/www/Hosts/bankrupt/TCR_Public/050922.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, September 22, 2005, Vol. 9, No. 225
Headlines
ACCURIDE CORPORATION: Registers 8 Million Shares for Resale
ACTIVANT SOLUTIONS: Borrows $140 Mil. to Finance Prophet 21 Merger
ALLMERICA FINANCIAL: Moody's Affirms Preferred Stock Rating at Ba2
AMERICAN AIRLINES: Moody's Rates Class B Certificates at Ba3
AMERICAN NATURAL: Pays Middlemarch Common Shares for Consultancy
AMERUS GROUP: Moody's Assigns Preferred Stock Rating at Ba2
AMHERST TECH: Ct. OKs Panel Hiring Drinker Biddle as Lead Counsel
AMHERST TECH: Panel Brings-In Devine Millimet as Local Counsel
ANCHOR GLASS: Four Utilities Balk at Adequate Assurance Scheme
ASPECT SOFTWARE: Moody's Cuts Rating on $525 Million Loans to B2
AVIA ENERGY: Court Okays Marvin Mohney as Lead Bankruptcy Counsel
AVIA ENERGY: Ct. OKs Scheef & Stone as Special Litigation Counsel
AVIA ENERGY: Section 341(a) Meeting Slated for September 26
CATHOLIC CHURCH: Portland Insurers Allow Access to Documents
CELERO TECHNOLOGIES: Look for Bankruptcy Schedules Today
CELERO TECHNOLOGIES: White & Williams Approved as Bankr. Counsel
CIDER RIDGE: Files Plan & Disclosure Statement in Alabama
CIDER RIDGE: Wells Fargo Says Disclosure Statement is Inadequate
CLAREMONT TECH: Wataire Industries Vote to Participate in Plan
COLLINS & AIKMAN: Committee Has Until Oct. 21 to Sue Lender Group
CONJUCHEM INC: Equity Deficit Tops $13 Million at July 31
CORNING INC: Registers 10 Million Common Shares for Resale
CREDIT SUISSE: Fitch Lifts $13.2MM Class G Certs. 1 Notch to BBB-
DAVCRANE INC: Wants Winstead Sechrest as Special Counsel
DELTA AIR: CFO Edward Bastian Says Layoffs Won't be Minimal
DELTA AIR: Court Gives Interim OK on Existing Investing Guidelines
DELTA AIR: U.S. Trustee to Form Official Committees on Sept. 28
EAGLEPICHER INC: GE Railcar Can End Lease & Repo 119 Railcars
ELITE TECHNICAL: Files Notice Under Bankruptcy and Insolvency Act
ENDEVCO INC: New Auditing Firm Expresses Going Concern Doubt
ENRON CORP: Bankruptcy Court Creates Solvency Discovery Docket
ENRON CORP: Inks Pact with General Electric Resolving AEP Claim
ENRON CORP: Prisma Energy to Sell 50% Equity Stake in SK Enron
ENTERGY NEW ORLEANS: Moody's Cuts Preferred Stock Rating to Caa2
ESCHELON TELECOM: Completes Redemption of Senior 2nd Sec. Notes
FIRST UNION: Fitch Upgrades $5MM Class Q Certs. From BB to AAA
FLOW INTERNATIONAL: Restatements Delay Tardy Financial Reports
FOSS MANUFACTURING: Foley Hoag Approved as Bankruptcy Counsel
FOSS MANUFACTURING: Section 341(a) Meeting Slated for October 26
FRANCIS PIOTROWSKI: Case Summary & 4 Largest Unsecured Creditors
FREMONT GENERAL: Moody's Raises Subordinated Debt Rating to Caa1
HAPPY KIDS: Taps Marketing Management as Sale Consultants
INTERMET CORP: Wants More Time to Make Lease-Related Decisions
INTERNATIONAL PAPER: Inks Pact to Buy Compagnie for $80 Million
INTERSTATE BAKERIES: 120 Creditors Sell $1.5 Mil. of Trade Claims
J. CREW GROUP: Moody's Reviews Junk Senior Discount Notes' Rating
JOVE CORPORATION: Auditor Raises Going Concern Doubt
KEYSTONE CONSOLIDATED: Court Approves Midco Settlement
KRISPY KREME: Court Extends KremeKo's CCAA Protection to Oct. 21
LOGAN INTERNATIONAL: Wants Hallman & Dretke as Special Counsel
MARGUERITE HOLLIDAY: Case Summary & 20 Largest Unsecured Creditors
MCI INC: Appoints Members to MCI-Verizon Merger Transition Team
MCI INC: FCC May Okay $8.5B Verizon Deal as DoJ Raises Issues
MEI LLC: Can Continue Using MAK's Cash Collateral Until June 17
MEI LLC: Want Court Approval of Madison Capital DIP Financing Pact
METABOLIFE INT'L: IdeaSphere Terminates Asset Purchase Agreement
MICROISLET INC: AMEX Accepts Compliance Plan to Continue Listing
NEIMAN MARCUS: Moody's Rates $575 Million Guaranteed Notes at B3
NEW WORLD: Court Approves Financial Balloting Retention
NEW WORLD: Wants to Reject 128 Leases and Contracts
NEW WORLD: Wants to Save $311K Yearly by Ending Retirement Program
NORTHWEST AIRLINES: AMFA Says Strike Is Good for Union
NORTHWEST AIRLINES: Can Continue Using Cash Management System
NORTHWEST AIRLINES: Wants to Maintain Existing Bank Accounts
NOVO NETWORKS: Completes Recapitalization & Adopts Berliner Name
OMNE STAFFING: Ch. 11 Trustee Wants to Expand Bederson Retention
ORMET CORP: Louisiana Steelworkers Refuse Company's "Final" Offer
PIER 1: Moody's Lowers Sr. Unsec. Issuer Rating to Ba3 from Baa3
PIONEER NATURAL: 96.9% of Senior Noteholders Tender Notes
POTLATCH CORP: Plans to Restructure as REIT Starting January 1
PRG-SCHULTZ: Taps Rothschild to Evaluate Financing Options
QWEST COMMS: Will Issue New Shares of Stock to Reduce $17.5B Debt
RESIDENTIAL PARTNERS: Case Summary & 20 Largest Unsec. Creditors
SAINT VINCENTS: Settles Cash Collateral Dispute With CCC
SALTON INC: Completes Sale of Tabletop Assets for $14.2 Million
SANTA RITA: Case Summary & 12 Largest Unsecured Creditors
SBC COMMS: FCC May Okay $8.5B Verizon Deal as DoJ Raises Issues
SELECT MEDICAL: Moody's Affirms Junk Rating on $175 Million Notes
SHOPKO STORES: Special Shareholders Mtg. to Reconvene on Oct. 10
SILVERADO FINANCIAL: Sallmann Yang Express Going Concern Doubt
SIRIUS SATELLITE: Expects Revenues to Grow to $230MM by Year-End
SPORTS COURTS: List of 5 Largest Unsecured Creditors
SPIEGEL INC: Eddie Bauer Wants Until Nov. 18 to Object to Claims
SUPER VENTURES: List of 8 Largest Unsecured Creditors
SWAN TRANSPORTATION: Court Okays Federal Settlement Agreement
TATER TIME: Court Okays Jeffers Danielson as Special Counsel
TENET HEALTHCARE: Fitch Removes Ratings From Watch Negative
TERAFORCE TECHNOLOGY: Court Okays $750,000 DIP Financing Facility
TESORO PETROLEUM: Fitch Changes Outlook to Positive
TRUMP HOTELS: AIG Said Cure Amounts Not Determined
TRUMP HOTELS: BET Investments Gets World's Fair Site for $25 Mil.
TRUMP HOTELS: Wants Bodner's Request to Extend Bar Date Denied
UAL CORP: Wants Court Nod to Enter Pegasus Sale/Leaseback Deal
UAP HOLDING: Streamlining Operations as Part of Restructuring
UNITED FLEET: Judge Clark Converts Chapter 11 Cases to Chapter 7
UNITED FLEET: Chapter 7 Trustee Taps Munsch Hardt as Counsel
US AIRWAYS: Raising $297 Mil. from New Stock & Private Offering
US CAN: Plans to Restate 2002, 2003 & 2004 Financial Statements
VARIG S.A.: Presents Restructuring Plan To Brazilian Court
VARIG S.A.: Shareholders Favor VarigLog Sale to MatlinPatterson
VARIG S.A.: Tap Air Still Interested in Alliance
WELLS FARGO: Fitch Places Low-B Rating on Two Certificate Classes
WESCO INT'L: Moody's Rates $125 Million Senior Debentures at B2
WESTERN SKIES: List of 20 Largest Unsecured Creditors
WEX PHARMACEUTICALS: COO Donna Shum Departs Due to Restructuring
WORLDCOM INC: Moves for Summary Judgment on Holley Clark's Claim
XRG INC: June 30 Balance Sheet Upside-Down by $3.39 Million
YUKOS OIL: Three Shareholders to Sell Interests in Some Banks
* Sheppard Mullin Adds Scott Hudson to Expand New York Office
*********
ACCURIDE CORPORATION: Registers 8 Million Shares for Resale
-----------------------------------------------------------
Accuride Corporation filed a Registration Statement with the
Securities and Exchange Commission to allow the resale of
8,050,000 shares of common stock. The Company valued the common
shares at an aggregate of $114,712,500.
These are the holders of the shares registered:
Selling Shareholders Common Shares
-------------------- -------------
KKR 1996 GP L.L.C. 4,045,910
Entities affiliated with
Trimaran Investments II, L.L.C. 1,821,359
Directors and Executive Officers:
James H. Greene, Jr. 4,045,910
Todd A. Fisher 4,045,910
Jay R. Bloom 2,008,956
Mark D. Dalton 1,821,359
Andrew M. Weller 15,779
All current directors and
executive officers as a group 6,070,645
The Company's common stock is listed on the New York Stock
Exchange under the ACW symbol and trades around $15 per share.
Accuride Corporation -- http://www.accuridecorp.com/-- is one of
the largest and most diversified manufacturers and suppliers of
commercial vehicle components in North America. Accuride's
products include commercial vehicle wheels, wheel-end components
and assemblies, truck body and chassis parts, seating assemblies
and other commercial vehicle components. Accuride's products are
marketed under its brand names, which include Accuride, Gunite,
Imperial, Bostrom, Fabco and Brillion.
* * *
As reported in the Troubled Company Reporter on July 12, 2005,
Moody's Investors Service has upgraded the corporate family
(previously called senior implied) and senior secured debt ratings
of Accuride Corporation and Accuride Canada Inc. to B1 from B2,
and Accuride's senior subordinated debt to B3 from Caa1. At the
same time the rating outlook was revised to stable from positive.
As reported in the Troubled Company Reporter on Feb. 3, 2005,
Standard & Poor's Ratings Services raised its corporate credit
rating on Accuride Corporation to 'B+' from 'B' and removed the
ratings from CreditWatch, where they were placed on Dec. 28, 2004.
Evansville, Indiana-based Accuride has total debt of about
$800 million. The ratings outlook is stable.
"The upgrade follows Accuride's completion of the acquisition of
TTI and reflects the improved operating performance of both
companies in 2004 as they have benefited from robust demand of the
heavy-duty truck industry," said Standard & Poor's credit analyst
Martin King.
ACTIVANT SOLUTIONS: Borrows $140 Mil. to Finance Prophet 21 Merger
------------------------------------------------------------------
Activant Solutions Inc. obtained the necessary funds to finance
the acquisition by P21 Merger Corporation of Prophet 21, Inc.,
through cash on hand, a capital contribution from Activant
Solutions Holdings Inc., the Company's parent corporation, and
$140 million through borrowings under a senior unsecured bridge
loan.
P21 Merger is the Company's wholly owned subsidiary. The total
consideration paid pursuant to the Agreement and Plan of Merger
was approximately $215 million.
Loan Agreements
I. Fourth Amended and Restated Credit Agreement
The Company entered into the Fourth Amended and Restated
Credit Agreement with:
* Activant Holdings, as guarantor,
* the lenders from time to time party thereto,
* JPMorgan Chase Bank, N.A., as administrative agent, and
* J.P. Morgan Securities Inc., and
* Deutsche Bank Securities Inc., as joint lead arrangers
and bookrunners.
Pursuant to the Credit Agreement, the Company's prior credit
facility was amended to:
(1) allow the Merger as a permitted transaction; and
(2) increase the capacity available under the Company's
revolving credit facility from $15 million to
$20 million.
In addition, Prophet 21, together with:
* Prophet 21 Investment Corporation, a Delaware
corporation;
* Prophet 21 Canada, Inc., a Delaware corporation;
* Prophet 21 New Jersey, Inc., a New Jersey corporation;
* Distributor Information Systems Corporation, a
Connecticut corporation;
* Trade Service Systems, Inc., a Pennsylvania corporation;
and
* Stanpak Systems, Inc., a Massachusetts corporation;
* Speedware Holdings, Inc., a Delaware corporation;
* Speedware USA, Inc., a New York corporation
were added as guarantors under the Credit Agreement.
A full-text copy of the Amended Credit Agreement is available
for free at http://ResearchArchives.com/t/s?1aa
II. Senior Bridge Loan Agreement
On September 13, 2005, the Company entered into a Senior
Bridge Loan Agreement, among:
* Activant Holdings, as guarantor;
* the several lenders from time to time party thereto;
* Deutsche Bank AG Cayman Islands Branch, as
administrative agent,
* Deutsche Bank AG Cayman Islands Branch, as initial
lender;
* JPMorgan Chase Bank, N.A., as initial lender;
* Deutsche Bank Securities Inc., as co-lead arranger
and co-book runner;
* J.P. Morgan Securities Inc., as co-lead arrangers
and co-book runners.
The Company borrowed $140 million under the Bridge Loan, the
entire amount of which was used to fund the purchase price
paid in connection with the Merger.
The Bridge Loan is a general, unsecured obligation of the
Company, guaranteed by Activant Holdings and each of the
guarantors under the Credit Agreement. The Bridge Loan bears
interest, payable quarterly, at a rate of 3-month LIBOR plus
6.5%, increasing by 0.5% every three months that the Bridge
Loan remains outstanding. In addition, in the event the
Company's long-term debt obligations fail to meet certain
ratings requirements set forth in the Bridge Loan, the
interest rate will be increased by 0.75%. In any event, the
maximum interest rate payable by the Company under the Bridge
Loan will not exceed 12.75%, plus 0.75% if the provisions with
regard to the Company's long-term debt ratings described in
the preceding sentence are not satisfied, and if the interest
rate exceeds 11.75% at any one time, the excess interest will
be paid in kind unless the Company elects to pay it in cash.
At any time after October 13, 2005 and prior to September 13,
2006, the Company may be required to take all reasonable
actions necessary or desirable so that debt securities may be
publicly offered or privately placed in an amount sufficient
to repay the then outstanding principal amount of the Bridge
Loan. The Company's obligations under the Bridge Loan mature
on September 13, 2006, provided that, so long as certain
events specified in the Bridge Loan have not occurred on or as
of such date, the maturity will be automatically extended to
April 1, 2010.
A full-text copy of the Senior Bridge Loan Agreement is
available for free at http://ResearchArchives.com/t/s?1ab
Indenture Amendments
Second Supplement to Indenture
for Floating Rate Notes due 2010
On September 13, 2005, the Company and its newly acquired
subsidiaries, the New P21 Subsidiary Guarantors, together with the
New Speedware Subsidiary Guarantors, entered into a Second
Supplemental Indenture with Wells Fargo Bank, National
Association, as trustee.
Under the 2005 Indenture Supplement, each of the New Subsidiary
Guarantors agreed to assume the covenants, agreements and
undertakings of a guarantor under the Indenture, dated March 30,
2005, among the Company, the subsidiary guarantors parties thereto
and the Trustee, which provides for the issuance of $120,000,000
aggregate principal amount of floating rate senior notes due 2010.
A full-text copy of the Second Supplemental Indenture is available
for free at http://ResearchArchives.com/t/s?1ac
Second Supplement to
Indenture for 10-1/2% Notes due 2011
On September 13, 2005, the Company and the New Subsidiary
Guarantors entered into a Second Supplemental Indenture with the
Trustee. Under the 2003 Indenture Supplement, each of the New
Subsidiary Guarantors agreed to assume the covenants, agreements
and undertakings of a guarantor under the Indenture, dated as of
June 27, 2003, among the Company, the subsidiary guarantors
parties and the Trustee, which provides for the issuance of
$157,000,000 aggregate principal amount of 10-1/2% Senior Notes
due 2011.
A full-text copy of the Second Supplemental Indenture is available
for free at http://ResearchArchives.com/t/s?1ad
About Prophet 21
Prophet 21, Inc. -- http://www.p21.com/-- develops technology
solutions and services for the wholesale distribution vertical
market that are designed to help distributors increase sales,
improve customer service, and reduce operating costs. Founded in
1967, Prophet 21 continues to expand and enhance both its products
and customer base. Prophet 21 CommerceCenter - the popular
enterprise software solution for distributors - combines the power
of SQL Server and the familiarity of the Windows(R) operating
system in a solution designed especially for distributors.
Trading Partner Connect, a leading Internet trading network for
distributors, expedites sourcing, expands geographic reach, and
streamlines transactions between distributors and manufacturers.
Prophet 21 Professional Services include support, consulting, and
educational programs designed to give distributors the maximum
return on their technology investment.
About Activant Solutions
Activant Solutions Inc. -- http://www.activant.com/-- is a
technology provider of vertical ERP solutions servicing the
automotive aftermarket, hardware and home center, wholesale trade,
and lumber and building materials industry segments. Over 20,000
wholesale, retail and manufacturing customer locations use
Activant to help drive new levels of business performance. With
proven experience and success, Activant is fast becoming an
industry standard for companies seeking competitive advantage
through stronger customer integration.
* * *
As reported in the Troubled Company Reporter on Aug. 22, 2005,
Moody's Investors Service has placed these ratings of the Activant
Solutions Inc. under review for possible downgrade.
* B2 rating on $120 million senior unsecured notes, due 2010
* B2 rating on $157 million (face value) senior unsecured notes
due 2011; and
* B1 Corporate Family Rating
As reported in the Troubled Company Reporter on Mar. 2, 2005,
Standard & Poor's Ratings Services assigned its 'B+' debt rating
to Austin, Texas-based Activant Solutions Inc.'s proposed
$120 million senior unsecured floating rate notes.
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit and senior unsecured debt ratings.
The proposed floating rate notes are rated the same as the
corporate credit rating, because of the minimal amount of secured
debt, a $15 million revolving credit facility, in the capital
structure. Proceeds from the proposed floating rate notes will
primarily be used to fund the acquisition of Speedware
Corporation, which was announced in January 2005. S&P says the
outlook is stable.
ALLMERICA FINANCIAL: Moody's Affirms Preferred Stock Rating at Ba2
------------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Allmerica
Financial Corporation (AFC; senior debt at Ba1) and its
subsidiaries. The rating outlook on the debt of AFC and on the
insurance financial strength of Hanover Insurance Company
(Hanover; Baa1) was changed to negative from stable. The
insurance financial strength rating of First Allmerica Financial
Life Insurance Co. (FAFLIC; Ba1) was affirmed with a stable
outlook. The insurance financial strength rating of Allmerica
Financial Life Insurance & Annuity (AFLIAC; Ba1) remains on review
for possible upgrade, consistent with Moody's last rating action
on August 24, 2005.
According to Moody's, the negative outlook on AFC and Hanover
reflects the inherent uncertainty regarding the size of the
company's ultimate losses due to Hurricane Katrina given the
company's sizable market share in Louisiana. Moody's notes that
AFC writes approximately 75% of its P&C business in five states,
with Louisiana representing the company's fifth-largest state in
terms of direct premiums written. Despite its significant
catastrophe reinsurance program, in Moody's view, AFC, like other
companies in the property casualty sector, may face potential
coverage disputes -- for instance, regarding payment of extra-
contractual losses related to flood damage.
As the company estimates its losses over the coming weeks, Moody's
believes that the company will manage its capital appropriately
given the announced sale of AFLIAC. Cash proceeds from the sale
of AFLIAC are projected to be $385 million, approximately $70
million of which are expected to be deferred and paid over a three
year period. Further, in the past, the company's franchise was
under pressure as a result of difficulties associated with its
life operations. Potential losses from Hurricane Katrina could
place added pressure on the company's agency distribution network.
Moody's Baa1 insurance financial strength rating of Hanover
reflects challenges the company faces in maintaining its existing
portfolio of business, as well as its high expense ratio relative
to peers, offset by good underwriting profitability and a modest
risk profile which is weighted toward personal lines.
Moody's Ba1 insurance financial strength rating of FAFLIC reflects
the company's modest scale and embedded value, and the runoff
nature of the business. The rating agency views AFC's life
insurance operations as non-strategic in relation to its stated
business objectives and believes that, over time, capital will be
reallocated from the non-core life insurance operations to AFC's
core P&C business.
Moody's Ba1 insurance financial strength rating of AFLIAC reflects
the potential earnings volatility associated with the variable
business and the non-core nature of the operations to AFC. The
review for upgrade will focus on the completion of the recently
announced transaction and the execution of a support agreement
with Goldman Sachs Group, Inc.
These ratings were affirmed with a negative outlook:
Allmerica Financial Corporation:
* senior unsecured debt rating at Ba1
* AFC Capital Trust 1 - preferred stock rating at Ba2
Hanover Insurance Company:
* insurance financial strength rating at Baa1.
These ratings were affirmed with a stable outlook:
First Allmerica Financial Life Insurance Company:
* insurance financial strength rating at Ba1
First Allmerica Financial Life Insurance Company:
* short-term insurance financial strength rating of
Not-Prime; and
* Premium Asset Trust Series 1999-1 - senior debt rating
at Ba1;
This rating was affirmed:
Allmerica Financial Corporation:
* commercial paper rating at Not Prime.
This rating is currently on review for possible upgrade:
Allmerica Financial Life Insurance and Annuity Company:
* insurance financial strength rating at Ba1.
AFC writes predominantly personal and commercial lines insurance
on a regional basis, including in:
* Michigan,
* Massachusetts,
* New York,
* New Jersey, and
* Louisiana.
For the year ended December 31, 2004, AFC reported net income of
$125 million. As of June 30, 2005, shareholders' equity was
$2.5 billion.
AMERICAN AIRLINES: Moody's Rates Class B Certificates at Ba3
------------------------------------------------------------
Moody's Investors Service assigned a Aaa rating to the Class G
Certificates and a Ba3 rating to the Class B Certificates of
American Airlines, Inc.'s Series 2005-1 Pass Through Certificates.
The Aaa rating of the Certificates is based on a Financial
Guarantee Insurance Policy issued by Financial Guaranty Insurance
Company. The Policy will support the timely payment of interest
and the ultimate payment of principal at the Final Maturity Date
for the Class G Certificates. There is no insurance policy in
place for the Class B Certificates. Moody's rating of the
Insurance Financial Strength of FGIC is Aaa.
The Certificates are being issued through separate pass through
trusts, and the proceeds from the sale of the Certificates will be
used by the trusts to purchase equipment notes which will be
issued to finance the acquisition of a portfolio of 89 engines
from American. The purchased engines will immediately be leased
back to American for a seven year term, and the lease payments
made by American will support the scheduled payments on the
equipment notes held in trust for the Certificates. It is the
opinion of counsel to the lessor that due to the leasing
arrangement, the equipment notes will be entitled to benefits
under section 1110 of the US Bankruptcy Code.
The 89 spare engines comprise the collateral pool supporting the
transaction and are used on American's:
* B757,
* B767,
* A300, and
* MD80 aircraft.
The spare engines are subject to semi-annual maintenance
appraisals and status updates, and a minimum engine portfolio
condition is required to be maintained. In the event minimum
engine maintenance conditions are not met, American is required to
make a cash deposit with the trustee in an amount determined by a
specified formula sufficient to meet the minimum engine portfolio
condition requirement.
Moody's notes that while the spare engines provide adequate asset
protection to creditors, engines have different characteristics
than aircraft or spare parts that have previously been used as
collateral supporting typical Enhanced Equipment Trust
Certificates. In Moody's opinion, engines are generally easier to
liquidate as aircraft typically require some modification before
being sold in the secondary market, and spare parts inventories
are harder to liquidate due to the large number of small, low
value items. The exception to this relates to the engines
associated with the MD-80 aircraft.
Due to the recent bankruptcy filings by Delta and Northwest, major
operators of MD-80's, there is uncertainty surrounding which
aircraft will be rejected in the bankruptcy process. If MD-80
aircraft were to be rejected and sold in the secondary market,
then there could be a surplus of the associated engines which, in
Moody's opinion, would put more pressure on liquidation values.
Also, in Moody's view, the current value of engines is more
volatile due to the maintenance, which, in the case of a major
overhaul, supports a substantial portion of an engine's value.
However, due to the requirements of the indenture, which include
semi-annual maintenance condition appraisals, concerns over
volatility are lessened.
Certificate holders benefit under Section 1110 of the US
Bankruptcy Code, and this transaction requires that the spare
engine pool being used as collateral to either be accepted or
rejected in its entirety in the event of bankruptcy. Moody's
notes that this requirement differs from aircraft being used as
collateral which can be affirmed or rejected on an individual
basis in bankruptcy. The portfolio of engines being used as
collateral represent the majority of American's spare engines used
by their B757, B767, A300, and MD80 aircraft types. Without
sufficient spare engines for these aircraft, American would be
faced with significant operational problems, thus, in Moody's
opinion, there is less likelihood that American would reject spare
engines supporting these aircraft types in the event of
reorganization.
Interest on the Certificates will be supported by a liquidity
facility intended to pay up to 18 months of interest in the event
American defaults on its lease payments. The liquidity facility
does not provide for payments of principal due. The short-term
rating of the liquidity provider, WestLB AG, New York branch, is
P-1.
The rating assigned to the Certificates reflects the ability of
American to make timely payment of interest and the ultimate
payment of principal at a date no later than the final maturity
date (seven years from the closing of the transaction).
The ratings are based upon:
* the credit quality of American, as obligor under the
engine leases;
* the value of the engine pool collateralizing the
equipment notes;
* the insurance policy for the Class G Certificates; and
* the credit support provided by the liquidity facilities for
the Class G and B Certificates.
Any future changes in the underlying credit quality of American
and its ratings, and/or material changes in the value of the spare
engines pledged as collateral, and/or changes in the status of the
liquidity facility or the credit quality of the liquidity provider
could cause a change in the ratings assigned to the Certificates.
American Airlines, Inc., and its parent company, AMR Corporation,
are headquartered in Fort Worth, Texas.
AMERICAN NATURAL: Pays Middlemarch Common Shares for Consultancy
----------------------------------------------------------------
American Natural Energy Corporation (TSX Venture: ANR.U) issued to
Middlemarch Partners Ltd. 2,170,000 shares of its common stock at
a deemed price of US$0.115 per share in consideration of
consulting services valued at US$250,000 rendered in connection
with its debenture restructuring completed in June 2005. The
shares were issued in reliance upon the exemption from the
registration requirements of the US Securities Act of 1933, as
amended, afforded by Section 4(2) and pursuant to Regulation S
under the Act.
The shares issued may not be reoffered or resold absent
registration under the Act or an applicable exemption from the
registration requirements of the Act. In addition, the shares are
subject to a hold period under Canadian law and, subject to
compliance with the requirements of the Act, the shares may not be
traded until January 14, 2006, except as permitted by Canadian
securities legislation and the TSX Venture Exchange.
American Natural Energy Corporation is a Tulsa, Oklahoma based
independent exploration and production company with operations in
St. Charles Parish, Louisiana.
At June 30, 2005, American Natural Energy Corporation's balance
sheet showed a $13,687,504, stockholders' deficit, compared to a
$9,596,356, deficit at Dec. 31, 2004.
* * *
Going Concern Doubt
PricewaterhouseCoopers, LLP, expressed substantial doubt about
American Natural Energy Corporation'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 accumulated deficit and working capital deficiencies.
The Company experienced a $1.5 million net loss in the three month
period ended March 31, 2005, and has a working capital deficiency
and an accumulated deficit at March 31, 2005, all of which lead to
questions concerning its ability to meet its obligations as they
come due. The Company also has a need for substantial funds to
develop oil and gas properties and repay borrowings. Historically
the Company has financed its activities using private debt and
equity financing. American Natural Energy has no line of credit
or other financing agreement providing borrowing availability. As
a result of the losses incurred and current negative working
capital and other matters described, there is no assurance that
the carrying amounts of its assets will be realized or that
liabilities will be liquidated or settled for the amounts
recorded.
AMERUS GROUP: Moody's Assigns Preferred Stock Rating at Ba2
-----------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to AmerUs Group
Company's issuance of preferred stock under its universal shelf
registration. The preferred stock will have a perpetual maturity
and optional dividend deferral. Any payments that are deferred
are non-cumulative. The proceeds of the issuance will be
primarily used for the repayment of existing debt in connection
with recent stock repurchases, as well as general corporate
purposes and possible additional stock repurchases in 2006. The
outlook on the preferred stock is negative, in line with other
AmerUs ratings.
According to the rating agency, the security will receive "Basket
D" treatment (i.e., 75% equity and 25% debt) on Moody's Debt-
Equity Continuum. In determining the basket assignment under its
Hybrid Criteria, Moody's ranks hybrid securities such as preferred
stock relative to the features of common equity including No
Maturity, No Ongoing Payments, and Loss Absorption. The rankings
can be either none, weak, moderate or strong relative to common
equity, with none being the closest to debt and strong closest to
equity.
AmerUs' prospectus supplement for its perpetual preferred issue
includes a legally enforceable Declaration of Covenant. Under the
Declaration, the company is contractually obligated to redeem the
preferred stock only with the proceeds from the issuance of
equivalent or more equity-like securities. The Declaration runs
in favor of "covered debt", which is debt that is senior, pari
passu, or junior to the preferred stock.
Given the strength of AmerUs' commitment regarding a replacement
security, the ranking of the preferred stock on the No Maturity
dimension was deemed strong. When combined with a ranking of
moderate on the No Ongoing Payments dimension of equity (optional
deferral, non-cumulative) and strong on Loss Absorption (preferred
stock that absorbs losses), the basket was deemed to be "D".
Commenting on the issuance, Moody's noted that despite its high
equity content, AmerUs' financial leverage ratio was expected to
rise incrementally, in conjunction with recent stock repurchases.
The company's cash coverage ratio is expected to decline. The
rating agency added, however, that these key financial ratios are
projected to remain within Moody's rating expectations, with
financial leverage not exceeding 25%, and cash coverage (including
common stock dividends) remaining at or above 3x.
Commenting on AmerUs, Moody's said that the company's ratings are
based on:
* its growing presence in the fixed annuity market through
American Investors Life (AIL);
* its profitable and growing block of life insurance;
* the relatively high margins on its equity-indexed products;
and
* its limited exposure to mortgages and real estate.
These strengths are mitigated by:
* the group's significant and growing reliance on equity-
indexed products for new sales;
* modest consolidated profitability;
* earnings growth and statutory capitalization (albeit
improving); and
* a relatively high level of balance sheet intangibles.
Moody's commented further that a more recent concern is the
pending $110 million in civil lawsuits filed by the California
Attorney General and the California Insurance Commissioner, as
well as several separate class action lawsuits against AIL and two
of it wholly owned marketing organizations for allegedly operating
a "living trust mill" (whereby agents convinced senior citizens to
use their retirement savings to buy AIL annuities via a trust).
Uncertainties as to the outcome and potential financial and
reputational impact of these lawsuits on AMH caused Moody's to
change the group's rating outlook to negative from stable in
February 2005. The company recently entered into a tentative
settlement related to the private class action in California,
however a final settlement is still has not yet been reached.
AmerUs Group Company is a life insurance group headquartered in
Des Moines, Iowa. At June 30, 2005, the company reported
consolidated GAAP assets of approximately $24 billion and
consolidated GAAP shareholders' equity of $1.7 billion. American
Investors Life Insurance Company, AmerUs Life Insurance Company,
and Indianapolis Life Insurance Company are all wholly owned
subsidiaries of AmerUs Group Company.
AMHERST TECH: Ct. OKs Panel Hiring Drinker Biddle as Lead Counsel
-----------------------------------------------------------------
The Honorable J. Michael Deasy of the U.S. Bankruptcy Court for
the District of New Hampshire gave the Official Committee of
Unsecured Creditors appointed in Amherst Technologies, LLC, and
its debtor-affiliates' chapter 11 cases authority to retain
Drinker Biddle & Reath LLP as its lead counsel, nunc pro tunc to
Aug. 2, 2005.
As previously reported in the Troubled Company Reporter on
Sept. 2, 2005, Robert K. Malone, Esq., a partner at Drinker Biddle
and the lead attorney in this engagement, bills $450 per hour for
his services.
The current hourly rate for Drinker Biddle's other attorneys and
paraprofessionals are:
Designation Hourly Rate
----------- -----------
Partners $325 to $600
Counsel and Associates $175 to $375
Paraprofessionals $ 75 to $190
Headquartered in Merrimack, New Hampshire, Amherst Technologies,
LLC -- http://www.amherst1.com/-- offers enterprise class
solutions including wired and wireless networking, server and
storage optimization implementations, document management
solutions, IT lifecycle solutions, Microsoft solutions, physical
security and surveillance and complex configured systems. The
Company and its debtor-affiliates filed for chapter 11 protection
on July 20, 2005 (Bankr. D. N.H. Case No. 05-12831). Daniel W.
Sklar, Esq., and Peter N. Tamposi, Esq., at Nixon Peabody LLP
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they estimated
assets and debts between $10 million to $50 million.
AMHERST TECH: Panel Brings-In Devine Millimet as Local Counsel
--------------------------------------------------------------
The Honorable J. Michael Deasy of the U.S. Bankruptcy Court for
the District of New Hampshire gave the Official Committee of
Unsecured Creditors appointed in Amherst Technologies, LLC, and
its debtor-affiliates' chapter 11 cases permission to retain
Devine, Millimet & Branch, Professional Association, as its local
counsel, nunc pro tunc to Aug. 2, 2005.
As previously reported in the Troubled Company Reporter on
Sept. 5, 2005, the lead attorneys in this engagement, and their
hourly billing rates, are:
Attorney Hourly Rate
-------- -----------
Daniel J. Callaghan, Esq. $350
Charles R. Powell, Esq. $250
Matthew R. Johnson, Esq. $225
The hourly rates for Devine Millimet's other professionals are:
Designation Hourly Rate
----------- -----------
Partners $200 - $350
Counsel and Associates $160 - $250
Paraprofessionals $ 75 - $170
Headquartered in Merrimack, New Hampshire, Amherst Technologies,
LLC -- http://www.amherst1.com/-- offers enterprise class
solutions including wired and wireless networking, server and
storage optimization implementations, document management
solutions, IT lifecycle solutions, Microsoft solutions, physical
security and surveillance and complex configured systems. The
Company and its debtor-affiliates filed for chapter 11 protection
on July 20, 2005 (Bankr. D. N.H. Case No. 05-12831). Daniel W.
Sklar, Esq., and Peter N. Tamposi, Esq., at Nixon Peabody LLP
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they estimated
assets and debts between $10 million to $50 million.
ANCHOR GLASS: Four Utilities Balk at Adequate Assurance Scheme
--------------------------------------------------------------
Four utility companies providing various services to Anchor Glass
Container Corporation submitted their responses to the Debtor's
motion to deem utilities adequately assured of payment for future
utility services pursuant to 11 U.S.C. Sec. 366.
The Debtor had previously asked the U.S. Bankruptcy Court for the
Middle District of Florida to find that that the utility companies
are adequately assured of future performance. The Debtor also
asked the Bankruptcy Court to establish procedures for determining
requests by utility companies for additional adequate assurance of
future payment.
Utilities Respond
(1) Noble Energy
As of January 1, 2003, Noble Energy Marketing, Inc., and Anchor
Glass are parties to a Base Contract for Sale and Purchase of
Natural Glass. The Base Contract contained the rights and
obligation of the parties for future gas purchases to be agreed
to under Transaction Confirmations. Noble Energy and the Debtor
executed several Transaction Confirmations where Noble Energy
agreed to sell, and the Debtor agreed to purchase, certain
quantities of natural gas going forward. Because of its credit
rating, the Debtor was required to prepay for its natural gas
purchases.
Holly M. Anderson, Esq., at Thompson & Knight LLP, in Houston,
Texas, asserts that Anchor Glass has improperly listed Noble
Energy as a utility company subject to the Utilities Motion and
Order.
Ms. Anderson adds that the Utility Order is improper to Noble
Energy because it cuts off the rights granted to Noble under
Section 556 of the Bankruptcy Code. The Base Contract and
Confirmations show that Noble Energy agreed to sell certain
quantities of wholesale gas to the Debtor at defined future
intervals. Consequently, Noble is a forward contract merchant
for the purchase of natural gas with the Debtor.
Pursuant to Section 556, no provision of the Bankruptcy Code or
Court order can limit Noble's ability to liquidate the Base
Contract, Ms. Anderson notes. However, the Utility Order
purports to prevent Noble from discontinuing, altering or
refusing service to the Debtor, in clear violation of Section
556.
Ms. Anderson explains that Noble Energy is not a utility,
therefore, applying Section 366 cannot take the protections
afforded to a forward contract merchant.
Furthermore, the Debtor has wholly failed to prove that Noble
Energy is a monopoly, and that it has no choice but to enter into
the Base Contract because it could not otherwise obtain
comparable service. If the Debtor did not find the terms and
conditions of the Base Contract acceptable, it could have
negotiated with another natural gas supplier.
Pursuant to the Base Contract, the Debtor was prepaying Noble
Energy for each wholesale purchase of gas in the period leading
up to the Petition Date. The Utility Order's prohibition on
"Utilities" requiring payment of deposit or "other security"
could be interpreted to prevent Noble from continuing to enforce
the prepayment security term under the Base Contract, Ms.
Anderson contends.
Accordingly, Noble Energy asks Judge Paskay to modify the Utility
Order to exclude Noble from the list of Utility Companies covered
by the Order.
(2) ACE
Atlantic City Electric, formerly operating as Conectiv Power
Delivery, urges the Court to reconsider the Utility Order. ACE
also objects to the Utility Motion and seeks additional adequate
assurance of payment.
William Douglas White, Esq., at McCarthy & White PLLC, in McLean
Virginia, asserts that the Debtor's request is defective on four
grounds:
(a) The Motion was not properly served on ACE;
(b) The Motion seeks injunctive relief that is not authorized
by Sections 105 or 366;
(c) The Motion seeks injunctive relief without an Adversary
Proceeding or service of process; and
(d) The Motion seeks denial of $591,750 in deposits that are
required to furnish adequate assurance of payment to ACE
under Section 366.
The Court lacks a proper substantive basis for granting
injunctive relief against ACE, Mr. White maintains. Section 366
is simply a statute that -- unlike Section 362 with its automatic
stay provisions -- does not purport to create an injunction or
stay.
According to Mr. White, the Debtor's request was defective
because it sought to enjoin ACE from terminating service for
postpetition default. Postpetition default is a subject matter
not addressed by Section 366. The protection afforded to the
Debtor under Section 366 pertains to the first 20 days of the
case and applies only to adverse actions that a utility might
take because of the Debtor's failure to post a deposit or to pay
a prepetition debt. Section 366 does not impose any limitation
upon a utility's right to terminate for a postpetition default.
Enjoining utilities from exercising their rights under applicable
rules and tariffs to terminate service for nonpayment of
postpetition obligations plainly has no basis in Section 366, Mr.
White argues. Congress intended utilities to be free to cut off
service in the normal course under applicable rules and tariffs
when a postpetition default occurs.
Mr. White remarks that the Debtor's flouting of procedural
requirements has the strong potential to inflict real harm on
ACE. By not filing an adversary proceeding and subjecting itself
to the attendant "formal procedural framework" and "stringent
rules of evidence," the Debtor strived to obtain the
extraordinary remedy of injunctive relief against ACE:
-- without compliance with Rule 7065 of the Federal Rules of
Bankruptcy Procedure;
-- without meeting the traditional standards in the
jurisdiction for obtaining an injunction; and
-- so far, as appears of record, without any evidentiary
basis.
Mr. White points out that the Order only provides that the Debtor
is authorized, but not required, to pay on a timely basis, in
accordance with prepetition practices, all undisputed prepetition
and postpetition invoices. The prepetition debt to ACE is
approximately $375,000, but the amount required to protect ACE
from the Debtor's default is nearly $600,000. Therefore, even if
the Debtor elected in its discretion to pay ACE's prepetition
debt, it still would not provide ACE the necessary adequate
assurance of future performance. That the Debtor may have
budgeted for utility costs hardly provides ACE with the "deposit
or other security" as required by Section 366. The Debtor's
failure to post any security followed by an administrative
insolvency would still leave ACE with significant unpaid service.
ACE believes that its exposure to significant loss is real. ACE
provides approximately 70 days of service to a customer before
terminating a service in the event of payment default. For this
reason, ACE's rules and regulations specifically provide that ACE
may request a security deposit equal to twice the monthly bill.
To be adequately assured that the Debtor's future utility bills
will be paid, ACE requests a $591,750 deposit.
(3) JEA
JEA, a utility provider serving Northeast Florida, demands a
$750,000 advance payment to serve as adequate assurance for the
continuance of its service to the Debtor.
Richard R. Thames, Esq., at Stutsman & Thames, PA, in
Jacksonville, Florida, informs the Court that on average, the
Debtor consumes $375,000 in utility services from JEA per month.
On the Petition Date, the Debtor owed JEA $339,618 for utility
services provided in the month preceding the bankruptcy filing.
That amount does not include those amounts owed to JEA in the
Debtor's previous bankruptcy cases.
Mr. Thames asserts that as a utility provider, JEA is inherently
at risk since it is statutorily compelled by Section 366 of the
Bankruptcy Code to continue providing postpetition service to the
Debtor on an around-the-clock basis. JEA's invoices are payable
only after services have been delivered and irreversibly consumed
by Anchor Glass.
Due to the manner in which Anchor Glass utilizes and pays for
utility services, Mr. Thames argues that JEA can only be
adequately assured of payment through a cash deposit, surety bond
or advance payment.
Mr. Thames contends that the Utility Order does not provide JEA
with the "deposit or other security" expressly required by
Section 366. In addition, no provision in the Utility Motion
remotely equates to "security" for the payment of future
obligations by Anchor Glass.
According to Mr. Thames, in the context of a utility-customer
relationship, "other security" ordinarily means prepayment of
bills, shortened payment deadlines, letters of credit or surety
bond or, in any event, something more than the mere promise of
Anchor Glass to pay an administrative expense claim. Mr. Thames
adds that in Florida, where the Debtor is headquartered, a
postpetition security deposit equal to two months' average
utility expenses is considered the norm.
JEA customarily provides businesses like Anchor Glass with
approximately 73 days of utility service at a particular location
before it terminates electric service. That very substantial
risk has resulted in JEA's recognition that a deposit equal to
two months' average electric service should be required in all
Chapter 11 cases where it is the primary utility provider.
Mr. Thames points out that in the Utility Motion, Anchor Glass
made no effort to examine the circumstances and requirements of
JEA and other utilities, including factors like billing cycles,
termination procedures and regulatory requirements that have a
significant influence on the risk that is assumed by utilities
when providing postpetition services to Anchor Glass. Indeed,
the significant risks that are imposed on utilities are
disregarded completely in favor of accommodations for Anchor
Glass that are contrary to the safeguard outline in Section 366.
Mr. Thames assures the Court that the $750,000 deposit JEA
requires is consistent with the anticipated water and electricity
consumption by Anchor Glass and the minimum period of time that
it could continue to receive electricity and water from JEA
before service could be terminated for non-payment. The deposit
requested is for the amount JEA would require from other
customers with questionable or unknown credit and is within the
range approved by case law.
Since this is the Debtor's third attempt to reorganization, Mr.
Thames says a postpetition security deposit is appropriate.
According to Anchor Glass' Form 10-Q for the quarter ended
March 31, 2005, Anchor Glass lost $12,800,000, or 52 cents a
share, on revenue of $179,300,000. There has been no showing
that the operating losses will be reversed, Mr. Thames adds.
Moreover, JEA believes that the Debtor's risk of liquidation or
conversion to Chapter 7 is particularly high. The Debtor's
desire to stay afloat should not require JEA and other utilities
that are statutorily required to provide utility services to bear
the extraordinary risk, Mr. Thames insists.
The Debtor has already conceded in numerous pleadings filed with
the Court that it does not have sufficient working capital to
fund its ongoing business operations without outside funding.
There are already substantial liens on the Debtor's assets, and
its secured lenders have already been granted superpriority
administrative expense status to protect their postpetition
advances. Mr. Thames points out that the superpriority liens
will have priority over any administrative expense given to JEA.
(4) UGI
UGI Energy Service, Inc., doing business as GASMARK, asks the
Court to extend for 45 days, or to October 28, 2005, its deadline
to seek additional assurance of payment.
Raymond M. Patella, Esq., at Blank Rome LLP, in Philadelphia,
Pennsylvania, informs the Court that with UGI's normal billing
cycles, the current deadline does not permit sufficient time to
assure that UGI will be paid pursuant to the Court's Utility
Order.
Mr. Patella tells Judge Paskay that the Debtor's counsel has
indicated no objection to the requested extension.
Headquartered in Tampa, Florida, Anchor Glass Container
Corporation is the third-largest manufacturer of glass containers
in the United States. Anchor manufactures a diverse line of flint
(clear), amber, green and other colored glass containers for the
beer, beverage, food, liquor and flavored alcoholic beverage
markets. The Company filed for chapter 11 protection on Aug. 8,
2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano,
Esq., at Carlton Fields PA, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $661.5 million in assets and
$666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No.
8; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ASPECT SOFTWARE: Moody's Cuts Rating on $525 Million Loans to B2
----------------------------------------------------------------
Moody's Investors Service revised the ratings on the proposed
revolver and the first lien term loan from B1 to B2 while
affirming first-time Corporate Family rating of B2 to Aspect
Software Inc. The notching revision is a result of changes in the
proposed financing structure which will increase the first lien
piece by $50 million and reduce the second lien loan (unrated by
Moody's) by the same amount.
While the change does not increase the overall leverage and will
probably generate incremental interest savings and enhance overall
interest coverage measures, it will increase the preponderance of
the first lien piece while reducing the amount of cushion afforded
by now reduced second lien loan. The revised plan will also lower
asset protection and interest coverage for the first lien term
loan and revolving credit facility which combined led to Moody's
revision of the notching differential originally assigned.
This first time rating has been affirmed:
* Corporate Family Rating - B2
These ratings have been revised:
* $475 million, up from $425 million, senior secured term loan
due 2010 -- B2 from B1
* $50 million revolving credit facility due 2010 -- B2 from B1
* $200 million, down from $250 million, second lien secured
term loan due 2010 -- unrated by Moody's
The ratings outlook is Stable.
Proceeds of the combined term loans are expected to finance the
acquisition of Aspect Communications Corporation by Concerto
Software Inc. with the new company to be named Aspect Software
Inc.
Concerto Software Inc. is headquartered in Westford, Massachusetts
with operations across the Americas, Europe and Asia Pacific.
Concerto provides products and services including customer
service, collections, and sales and telemarketing for in-house and
outsourced contact centers.
Aspect Communications Corp. is headquartered in San Jose,
California, with offices in countries around the world. The
company develops, markets, licenses and supports an end-to-end,
integrated suite of contact center software applications that
support customer communications, customer and contact center
information and workforce productivity.
AVIA ENERGY: Court Okays Marvin Mohney as Lead Bankruptcy Counsel
-----------------------------------------------------------------
The Honorable Barbara J. Houser of the U.S. Bankruptcy Court for
the Northern District of Texas gave Avia Energy Development, LLC,
and Avia de Mexico S. de R.l. de CV permission to employ Marvin R.
Mohney, Esq., of Dallas, Texas, as their general bankruptcy
counsel.
As previously reported in the Troubled Company Reporter on
Aug. 22, 2005, Mr. Mohney will bill the Debtors $225 per hour for
his professional services.
Headquartered in Dallas, Texas, Avia Energy Development, LLC, and
Avia de Mexico S. de R.l. de CV filed for chapter 11 protection on
August 18, 2005 (Bankr. N.D. Tex. Case No. 05-39339). Kimberly A.
Elkjer, Esq., Scheef & Stone, LLP, and Marvin R. Mohney, Esq., in
Dallas, Texas, represent the Debtors. When the Debtors filed for
protection from their creditors, they listed $2,298,509 in
consolidated assets and $11,768,065 in consolidated debts.
AVIA ENERGY: Ct. OKs Scheef & Stone as Special Litigation Counsel
-----------------------------------------------------------------
The Honorable Barbara J. Houser of the U.S. Bankruptcy Court for
the Northern District of Texas gave Avia Energy Development, LLC,
and Avia de Mexico S. de R.l. de CV permission to employ Scheef &
Stone, LLP, as their special bankruptcy counsel.
As previously reported in the Troubled Company Reporter on Aug.
22, 2005, Scheef & Stone will represent the Debtors in two
litigation matters in Dallas County, Texas and two in Starr
County, Texas.
Kimberly A. Elkjer, Esq., a partner at Scheef & Stone, LLP,
discloses that the Firm received a $65,544 prepetition retainer.
As of Aug. 17, 2005, the Debtor still owes $19,576 to the Firm.
James C. Musselman, the Debtors' president, assures the Firm that
it will be paid before the end of August 2005. The current hourly
rates of the Firm's professionals are:
Designation Hourly Rate
----------- -----------
Partners $250 - $300
Associates $170 - $250
Paralegals $90 - $120
Headquartered in Dallas, Texas, Avia Energy Development, LLC, and
Avia de Mexico S. de R.l. de CV filed for chapter 11 protection on
August 18, 2005 (Bankr. N.D. Tex. Case No. 05-39339). Kimberly A.
Elkjer, Esq., Scheef & Stone, LLP, and Marvin R. Mohney, Esq., in
Dallas, Texas, represent the Debtors. When the Debtors filed for
protection from their creditors, they listed $2,298,509 in assets
and $11,768,065 in debts.
AVIA ENERGY: Section 341(a) Meeting Slated for September 26
-----------------------------------------------------------
The U.S. Trustee for Region 7 will convene a meeting of Avia
Energy Development, LLC, and Avia de Mexico S. de R.l. de CV's
creditors at 2:00 p.m., on Sept. 26, 2005, at the Office of the
U.S. Trustee, Room 976, 1100 Commerce Street, Dallas, Texas 75242.
This is the first meeting of creditors required under 11 U.S.C.
Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Dallas, Texas, Avia Energy Development, LLC, and
Avia de Mexico S. de R.l. de CV filed for chapter 11 protection on
August 18, 2005 (Bankr. N.D. Tex. Case No. 05-39339). Kimberly A.
Elkjer, Esq., Scheef & Stone, LLP, and Marvin R. Mohney, Esq., in
Dallas, Texas, represent the Debtors. When the Debtors filed for
protection from their creditors, they listed $2,298,509 in assets
and $11,768,065 in debts.
CATHOLIC CHURCH: Portland Insurers Allow Access to Documents
------------------------------------------------------------
As reported in the Troubled Company Reporter on August 29, 2005,
the Archdiocese of Portland in Oregon and three insurance carriers
are parties to three separate insurance coverage adversary
proceedings:
* In Roman Catholic Archbishop of Portland in Oregon, doing
business as the Archdiocese of Portland in Oregon v. ACE
USA, Inc., et al., Adv. Pro. No. 04-3373;
* In Roman Catholic Archbishop of Portland in Oregon, doing
business as the Archdiocese of Portland in Oregon v. Oregon
Insurance Guaranty Association, Adv. Pro. No. 04-3375;
and
* Certain Underwriters at Lloyd's London, et al., v. The
Archdiocese of Portland in Oregon, Case No. 0209-09053,
which was brought in the Circuit Court of Multnomah County
in the Circuit Court of Multnomah County in Oregon, and
removed by the Archdiocese to the U.S. Bankruptcy Court for
the District of Oregon, where it is now pending as an
adversary proceeding, captioned as Adv. Pro. No. 04-3326.
In May 2005, the Bankruptcy Court approved the Stipulated
Protective Order in its entirety.
Insurers Clarify Issues
On behalf of the insurers, Joseph A. Field, Esq., at Field &
Associates, in Portland, Oregon, contends that the Tort
Claimants' objection seems to have little to do with the agreed
confidentiality that should be afforded the documents. The
objection seeks to disadvantage the insurance carriers in the
context of both the Accelerated Claims Resolution Process and the
coverage adversary proceedings.
To the extent the Protective Order does not sufficiently restrict
the subject documents for use exclusively in the present case and
related adversary proceedings, it should be amended by a
supplemental order, Mr. Field suggests.
As for the documents governed by state law, Mr. Field tells Judge
Perris that counsel for ACE, along with Erin K. Olson for the
Tort Claimants; Margaret Hoffman, Esq., at Schwabe, Williamson &
Wyatt, PC, for the Archdiocese; and William C. Tharp of the State
of Oregon Department of Human Services, for the State of Oregon
Defendants, have commenced work on separate protective orders to
address the matter.
Judge Perris Amends Protective Order
To address the Tort Claimants' concerns, Judge Perris issues an
amended Protective Order, which provides that certain documents
and other records pertaining to tort claimants may only be
distributed pursuant to certain terms. Specifically:
(a) All documents and other records may be distributed to the
insurers who assert in good faith that their policies may
be or alleged to be at risk on a claim;
(b) Documents and other records pertaining to tort claimants
that contain these information will not be distributed
without certain written consent of the individual tort
claimant, except:
-- Protected Health Information as this is defined in
Health Insurance Portability and Accountability Act
and its effecting regulations, 45 C.F.R. 160 and
154;
-- health records protected by Oregon Revised Statutes
179.505 and 192.518;
-- financial information including federal and state
tax records and returns;
-- juvenile information afforded confidentiality by
Oregon Revised Statutes 419A.255; and
-- documents and other records stamped as subject to
existing protective orders, which may only be
distributed by filing addenda to the existing
protective orders that add insurers as covered
participants;
(c) A party or insurer whose policy is alleged to be at risk
on a particular claim and who has access to records
covered by this provision who believes, in good faith,
that a document or documents are relevant to a coverage
defense of any party in an insurance coverage adversary
proceeding may, after first requesting and being denied
written consent from the individual tort claimant who is
the subject of the document or documents, petition the
court for permission to share the document with the other
insurers whose policies may be at risk in claims filed in
the bankruptcy case; and
(d) Except as specified, the insurers may share and use
documents and other records.
Judge Perris rules that the Amended Protective Order is effective
nunc pro tunc to May 13, 2005.
* * *
Several insurers signed a stipulation among themselves to provide
litigating parties access to documents that are protected by
Oregon law.
The Insurers are:
* Ace Property and Casualty Co.,
* Centennial Insurance Company,
* Certain Underwriters at Lloyd's London and London Companies,
* Employers Surplus Lines Insurance Co.,
* Fireman's Fund,
* General Insurance Company of America,
* Interstate Insurance Group,
* Oregon Insurance Guaranty Association,
* National Union fire Insurance Co., and
* St. Paul Fire & Marine Insurance Co.
To assure the Oregon Department of Justice that the dissemination
of the protected documents is in compliance with Oregon law, the
Insurers agree to be bound by the protective orders in these
adversary cases:
Case No. Adversary Proceeding
-------- --------------------
04-3356 Kenneth Nail and Gary Mitz, Plaintiffs v.
Archdiocese
04-03441 John Doe a.k.a. RDW v. Archdiocese et al.
04-037154 Ricky Duhaime v. Archdiocese et al.
04-03451 Douglas Moore v. Archdiocese
04-03348 Curtis Grecco et al. v. Archdiocese et al.
04-03444 John Doe a.k.a. R.B. v. Michael Sprauer
et al.
04-03446 John Doe a.k.a M.C. v. Michael Sprauer
et al.
The Insurers also agree to be bound by the protective orders
entered in these cases pending before the Circuit Court of
Multnomah County in Oregon:
Case No. Multnomah Case
-------- --------------
0311-12724 Randy Sloan at al. v. Archdiocese et al.
0409-09193 F.B. et al. v. Archdiocese et al.
The Stipulation also applies to these related adversary
proceedings and in any forum in which these cases may be
litigated:
* In Roman Catholic Archbishop of Portland in Oregon, doing
business as the Archdiocese of Portland in Oregon v. ACE
USA, Inc., et al., Adv. Proc. Case No. 04-3373;
* In Roman Catholic Archbishop of Portland in Oregon, doing
business as the Archdiocese of Portland in Oregon v. Oregon
Insurance Guaranty Association, Adv. Proc. Case No. 04-3375;
and
* Certain Underwriters at Lloyd's London, et al., v. The
Archdiocese of Portland in Oregon, Case No. 0209-09053,
which was brought in the Circuit Court of Multnomah County
in the Circuit Court of Multnomah County, and removed by the
Archdiocese to the U.S. Bankruptcy Court for the District of
Oregon, where it is now pending as an adversary proceeding,
captioned as Adv. Proc. Case No. 04-3326.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts. In its Schedules of Assets and Liabilities filed with
the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities. (Catholic
Church Bankruptcy News, Issue No. 42; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CELERO TECHNOLOGIES: Look for Bankruptcy Schedules Today
--------------------------------------------------------
Celero Technologies, Inc., fka Sim Training Holdings, Inc., fka
Strategic Management Group, Inc., asks the U.S. Bankruptcy Court
for the Eastern District of Pennsylvania for an extension of its
time to file schedules of assets and liabilities and statements of
financial affairs. The Debtor wants until Thursday, September 22,
to file those documents.
To prepare the required schedules and statements, the Debtor says
it must gather information from books, records, and documents
relating to a multitude of parties and transactions. Collection
of the necessary information requires an expenditure of
substantial time and effort on the part of the Debtor's employees,
including its President and Chief Executive Officer James J.
Christino.
Headquartered in Philadelphia, Pennsylvania, Celero Technologies,
Inc., filed for chapter 11 protection on August 22, 2005 (Bankr.
E.D. Pa. Case No. 05-31273). Amy E. Vulpio, Esq., and Robert A.
Kargen, Esq., at White and Williams LLP represent the Debtor in
its restructuring efforts. When the Company filed for protection
from its creditors, it listed $500,000 to $1 million in assets and
$10 million to $50 million in liabilities.
CELERO TECHNOLOGIES: White & Williams Approved as Bankr. Counsel
----------------------------------------------------------------
Celero Technologies, Inc., fka Sim Training Holdings, Inc., fka
Strategic Management Group, Inc., sought and obtained permission
from the U.S. Bankruptcy Court for the Eastern District of
Pennsylvania to retain White and Williams LLP as its chapter 11
counsel.
Since May 2005, White and Williams provide the Debtors with legal
counsel pertaining to settlement negotiations and possible out-of-
court restructuring opportunities. The Debtor wants White and
Williams to continue providing it legal representation while in
bankruptcy.
During the Debtor's restructuring, White and Williams is expected
to:
a) take all necessary action to protect and preserve the
Debtor's estate, including the prosecution of actions
on the Debtor's behalf, the defense of any actions
commenced against the Debtor, the negotiation of disputes
in which the Debtor is involved, and the preparation of
objections to claims filed against the estate;
b) prepare on behalf of the Debtor all necessary motions,
applications, answers, orders, reports, and papers in
connection with the administration of the estate;
c) prosecute, on behalf of the Debtor, a proposed plan of
reorganization and all related transactions and any
revisions; and
d) perform all other necessary legal services in connection
with this Chapter 11 case.
Robert A. Kargen, Esq., a partner at White & Williams, discloses
that the Debtor paid his firm a $26,367 retainer. Mr. Kargen will
be the primary counsel for the Debtor and he charges $425 an hour.
He will be assisted by Amy E. Vulpio, Esq., who charges $295 an
hour for her professional services.
To the best of the Debtor's knowledge, White & Williams is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Philadelphia, Pennsylvania, Celero Technologies,
Inc., filed for chapter 11 protection on August 22, 2005 (Bankr.
E.D. Pa. Case No. 05-31273). Amy E. Vulpio, Esq., and Robert A.
Kargen, Esq., at White and Williams LLP represent the Debtor in
its restructuring efforts. When the Company filed for protection
from its creditors, it listed $500,000 to $1 million in assets and
$10 million to $50 million in liabilities.
CIDER RIDGE: Files Plan & Disclosure Statement in Alabama
---------------------------------------------------------
Cider Ridge LLC filed a Plan of Reorganization and an accompanying
Disclosure Statement explaining the Plan in the U.S. Bankruptcy
Court for the Northern District of Alabama on Aug. 16, 2005.
The Debtor tells the Bankruptcy Court that in order to pay its
creditors, it intends to sell its assets at a private sale. If
the private sale does not push through, it will sell its assets in
a Court approved auction, the Debtor says.
Terms of the Plan
The Debtor discloses that the two secured claims are:
(1) BSFS Equipment in the amount of $3,275; and
(2) American Express in the amount of $11,870,000.
The Debtor tells the Court that American Express did not file a
proof of claim but the claim in secured by the real estate of the
Debtor.
Under the plan, secured claims will be paid in full using proceeds
from the sale of its assets.
Unsecured claims totaling $2,401,196 will get nothing under the
plan. Equity Security Holders will also get nothing under the
plan.
Headquartered in Oxford, Alabama, Cider Ridge LLC is a real estate
developer. The Company filed for chapter 11 protection on May 19,
2005 (Bankr. N.D. Ala. Case No. 05-41754). Harry P. Long, Esq.,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it estimated
assets between $1 million and $10 million and estimated debts
between $10 million and $50 million.
CIDER RIDGE: Wells Fargo Says Disclosure Statement is Inadequate
----------------------------------------------------------------
Wells Fargo Bank, National Association, raises several objections
to the Disclosure Statement explaining the Plan of Reorganization
filed by Cider Ridge, LLC. Wells Fargo is a secured creditor of
the Debtor.
Wells Fargo contends that:
(1) the Disclosure Statement fails to provide Wells Fargo and
other claimholders adequate information so they can't
make informed judgments about the Plan; and
(2) the Plan accompanying the Disclosure Statement is facially
unconfirmable.
Disclosure Lacks Adequate Information
Wells Fargo tells the Court that the Disclosure Statement fails to
explain vital information concerning the Debtor's primary asset
and events preceding the bankruptcy filing.
Well Fargo points to seven specific disclosure failures:
(a) the Debtor did not indicate how much it paid for the real
estate;
(b) the Debtor did not describe in detail the estimated costs
and the results of various market studies performed
associated with the development of the Cider Ridge
residential community;
(c) the Debtor did not explain how much capital has been
infused by the Debtor into the development;
(d) there is no discussion of the repayment terms of the
Debtor's bond indebtedness; and
(e) the Debtor's discussion regarding the restrictive
covenants affecting the subject property is deficient;
(f) the Debtor fails to adequately describe the current
status of the development; and
(g) the discussion regarding the dispute of the Debtor and
Wells Fargo is inaccurate and incomplete.
Vague Description of Asset Sale
Wells Fargo also tells the Court that the Disclosure Statement
only gives a general description on the Debtor's plan to sell its
assets. The Debtor vaguely alludes to "one prospect for a private
sale" yet fails to summarize the status or proposed terms of any
sale negotiations or if such a sale is likely in a reasonable
amount of time. The Debtor also provides no description as to the
efforts it employed to sell its assets, says Wells Fargo.
Inconsistencies Within the Plan
Wells Fargo further tells the Court that the plan contains some
inconsistencies regarding:
(a) the auction of its assets. Wells Fargo says that in one
section the Debtor speaks in terms of the Debtor itself
proceeding with an auction while in another the Debtor
says that Wells Fargo will conduct the auction; and
(b) the definition of the "Effective Date". The Plan defines
"Effective Date" as "60 days after approval and
confirmation of the Plan" while the Disclosure Statement
defines it as "45 days after the closing of the sale of
assets of the Debtor," Wells Fargo observes.
Given these problems, Wells Fargo asks the Court to deny approval
of the Debtor's Disclosure Statement.
Headquartered in Oxford, Alabama, Cider Ridge LLC is a real estate
developer. The Company filed for chapter 11 protection on May 19,
2005 (Bankr. N.D. Ala. Case No. 05-41754). Harry P. Long, Esq.,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it estimated
assets between $1 million and $10 million and estimated debts
between $10 million and $50 million.
CLAREMONT TECH: Wataire Industries Vote to Participate in Plan
--------------------------------------------------------------
The Board of Directors for Wataire Industries Inc. voted to
participate in a Plan of Reorganization of Claremont Technologies
Corp. (OTCBB:CTTG), a Debtor-in-Possession in the United States
Bankruptcy Court for the District of Nevada. The approval was
supported by the written consent of holders of approximately 71%
of the issued and outstanding shares of the Company's common
stock.
Under the Plan of Reorganization of Claremont, Wataire will be
contributing certain assets and technologies to Claremont in
exchange for approximately 70% of the common stock of Claremont.
This will result in Claremont becoming a majority owned subsidiary
of Wataire.
Disclosure Statement Hearing
On Sept. 19, 2005, the Bankruptcy Court in Nevada continued the
hearing on Claremont's Disclosure Statement to consider approval
of its Plan of Reorganization to Oct. 11, 2005. If the Disclosure
Statement is approved at that hearing, then the Court will set a
date for the shareholders and creditors of Claremont to vote on
the Plan of Reorganization.
If the Plan of Reorganization of Claremont is approved, Wataire
will have the ability to expand its capital resources, the
existing manufacturing and distribution agreements and have the
required infrastructure to move forward to a global scale.
Upon approval, all shareholders of record in Wataire Industries
Inc. will retain their position in WTAF as well as receive one
share in Claremont.
Wataire Industries Inc. is an international company focused on
developing and delivering technology-based water generation and
purification products worldwide. The company provides innovative
water supply solutions that are adaptable to almost every type of
environmental conditions. Wataire was founded by a team of
veterans with extensive experience in business administration,
product development, project management, manufacturing,
international distribution, sales and marketing. The Company is
dedicated to provide an array of revolutionary solutions to
deliver clean, unlimited supply of pure water for drinking, for
lifesaving, and for irrigation.
Headquartered in Las Vegas, Nevada, Claremont Technologies Corp.
develops the first and only independent lab certified device, the
Safe Cell Tab, which helps eradicate all cancer-causing radiation
from electromagnetic frequencies. The Company was subject to an
involuntary chapter 7 petition on March 25, 2005 (Bankr. D. Nev.
Case No. 05-12235). The Debtor consented to an entry of an order
for relief under chapter 11 on Aug. 24, 2005. Matthew L. Johnson,
Esq., at Matthew L. Johnson & Associates, P.C., represents the
Debtor in its bankruptcy proceeding.
COLLINS & AIKMAN: Committee Has Until Oct. 21 to Sue Lender Group
-----------------------------------------------------------------
In a stipulation approved by the U.S. Bankruptcy Court for the
Eastern District of Michigan, the Official Committee of Unsecured
Creditors of Collins & Aikman Corporation and its debtor-
affiliates and JP Morgan Chase Bank, NA, agree to extend the
Committee's deadline to file an adversary proceeding or contested
matter to October 21, 2005.
As previously reported, the Debtors and JP Morgan, in its capacity
as Agent for the DIP Lenders and Prepetition Agent for the
Prepetition Secured Lenders, agreed that any committees appointed
in the Debtors' Chapter 11 cases will be permitted to use up to
$200,000 to:
-- perform investigations regarding and object, contest or
raise any defense to, the validity, perfection, extent or
enforceability of any amount due under the DIP Documents or
the Existing Agreements, or Court-approved liens or claims;
and
-- assert any Claims or Defenses or causes of actions against
JPMorgan, the DIP Lenders, and the Prepetition Secured
Lenders.
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. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CONJUCHEM INC: Equity Deficit Tops $13 Million at July 31
---------------------------------------------------------
Conjuchem Inc. reported its financial results for its third
quarter of fiscal 2005, ending July 31, 2005.
Net loss for the quarter ending July 31, 2005, amounted to
$7.4 million compared to $12.6 million for the quarter ending
July 31, 2004. The company's net loss for the nine-month period
ending July 31, 2005 amounted to $27.3 million compared to
$34.7 million for the nine-month period ending July 31, 2004. The
decrease in the net loss is mainly attributable to reduced net
research and development expenses.
"The landscape of new drugs for Type 2 diabetes continues to
evolve with the market introduction of the first GLP-1 drug and
with encouraging results reported with new formulations that
will compete in a second wave of more patient friendly GLP-1
compounds," said Lennie Ryer, Chief Financial Officer and
Vice-President. "At ConjuChem, with progress made in both our
diluent program and with the announcement of our new PC-DAC(TM)
platform, our confidence to create highly competitive compounds -
long lasting with attractive safety and tolerability profiles -
has never been higher."
The Company recorded interest income on cash, short and long-term
investments that amounted to $168,400 for the quarter ending
July 31, 2005, compared to $149,497 for the quarter ending July
31, 2004. For the nine-month period ending July 31, 2005,
interest income was $484,609 compared to $657,526 a year earlier.
The decrease in interest revenue was a result of lower rates of
return on invested funds caused by a reduction in funds available
for investment.
Net research and development expenses amounted to $3.9 million for
the quarter ending July 31, 2005, compared to $10.6 million for
the quarter ending July 31, 2004. Net research and development
expenses amounted to $16.8 million for the nine-month period
ending July 31, 2005, compared to $27.7 million a year earlier.
This decrease is largely attributable to reduced clinical trial
activity in both the DAC(TM):GLP-1 and DAC(TM):GRF programs this
quarter compared to the same period a year ago.
General and Administrative costs for the quarter ending
July 31, 2006, remained at $1.0 million, the same as the quarter
ending July 31, 2004. For the nine-month period ending July 31,
2005 general and administrative costs declined to $3 million,
compared to $3.2 million a year earlier.
As of July 31, 2005, the Company had cash, cash equivalents and
short-term investments totaling $25.1 million and a working
capital of $23.1 million.
ConjuChem Inc. -- http://www.conjuchem.com/-- is biotechnology
company, developing drugs to improve the treatment of human
diseases. At the core of ConjuChem is a powerful, proprietary
technology, which we are leveraging to create an attractive
portfolio of commercial drugs. The Company's primary focus is the
further development of a drug for Type 2 diabetes, which is
currently in Phase II testing.
As of July 31, 2005, the Company's equity deficit widened to
$13,189,014 from a $10,252,756 deficit at October 31, 2004.
CORNING INC: Registers 10 Million Common Shares for Resale
----------------------------------------------------------
Corning Inc. filed a Registration Statement with the Securities
and Exchange Commission for the resale of 10 million shares of its
common stock by the Corning Incorporated Retirement Master Trust.
The Company valued the shares at $177.7 million.
The Trust is a part of, and was created to hold certain assets of
Company's Pension Plan in segregated accounts.
William D. Eggers, the Company's Senior Vice President informs SEC
that the Plan and the Trust are intended to be tax-qualified
within the meaning of Sections 401(a) and 501(a) of the Internal
Revenue Code of 1986, as amended. The Trust is funded by
individual participant and Corning contributions, which are held
for the sole benefit of plan participants and beneficiaries and
which pay for proper expenses of plan administration.
JP Morgan Chase Bank, N.A., serves as trustee of the segregated
accounts in the Trust.
The Company's authorized capital stock consists of 3.8 billion
shares of common stock, $.50 par value, and 10,000,000 shares of
preferred stock, $100 par value.
As of September 12, 2005, there were 1,517,369,151 outstanding
shares of Corning common stock held by approximately 21,700
holders of record.
The Company's common stock is listed on the New York Stock
Exchange under the symbol "GLW." The Company's shares traded
around $16 in early July and now trade around $20.
Headquartered in Corning, New York, Corning Inc. is a global,
technology-based corporation that operates in four reportable
business segments: Display Technologies, Telecommunications,
Environmental Technologies, and Life Sciences.
* * *
As reported in the Troubled Company Reporter on July 13, 2005,
Moody's Investors Service has placed these debt ratings of Corning
Incorporated under review for possible upgrade.
* Ba2 for the corporate family rating (previously called the
senior implied rating);
* Ba2 for senior unsecured notes, debentures, and IRBs;
* (P)Ba2 for senior unsecured securities and (P)B1 for
preferred stock issued pursuant to its 415 universal shelf
registration;
* B1 for mandatory convertible preferred securities and Not
Prime for the short-term debt rating.
At the same time, the rating agency affirmed the company's
SGL-1 speculative grade liquidity rating.
CREDIT SUISSE: Fitch Lifts $13.2MM Class G Certs. 1 Notch to BBB-
-----------------------------------------------------------------
Fitch Ratings upgrades Credit Suisse First Boston Mortgage
Securities Corp.'s commercial mortgage pass-through certificates,
series 2004-FL1:
-- $36.8 million class B to 'AAA' from 'AA';
-- $15.8 million class C to 'AA+' from 'A';
-- $12.8 million class D to 'A+' from 'BBB+';
-- $6.8 million class E to 'A-' from 'BBB';
-- $11.1 million class F to 'BBB+' from 'BBB-';
-- $13.2 million class G to 'BBB-' from 'BB+';
In addition, Fitch affirms these classes:
-- $105.7 million class A at 'AAA';
-- Interest-only class A-X at 'AAA';
-- Interest-only class A-Y-1 at 'AAA';
-- Interest-only class A-Y-2 at 'AAA';
-- Interest-only class A-Y-3 at 'AAA';
-- $10.7 million class H at 'BB';
-- $6 million class J at 'BB-';
-- $5.6 million class K at 'B+';
-- $4.7 million class L at 'B';
-- $6.4 million class M at 'B-'.
The $5.1 million class N certificates remain at 'CCC'. Fitch does
not rate the $14.4 million class O or the $1 million class P
certificates.
The rating upgrades are due to increased subordination levels
resulting from the payoff of six loans since issuance. As of the
September 2005 distribution date, the pool has paid down 25.1% to
$256.1 million from $341.9 million at issuance.
The remaining pool consists of 19 floating-rate loans, the
majority of which are interest-only (88.6%). The loans mature
between October 2005 and April 2007, with three loans (23.2%)
having single one-year extension options.
The largest loan in the transaction, the Alliance FH Portfolio
(19.9%), is collateralized by four multifamily properties located
in Houston, Austin, Dallas, and Indianapolis. Net cash flow for
the portfolio declined by 30% as of year-end 2004 compared to
issuance due to declines in occupancy and rental rates at the
properties.
The majority of the remaining loans continue to be in transition.
The total NCF of the 19 loans has dropped by 14.7% as of YE 2004
since issuance. However, due to the substantial paydown and
subsequent increased credit enhancement, upgrades are warranted.
One loan (1.9%) is secured by a multifamily property located in
Mobile, AL, an area affected by Hurricane Katrina. The master
servicer, Wachovia Bank, N.A., has spoken with the borrower and
the property was reported to have sustained minimal damage from
the storm.
DAVCRANE INC: Wants Winstead Sechrest as Special Counsel
--------------------------------------------------------
Davcrane Inc. asks the U.S. Bankruptcy Court for the Southern
District of Texas for permission to employ and retain Winstead,
Sechrest & Minick, P.C. as its special counsel.
The Debtor tells the Court that Winstead Sechrest will represent
the Debtor regarding the Debtor's intellectual property and
corporate issues and the protection of the Debtor's intellectual
property.
Joe W. Stuckey, Esq., at Winstead Sechrest, discloses that he will
be the Attorney-in-Charge and will bill $375 per hour for his
services. Mr. Stuckey also disclosed that Robert Shaddox, Esq.,
will bill $375 per hour and the Firm's paralegals will bill $175
per hour.
The Debtor also tells the Court that Winstead Sechrest will be
paid a retainer of $75,000.
Mr. Stuckey assures the Court that the Firm is a "disinterested
person" as that term is defined by section 101(14) Bankruptcy
Code.
Headquartered in Harlingen, Texas, Davcrane, Inc., --
http://www.davcrane.com/-- produces and develops cranes. The
Debtor filed for chapter 11 protection on November 12, 2004
(Bankr. S.D. Tex. 04-11507). Michael J. Urbis, Esq., at Jordan
Hyden Womble & Culbreth, represents the Company in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it reported an estimated $1 million to $10 million
in assets and liabilities.
Headquartered in Harlingen, Texas, Davis Pipelayer, Inc., and its
president, Daniel Edward Davis, filed for chapter 11 protection on
Aug. 8, 2005 (Bankr. S.D. Tex. Case Nos. 05-21192 & 05-21194).
Shelby A. Jordan, Esq., at Jordan Hyden Womble and Culberth, P.C.,
represents the Debtors in their restructuring efforts. When Davis
Pipelayer filed for protection from its creditors, it listed total
assets of $12,884,960 and total debts of $890,771.
Davis Pipelayer, Inc. and Daniel Edward Davis' chapter 11 cases
are jointly administered under Davcrane, Inc.'s bankruptcy
proceedings.
DELTA AIR: CFO Edward Bastian Says Layoffs Won't be Minimal
-----------------------------------------------------------
Business First of Columbus reports that Delta Air Lines Inc. CEO
Jerry Grinstein told the Georgia Senate this week that the carrier
will announce pay and benefit cuts for employees today or
tomorrow. Layoff announcement will come at a latter date. Mr.
Grinstein said that negotiations with aircraft lessors will
determine where those layoffs will occur.
Business First of Columbus reports that Edward Bastian, the
company's chief financial officer said the layoffs "will not be
small." Neither Mr. Bastian nor Mr. Grinstein could say how heavy
the cuts will be.
Delta has laid off 7,000 employees in the course of its pre-
bankruptcy transformation plan. The company plans to reduce U.S.
service further while maintaining its more profitable
international routes.
Headquartered in Atlanta, Georgia, Delta Air Lines, Inc. --
http://www.delta.com/-- is the world's second-largest airline in
terms of passengers carried and the leading U.S. carrier across
the Atlantic, offering daily flights to 502 destinations in 88
countries on Delta, Song, Delta Shuttle, the Delta Connection
carriers and its worldwide partners. The Company and 18
affiliates filed for chapter 11 protection on Sept. 14, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner,
Esq., at Davis Polk & Wardwell, represents the Debtors in their
restructuring efforts. As of June 30, 2005, the Company's balance
sheet showed $21.5 billion in assets and $28.5 billion in
liabilities.
DELTA AIR: Court Gives Interim OK on Existing Investing Guidelines
------------------------------------------------------------------
Delta Air Lines, Inc., and its debtor-affiliates seek the U.S.
Bankruptcy Court for the Southern District of New York's
permission to continue investing their cash based on their
existing investment guidelines.
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in New York,
relates that the goal of the Debtors' short-term investment
program is to effectively manage their cash by preserving
principal, providing liquidity and maintaining yield.
Investments for speculative purposes are not permitted.
Under the Investment Guidelines, the Debtors may only invest in:
(A) U.S. Government Securities
(B) U.S. Bank Obligations
(C) Foreign Bank Obligations
(D) Commercial Paper
(E) Master Note Agreements and Demand Notes
(F) Auction Rate Securities
(G) Short-Term/Money Market Investment
(H) Private Placement Securities (Rule 144A Securities)
(I) Other investments as agreed upon between the Debtors and
the Office of the United States Trustee for the Southern
District of New York.
The Investment Guidelines prohibit the Debtors from investing
more than 20% of their total portfolio in obligations of any one
issuer, except for U.S. Government Securities, U.S. Bank
Obligations, Foreign Bank Obligations or Short-Term/Money Market
Investment Funds.
The Investment Guidelines permit the Debtors to invest up to 100%
of their investment portfolio in U.S. Government Securities or
Short-Term/Money Market Investment Funds and up to $100 million
in the obligations of a U.S. or foreign bank.
Debtors Want Surety Requirement Waived
Section 345 of the Bankruptcy Code governs a debtor's deposit and
investment of cash during a Chapter 11 case, and authorizes
deposits or investments of money as will yield the maximum
reasonable net return on such money, taking into account the
safety of that deposit or investment.
For deposits or investments that are not insured or guaranteed by
the United States or by a department, agency, or instrumentality
of the U.S. or backed by the full faith and credit of the U.S.,
Section 345(b) requires the estate to obtain from the entity with
which the money is deposited or invested a bond in favor of the
U.S. and secured by the undertaking of an adequate corporate
surety, unless the Court, for cause, orders otherwise.
Mr. Huebner argues that the strict compliance with the surety
requirements under Section 345(b) would not be practical in the
Debtors' Chapter 11 cases and would not be necessary to protect
the creditors.
While the Investment Guidelines do not require a corporate surety
for investments, they do both limit the placement of investments
with financially strong entities and require ample
diversification, Mr. Huebner points out.
* * *
The Court grants the Debtors' request on an interim basis,
pending a final hearing on the matter.
Headquartered in Atlanta, Georgia, Delta Air Lines, Inc. --
http://www.delta.com/-- is the world's second-largest airline in
terms of passengers carried and the leading U.S. carrier across
the Atlantic, offering daily flights to 502 destinations in 88
countries on Delta, Song, Delta Shuttle, the Delta Connection
carriers and its worldwide partners. The Company and 18
affiliates filed for chapter 11 protection on Sept. 14, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner,
Esq., at Davis Polk & Wardwell, represents the Debtors in their
restructuring efforts. As of June 30, 2005, the Company's balance
sheet showed $21.5 billion in assets and $28.5 billion in
liabilities. (Delta Air Lines Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DELTA AIR: U.S. Trustee to Form Official Committees on Sept. 28
---------------------------------------------------------------
Deirdre A. Martini, the United States Trustee for Region 2, will
convene an organizational meeting of Delta Air Lines, Inc., and
its debtor-affiliates' largest unsecured creditors on September
28, 2005, at 11:00 a.m. The meeting will be held in the New York
Marriott East Side Hotel at 525 Lexington Avenue in New York City.
Greg M. Zipes, Esq., trial attorney for the U.S. Trustee, explains
that the sole purpose of the meeting will be to form a committee
or committees of unsecured creditors in the Debtors' cases. "This
is not the meeting of creditors pursuant to Section 341 of the
Bankruptcy Code," Mr. Zipes emphasizes.
Mr. Zipes relates that a representative of the Debtors will attend
and provide background information regarding the Chapter 11
petitions.
Creditors who want to serve on the Committee are required to
complete an acceptance form, disclosing information regarding the
creditors' connections or relationships to other U.S. airline
bankruptcy cases.
"The disclosure of any such information and/or relationship will
not necessarily form the basis for disqualification as a proposed
committee member, but may be relevant in determining whether the
creditor can fulfill its fiduciary duties on the Creditors'
Committee" Mr. Zipes says.
The acceptance form must be returned to the U.S. Trustee by
September 26.
The U.S. Trustee reserves the right to seek Court authorization
for the maintenance of certain information barriers and
restrictions with respect to committee members who serve on more
than one official committee of creditors in the U.S. airline
bankruptcy cases currently pending in federal courts in the
United States, Mr. Zipes notes.
Headquartered in Atlanta, Georgia, Delta Air Lines --
http://www.delta.com/-- is the world's second-largest airline in
terms of passengers carried and the leading U.S. carrier across
the Atlantic, offering daily flights to 502 destinations in 88
countries on Delta, Song, Delta Shuttle, the Delta Connection
carriers and its worldwide partners. The Company and 18
affiliates filed for chapter 11 protection on Sept. 14, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner,
Esq., at Davis Polk & Wardwell, represents the Debtors in their
restructuring efforts. As of June 30, 2005, the Company's balance
sheet showed $21.5 billion in assets and $28.5 billion in
liabilities. (Delta Air Lines Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
EAGLEPICHER INC: GE Railcar Can End Lease & Repo 119 Railcars
-------------------------------------------------------------
The Honorable J. Vincent Aug, Jr., of the U.S. Bankruptcy Court
for the Southern District of Ohio, Western Division, authorized
General Electric Railcar Services Corporation to terminate its
unexpired lease and reclaim 119 of its railcars from EaglePicher
Incorporated and its debtor-affiliates.
As previously reported in the Troubled Company Reporter on
Aug. 31, 2005, GE Railcar is a creditor holding approximately
$80,259 in unsecured prepetition claims in the Debtors' chapter 11
cases.
The Debtor has rented railcars from GE Railcar since 1984 pursuant
to a master leasing agreement. The leasing agreement allows the
Debtor use of GE Railcar's railcars. Under the lease agreement,
GE Railcar is also obliged to provide maintenance and
administrative support services for the leased equipment.
GE Railcar's counsel, Martin Weis, Esq., at Dilworth Paxson LLP,
told the Court that the Debtor has an unpaid balance of $231,064.
GE Railcar wants to terminate the lease agreement because the
Debtor has not been prompt in paying its postpetition obligations
and because the Debtor has not sought approval to assume or reject
the agreement. GE Railcar further says that the rented railcars
are not necessary to the Debtor's reorganization.
General Electric Railcar Services Corporation --
http://www.ge.com/railservices/-- is a leading service provider
to the rail industry. GE Railcar offers one of the most diverse
fleet of railcars in the business, as well as a full range of
intermodal assets, to transport vital commodities where and when
they are needed. The Company also offers a full range of flexible
leasing products - from per diem leases to sale/leasebacks - to
help clients meet operational and financial goals. GE Railcar
maintains superior performance from its transportation assets.
The Company's suite of maintenance, repair, engineering and
administrative services lets clients maintain their focus on their
business.
Headquartered in Phoenix, Arizona, EaglePicher Incorporated
-- http://www.eaglepicher.com/-- is a diversified manufacturer
and marketer of innovative advanced technology and industrial
products for space, defense, automotive, filtration,
pharmaceutical, environmental and commercial applications
worldwide. The company along with its affiliates and parent
company, EaglePicher Holdings, Inc., filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Ohio Case No. 05-12601).
When the Debtors filed for protection from their creditors, they
listed $535 million in consolidated assets and $730 in
consolidated debts.
ELITE TECHNICAL: Files Notice Under Bankruptcy and Insolvency Act
-----------------------------------------------------------------
Elite Technical Inc. (TSX VENTURE:ET) reported that due to market
conditions it has terminated its agreement with Wolverton
Securities Ltd to raise $3.5 million pursuant to the prospectus
previously filed on July 29, 2005. In addition the Company filed
a Notice of Intention to make a Proposal under the Bankruptcy and
Insolvency Act to Creditors and is in discussions with its lenders
while it continues operations and evaluates strategic alternatives
for the Company. Subject to certain conditions the chartered bank
that provides Elites main lending facility has agreed not to
enforce any security held by it until October 11, 2005.
Elite Technical Inc. is a Calgary-based manufacturer of high-
quality, high-reliability cable assemblies and connection
solutions for use in a broad range of consumer products,
commercial and industrial products, and electrical systems. Elite
is listed for trading on the TSX Venture Exchange under the symbol
"ET." and has 10,999,650 common shares outstanding.
ENDEVCO INC: New Auditing Firm Expresses Going Concern Doubt
------------------------------------------------------------
Killman, Murrell & Company, P.C. expressed substantial doubt about
EnDevCo, Inc.'s ability to continue as a going concern after
competing an audit of the company's 2004 financial statements on
August 12, 2005. Clyde Bailey, P.C., expressed identical doubts
after it completed an audit of the 2004 financial statements
earlier this year. The reason for the second audit is not clear.
The Company changed auditing firms in July 2005.
The auditing firms point to the Company's:
* recurring losses from operations,
* limited capital resources, and
* the need to raise substantial amounts of money to develop
the oil and gas leases currently owned.
Liquidity and Capital Resources
The Company has incurred net operating losses since the fiscal
year ended May 31, 1997 and currently has negative working
capital. The Company has no operations at this time that provide
working capital. It is seeking project based financing to secure
the necessary funds to participate in projects. There is no
assurance that the Company will be able to secure adequate
financing to fund operations.
Insufficient Working Capital
Under previous management, the Company depended on the sale of its
common stock to obtain working capital. With approval by the
shareholders to increase the authorization of common stock for the
Company, a Securites Registration Statement will be prepared which
will allow for the sale of common stock to raise working capital
for the Company. Unless project based funding can be found that
will generate capital to allow the Company to begin receiving
income from operations, the Company will remain in a relatively
inactive state due to the lack of additional working capital until
the SEC approves the Company's Securities Registration Statement.
No assurance can be given that funds will be available from any
source when needed by the Company or, if available, upon terms and
conditions reasonably acceptable to the Company.
Dependence on Others
The Company forms joint ventures with industry participants in
order to finance and facilitate its activities. In some
instances, the Company will depend on other companies to develop,
provide financing, and operate its properties and projects. The
prospects of the Company will be highly dependent upon the ability
of such other parties. As indicated by the nature of the
partners, with which the Company is participating in current
projects, management believes the risk in relying on such partners
is reasonable.
Political Climate
The Company has direct oil and gas interests in the United States
and the Republic of Colombia. Countries that the U.S. government
has placed on the list believed to harbor terrorists will be
subjected to increased scrutiny by U.S. Federal authorities. As
these types of events mature, the properties held by the Company
in Colombia may be subject to embargo or other restrictions in
support of U.S. governmental policies.
EnDevCo Inc. -- http://www.endevcoinc.com/-- is a dynamic and
growing energy company establishing an identity that is consistent
with its business development activities. The Company participates
in three sectors of today's energy industry: 1) oil and gas
exploration and production, 2) development of new technologies
which increase oil and gas production, using that technology to
gain leverage in the purchase of domestic natural gas production,
and 3) merchant power and integrated industrial site development.
EnDevCo is pursuing oil and gas exploration and production
opportunities in both domestic and international venues.
At June 30, 2005, EnDevCo Inc.'s balance sheet showed a
$2,288,484 stockholders' deficit, compared to a $2,422,882
deficit at Mar. 31, 2004.
ENRON CORP: Bankruptcy Court Creates Solvency Discovery Docket
--------------------------------------------------------------
Pursuant to an order, dated June 20, 2005, consolidating
avoidance actions to litigate insolvency issues, Judge Gonzalez
directs the Clerk of the Court to establish a separate docket
under number 55-55555 in the CM/ECF System for the U.S.
Bankruptcy Court for the Southern District of New York.
Notwithstanding Rule 7005-1 of the Local Rules of Bankruptcy
Practice and Procedure of the U.S. Bankruptcy Court for the
Southern District of New York and except with regard to documents
that may be filed under seal, these documents will only be filed
electronically on the Solvency Discovery Docket:
-- written disclosures pursuant to Rule 7026 of the Federal
Rules of Bankruptcy Procedure,
-- interrogatories,
-- answers to interrogatories,
-- document requests,
-- written responses to document requests,
-- requests for admissions,
-- responses to requests for admission,
-- subpoena,
-- notices of deposition,
-- notices of deposition upon written questions, and
-- any related notices and any other papers served pursuant to
Bankruptcy Rules 7026 to 7036 or 9016.
Except as to documents that may be filed under seal, all
pleadings, motions, applications and any responses or objections,
memoranda of law, affidavits, notices of presentment,
stipulations, exhibits, pleadings that relate to any contested
matter or motion concerning Solvency Discovery or any other issue
with respect to which the Avoidance Actions have been
consolidated -- the Solvency Pleadings -- will be filed
electronically on:
* the docket of the relevant Avoidance Action or the
Reorganized ACOM Debtors' main case docket (docket number
01-16034), as appropriate; and
* the Solvency Discovery Docket.
Only one courtesy copy of any of the Solvency Pleadings need to
be delivered to chambers.
The Court will post copies of any orders relating to any Solvency
Discovery Pleadings on the docket of the relevant adversary
proceeding or the main case docket, as appropriate.
All attorney parties to the Avoidance Actions who desire to
receive electronic notice of any filing made on the Solvency
Discovery Docket must register for e-mail notification on the
Court's CM/ECF System.
* * *
On Sept. 9, 2005, counsel to PPL Montana, LLC, and PPL Energy
Plus, LLC, on behalf of the Defendants' Committee, disclosed that
the Clerk of the Court has already activated the Solvency
Discovery Docket.
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.
158; Bankruptcy Creditors' Service, Inc., 15/945-7000)
ENRON CORP: Inks Pact with General Electric Resolving AEP Claim
---------------------------------------------------------------
On Oct. 15, 2002, American Electric Power Service Corporation
filed Claim No. 13802 against Enron Wind Systems, Inc., on
account of damages for breach of warranty under an agreement
entered into in connection with the construction of a wind farm
located near Fort Davis, Texas.
The Debtors objected to the AEP Claim. They claimed that General
Electric Company assumed the liability to the Claim pursuant to a
purchase agreement between them. On April 15, 2002, the Court
had approved GE's acquisition of the U.S. and European
manufacturing assets relating to the Debtors' Enron Wind
Business.
On June 30, 2005, the Reorganized Debtors filed a motion to
enforce the terms and provisions of the Purchase Agreement and
compel GE to take all actions consistent with its assumption of
the liability for the warranty claims set forth in the AEP Claim.
After arm's-length negotiations, the Reorganized Debtors and GE
agree that:
(1) the AEP Claim will be deemed disallowed and expunged in
its entirety;
(2) the Reorganized Debtors will withdraw the GE Motion; and
(3) they will exchange mutual releases of claims in
connection with the AEP claim provided that:
-- the Reorganized Debtors do not waive or release GE
from claims and causes of action in connection with
the avoidance action it filed against GE on
November 20, 2003, and amended on March 9, 2004, and
-- other than the AEP Claim, the parties do not waive any
claims, liabilities or other issues relating to the
Sale Order and the Purchase Agreement.
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.
158; Bankruptcy Creditors' Service, Inc., 15/945-7000)
ENRON CORP: Prisma Energy to Sell 50% Equity Stake in SK Enron
--------------------------------------------------------------
According to Bloomberg News, Maeil Business Newspaper reported
that Enron Corp.'s Prisma Energy unit is planning to sell its 50%
stake in SK Enron Co. Ltd. -- a South Korean venture with SK
Corp.
Enron and Korea's SK Corporation formed SK-Enron Co. Ltd., a
Korean holding company in January 1999. Enron invested
$243 million in the joint venture.
Through its operating subsidiaries, SK-Enron distributes natural
gas and imports/markets liquefied petroleum gas (LPG). SK-Enron
currently owns and operates nine city gas companies, one
liquefied petroleum gas import and marketing company and one
cogeneration company.
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.
158; Bankruptcy Creditors' Service, Inc., 15/945-7000)
ENTERGY NEW ORLEANS: Moody's Cuts Preferred Stock Rating to Caa2
----------------------------------------------------------------
Moody's Investors Service downgraded the debt ratings of Entergy
New Orleans, Inc. Ratings downgraded include Entergy New
Orleans':
* senior secured debt to B1 from Baa2;
* Issuer Rating to B3 from Baa3; and
* preferred stock to Caa2 from Ba2.
Moody's placed the ratings of Entergy New Orleans under review for
downgrade on September 8. Following today's rating action, the
company's ratings remain under review for possible further
downgrade.
The downgrade reflects the announcement that Entergy New Orleans
will consider seeking a petition for protection under federal
bankruptcy law. Entergy Corporation also provided an initial
Hurricane Katrina damage estimate for Entergy New Orleans of
between $325 million and $475 million, which is well above the
capacity of the utility to meet with its existing financial
resources and approved debt capacity without parent company or
other outside financial support. Moody's notes that the damage to
Entergy New Orleans' service territory is so severe such that the
utility is expected to suffer a permanent loss of ratepayers,
limiting the ability of the utility to recover costs and lost
revenues through cost of service filings under the normal
regulatory process.
In addition to considering a bankruptcy filing, Entergy is also
pursuing a wide range of other options to maintain the long-term
financial viability of Entergy New Orleans, including:
* insurance,
* possible federal legislation, and
* regulatory recovery mechanisms.
Entergy is also considering alternatives to support the liquidity
of Entergy New Orleans, including:
* additional advances under its money pool arrangement,
* debt issuance,
* the expansion of short-term borrowing capacity, and
* equity infusions.
However, because the damage estimates appear to be well above the
utility's internal capacity, Moody's believes that a bankruptcy
filing is a distinct possibility in the near term. Moody's
understands that such a filing, absent any waivers, would trigger
cross defaults with four parent company bank facilities, including
Entergy's $2 billion revolving credit facility.
The downgrade also considers:
* the slow pace of the restoration process in the City of New
Orleans, much of which remains inaccessible;
* the permanent impact the storm may have had on the economic
vitality of the City;
* substantial anticipated lost revenues at the utility due to
electric and gas outages and difficulties in billing and
collecting for previously provided services;
* the utility's limited financial flexibility in the face of a
massive rebuilding effort; and
* its need to rely on Entergy or other external resources, such
as public or governmental assistance, for a substantial
amount of financial support.
The company estimates that between 115,000 and 130,000 of its
customers are still unable to accept electric and gas service,
which represents a sizeable majority of its customer base prior to
the storm. The utility's three generating units remain out of
service and Entergy has provided no specific damage estimate or
timetable for their return to service.
Entergy New Orleans' ratings remain under review for possible
further downgrade. The review will focus on:
* the potential for a bankruptcy filing;
* the extent of financial support to be provided by Entergy
Corporation and its affiliates;
* progress on the various alternatives under consideration for
outside financial support for the utility;
* the level of insurance and regulatory recovery mechanisms
available to the utility; and
* the progress of restoration and recovery of the utility's
infrastructure.
The review will also focus on the utility's ongoing financial
flexibility as it undergoes this rebuilding process, including
that it has a $100 million limitation on borrowings from the
Entergy system money pool and a $40 million limitation on the
issuance of additional unsecured debt.
Entergy New Orleans, Inc. is a public utility subsidiary of
Entergy Corporation, an integrated energy company headquartered in
New Orleans, Louisiana. Entergy is also the parent company of:
* Entergy Arkansas,
* Entergy Gulf States,
* Entergy Louisiana,
* Entergy Mississippi, and
* System Energy Resources.
ESCHELON TELECOM: Completes Redemption of Senior 2nd Sec. Notes
---------------------------------------------------------------
Eschelon Telecom, Inc., completed on September 15 its previously
announced redemption of 35 percent of its outstanding 8-3/8%
senior second secured notes due 2010.
The company used a portion of the proceeds from its recently
completed initial public offering to complete the redemption,
which reduced the company's outstanding debt level by $50 million.
With the redemption complete, the company's current debt level is
now approximately $97 million, including both its senior second
secured notes and its capital lease obligations.
"We're very pleased to have completed our bond redemption as
planned using the proceeds from our recently completed initial
public offering," stated Richard Smith, President and CEO of
Eschelon Telecom, Inc. "We now have one of the best balance
sheets in the CLEC industry. With our proven ability to execute
our business model, Eschelon is in an excellent position to move
forward with our previously-announced colocation expansion plan
and to continue looking selectively at potential acquisitions."
Eschelon Telecom, Inc. is a facilities-based competitive
communications services provider of voice and data services and
business telephone systems in 19 markets in the western United
States. Headquartered in Minneapolis, Minnesota, the company
offers small and medium-sized businesses a comprehensive line of
telecommunications and Internet products. Eschelon currently
employs approximately 1,134 telecommunications/Internet
professionals, serves over 50,000 business customers and has
approximately 400,000 access lines in service throughout its
markets in Minnesota, Arizona, Utah, Washington, Oregon, Colorado,
Nevada and California.
As of June 30, 2005, Eschelon Telecom's equity deficit more than
doubled to $22,980,000 from an $8,180,000 deficit at Dec. 31,
2004.
* * *
As reported in the Troubled Company Reporter on Sept. 5, 2005,
Standard & Poor's Ratings Services revised its outlook on
Minneapolis, Minnesota-based Eschelon Telecom Inc. to positive
from developing following the company's consummation of its
initial public offering, resulting in net proceeds of
$69.8 million, of which roughly $51 million will be used to
redeem the senior second secured notes due 2010. Additionally,
$63 million of preferred stock will be converted to common shares.
All ratings, including the company's 'CCC+' corporate credit
rating, were affirmed.
FIRST UNION: Fitch Upgrades $5MM Class Q Certs. From BB to AAA
--------------------------------------------------------------
Fitch Ratings upgrades First Union National Bank Commercial
Mortgage Trust's commercial mortgage pass-through certificates,
series 2000-C2:
-- $55.7 million class B to 'AAA' from 'AA';
-- $42.9 million class C to 'AA' from 'A';
-- $17.1 million class D to 'AA-' from 'A-';
-- $18.6 million class E to 'A' from 'BBB+';
-- $17.1 million class F to 'A-' from 'BBB';
-- $14.3 million class G to 'BBB+' from 'BBB-';
-- $5 million class Q to 'AAA' from 'BB'.
In addition, Fitch affirms the following classes:
-- $75.4 million class A-1 'AAA';
-- $686.9 million class A-2 'AAA';
-- Interest-only class IO 'AAA'.
Class Q represents the interests in the trust corresponding to the
junior portion of the Schneider Automation Facility loan. Fitch
does not rate the class H, J, K, L, M, N, and O certificates.
The rating upgrades are due to paydown and defeasance since
issuance. As of the August 2005 distribution date, the pool has
paid down 10.6% to $1.02 billion from $1.14 billion at issuance.
In addition, 11 loans (10.6%) have defeased, including the
Schneider Automation R&D Building loan (3.2%), the fourth largest
loan in the pool, and the junior note collateralizing class Q. In
addition, the loan is credit assessed by Fitch.
Wachovia Bank, N.A., as master servicer, collected year-end 2004
financials for 92.6% of the nondefeased loans. Among those
properties that reported at YE 2004, the weighted average debt
service coverage ratio, based on net cash flow, increased to 1.44
times (x) from 1.35x at issuance.
There are currently five assets (3.7%) in special servicing,
consisting of two real estate owned properties (1.6%), one loan in
foreclosure (0.4%), one 30-day delinquent loan (1.5%), and one
loan that is current (0.2%).
The largest specially serviced loan (1.5%) is secured by an R&D
facility in North Andover, MA. This loan was transferred to the
special servicer in July 2005 after the borrower failed to make
their required balloon payment. The borrower is currently making
partial payments from the property's cash flow and updated
valuations of the property are pending.
The second largest specially serviced asset (1.2%) is an REO
retail property located in Chesapeake, VA. A letter of intent to
buy the property was accepted by the special servicer, and a
purchase and sales agreement is under final negotiation. Losses
are likely on all of the specially serviced loans except for the
loan that is current, which is expected to be assumed.
Fitch also reviewed the performance of the Park Plaza Mall (4%).
Based on the stable performance of the mall, the loan maintains an
investment-grade credit assessment. The loan is the second
largest in the pool and secured by 265,144 square feet of a
549,144 square foot regional mall located in Little Rock, AR.
Despite a decline in occupancy, the Fitch-adjusted YE 2004 DSCR
was 1.46x, stable with issuance.
FLOW INTERNATIONAL: Restatements Delay Tardy Financial Reports
--------------------------------------------------------------
Flow International Corporation (Nasdaq: FLOW) has been further
delayed from filing its Form 10-Q for the fiscal 2006 first
quarter ended July 31, 2005. On Sept. 16, 2005, the Company filed
a Form 12b-25 to extend the filing date for its interim report,
extending the filing date to Sept. 19, 2005. The Company did not
file the Form 10-Q on Sept. 19, 2005, and currently is unable to
predict when it will file the 10-Q.
The Company, after consultation with its Independent Registered
Public Accounting Firm has determined that it will restate its
financial results for the year ended April 30, 2005, as a result
of an error related to the valuation of anti-dilution warrants
issued to the Company's lenders on March 21, 2005. The warrants
were issued as a result of the issuance of securities in a PIPE
transaction. The amount of the restatement, which will result in
a non-cash adjustment, is estimated to be approximately $600,000
and will increase the Company's paid-in capital and net loss for
the year ended April 30, 2005. The restatement for these warrants
will not have any effect on net shareholder's equity as of
April 30, 2005.
In conjunction with the Public Company Accounting Oversight
Board's inspection of the IRPAF, the IRPAF has advised that it
continues to complete required audit procedures in connection with
the 2005 financial statements. Until the IRPAF has completed
these procedures and the 2005 financial statements are restated,
the Company will not be in a position to file the 10- Q for the
first quarter.
Flow International Corporation -- http://www.flowcorp.com/-- is
the world's leading developer and manufacturer of ultrahigh-
pressure waterjet technology for cutting, cleaning, and food
safety applications, providing state-of-the-art ultrahigh-pressure
(UHP) technology to industries including automotive, aerospace,
job shop, surface preparation, food and more.
FOSS MANUFACTURING: Foley Hoag Approved as Bankruptcy Counsel
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Hampshire gave
Foss Manufacturing Company, Inc., permission to employ Foley Hoag
LLP as its general bankruptcy counsel.
Foley Hoag will:
a) advise the Debtor with respect to its powers and duties as a
debtor-in-possession in the continued operation of its
business and management of its property;
b) represent the Debtor at hearings and matters pertaining to
its affairs as a debtor and debtor-in-possession and
attend meetings and negotiations with representatives of the
Debtor's creditors and other parties-in-interest and respond
to creditor inquiries;
c) take all necessary actions to protect and preserve the
Debtor's estate and prepare on the Debtors' behalf all
necessary motions, applications, answers, orders, reports,
and papers necessary to the administration of the Debtor's
estate;
f) negotiate and prepare on the Debtor's behalf a plan of
reorganization and disclosure statement, and all related
agreements or documents and take any necessary action on
behalf of the Debtor to obtain confirmation of that
plan;
g) advise the Debtor in connection with any potential sale of
assets or business, or in connection with any strategic
partnering;
h) review and evaluate the Debtor's executory contracts and
unexpired leases and represent the Debtor in connection with
the rejection, assumption, or assignment of those leases;
i) consult with and advise the Debtor regarding labor and
employment matters and represent the Debtor in connection
with any adversary proceedings or automatic stay litigation
which may be commenced against the Debtor;
j) review and analyze various claims of the Debtor's creditors
and the treatment of those claims, and prepare, file or
prosecute any objections to those claims; and
k) perform all other necessary legal services to the Debtor in
connection with its chapter 11 case.
Kenneth S. Leonetti, Esq., and Andrew Z. Schwartz, Esq., are the
lead professionals from the Firm performing services to the
Debtor. Mr. Leonetti disclosed that his Firm received a $40,000
retainer.
Mr. Leonetti charges $445 per hour for his services, while Mr.
Schwartz charges $535 per hour.
Foley Hoag assures the Court that it does not represent any
interest materially adverse to the Debtor or its estate.
Headquartered in Hampton, New Hampshire, Foss Manufacturing
Company, Inc., -- http://www.fossmfg.com/-- is a producer of
engineered, non-woven fabrics and specialty synthetic fibers, for
a variety of applications and markets. The Company filed for
chapter 11 protection on Sept. 16, 2005 (Bankr. D.N.H. Case No.
05-13724). When the Debtor filed for protection from its
creditors, it listed estimated assets of $10 million to $50
million.
FOSS MANUFACTURING: Section 341(a) Meeting Slated for October 26
----------------------------------------------------------------
The U.S. Trustee for Region 1 will convene a meeting of Foss
Manufacturing Company, Inc.'s creditors at 10:00 a.m., on Oct. 26,
2005, at 1000 Elm Street, 7th Floor - Room 702, Manchester, New
Hampshire 03101. This is the first meeting of creditors required
under 11 U.S.C. Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Hampton, New Hampshire, Foss Manufacturing
Company, Inc., -- http://www.fossmfg.com/-- is a producer of
engineered, non-woven fabrics and specialty synthetic fibers, for
a variety of applications and markets. The Company filed for
chapter 11 protection on Sept. 16, 2005 (Bankr. D.N.H. Case No.
05-13724). Andrew Z. Schwartz, Esq., at Foley Hoag LLP represents
the Debtor in its restructuring efforts. When the Debtor filed
for protection from its creditors, it listed estimated assets of
$10 million to $50 million.
FRANCIS PIOTROWSKI: Case Summary & 4 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Francis Kevin Piotrowski
186 Stanton Mountain Road
Lebanon, New Jersey 08833
Bankruptcy Case No.: 05-40877
Type of Business: The Debtor owns Jersey Juice, Inc., which
manufactures juice, juice concentrates &
soda syrups. Jersey Juice filed for bankruptcy
protection on Sept. 26, 2002 (Bankr. D. N.J.
Case No. 59704)(Ferguson, J.).
Chapter 11 Petition Date: September 21, 2005
Court: District of New Jersey (Trenton)
Debtor's Counsel: Barry W. Frost, Esq.
Teich Groh
691 State Highway 33
Trenton, New Jersey 08619-4407
Tel: (609) 890-1500
Fax: (609) 890-6961
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 4 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Hoffman International $45,000
c/o Harry L. Hoffman, Reg. Agent
300 South Randolphville Road
Piscataway, NJ 08854
Fallon Trading Co. Jersey Juice $15,000
3895 Adler Place obligation
Bethlehem, PA 18017
Strydesky & Company Accounting $2,000
812 North Wood Avenue, Suite 202
Linden, NJ 07036
American Trading Co. Medical $800
c/o Brotman Graziano & Hubert
3685 Quakerbridge Road
Trenton, NJ 08619
FREMONT GENERAL: Moody's Raises Subordinated Debt Rating to Caa1
----------------------------------------------------------------
Moody's Investors Service upgraded the debt ratings of Fremont
General Corporation (senior to B2 from B3). It also assigned
ratings to Fremont General's bank subsidiary, Fremont Investment &
Loan (Ba3 for deposits). Moody's said that the upgrade of Fremont
General's debt ratings reflects the improved financial coverage it
obtains from the operations of its bank subsidiary, which has now
become its dominant operating business after the demise of its
workers-compensation insurance operations. The upgrade also
reflects improvement in Fremont General's double leverage, which
has declined to a more moderate level of approximately 118%.
Fremont Investment & Loan (FIL) has two major businesses. The
first is to originate sub-prime residential mortgages, the
majority of which are sold. The second is to originate and fund
commercial real estate loans. These loans are typically for
construction and conversion purposes with limited or no recourse
to the developer. The bank also services mortgages and gathers
market rate deposits from its branch network and from brokers.
Moody's said that FIL's Ba3 rating for long-term deposits, B1 for
senior obligations, Non-Prime for short-term obligations, and D-
bank financial strength rating, reflects FIL's high capital levels
and ratios. Currently FIL has a good capital buffer in which it
can absorb quite large credit losses from its commercial real
estate portfolio and still exceed minimum regulatory capital
levels. Moody's views this capital cushion as FIL's best credit
strength.
Moody's said that the rating also reflects the potential
volatility in FIL's earnings from a fall in loan sale revenues and
related net-interest margin spread, as well as increased credit
costs. Moody's stated that revenue levels could fall quickly
mirroring abrupt decline in demand for sub-prime mortgages in the
capital markets. Meanwhile, credit costs could increase mirroring
deterioration in the credit quality of FIL's commercial real
estate portfolio. Moody's said that it is feasible that a fall in
investor demand for residential mortgages and a rise in credit
costs in the commercial real estate portfolio could occur
simultaneously. This likelihood explains the emphasis by Moody's
on FIL's capital and reserve levels, as opposed to FIL's earnings,
as a main protector for creditors.
Moody's said that FIL's future capital ratios will be an important
rating driver. Currently, FIL's capital ratios are high and
Moody's expects that although management may reduce capital ratios
somewhat, it expects FIL's capital ratios to remain comparatively
robust. Therefore, if the capital ratios were to fall to levels
that were only a few hundred basis points above well-capitalized
regulatory levels, then negative rating pressure could emerge.
Moody's said that if FIL's already high capital ratios rose
further, then upward rating pressure could occur. In the longer
term, upward rating pressure could emerge if Moody's felt that a
change in underwriting standards reduced volatility in Fremont's
major business lines.
Regarding earnings, Moody's said that sale of sub-prime mortgages
contributes to earnings in two ways. The first is loan sales and
the second is net interest income generated by sub-prime mortgages
that are warehoused on FIL's balance sheet prior to sale. Moody's
said that FIL's warehouse portfolio is the major contributor to
its net interest margin.
Regarding commercial real estate risk, Moody's said that FIL's
business practice of lending with limited or no recourse increases
FIL's risk. Moody's noted that because of increased competition,
the leverage in commercial real estate markets has risen. Moody's
stated that FIL's commercial real estate exposure at just over
three times equity constitutes a concentration risk.
Regarding liquidity and asset and liability management, Moody's
said that access to non-brokered deposits and other forms of
secured funding improve FIL's liquidity profile. Moody's believes
FIL is prudently funding its loan portfolio while its mortgage
servicing right asset is small, thereby reducing this source of
potential volatility.
These key ratings were upgraded:
Fremont General Corporation:
* senior unsecured to B2 from B3 and subordinated debt to Caa1
from Caa2
Fremont General Financing I:
* backed preferred stock to Caa1 from Caa2.
These key ratings were assigned:
Freemont Investment & Loan:
* bank deposits at Ba3
* issuer and OSO at B1
* bank financial strength at D-
* short-term bank deposits and OSO at Not Prime
Fremont General Corporation headquartered in Santa Monica,
California, reported assets of $11 billion as of June 30, 2005.
Fremont Investment & Loan had total assets of $10.8 billion.
HAPPY KIDS: Taps Marketing Management as Sale Consultants
---------------------------------------------------------
Happy Kids Inc. and its debtor-affiliates sought and obtained from
the U.S. Bankruptcy Court for the Southern District of New York
authority to employ and retain Marketing Management Group, Inc. as
their marketing and sale consultants.
The Debtors tell the Court that Marketing Management, in
conjunction with Carl Marks Consulting Group LLC, will seek
qualified purchasers capable of purchasing the business or assets
of the Debtors.
Marketing Management will:
(a) prepare a "positioning document" which will be available
for review by prospective qualified purchasers;
(b) solicit prospective purchasers;
(c) advise and assist the Debtors with any merger,
acquisition, divestiture, consolidation or sale of any
material asset during the pendency of the Debtors' chapter
11 cases or upon emergence from chapter 11;
(d) review and evaluate proposals from potential qualified
purchasers, and assisting and advising the Debtors with
respect to the same;
(e) formulate strategies and mechanics for the sale process to
maximize the return on the sale of the Debtors' assets and
business;
(f) determine the qualifications of prospective bidders,
including the means by which any transaction would be
capitalized, financed and operated;
(g) monitor the Debtors' performance and provide appropriate
information with respect thereto to potential bidders;
(h) work with parties to structure a transaction;
(i) create and maintain a "data room" in order to efficiently
procure, organize and distribute information to qualified
bidders;
(j) assist in the preparation of a "terms sheet" to guide the
attorneys in drafting legal documents;
(k) manage, with Debtors' counsel and Carl Marks, an auction
process related to the sale;
(l) testify at any court hearings with respect to approval(s)
of such transaction(s); and
(m) provide weekly updates to the Debtors and their advisors,
The CIT Group/Commercial Services, Inc., Deutsche Bank
Trust Company Americas and the Official Committee of
Unsecured Creditors.
Allan J. Ellinger, Senior Managing Director at Marketing
Management, discloses that the Firm will receive a $50,000
retainer for services to rendered. Mr. Ellinger also discloses
that should the Debtors consummate a transaction, the Firm, in
addition to the retainer, will receive a "success fee" under these
terms:
(a) if a transaction is consummated for the assets of the
Debtors including accounts receivable assigned to the
Debtors' factor, the Firm will be paid 1% of the total
consideration up to $30 million and 2% on all amounts in
excess of $30 million;
(b) if the receivables are not purchased in the transaction,
the Firm will be paid 2% of the total consideration; and
(c) in under no circumstances will the "success fee" be less
than $275,000.
Mr. Ellinger further discloses that the Firm received;
(1) $73,425 as payment for pre-petition services; and
(2) $100,000 retainer for post-petition services.
Mr. Ellinger tells the Court that of the $100,000 retainer, it has
returned $80,000 to the Debtors' and holding the $20,000 in
escrow. The Firm is also owed $3,200, post petition, in
connection with research conducted on commensurate executive
compensation arrangements and work performed regarding the
Debtors' 2005 operating plan, says Mr. Ellinger.
Mr. Ellinger assures the Court that the Firm is a "disinterested
person" as that term is defined in section 101(14) of the
Bankruptcy Code.
Headquartered in New York, New York, Happy Kids Inc. and its
affiliates are leading designers and marketers of licensed,
branded and private label garments in the children's apparel
industry. The Debtors' current portfolio of licenses includes
Izod (TM), Calvin Klein (TM) and And1 (TM). The Company and its
debtor-affiliates filed for chapter 11 protection on Jan. 3, 2005
(Bankr. S.D.N.Y. Case No. 05-10016). Sheldon I. Hirshon, Esq., at
Proskauer Rose LLP, represents the Debtors in their restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed total assets of $54,719,000 and total
debts of $82,108,000.
INTERMET CORP: Wants More Time to Make Lease-Related Decisions
---------------------------------------------------------------
Intermet Corporation and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Eastern District of Michigan for an
extension until Nov. 15, 2005, or, if earlier, the effective date
of their proposed Amended Plan of Reorganization, the periods
within which they can elect to assume, assume and assign, or
reject their unexpired nonresidential real property leases.
The Court approved the adequacy of the Debtors' Amended Disclosure
Statement explaining their Amended Plan on Aug. 12, 2005, and the
confirmation hearing for that Plan is tentatively scheduled on
Sept. 27, 2005.
The Debtors explain that they are parties to various unexpired
nonresidential real property leases at various locations
throughout the country.
The Debtors give the Court four reasons in support of the
extension:
1) the unexpired leases are critical part of their estates and
are integral to the continued operation of their businesses;
2) all of their major constituents want the treatment of the
unexpired leases to be addressed as part of the Plan
confirmation process, and although the Plan confirmation
hearing is already scheduled on September 27, analysis and
assessment of those leases' treatment under the Plan is
still ongoing;
3) premature assumption or rejection of the unexpired leases
before the Plan's confirmation would result in their estates
incurring a substantial administrative obligation; and
4) the requested extension is in the best interest of their
estates, their creditors and other parties-in-interest.
Headquartered in Troy, Michigan, Intermet Corporation --
http://www.intermet.com/-- provides machining and tooling
services for the automotive and industrial markets specializing
in the design and manufacture of highly engineered, cast
automotive components for the global light truck, passenger car,
light vehicle and heavy-duty vehicle markets. Intermet, along
with its debtor-affiliates, filed for chapter 11 protection on
Sept. 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through
04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP
represents the Debtors. When the Debtors filed for protection
from their creditors, they listed $735,821,000 in total assets
and $592,816,000 in total debts.
INTERNATIONAL PAPER: Inks Pact to Buy Compagnie for $80 Million
---------------------------------------------------------------
International Paper has signed an agreement to acquire a majority
share of Compagnie Marocaine des Cartons et des Papiers, a leading
Moroccan corrugated packaging company. Under the terms of the
planned investment, IP will acquire approximately 65 percent of
CMCP, for approximately $80 million cash plus assumed debt of
approximately $40 million. Completion of the transaction is
subject to normal closing conditions and is anticipated before the
end of 2005.
"CMCP fits well with International Paper's strategy to grow our
corrugated box business globally, and will further strengthen our
position in the fruit and vegetable segment, where we are already
a European leader. Additionally, the investment in CMCP will
offer IP an attractive opportunity to increase shipments of Kraft
linerboard to Morocco," said Tom Kadien, president of
International Paper Europe.
Following completion of the transaction, CMCP will become part of
International Paper's European Container business.
"Morocco is an attractive market for International Paper's
packaging business," said Paul Brown, vice president of
International Paper's European Container business. "The country
has a rapidly growing economy with low inflation and recently
signed free-trade agreements with the European Union and the
United States."
Both, International Paper and CMCP remain dedicated to providing
top quality products, excellent services and superior value-added
solutions to their customers.
CMCP, based in Casablanca, Morocco, has 1,500 employees and
operates four box plants and one recycled containerboard mill in
Morocco. CMCP produces corrugated packaging materials for the
industrial and agricultural markets.
International Paper's European Container business has 3,200
employees and operates 25 box plants and 2 corrugated
containerboard mills in France, Ireland, Italy, Spain, the United
Kingdom, and through a joint venture in Turkey.
International Paper -- http://www.internationalpaper.com/-- is
the world's largest paper and forest products company. Businesses
include paper, packaging, and forest products. As one of the
largest private forest landowners in the world, the company
manages its forests under the principles of the Sustainable
Forestry Initiative(R) program, a system that ensures the
continual planting, growing and harvesting of trees while
protecting wildlife, plants, soil, air and water quality.
Headquartered in the United States, International Paper has
operations in over 40 countries and sells its products in more
than 120 nations.
* * *
As reported in the Troubled Company Reporter on July 22, 2005,
Moody's Investors Service placed International Paper Company's
ratings on review for possible downgrade.
International Paper Company:
* Senior Unsecured Baa2
* Subordinate Shelf (P)Baa3
* Preferred Shelf (P)Ba1
* Commercial Paper P-2
International Paper Capital Trust II:
* Bkd Preferred Stock Baa3
* International Paper Capital Trust III:
* Bkd Preferred Shelf Baa3
International Paper Capital Trust IV:
* Bkd Preferred Shelf (P) Ba1
* International Paper Capital Trust VI:
* Bkd Preferred Shelf (P) Ba1
Champion International Corporation:
* Senior Unsecured Baa2
* Federal Paper Board Co., Inc.
* Senior Unsecured Baa2
Union Camp Corporation:
* Senior Unsecured Baa2
INTERSTATE BAKERIES: 120 Creditors Sell $1.5 Mil. of Trade Claims
-----------------------------------------------------------------
From June 2 to June 13, 2005, the Clerk of the U.S. Bankruptcy
Court for the Western District of Missouri recorded 120 claim
transfers to:
(a) 3V Capital Management LLC
Creditor Claim Amount
-------- ------------
Avalon Petroleum Company $39,212
Congdon, Flaherty, O'Callaghan et al. 76,638
Dunbar Armored 48,093
Dunbar Bankpak, Inc. 96
(b) 3V Capital Master Fund Ltd.
Creditor Claim Amount
-------- ------------
OneBeacon Ins. Co. $331,609
(c) Debt Acquisition Company of America V, LLC
Creditor Claim Amount
-------- ------------
Aaron's Lawn Care & Landscaping, Inc. $100
Adkins Sanitation Ltd. 100
Affordable Janitorial 150
Agape Garage Doors 166
Alliance Development Corp. 1,122
Aqua One 81
B & D Towing 90
B & R Electrical 127
Binswanger Glass 118 965
Binswanger Glass 545 159
Blackmore's Security, Inc. 128
Brandon Hans 225
Buchmann's Egg Ranch, Inc. 768
Cameron Neal 100
CFM 3002 93
Columbia Container Corporation 73
Commercial Safety Systems, Inc. 800
Complete Auto Glass 428
D&D Starter Co. 382
Deringer 423
Deruiter Dist., Inc. 854
Direct Connection 3,641
Edward H. Monroe 1,988
Endre's Services, Inc. 2,690
Environmental Air Systems, Inc. 628
Enviro Shred, Inc. 94
Ex-El Cleaning & Restoration, Inc. 430
Ferrells AC & Heating 339
Fish Window Cleaning 215
Fitzenrider, Inc. 1,146
Food 4 Less 3,700
Franklin Auto & Wrecker Service 150
Full Service Lawn Care 240
Grocery Merchandising Association 120
Growing Pains Lawn Service 520
Harlan Bakeries, Inc. 210
Hites Window Cleaning 217
Ideal Services 803
Interstate Trailer & Equipment 1,418
James Mazick 238
Jason Underwood 450
Jefferson Co. Lock & Key 76
Jobs By Jake 140
John Elway Ford 1342563 73
Keiths Lawn Care Plus 75
Kellen & Company Steve Kellen 315
Lane Sales, Inc. Pepsi Cola 1,776
Lasco Heavy Duty 171
Lechlitner Door Sales & Service, Inc. 375
Mann-Fleming Machine Works 673
Mark Sanders 420
Martech Specialties 1,320
Mazzawi Bros., Inc. 1,842
Michigan Mobile Glass & Trim 93
Mickey's Dairy 758
Millers Contracting 60
Mountainside Lawn Care 227
Mount Olympus Waters 90386400 58
Navy Enterprises, LLC 135
Neos 308
Newer Cleaning Co. 65
Northstar Flag & Flagpole Co. 100
North Vernon Plain Dealer And Sun 64
Northwest Overhead Door 659
Paclab Network Laboratories 119
PJ Keating 168
Prepass 2,466
Quality Glass, Inc. 576
Quality Janitorial Service 420
Queen City Food & Vending, Inc. 243
Red Wing Shoe Store 496
Rid-Et Pest Control 407
Robins Lock Shop, Inc. 202
Rogers Rubber Mfg., Inc. 319
Samantha Kelly 100
Scott Systems 83
SDS of NY 311
Sellers Equipment, Inc. 432
Sharlet K. Bass 450
Simmons Knife & Saw Company 72
Standard Parts Corp. 1,358
Starjournal Publishing 193
Strongsville Heating & Air Conditioning 247
Terry's Dairy, Inc. 1,619
The Advertiser 278
The David Hirschberg Co. 780
Tinora High School Yearbook 80
Transport Graphics, Inc. 90
Veronica Chaplin 720
W2 Financial Staffing, Inc. 339
Wabash Ford 1,038
Weck's Lawn Care 75
West Herr Ford Of Amherst 334
Westmoreland Glass Company, Inc. 118
William's Landscape 275
Winder Dairy 404
WRS Maintenance & Janitorial 863
(d) Fair Harbor Capital, LLC
Creditor Claim Amount
-------- ------------
Canyon Logistics, Inc. $8,228
Cintas First Aid & Safety 1,466
Controlco 522
Cummins Gateway, Inc. 1,089
D & F Forklift Service 3,555
East Bay Ford Truck Sales, Inc. 1,407
Envirosolve 1,032
Janet George 500
Swiss Tire & Automotive Service 544
Western Flavors & Fragrances, Inc. 838
Wood's Lawn Service 1,080
(e) Longacre Master Fund, Ltd.
Creditor Claim Amount
-------- ------------
Svenhard's Swedish Bakery, Inc. $722,267
(f) Madison Liquidity Investors 123, LLC
Creditor Claim Amount
-------- ------------
Kerry Ingredients $83,584
Lason Canada Co. 6,215
Lason Canada Company 1,206
Lason Canada Co. T46025U 243
(g) Madison Liquidity Investors 127, LLC
Creditor Claim Amount
-------- ------------
Kerry Bio Science $49,151
Kerry Canada, Inc. 32,511
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014,
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
J. CREW GROUP: Moody's Reviews Junk Senior Discount Notes' Rating
-----------------------------------------------------------------
Moody's placed the ratings of J. Crew Group, Inc. on review for
possible upgrade following the company's filing for an upcoming
initial public offering and plan to utilize the proceeds to de-
lever its balance sheet.
These ratings were placed on review for possible upgrade:
* Corporate family rating of B3
* Senior discount notes of Caa2
Moody's noted that the company has announced its intention to
retire all of its outstanding redeemable preferred stock and
Series A preferred stock ($391 million) as well as its 13.125%
senior discount debentures ($22 million), to prepay all or a
portion of its 9.75% senior sub notes ($275 million), and to
convert its 5% notes payable to common stock ($23 million) with
the proceeds from its initial public offering. The company also
intends to enter into a new term loan at the time of the initial
public offering. Moody's review will focus on the success of the
pending initial public offering and subsequent deleveraging of the
company's balance sheets, as well as prospects for continued
improvement in the company's operating performance.
J. Crew Group, Inc., headquartered in New York, New York, is a
multi-channel apparel retailer who operates:
* 158 retail stores,
* 44 factory outlet stores,
* a catalogue, and
* website under the name J. Crew.
Revenues for fiscal year ended January 29, 2005 were approximately
$804 million.
JOVE CORPORATION: Auditor Raises Going Concern Doubt
----------------------------------------------------
Virchow, Krause & Company, LLP, Jove Corporation's independent
auditors, raised substantial doubt about Jove's ability to
continue as a going concern. The Company reported net losses in
the three and six months ended June 30, 2005, and for each of the
years ended December 31, 2004 and 2003.
The Company's management states that there is no expectation that
Jove will generate any significant revenues for the foreseeable
future, the ability to continue as a going concern will depend, in
large part, on the Company's ability to raise additional capital
through equity or debt financing transactions. If it cannot raise
additional capital, management states that Jove Corporation may be
forced to discontinue its business.
In addition, the Company's strategic investments and other capital
assets are illiquid and Jove may not be able to sell them in a
timely manner, or for an amount of proceeds that would enable the
Company to continue its operations as currently planned.
The company's balance sheet dated June 30, 2005, shows
approximately $1.5 million in assets and an accumulated deficit
of $29.7 million.
For the six months ended June 30, 2005, the Company recorded total
revenues of $68,683 and reported a net loss of $282,154. These
amounts may be compared with the total revenue of $20,866 for the
six months ended June 30, 2004, and the net loss in those six
months of $340,467. The higher revenue in the 2005 period
reflects a one-time gain on the sale of an investment of $15,000
and a $20,000 forfeited deposit on the sale of a real estate
investment.
Jove's cash balance decreased from $89,750 at December 31, 2004 to
$48,983 at June 30, 2005 and its current liabilities increased
from $1,153,572 at December 31, 2004 to $1,274,612 at June 30,
2005 as a result of an increase in accounts payable and accrued
expenses.
In December 2004, Jove Corporation acquired West Pier Corporation,
Michigan Business Development Company, or "MBDC," in order to
obtain the rights to certain developmental software. During 2004,
Jove also acquired two other small companies and made strategic
investments in other companies in order to obtain certain rights
in other resources that the Company's management believes will be
useful in commercializing the developmental software. Jove
Corporation is currently focusing its resources on commercializing
the developmental software and developing a network for Internet-
based payments that will be supported by major banking
institutions.
Virchow Krause Resigns
On August 16, 2005, Virchow Krause informed the Company of its
decision not to stand for re-election as the Company's independent
public accounting firm for the fiscal year ending December 31,
2005. As a result, Virchow Krause's relationship with the Company
will end once it completes its review of the Company's
consolidated financial statements for the quarter ending Sept. 30,
2005.
Based in Berkley, Michigan, Jove Corporation engages in the
development and commercialization of the developmental software
for the network supported by major banking institutions. The
Company owns 100% interest in Innovative Business Systems, LLC, an
approved IBM software development partner. In addition, it has
27.4% interest in MessageWay Solutions, Inc., which provides
middleware software solutions that enable user companies to
communicate with their customers' and suppliers' database and
software applications.
KEYSTONE CONSOLIDATED: Court Approves Midco Settlement
------------------------------------------------------
The Hon. Susan V. Kelley of the U.S. Bankruptcy Court for the
Eastern District of Wisconsin approved the compromise and
settlement agreement resolving all issues related to claims filed
by the Midco Claimants against Sherman Wire Company, fka Desoto,
Inc., and its debtor-affiliates. Sherman Wire is a debtor in the
jointly administered bankruptcy cases of Keystone Consolidated
Industries, Inc., and its affiliates.
Midco's claims relate to two industrial waste recycling storage
and disposal operation sites in Gary, Indiana. The Debtors are
alleged to be responsible for dumping waste containing hazardous
substances on these sites.
Pursuant to the settlement agreement, the Bankruptcy Court allows
Midco's claims as a Class B-4 General Unsecured Claim totaling
$1.1 million.
The Midco Claimants had originally filed claims in excess of $150
million against Keystone Consolidated and Sherman Wire. In Jan.
2005, the Bankruptcy Court approved a stipulation between the
Debtors and Midco disallowing all claims related to the sites,
except for two general unsecured claims in excess of $2 million
each. Pursuant to the settlement agreement, only $1.1 million of
these claims is allowed by the Bankruptcy Court.
In exchange for the recognition of their claims, the Midco
Claimants consent to assume all of Sherman Wire's remaining
obligations to the United States of America and to the State of
Indiana with regard to the superfund sites.
Sherman Wire also agrees to surrender its rights over funds held
by the Midco Sites Trust, including any funds received from
Insilco Corporation. The Midco Sites Trust, maintained by JP
Morgan Trust Company, was set up to guarantee the clean up of the
Indiana superfund sites.
A copy of the Midco Compromise and Settlement Agreement is
available for a fee at:
http://www.researcharchives.com/bin/download?id=050921222131
Headquartered in Dallas, Texas, Keystone Consolidated Industries,
Inc., makes carbon steel rod, fabricated wire products, including
fencing, barbed wire, welded wire and woven wire mesh for the
agricultural, construction and do-it-yourself markets. The
Company and its debtor-affiliates filed for chapter 11 protection
on February 26, 2004, (Bankr. E.D. Wisc. Case No. 04-22422). The
case is jointly administered under E.D. Wisc. Case No. 04-22421.
Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., and David
L. Eaton, Esq., at Kirkland & Ellis LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $196,953,000 in total
assets and $365,312,000 in total debts. The Bankruptcy Court
confirmed the Debtors' Third Amended Joint Plan of Reorganization
on Aug. 10, 2005 and the Debtor emerged from bankruptcy protection
on Aug. 31, 2005.
KRISPY KREME: Court Extends KremeKo's CCAA Protection to Oct. 21
----------------------------------------------------------------
The Ontario Superior Court of Justice extended KremeKo, Inc.'s
protection under the Companies' Creditors Arrangement Act through
Oct. 21, 2005. The extension will permit KremeKo and Krispy Kreme
Doughnut Corporation to:
-- conclude their discussions and negotiations with GE Canada
and the Bank of Nova Scotia;
-- finalize a Restructuring Plan; and
-- continue KremeKo's efforts to restructure without
disruption.
The CCAA stay expired on May 13, 2005, and was subsequently
extended until Sept. 16, 2005, to allow the Company to
restructure. Although its efforts to sell all or part of its
assets to a third party were unsuccessful, KremeKo and Krispy
Kreme continued negotiations with the secured lenders.
GE Canada Collateral
As reported in the Troubled Company Reporter on Aug. 22, the Court
partially lifted KremeKo's stay of proceedings to allow GE Canada
to take possession of the collateral pledged by the Company with
respect to the Hillcrest store. The remaining security held by GE
Canada relates to the Heartland store which KremeKo continues to
operate. Negotiations between KremeKo, Krispy Kreme, and GE
Canada regarding KremeKo's indebtedness to GE Canada are
continuing.
Krispy Kreme became KremeKo's largest creditor following its
purchase of KremeKo's indebtedness owed to BNS on Aug. 30.
KremeKo now owes Krispy Kreme $23 million claim of which
$14 million is secured.
Restructuring Plan
Robert Pajor, KremeKo's Chief Restructuring Officer, proposes that
a new wholly owned Canadian subsidiary of Krispy Kreme acquire
KremeKo's assets for the purpose of continuing the Krispy Kreme
business in Canada.
The proposal, Mr. Pajor says, is at a preliminary stage of
development and may be modified to address tax or other issues as
they arise. KremeKo intends to finalize the Restructuring Plan
during the Stay Period and to seek approval of the Plan from the
Court.
In the event that KremeKo and Krispy Kreme are unable to reach a
settlement with GE Canada regarding the outstanding indebtedness
owed to GE, the Company intends to pursue the Restructuring Plan
without the Heartland store assets which are pledged as security
to GE.
DIP Loan
On Sept. 15, 2005, KremeKo amended a term sheet with Krispy Kreme
allowing the Company to borrow a maximum of CDN$1.5 million in
three tranches of CDN$500,000 each. The availability of the
tranches under the Amended Term Sheet is as follows:
Tranche 1 - Available and committed from the beginning of the
CCAA proceedings until Aug. 5, 2005, or any later
date as may be agreed to from time to time between
Krispy Kreme and KremeKo;
Tranche 2 - Available and committed from the Tranche 1
Termination Date to the Maturity Date; and
Tranche 3 - Available on the same basis as Tranche 2, although
not as a committed facility but rather at Krispy
Kreme's sole option.
The Amended Term Sheet includes a waiver of a payment default
following the Company's failure to remit payments for royalties
and the purchase of goods to Krispy Kreme due during the weeks
ended Sept. 4 and 11, 2005. The Term Sheet also includes a waiver
of the other previous events of default that occurred during the
Company's CCAA proceedings.
KremeKo projects negative cash flows for the six-week period
ending Oct. 23, 2005:
KREMEKO, INC.
Revised Cash Flow Forecast
For the Six-Week Period Ending Oct. 23, 2005
Receipts $2,147,000
Disbursements 2,273,000
----------
Net Cash Flow ($126,000)
Opening Cash Balance 486,000
----------
Closing Cash Balance ($410,000)
The Revised Cash Flow Forecast indicate that KremeKo expects to
have negative cash flow of approximately $126,000 through Oct. 23,
2005, and, consequently, will require additional DIP funds.
Krispy Kreme has confirmed that it will continue to fund KremeKo's
operations through the end of the stay period.
Advances under the DIP facility are repayable on the date which is
the earliest of:
* Oct. 21, 2005;
* the completion of the sale of all or substantially all of
KremeKo's assets;
* the occurrence of an event of default; and
* other date as Krispy Kreme may agree to.
As of Sept. 15, 2005, KremeKo has drawn $850,000 in DIP advances
which comprised of $500,000 from the first tranche and $350,000
from the second tranche.
KremeKo, Inc., a Krispy Kreme Doughnuts, Inc. franchisee,
filed an application with the Ontario Superior Court of Justice
to restructure under the Companies' Creditors Arrangement Act, on
Apr. 15, 2005. Pursuant to the Court's Initial Order, Ernst &
Young Inc. was appointed as Monitor in KremeKo's CCAA proceedings.
Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme is
a leading branded specialty retailer of premium quality doughnuts,
including the Company's signature Hot Original Glazed. Krispy
Kreme currently operates approximately 400 stores in 45 U.S.
states, Australia, Canada, Mexico, the Republic of South Korea and
the United Kingdom. Krispy Kreme can be found on the World Wide
Web at http://www.krispykreme.com/
LOGAN INTERNATIONAL: Wants Hallman & Dretke as Special Counsel
--------------------------------------------------------------
Logan International II LLC and its debtor-affiliate ask the U.S.
Bankruptcy Court for the District of Oregon for permission to
employ Hallman & Dretke as its special counsel.
The Debtors tell the Court that Hallamn & Dretke will represent
them for the limited purpose of handling all remaining matter,
including appeals in the Oregon District Court regarding the
"Tiegs matters" which concern various fraud, breach of contract,
guaranty and foreclosure claims. The Debtors say that Hallman &
Dretke has represented them in the "Tiegs matters" since Feb.
2003.
Contingent Fee Agreement
The Debtors disclose that the Firm will be paid thru a contingent
fee agreement. Under the agreement, the Debtors say that Hallman
& Dretke will be paid:
(a) 50% of any recovery if the Tiegs matters are tried or
arbitrated;
(b) by the hour for any Tieg matters settled in advance of
trial or arbitration. The Debtors tell the court that the
rate will be $300 per hour for Eugene Hallman, Esq. and
150% of the attorney's hourly rate if the attorney is
other than Mr. Hallman; and
The Debtors further disclose that should Hallman & Dretke's
services be terminated before the cases reach a resolution, the
fees incurred by the Firm will become owing under the agreement.
The Debtors tell the Court that under the agreement, the Debtors
must maintain a client trust account for the purpose of paying
expenses in the Tiegs matters. The Debtors say that the trust
account was established with two initial payments of $25,000 and
has been replenished periodically as the fund is depleted. The
Debtors further tell the Court that the current balance of the
account is $7,135.
To the best of the Debtors' knowledge, the Firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Irrigon, Oregon, Logan International II LLC --
http://www.loganinternational.com/-- is a manufacturer and
wholesaler of frozen French fries. The Debtor and its debtor-
affiliates filed for chapter 11 protection on January 18, 2005
(Bankr. D. Ore. Lead Case No. 05-38286). Leon Simson, Esq., at
Ball Janik LLP represents the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they estimated between $10 million to $50 million in
assets and $10 million to $50 million in debts.
MARGUERITE HOLLIDAY: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Marguerite Holliday
383 Wilson Street
West Hempstead, New York 11552-1934
Bankruptcy Case No.: 05-86547
Type of Business: The Debtor owns Holmar Nursing Agency, Inc.,
which filed for bankruptcy protection on
Nov. 18, 2002 (Bankr. E.D.N.Y. Case No.
02-24654)(Duberstein, J.).
Chapter 11 Petition Date: September 21, 2005
Court: Eastern District of New York (Central Islip)
Debtor's Counsel: Anthony F. Giuliano, Esq.
Pryor & Mandelup, LLP
675 Old Country Road
Westbury, New York 11590
Tel: (516) 997-0999
Fax: (516) 333-7333
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service Taxes $2,600,000
Special Procedures Function
625 Fulton Street
10 Metrotech Center
Brooklyn, NY 11201
New York State Taxes $1,500,000
Department of Taxation & Finance
Queens District Office 8002
Kew Gardens Road
Kew Gardens, NY 11415
Mayo Clinic Jacksonville Medical Bill $7,880
4500 San Pablo Road
Jacksonville, FL 32224
North Shore University Hospital Medical Bill $900
P.O. Box 4318
Manhasset, NY 11030
Mayo Clinic Jacksonville Medical Bill $649
South Nassau Communities Medical Bill $523
Hospital
Dr. Mori, Bean, Brooks Medical Bill $448
c/o Medical Consumer Counseling
New York University Medical Bill $430
Department of Radiology
Quest Lab Medical Bill $412
c/o Credit Collection Services
New York University Medical Bill $389
Hospitals Center
Jacksonville Emergency Medical Bill $306
Consultants
c/o Recovery Specialist Inc.
City of Jacksonville Medical Bill $295
Fire Rescue
City of Jacksonville Medical Bill $275
Fire Rescue
North Shore Health System Medical Bill $200
Hackensack University Medical Bill $182
Medical Center
c/o Community Collections, Inc.
Ameripath Florida, Inc., LPJA Medical Bill $180
Hackensack University Med Medical Bill $135
Center Lab
Belfort Emergency Physicians Medical Bill $119
Mercy Medical Center Radiology Medical Bill $105
Hackensack Radiology Group PA Medical Bill $101
MCI INC: Appoints Members to MCI-Verizon Merger Transition Team
---------------------------------------------------------------
In a letter to MCI Inc.'s employees, Michael Capellas, the
Company's President and CEO, disclosed the appointment of an
MCI-Verizon Merger Transition Team, composed of an Executive
Steering Committee and a Transition Team.
The Executive Steering Committee, consisting of:
* Ivan Seidenberg, Verizon's CEO;
* Verizon's President, Lawrence Babbio; and
* Michael Capellas, MCI's CEO;
will oversee the overall integration effort.
The Transition Team, reporting to the Executive Steering
Committee, will develop the go-to-market strategy and the
operational plan designed to achieve those marketing objectives
and to realize the operational synergies promised by the merger.
Leading the Transition Team will be three Verizon executives:
* John Killian, Senior Vice President and Chief Financial
Officer of Verizon Domestic Telecom, who will serve as chair
of the Transition Team.
* Francis Shammo, President - West Area for Verizon Wireless,
will be responsible for developing the financial integration
plan and establishing appropriate control mechanisms for the
merged organization.
* Randy Milch, Senior Vice President and Deputy General Counsel
at Verizon Domestic Telecom, will be responsible for planning
the integration of legal activity functions for the combined
businesses.
They will be supported by these initial members of the Transition
Team who will assist in the development of marketing and network
strategies:
* Wayne Huyard, President of US Sales and Services -- MCI
* Fred Briggs, President of Operations and Technology -- MCI
* Jonathan Crane, EVP and Chief Strategy Officer -- MCI
* Mark Wegleitner, Senior Vice President Technology -- Verizon
* Veronica Pellizzi, Senior Vice President Enterprise Sales --
Verizon
* Ed McGuinness, Senior Vice President Enterprise Marketing -
Verizon
Additional representatives will be named as the Transition Team
initiates planning activities in other areas. The Executive
Steering Committee intends to communicate final personnel
announcements in the upcoming months.
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.
MCI INC: FCC May Okay $8.5B Verizon Deal as DoJ Raises Issues
-------------------------------------------------------------
The Wall Street Journal reports that Federal Communications
Commission Chairman Kevin Martin is reportedly pressing for the
approval of Verizon Communications Inc.'s acquisition of:
* MCI Inc. for $8.5 billion; and
* SBC Communications for $16 billion.
On the other hand, the Department of Justice has concluded that
the companies must sell some assets to preserve competition. The
companies are still negotiating with anti-trust enforcers on this
matter.
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 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.
MEI LLC: Can Continue Using MAK's Cash Collateral Until June 17
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana
gave MEI, LLC, continued access to MAK Energy, LLC's Cash
Collateral until June 17, 2006.
Pre-Petition Debt & Cash Collateral Use
The Debtor owes MAK Energy approximately $4,250,025. By virtue of
that indebtedness, MAK Energy holds a secured and valid
enforceable and non-avoidable, first priority liens and security
interests over a majority of the Debtor's property.
The Debtor will use the Cash Collateral for the orderly
continuation of the operation of its business, to pay employees,
to maintain business relationships and to satisfy other working
capital needs.
MAK Energy has consented to the Debtor's use of the Cash
Collateral.
MAK Energy's consent for the Debtor's use of the Cash Collateral
is pursuant on the conditions that:
1) the Cash Collateral will only be used in the ordinary course
of the Debtor's operations and for its post-petition
obligations;
2) the Debtor will submit a monthly proposed budget in advance
of each month, and that proposed budget must be reasonably
acceptable to MAK;
3) the Debtor in emergency may deviate from the monthly budget,
but the Debtor must immediately notify MAK in writing about
that deviation; and
4) in the event that MAK objects to any budget item or
deviation from the monthly budget as unreasonable, it may
file an objection provided that MAK serves the objection
only to the Debtor, the U.S. Trustee and the intervenors of
record.
As adequate protection for its interests, MAK Energy is granted a
perfected first priority security interest in the Debtor's post-
petition rent, profit and royalty income without the need to
record, file or perfect any document or instrument evidencing the
Debtor's post-petition rent, profit and royalty income.
Headquartered in Evansville, Indiana, MEI, LLC is a real estate
developer. The Company filed for chapter 11 protection on
June 17, 2005 (Bankr. S.D. Ind. Case No. 05-71351). Adria S.
Price, Esq., at Price & Associates, LLC, represents the Debtor.
When the Debtor filed for protection from its creditors, it
estimated assets of $10 million to $50 million and debts of $1
million to $10 million.
MEI LLC: Want Court Approval of Madison Capital DIP Financing Pact
------------------------------------------------------------------
MEI, LLC asks the U.S. Bankruptcy Court for the Southern District
of Indiana for authority to obtain post-petition financing from
Madison Capital Company, LLC on an unsecured superpriority
administrative expense basis and to approve the terms and
conditions of the DIP Financing Facility Agreement that will
govern the DIP financing.
The Debtor and Madison Capital entered into a DIP Financing
Facility that provides for the Debtor to borrow up to a maximum
amount of $300,000 from Madison Capital.
Under that agreement, upon the Court's entry of an interim order
approving the DIP Facility, Madison will lend the Debtor up to a
maximum amount of $57,000 on an interim basis prior to the Court's
entry of a final order. Upon the entry of a final order approving
the DIP Facility, Madison will immediately provide the Debtor with
an additional amount of $185,000.
The Debtor will use the proceeds of the DIP loan to meet its
immediate cash needs for its operations and business and to have
sufficient liquidity to fund a plan of reorganization which will
provide for payment in full of all creditors in its chapter 11
case.
The Debtor's proposed use of the proceeds of the DIP loan is in
accordance with a three-month Budget covering the period from
September 2005 up to November 2005, submitted by the Debtor to the
Court for its approval.
A full-text copy of the Budget is available for free at:
http://bankrupt.com/misc/MEILLCDIPFinancingBudget.pdf
Summary of Terms & Conditions
of DIP Financing Facility
Under the DIP Facility:
1) the Debtor will pay Madison 2% of any advances made on the
DIP Facility at the those advances are made and all amounts
outstanding under the DIP Facility will bear interest at the
per annum rate of 13% of the existing indebtedness as of the
date of each advance under the DIP Facility;
2) all principal, accrued interest and all charges, fees
and expenses incurred by Madison in connection with the DIP
Facility are required to be repaid in full, unless agreed
to by Madison, on the earlier to occur of a date that is
12 months from the initial advance or confirmation of a
chapter 11 plan;
3) all of Madison's fees and expenses incurred in connection
with the DIP Facility and its due diligence in connection
with a possible funding of the Debtor's plan of
reorganization, including third-party report fees and fees
and expenses of counsel in connection with the DIP Facility
will be entitled to superpriority administrative expense
treatment; and
4) Madison will be entitled to a $100,000 Break-up Fee in the
event that Madison completes its due diligence and is
prepared to fund the Debtor's chapter 11 plan, but the
Debtor chooses to accept a financing proposal from an entity
not related to Madison.
Headquartered in Evansville, Indiana, MEI, LLC is a real estate
developer. The Company filed for chapter 11 protection on
June 17, 2005 (Bankr. S.D. Ind. Case No. 05-71351). Adria S.
Price, Esq., at Price & Associates, LLC, represents the Debtor.
When the Debtor filed for protection from its creditors, it
estimated assets of $10 million to $50 million and debts of $1
million to $10 million.
METABOLIFE INT'L: IdeaSphere Terminates Asset Purchase Agreement
----------------------------------------------------------------
IdeaSphere, Inc., owner of the Twinlab, Nature's Herbs and Alvita
Teas brands and Rebus Publishing, told the U.S. Bankruptcy Court
for the Southern District of California that it has invoked its
right to terminate the asset purchase agreement filed earlier this
year to acquire certain assets of Metabolife International Inc., a
maker of diet and nutritional supplements.
IdeaSphere signed an asset purchase agreement on July 1 to acquire
assets of Metabolife, which is in Chapter 11 bankruptcy. However,
the asset purchase agreement included provisions requiring
Metabolife to operate the business in the ordinary course during
the bankruptcy. IdeaSphere recently discovered that Metabolife
did not meet its obligations under the agreement. Despite several
good faith attempts to negotiate with Metabolife to restructure
the agreement to reflect the current state of the business,
Metabolife consistently refused to open any such discussions, and
IdeaSphere invoked its contractual right to terminate the
agreement.
Mark Fox, president of IdeaSphere, stated that IdeaSphere
continues to be interested in acquiring the Metabolife assets if
an accord can be reached on an appropriate valuation for those
assets, which include the company's core non-ephedra brands:
Metabolife Ultra, Metabolife Complete, Metabolife Ultra Caffeine
Free and Metabolife Green Tea Formula.
"We made a premium bid for the Metabolife assets in July because
we believed they could be integrated very efficiently into our
existing structure and operations, and the products were a good
fit for our brand portfolio," said Mr. Fox. "However, because
Metabolife has not operated its business consistent with past
practices as required by the agreement, we can no longer justify
the original bid, as the value of those assets has diminished
considerably over the past several months."
In correspondence to Metabolife, IdeaSphere outlined in detail
some of the specific material changes to the Metabolife business
that had forced their decision to terminate the agreement,
including:
* As much as 30 percent of Metabolife inventory expired or was
soon to expire.
* The company lost sales with clients in the mass retail
sector including Costco.
* Metabolife failed to sustain marketing and advertising to
support product sales, spending only $34,000 in July and
August rather than the $900,000 set forth in its
projections.
Mr. Fox said IdeaSphere approached Metabolife in good faith to
correct these deficiencies and protect the valuation of the
assets, but the bankrupt company would not even discuss any
changes, forcing ISI to invoke the termination clause in the
agreement.
"We remain interested in acquiring these assets, and we plan to
file a new offer to purchase the assets for $14 million, at a
price that more accurately reflects the value of the assets
today," said Mr. Fox.
IdeaSphere intends to continue to work in good faith with
Metabolife to determine if an asset purchase can be consummated,
but will also be moving forward through applicable bankruptcy
court procedure to secure the return of its $2 million deposit if
no agreement can be reached.
IdeaSphere Inc. is a purpose-built, vertically integrated health
and wellness company. It provides total wellness solutions
through its entities, which include leaders in wellness products,
content, and services. IdeaSphere's family of companies includes
leaders in wellness products, content, and services. The family
of companies includes Twinlab Corporation, Nature's Herbs and
Alvita Teas, as well as Rebus Health Media, a leading consumer
health and science content developer and publisher.
Headquartered in San Diego, California, Metabolife International,
Inc. -- http://www.metabolife.com/-- sells dietary supplements
and management products in grocery, drug and mass retail locations
nationwide. The Company and its subsidiary, Alpine Health
Products, LLC, filed for chapter 11 protection on June 30, 2005
(Jointly Administrated Under Bankr. S.D. Calif. Case No.
05-06040). David L. Osias, Esq., and Deb Riley, Esq., at Allen
Matkins Leck Gamble & Mallory LLP, represent the Debtors in their
chapter 11 cases. When the Debtors filed for protection from
their creditors, they listed $23,983,112 in total assets and
$12,214,304 in total debts.
MICROISLET INC: AMEX Accepts Compliance Plan to Continue Listing
----------------------------------------------------------------
MicroIslet, Inc. (Amex: MII) received a notice from the American
Stock Exchange advising that Amex had accepted the company's plan
of compliance submitted on Sept. 6, 2005.
MicroIslet is out of compliance with the Amex requirements of
Sections 134, 1003(d) and 1101 of the Amex Company Guide for the
company's failure to file its Form 10-QSB for the period ended
June 30, 2005, with the Securities and Exchange Commission, and
its listing is being continued pursuant to an extension granted by
Amex. The extension is predicated on the company being in
compliance with all continued listing standards, including the
filing of the company's Form 10-QSB for the period ended June 30,
2005, by Oct. 6, 2005. The company will remain listed during the
plan period, subject to periodic review of progress by Amex.
Financial Restatements
MicroIslet has been unable to file its Form 10-QSB for the period
ending June 30, 2005, due to the company's continuing analysis of
its accounting for warrants issued to service providers in 2004.
The company disclosed that as a result of errors in the accounting
treatment for certain non-cash expenses relating to these
warrants, a restatement of the financial statements for the fiscal
year ended Dec. 31, 2004, and the first quarter of 2005 is
required. MicroIslet is devoting substantial resources and
working with its outside auditors to complete and file the Form
10-QSB for the period ended June 30, 2005, and the restatements
discussed above as soon as reasonably practicable and to restore
its compliance with the Amex requirements.
MicroIslet, Inc. -- http://www.microislet.com/-- is a
biotechnology company engaged in the research, development, and
commercialization of patented technologies in the field of
transplantation therapy for people with insulin-dependent
diabetes. MicroIslet's patented islet transplantation technology
includes methods for isolating, culturing, cryopreservation, and
immuno-protection (microencapsulation) of islet cells. MicroIslet
is working to develop and commercialize a first product, called
MicroIslet-P(TM), a microencapsulated porcine islet cell
suspension that will be used for transplantation in patients with
insulin-dependent diabetes.
NEIMAN MARCUS: Moody's Rates $575 Million Guaranteed Notes at B3
----------------------------------------------------------------
Moody's Investors Service assigned ratings with a stable outlook
to the new long term debt that will finance the acquisition of
Neiman Marcus Group, Inc. by private equity funds sponsored by:
* TPG Advisors III, Inc.,
* TPG Advisors IV, Inc.,
* Warburg Pincus & Co.,
* Warburg Pincus LLC, and
* Warburg Pincus Partners LLC;
lowered the ratings of the company's legacy debt, leaving the
rating of the 7.125% debentures on review for further possible
downgrade until the security interest has been perfected; and
assigned a Speculative Grade Liquidity Rating of SGL-2.
The rating actions are based on the expected significant increase
in leverage, deterioration in cash flow metrics and reduced
financial flexibility following the completion of the acquisition,
but also take into account Neiman's strong franchise as a high-end
department store and its track record of good operating
performance.
Ratings assigned:
* Corporate Family Rating at B1
* $1 billion senior secured guaranteed term loan at B1
* $850 million senior secured guaranteed notes to be issued
under Rule 144A at B1
* $750 million senior unsecured guaranteed PIK/cash notes to be
issued under Rule 144A at B2
* $575 million senior subordinated unsecured guaranteed notes
to be issued under Rule 144A at B3
* Speculative Grade Liquidity Rating at SGL-2
Ratings downgraded and to be withdrawn:
* 6.65% senior unsecured notes due 2008, to be repaid, to B2
from Baa2
* Senior unsecured shelf to (P)B2 from (P)Baa2
Ratings downgraded, and kept on review for possible downgrade:
* 7.125% debentures due 2028 to B1 from Baa2
Neiman is being sold to the Sponsors for approximately $5.47
billion plus the assumption of about $125 million of the company's
existing debt. The transaction is expected to be completed in
October 2005. Neiman will be owned by Newton Acquisition, Inc.
which in turn will be owned by Newton Holding, LLC. Sponsors'
equity of approximately $1.47 billion will be contributed to
Newton Holding, LLC as common stock. Funding at closing will
consist of approximately $1.47 billion in equity and nearly $3.18
billion in new long-term debt. Moody's expects that any drawings
under the company's unrated $600 million asset backed bank
revolving credit agreement are likely to finance seasonal working
capital needs.
Neiman's ratings incorporate the expected significant
deterioration in credit metrics following its leveraged buyout,
with debt to EBITDA (based on Moody's standard analytic
adjustments) expected to exceed 6 times at fiscal year end July
2006. The ratings also reflect the company's prominence in the
high-end department store/specialty store segments and its
consistent execution and improving operating profitability despite
the intense competition at retail. With Neiman's current senior
management to remain, Moody's anticipates that there will be no
material changes in critical elements of the company's operations,
including merchandising, customer service and shopping
environment.
However, the proposed sale of Neiman to the Sponsors will greatly
increase the company's currently moderate leverage and cause
significant deterioration in other key credit metrics. Free cash
flow measures are especially limited -- free cash flow to debt is
unlikely to reach 4% at fiscal year end July 2006, in Moody's
view. To generate free cash flow for debt reduction, the company
must grow revenues robustly post-sale and, just as important,
continue to improve current profit margins -- already at a high
level.
Moody's believes that refinancing debt issues at their maturity is
likely to be necessary. The loss of much of the company's
historical financial flexibility is a major credit negative given
that Neiman operates in a cyclical and seasonal industry subject
to fashion risk. The proposed transaction will leave Neiman with
little room to accelerate capital expenditure spending or to
rebound from a recession, for example. The company's high service
standards, which are a key element in its business model, preclude
aggressive cost cutting as a source of funding. Yet, with this
degree of leverage, management may be under much greater pressure
than in the past to trim costs and will face the significant, new
challenge of finding a workable balance between belt-tightening
and maintaining sufficiently high service levels to meet the
demands of its affluent customer base.
Neiman is the leading high-end department/specialty chain, through
its:
* 35 upscale Neiman Marcus stores,
* 2 Bergdorf Goodman stores,
* 17 clearance centers, and
* direct retail business.
The company's stores are somewhat concentrated in:
* Texas,
* the West,
* the Midwest, and
* the Northeast
to serve its affluent customer base.
Neiman targets the wealthiest consumers by offering carefully
chosen:
* couture,
* designer and bridge apparel,
* jewelry, and
* accessories.
While Neiman has no guaranteed supply sources, its prestige and
ability to sell at full retail price encourage many designers to
introduce new products in its stores. The company's sales
associates, whose compensation is heavily commission-based,
provide superior service. Neiman quite appropriately protects its
cachet by carefully controlling its expansion and by not
soliciting lower income consumers. Consequently, its store base
is small compared to other department and specialty store chains,
and its ability to grow physically is limited. Service is
exceptional, merchandising appropriate, and execution consistent.
The identification and prediction of demand trends may be
marginally more difficult for Neiman than for moderate department
stores, because Neiman's loyal customers are likely to be more
fashion forward. Maintaining this high level of execution will be
significantly more challenging with the very substantial increase
in leverage. Management will have to balance pressure to trim
unnecessary costs in order to meet significant debt service
obligations and to reduce leverage against the need to maintain
spending at an appropriate level in order to meet the demanding
expectations of Neiman's affluent customer base.
Given its upscale customers, Neiman's sales growth is generally
solid. However, Neiman is not immune to recessions -- comparable
store sales were negative from the last half of calendar 2001
through about the first half of calendar 2002. During that
period, Neiman did not move downscale to stimulate sales. Since
then, 'comps' have been positive in almost every month, and often
well exceed those of other department stores, a function of
improved consumer confidence, a desire for fashion, and the
financial wherewithal of Neiman's upscale customer base. Neiman's
profit margins have also steadily improved since the recession,
and are approaching the levels of more highly rated retailers.
Moody's anticipates that the company, despite the proposed very
substantial increase in leverage, will internally fund a capital
expenditure budget in excess of minimal maintenance expenses to
maintain the high quality store environment that appeals to its
target customers.
The stable rating outlook reflects Moody's expectation the Neiman
will grow comparable store sales at the same pace or faster than
department store peers, that margins will continue to improve and
that all free cash flow will be applied to debt reduction.
Given the magnitude of this rating action and the company's highly
leveraged capital structure, an upgrade in the intermediate term
is unlikely. Over the longer term, an upgrade would require:
* consistently positive comparable store sales;
* continued margin improvement;
* a significant reduction in leverage such that debt to EBITDA
(based on Moody's standard analytic adjustments) is below
5 times; and
* more robust free cash flow generation such that free cash
flow to debt is approaching 10%.
Ratings would be pressured:
* if comparable store sales fall or if margins fail to continue
to improve;
* if debt to EBITDA rises above 6.5 times; or
* if already thin free cash flow generation diminishes such
that free cash flow to debt falls below 3%.
All funded debt and bank facilities will be the obligation of
Neiman. Moody's assumes that future funded debt, if any, will
also be centralized at Neiman. The new $1 billion senior secured
guaranteed term loan due in 7.5 years and the $850 million of
senior secured guaranteed notes due 2013 will be secured by a
first priority interest in property, plant and equipment and other
non-current assets and by a second priority interest in current
assets. Neiman will also issue $750 million of senior unsecured
guaranteed PIK/Cash notes due 2015 and $575 million of senior
subordinated guaranteed unsecured notes due 2015.
All new debt issues will be guaranteed by Neiman's wholly owned
domestic subsidiaries and by immediate parent Newton Acquisition.
Moody's understands that the new $850 million senior secured
guaranteed notes, the $750 million senior unsecured guaranteed
notes and the $575 million senior subordinated unsecured
guaranteed notes will be offered and sold privately without
registration under the Securities Act of 1933, under circumstances
reasonably designed to preclude a distribution thereof in
violation of the Act.
Moody's also understands that the issues have been structured to
permit resale under Rule 144A. The legacy $125 million 6.65%
debentures due in 2008 will be called for redemption, and its
rating will be withdrawn when redeemed. The legacy $125 million
7.125% debentures due in 2028 will remain outstanding and will
share in the first lien on certain of the collateral that secures
the senior secured term loan and senior secured public debt.
The B1 rating on the 7.125% debentures incorporates the expected
receipt of security, but the ratings remain on review for possible
downgrade to cover the unlikely event that the security is not
forthcoming. Notching on Neiman's long-term debt reflects the
fact that a first lien on Neiman's most liquid assets -- primarily
inventory -- and a second lien on non-current assets will secure
an unrated senior secured guaranteed $600 million Asset Backed
Revolving Credit. Moody's notes that the enterprise value of
Neiman Marcus at a reasonable multiple of 6.3 times reported
EBITDA of approximately $520 million for the fiscal year ended
July 30, 2005 fully covers anticipated funded debt at closing.
The Speculative Grade Liquidity Rating of SGL-2 reflects the
company's ability over the next 12 months to fund major cash uses
internally, but with modest cushion, and its access to the unrated
$600 million asset backed senior secured bank revolving credit
facility that will well exceed seasonal working capital needs of
about $165 million. Neiman's liquidity profile is characterized
by the expectation that the company will further improve operating
margins that are already at a high level. Its new asset backed
revolving credit facility, secured primarily by the company's
upscale inventory, is likely to be fully available to be drawn at
closing. The cushion of annual free cash flow can be enhanced
should Neiman exercise its ability to pay interest in kind instead
of in cash through 2010 on the new $750 million senior unsecured
guaranteed PIK/cash notes and/or reduce capital expenditures to
maintenance levels. However, specified percentages of excess cash
flow as defined must prepay the $1 billion term loan. Neiman has
limited alternative sources of liquidity since all its domestic
assets will be pledged to secure its debt.
Headquartered in Dallas, The Neiman Marcus Group, Inc. operates
Neiman Marcus and Bergdorf Goodman stores, in addition to both
print and online retail businesses. Revenues for the fiscal year
ended July 30, 2005 exceeded $3.8 billion.
NEW WORLD: Court Approves Financial Balloting Retention
-------------------------------------------------------
The Hon. Mary D. France of the U.S. Bankruptcy Court for the
Middle District of Pennsylvania gave New World Pasta Company and
its debtor-affiliates permission to retain Financial Balloting
Group LLC as their solicitation, balloting, and tabulation agent.
As reported in the Troubled Company Reporter, Financial Balloting
will assist the Debtors in connection with the solicitation of
votes on their Plan, as well as the issues attendant thereto.
Logan & Company, Inc., will continue to serve as the Debtors'
claims and general noticing agent. The Debtors believe that this
division of labor will eliminate duplication of work.
The current hourly rates of Financial Balloting's professionals
who will work in this engagement are:
Designation Hourly Rate
----------- -----------
Executive Director $375
Director $325
Senior Case Manager $275
Case Manager $200
Programmer II $195
Programmer I $165
The Firm discloses that it will receive a $8,500 reduced retainer.
The Firm will also charge:
-- $2,000 for 250 telephone calls within a 30-day solicitation
period;
-- $1,000 for setting up the website and an additional $100 to
$150 monthly hosting charge; and
-- $1,000 for setting up of each tabulation element and
additional $100 per hour for the tabulation of ballots.
The Debtors believe that Financial Balloting Group LLC is
disinterested as that term is defined in Section 101(14) of the
U.S. Bankruptcy Code.
Headquartered in Harrisburg, Pennsylvania, New World Pasta Company
-- http://www.nwpasta.com/-- is a pasta manufacturer in the
United States. The Company, along with its debtor-affiliates,
filed for chapter 11 protection (Bankr. M.D. Penn. Case No. 04-
02817) on May 10, 2004. Eric L. Brossman, Esq., and Robert Bein,
Esq., at Saul Ewing LLP, in Harrisburg, serve as the Debtors'
local counsel. Bonnie Steingart, Esq., and Vivek Melwani, Esq.,
at Fried, Frank, Harris, Shriver & Jacobson LLP, represent the
Creditors' Committee. In its latest Form 10-Q for the period
ended June 29, 2002, New World Pasta reported $445,579,000 in
total assets and $451,816,000 in total liabilities.
NEW WORLD: Wants to Reject 128 Leases and Contracts
---------------------------------------------------
New World Pasta Company and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Middle District Of Pennsylvania for
authority to reject 128 executory contracts and unexpired non-
residential real property leases.
The Debtors' counsel, Robert J. Bein, Esq., at Saul Ewing LLP,
tells the Bankruptcy Court that the proposed rejection will
advance the Debtors' reorganization and is in the best interests
of their estates.
The Debtors also ask the Court to set the supplemental bar date
for the filing of rejection damages claims 30 days following the
date of the entry of an order approving the rejection.
A list of the executory contracts and unexpired leases to be
rejected is available for free at:
http://researcharchives.com/t/s?1a9
Headquartered in Harrisburg, Pennsylvania, New World Pasta Company
-- http://www.nwpasta.com/-- is a pasta manufacturer in the
United States. The Company, along with its debtor-affiliates,
filed for chapter 11 protection (Bankr. M.D. Penn. Case No. 04-
02817) on May 10, 2004. Eric L. Brossman, Esq., and Robert Bein,
Esq., at Saul Ewing LLP, in Harrisburg, serve as the Debtors'
local counsel. Bonnie Steingart, Esq., and Vivek Melwani, Esq.,
at Fried, Frank, Harris, Shriver & Jacobson LLP, represent the
Creditors' Committee. In its latest Form 10-Q for the period
ended June 29, 2002, New World Pasta reported $445,579,000 in
total assets and $451,816,000 in total liabilities.
NEW WORLD: Wants to Save $311K Yearly by Ending Retirement Program
------------------------------------------------------------------
New World Pasta Company and its debtor-affiliates ask permission
from the U.S. Bankruptcy Court for the Middle District of
Pennsylvania to terminate retiree medical, dental and life
insurance benefits extended to the retired employees of Borden
Foods Corporation. There are approximately 191 Borden Retirees
presently receiving the retiree benefits.
New World assumed responsibility for funding the retiree benefit
program after it acquired certain assets of Borden Foods in 2001.
Pursuant to the purchase, New World agreed to maintain the
benefits until July 30, 2003. However, New World stated in the
Summary Plan Description governing the benefit program that it
expects and intends to continue funding the program indefinitely,
but reserves the right to end or amend them at any time.
Robert J. Bein, Esq., at Saul Ewing LLP, tells the Bankruptcy
Court that the retiree benefit program costs the Debtors
approximately $311,000 per year without any benefit to them or
their employees.
Mr. Bein explains that termination of the retirement program is
permitted under applicable non-bankruptcy law. The Employees
Retirement Income Security Act stipulates that an employer may
make unilateral changes to retiree benefits so long as the summary
plan description pertaining to those benefits reserved the
employer's right to modify.
Headquartered in Harrisburg, Pennsylvania, New World Pasta Company
-- http://www.nwpasta.com/-- is a pasta manufacturer in the
United States. The Company, along with its debtor-affiliates,
filed for chapter 11 protection (Bankr. M.D. Penn. Case No. 04-
02817) on May 10, 2004. Eric L. Brossman, Esq., and Robert Bein,
Esq., at Saul Ewing LLP, in Harrisburg, serve as the Debtors'
local counsel. Bonnie Steingart, Esq., and Vivek Melwani, Esq.,
at Fried, Frank, Harris, Shriver & Jacobson LLP, represent the
Creditors' Committee. In its latest Form 10-Q for the period
ended June 29, 2002, New World Pasta reported $445,579,000 in
total assets and $451,816,000 in total liabilities.
NORTHWEST AIRLINES: AMFA Says Strike Is Good for Union
------------------------------------------------------
Northwest Airlines Corp.'s employees belonging to the Aircraft
Mechanics Fraternal Association told Kyle Peterson at Reuters that
the Union believes the strike against the carrier puts them in a
better bargaining position than other labor groups whose talks
will be within the framework of chapter 11 bankruptcy.
Steve Conway, a Union representative said that as a result of the
strike, it is under no obligation to debate the terms of the
rejected collective bargaining agreement before the Court, Reuters
reports.
AMFA believes the airline really needs the experienced but
striking mechanics because their replacements can't match their
expertise, Reuters reports.
Contrary to what AMFA believes, Northwest said in reports that its
operations are basically uninterrupted because it is able to
employ temporary technicians, mechanics and cleaners.
AMFA members started striking on August 20 after a negotiation
with Northwest over labor cuts failed.
Industry experts told Reuters that other labor unions at Northwest
are in better positions because they still have contracts unlike
the employees on strike.
Northwest Airlines Corporation -- http://www.nwa.com/-- is
the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and
approximately 1,400 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. The Company and 12 affiliates filed for chapter
11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Case No.
05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq.,
at Cadwalader, Wickersham & Taft LLP in New York, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in
Washington, D.C., represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $14.4 billion in total assets and $17.9
billion in total debts.
NORTHWEST AIRLINES: Can Continue Using Cash Management System
-------------------------------------------------------------
Northwest Airlines Corporation and its debtor-affiliates sought
and obtained the U.S. Bankruptcy Court for the Southern District
of New York's authority, on an interim basis, to continue
utilizing their existing cash management system to avoid any
disruption in their business operations.
According to Neal S. Cohen, executive vice president and chief
financial officer of Northwest Airlines Corporation, the Debtors'
cash management system is designed to efficiently collect,
transfer and disburse funds generated through the Debtors'
operations and to accurately record the collections, transfers
and disbursements as they are made.
The Debtors' cash management system reduces administrative
expenses in moving funds, maintains accurate information
regarding receipts, account balances and disbursements, maintains
an efficient process for the investment of cash, and ensures
compliance with the Debtors' accounting and disbursement control
procedures. The Debtors are able to track the amounts paid to
and from each affiliated participant in the system. Thus,
although cash is generally commingled, the Debtors can trace and
identify the amounts paid to and from each affiliate.
Mr. Cohen relates that the Debtors used a centralized cash
management system, similar to those utilized by other major
corporate enterprises.
As of the Petition Date, the Debtors maintain approximately 189
bank accounts in the United States, Canada, Asia, Europe and the
Caribbean. The Debtors receive funds into various of their Bank
Accounts from different sources each day. Payment sources
include customers paying cash at airport locations, credit card
companies, travel agents, government agencies, investments,
clearinghouse settlements and interline settlements.
Funds deposited the prior day in all domestic collection accounts
are transferred into a master concentration account at U.S. Bank.
International funds, in excess of funds needed to meet near-term
obligations, are transferred into an international concentration
account, also at U.S. Bank, which sweeps daily into the master
concentration account.
Approximately $25 million to $75 million are transferred into the
master concentration account each day.
The Debtors disburse funds from the master concentration account
into, inter alia, investment accounts, payroll accounts, clearing
accounts, benefit accounts, and controlled disbursement accounts.
Through bank-automated transfers to the controlled disbursement
accounts, the Debtors satisfy their domestic payable obligations
which are made by check. International payables are generally
satisfied out of international bank accounts.
Funds not needed for disbursements or other operating
requirements are invested in accordance with the Debtors' cash
investment policy.
A diagram of the United States accounts is available for free:
http://bankrupt.com/misc/NWA_domestic_cashflow.pdf
A diagram of the international accounts is available for free:
http://bankrupt.com/misc/NWA_international_cashflow.pdf
Additionally, the Debtors obtained permission to pay any costs or
expenses associated with the maintenance of the cash management
system. The Debtors are also directed to maintain records
consistent with their prepetition practices, of transfers within
the cash management system so that postpetition transfers and
transactions will be adequately documented in, and readily
ascertainable from, their books and records, to the same extent
maintained by the Debtors before the Petition Date.
Superpriority Status on Intercompany Claims
Mr. Cohen also notes that the Debtors' cash management system
directs funds to each affiliate in accordance with its needs.
>From time to time, this may have the effect of rendering some
affiliates net lenders and some net borrowers.
To ensure that each individual Debtor and its affiliates will
not, at the expense of its creditors, fund the operations of
another entity, Judge Gropper holds that all intercompany claims
arising after the Petition Date are accorded superpriority
status, with priority over any and all administrative expenses
specified in Sections 503(b) and 507(b) of the Bankruptcy Code,
subject and subordinate only to the priorities, liens, claims and
security interests that may be granted by the Court, from time to
time.
Northwest Airlines Corporation -- http://www.nwa.com/-- is the
world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and
approximately 1,400 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. The Company and 12 affiliates filed for chapter
11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq.,
at Cadwalader, Wickersham & Taft LLP in New York, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in
Washington represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $14.4 billion in total assets and $17.9
billion in total debts. (Northwest Airlines Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NORTHWEST AIRLINES: Wants to Maintain Existing Bank Accounts
------------------------------------------------------------
The Operating Guidelines and Reporting Requirements promulgated
by the Office of the United States Trustee require that a chapter
11 debtor close its prepetition bank accounts and open new
debtor-in-possession accounts.
According to Neal S. Cohen, executive vice president and chief
financial officer of Northwest Airlines Corporation, the Debtor
and its affiliates can achieve the goals of the Operating
Guidelines without closing their existing accounts and opening new
ones.
Mr. Cohen contends that requiring the Debtors to close all
existing accounts and open new debtor-in-possession accounts
would:
(a) be costly;
(b) disrupt the Debtors' ability to satisfy postpetition
payables in a timely manner, potentially causing a loss of
trade credit and customer confidence;
(c) interfere with the efficient management of the Debtors'
cash resources; and
(d) distract Debtors' managers at a time when the business
requires their full attention.
Mr. Cohen notes that the Debtors maintain approximately 189 bank
accounts in the United States, Canada, Asia, Europe and the
Caribbean as of the Petition Date.
At the First Day Hearing on September 15, 2005, Judge Gropper
authorized the Debtors, on an interim basis, to designate,
maintain, and continue using their existing prepetition Bank
Accounts, in the names and with the account numbers existing
immediately prior to the Petition Date.
The Debtors, however, reserve the right to close some or all of
their prepetition Bank Accounts and open new debtor-in-possession
accounts.
The Debtors also obtained permission to deposit funds in and
withdraw funds from the accounts by all usual means, including,
without limitation, checks, wire transfers, and other debits, as
well as pay any ordinary course bank fees incurred postpetition
in connection with the Bank Accounts.
Mr. Cohen says the Debtors will advise all banks with whom they
have disbursement accounts not to honor checks issued prepetition,
except as authorized by the Court. By doing so, the
Debtors will achieve the goals of the Operating Guidelines: They
establish a clear demarcation between prepetition and
postpetition checks, and block the inadvertent payment of
prepetition checks, without disrupting their ongoing operations.
Northwest Airlines Corporation -- http://www.nwa.com/-- is the
world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and
approximately 1,400 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. The Company and 12 affiliates filed for chapter
11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq.,
at Cadwalader, Wickersham & Taft LLP in New York, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in
Washington represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $14.4 billion in total assets and $17.9
billion in total debts. (Northwest Airlines Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NOVO NETWORKS: Completes Recapitalization & Adopts Berliner Name
----------------------------------------------------------------
Novo Networks, Inc. (OTC Bulletin Board: BERL) completed a
recapitalization of its capital structure and changed its name to
Berliner Communications, Inc., and now trades under the symbol of
"BERL.OB".
"I am pleased that we now have completed the recapitalization and
will have a report card of our own," said Rich Berliner, CEO and
Chairman. "The hard work has paid off and we now move into a new
era in our corporate history. The transaction with Novo has given
us greater resources to move ahead and meet our sales and
profitability goals and we look forward to making it happen."
As part of its acquisition of the operations, assets and
liabilities of Berliner Communications, Inc., in February of 2005,
the holders of the Company's Series B and D Convertible Preferred
Stock along with its newly issued Series E Convertible Preferred
Stock entered into a Voting Agreement, whereby they gave Novo
their proxy to vote in their name for the approval of the filing
of two certificates of amendment to the Company's certificate of
incorporation.
The Certificates of Amendment were filed with the Delaware
Secretary of State on Sept. 16, 2005, and effected:
* Increased the aggregate number of shares that the Company
will have the authority to issue from 225,000,000 to
6,600,000,000 shares, of which 6,000,000,000 shares will he
shares of Common Stock, and 600,000,000 shares will be
shares of Preferred Stock;
* Changed its name from Novo Networks, Inc. to Berliner
Communications, Inc.;
* Amended the Certificate of Designation, Preferences and
Rights of Series B Convertible Preferred Stock to reduce the
conversion price of the Series B Convertible Preferred Stock
to $0.014018, and thereby increase the number of shares of
Common Stock issuable upon conversion of such shares of the
Series B Convertible Preferred Stock to 321,015,546;
* Amended the Certificate of Designation, Preferences and
Rights of Series D Convertible Preferred Stock to reduce the
conversion price of the Series D Convertible Preferred Stock
to $0.014018, and thereby increase the number of shares of
Common Stock issuable upon conversion of such shares of the
Series D Convertible Preferred Stock to 675,773,394;
* Provided that, upon the filing of the first Certificate of
Amendment, all shares of Series B Convertible Preferred
Stock, Series D Convertible Preferred Stock, and Series E
Convertible Preferred Stock will be automatically converted
into Common Stock;
* Effected a 1:300 reverse stock split, such that the
outstanding shares of Common Stock and Convertible Preferred
Stock will be reclassified and one new share of Common Stock
will be issued for every 300 shares of existing Common
Stock; and
* Amended the Certificate of Incorporation, such that, after
giving effect to the reverse stock split, the aggregate
number of shares that the Company will have the authority to
issue is 22,000,000 shares, of which 20,000,000 shares will
be shares of Common Stock, and 2,000,000 shares will be
shares of Preferred Stock. Subsequent to the
recapitalization and reverse stock split, the Company has
approximately 17,035,000 shares common shares outstanding.
Novo Networks, Inc., through its wholly owned subsidiary, BCI
Communications, Inc., provides wireless carriers with
comprehensive real estate site acquisition and zoning services,
radio frequency and network design and engineering, infrastructure
equipment construction and installation, radio transmission base
station modification and project management services either on an
individual basis or as a "turn-key" solution.
* * *
Going Concern Doubt
On March 17, 2005, the Company concluded negotiations with
Presidential Financial Corporation of Delaware Valley regarding
the establishment of a credit facility for BCI. A total of
$1,250,000 in financing is available under the agreement with
Presidential and approximately $119,000 had been borrowed by BCI
as of April 15, 2005. Presidential has a security interest on all
of the Berliner Assets and a guaranty from us as collateral for
the repayment of any borrowings under the credit facility.
In its Form 10-Q for the quarterly period ended March 31, 2005,
filed with the Securities and Exchange Commission, the Company
disclosed that: "BCI's failure to generate revenues sufficient to
fund its continuing operations, as well as to fund the Company's
operations, will jeopardize the Company's ability to continue as a
going concern. Due to these factors, we intend to seek
additional financing, almost immediately, from Presidential or
another lender."
OMNE STAFFING: Ch. 11 Trustee Wants to Expand Bederson Retention
----------------------------------------------------------------
Charles M. Forman, the duly appointed Chapter 11 Trustee of Omne
Staffing, Inc., and its debtor-affiliates, asks the Honorable
Rosemary Gambardella of the U.S. Bankruptcy Court for the District
of New Jersey to expand the scope of Bederson & Company, LLP's
retention.
The Court approved Bederson as the Chapter 11 Trustee's accountant
on June 25, 2004. Bederson was retained solely for the purpose of
assisting Mr. Forman in the administration of the Debtor's estate
and specifically precluded Bederson from performing any services
relating to the investigation of the Debtors' principals.
The Chapter 11 Trustee retained Wiss & Company LLP as his special
accountant and got Court approval on Aug. 2, 2004. Wiss was
retained for the purpose of investigating insiders, avoidance
actions and other projects outside the scope of work performed by
Bederson.
Sean Raquet, CPA, performed the majority of those investigative
services. Bederson recently employed Mr. Raquet.
Gail B. Cooperman at Forman, Holt & Eliades LLC tells the Court
that Bederson's retention should be expanded to permit Mr. Raquet
to continue to perform services related to the investigation of
the principals and fraudulent conveyances.
Mr. Raquet's continuing investigation, his observations,
workpapers and other documents will be segregated from Bederson's
continuing work and will not be shared with any of Bederson's
partners or employees.
Wiss will continue to serve as accountants for the primary purpose
of completing a preference claim analysis and provide accounting
support to any preference actions.
Timothy J. King, CPA, a member at Bederson & Company LLP,
discloses the hourly rates of their professionals:
Designation Hourly Rate
----------- -----------
Senior Partner $360 - $380
Partners $300 - $345
Managers $190 - $245
Senior Accountants $160 - $190
Paraprofessionals $70 - $100
Bederson & Company, LLP -- http://www.bederson.com/-- provides
financial and accounting services to individuals, small businesses
and large corporations.
The Debtors believe that Bederson & Company, LLP, is disinterested
as that term is defined in Section 101(14) of the U.S. Bankruptcy
Code.
Headquartered in Cranford, New Jersey, Omne Staffing, Inc., filed
for chapter 11 protection on April 9, 2004 (Bankr. D. N.J. Case
No. 04-22316). John K. Sherwood, Esq., at Lowenstein Sandler
represents the Debtors in their restructuring efforts. When the
Company filed for protection from their creditors, they listed
both estimated debts and assets of over $10 million. The Court
appointed Charles M. Forman as the Debtors' Chapter 11 Trustee.
Gail B. Cooperman at Forman, Holt & Eliades LLC represents the
Chapter 11 Trustee.
ORMET CORP: Louisiana Steelworkers Refuse Company's "Final" Offer
-----------------------------------------------------------------
Negotiators for the United Steelworkers' Local 14465 rejected what
Ormet Corp. has called its "last, best and final" offer with six
days remaining until their current labor agreement with the
company expires.
"Our committee from the Burnside refinery has seen first-hand that
Ormet prefers to dictate to its employees rather than negotiate
with them," said USW District 9 Director Connie Entrekin, "but
these managers need to understand that our members will not be
cowed into accepting a contract simply because Ormet calls it
'final'."
In addition to the Burnside refinery, the USW represents
approximately 1,200 members employed at the company's reduction
and rolling facilities in Hannibal, Ohio. These members have been
on strike since November of 2004.
USW District 1 Director David McCall said that USW members
employed by Ormet have learned through experience that they cannot
take anything the company says at face value.
"Ormet's credibility with our members is already strained after
the company abused the bankruptcy process to slash its commitments
to our members and retirees in Ohio," Mr. McCall said. "Time and
again, Ormet refused to consider more constructive alternatives in
Hannibal, so our committee at Burnside is wise to reject the
company's so-called 'last' offer and instead propose to continue
bargaining."
After receiving the company's offer, Ms. Entrekin urged Ormet,
which completed a Chapter 11 Bankruptcy Reorganization earlier
this year, to reconsider its hard-line approach to labor relations
with the USW and return to the bargaining table.
"Ormet's stakeholders already know that the company is worthless
without its loyal, experienced workforce," Ms. Entrekin said.
"Our members deserve a stable employer that recognizes the value
of a well-trained, highly-skilled workforce. The USW has always
sought to achieve this end, but we have long questioned
management's true intentions."
Ms. McCall said that USW members in both Louisiana and Ohio are
prepared to continue supporting each other as each fights for fair
contracts.
"All Steelworkers at all Ormet locations have long fought for
justice and dignity," Ms. McCall said, "and until all of our
members have a fair contract in place, we will continue our
struggle."
Headquartered in Wheeling, West Virginia, Ormet Corporation
-- http://www.ormet.com/-- is a fully integrated aluminum
manufacturer, providing primary metal, extrusion and thixotropic
billet, foil and flat rolled sheet and other products. The
Company and its debtor-affiliates filed for chapter 11 protection
on January 30, 2004 (Bankr. S.D. Ohio Case No. 04-51255). Adam C.
Harris, Esq., in New York, represents the Debtors in their
restructuring efforts. When the Company filed for bankruptcy
protection, it listed $50 million to $100 million in estimated
assets and more than $100 million in total debts. The Company's
chapter 11 plan was confirmed by the Court in April 2005. Under
the confirmed Plan, Ormet was authorized to break labor contracts,
which resulted in conflicts with the United Steelworkers of
America.
PIER 1: Moody's Lowers Sr. Unsec. Issuer Rating to Ba3 from Baa3
----------------------------------------------------------------
Moody's Investors Service assigned a Ba2 corporate family rating
to Pier 1 and downgraded its unsecured issuer rating to Ba3 from
Baa3, concluding a review for possible downgrade initiated in June
2005; Moody's will be withdrawing the unsecured issuer rating for
business reasons. The rating outlook is negative. The rating
action follows Pier 1's deteriorating credit metrics, triggered
by:
* a continued decline in same store sales over the last
two years; and
* Moody's expectation that same store sales will likely be slow
to rebound over the near term.
The key rating drivers for Pier 1's Ba2 rating include:
1) Business and cash flow volatility. The high dependency on
furniture sales (roughly 40%), which tends to be more
cyclical and susceptible to economic slowdowns, is a credit
weakness. On the other hand, the consistent generation of
over $1.7 billion of revenue the last three years and
through the LTM ended August 2005, and operating cash flow
of at least $140 million during this period are credit
strengths. That said, the company's continuing operating
difficulties resulted in the consumption of almost
$120 million of operating cash in the first six months of
fiscal 2006.
2) Market position. Pier 1's strong brand name and national
presence is a credit positive, although its loss of market
share to lower priced competitors is a significant credit
challenge. This loss of market share has contributed to
continuing monthly same store sales compression in each of
the past 17 months and 25 of the last 30 months.
3) Strategy execution. Pier 1's renewed focus of continually
refreshing its merchandise (roughly 75% is new each year)
and the new advertising campaign, should help increase
customer traffic. However, the new merchandising strategy
of reducing the number of SKUs but offering newer products
poses risks. It remains to be seen how successful the new
strategy will be to increase customer traffic and sales
volume.
4) Real Estate. The company's strategy of continually opening
new stores every year (47 net new stores planned for opening
in fiscal 2006) allows Pier 1 to increase its total revenue
and sustain its brand image, though its same store sales are
under significant pressure. The company's conversion of
Cargo Kids stores to Pier 1 Kids stores capitalizes on Pier
1's brand name and is considered a credit strength.
5) Financial policies. The modest amount of funded debt
($19 million outstanding), access to capital markets, lack
of any secured assets and access to an undrawn and unsecured
$125 million revolving credit facility provide sufficient
liquidity. Pier 1's propensity to repurchase shares and
issue dividends over the past few years poses financial
risk, although the company's curtailment of share
repurchases in the second quarter of fiscal 2006 and, more
importantly, its stated intent to invest most of its future
earnings for growth, moderates this risk.
6) Key ratios. Pier 1's sluggish operating performance amid
continuing same store sales compression has resulted in
deteriorating adjusted credit metrics. Of particular
concern is the company's high and increasing leverage
(increased to 6.1x in LTM ended August 2005 from 4.4x in
fiscal 2004), as measured by adjusted debt to adjusted
EBITDA and low retained cash flow to adjusted debt of 10.1%
for LTM ended August 2005. Decreasing adjusted EBIT margins
and adjusted interest coverage (EBIT/interest) are also
concerns (adjusted EBIT margin decreased to 6.4% in the LTM
ended August 2005 from 14.4% in 2004 and adjusted interest
coverage decreased to 1.1x in the LTM ended August 2005 from
2.9x in 2004). Retained cash flow is defined as cash flow
from operations less dividends but before working capital
changes.
The negative outlook reflects Moody's belief that Pier 1's
deteriorating operating performance experienced over the last two
years will be slow to recover and that the company may continue to
consume operating cash flow over the next 12 to 18 months.
Moody's expects management to attempt to recoup its lost market
share through continued development of its marketing and product
strategies.
Moody's will consider stabilizing Pier 1's ratings if operations
and cash flow generation improve through a likely combination of:
1) strong customer traffic coupled with same store sales
growth; and
2) enhanced operating metrics to previous levels (EBIT margins
around 9% to 11%, adjusted leverage of about 4.5x to 5.0x
and interest coverage in the 2.0x range).
Ratings could be further lowered if Pier 1's same store sales
decline more than expected in the remaining months of fiscal 2006
or if Pier 1 does not return to same store sales growth in fiscal
2007 and beyond. Ratings could also be lowered if:
* Pier 1's operating performance continues to decline resulting
in adjusted EBIT margins of less than 5%;
* adjusted leverage increases to 7.0x or higher; or
* adjusted interest coverage declines to about 1.0x or lower.
Finally, ratings could also be lowered if the company's operating
cash flow does not show improvement or if Pier 1 were to increase
debt levels in order to continue to grow its store base, pay
dividends or to repurchase stock.
The senior unsecured issuer rating is notched one level below the
corporate family rating to reflect the potential for effective
subordination arising from a possible future introduction of a
sizable secured revolving credit facility or other funded debt in
the capital structure.
Rating assigned:
* Corporate family rating at Ba2
Rating downgraded:
* Senior unsecured issuer rating to Ba3 from Baa3
Pier 1 is a specialty retailer, located in Forth Worth, Texas,
which operates principally through its Pier 1 Imports stores.
Sales for the LTM ended August 2005, approximated $1.9 billion.
PIONEER NATURAL: 96.9% of Senior Noteholders Tender Notes
---------------------------------------------------------
Pioneer Natural Resources Company (NYSE:PXD) reported early tender
results for its previously announced offer to purchase its 5.875%
Senior Notes due 2012 (CUSIP No. 299900 AD 2). The Tender Offer
also includes a solicitation of consents to proposed amendments to
the indenture governing the Notes.
As of 5:00 p.m., New York City time, on Thursday, Sept. 15, 2005,
Pioneer had received tenders for $188,375,000 in principal amount
of the Notes representing 96.9% of the outstanding principal
amount of the Notes. Pioneer will accept tenders of all of the
Tendered Notes.
As a result, Pioneer has received sufficient tenders of the Notes
to execute the proposed amendments. Settlement for the total early
payment of $1,061.15 for each $1,000 principal amount of Tendered
Notes, including a consent payment of $30, will be on Tuesday,
Sept. 20, 2005. Settlement will also include payment of accrued
and unpaid interest on the Tendered Notes to, but not including,
the Early Settlement Date. Pioneer will execute the proposed
amendments prior to the Early Settlement Date.
The Tender Offer expires at 12:00 midnight, New York City time, on
Thursday, Sept. 29, 2005. Holders who validly tender their Notes
and give their consent to the proposed amendments after the
Consent Date but before the Expiration Date will be entitled to
receive only the tender price, which is the Total Early Payment
less the consent payment of $30, plus accrued and unpaid interest
on Notes accepted in the Tender Offer to, but not including, the
final settlement date.
On Sept. 15, 2005, the Company paid the semiannual interest
payment on the Notes to holders of record of the Notes on
Sept. 1, 2005.
Pioneer has engaged D.F. King & Co., Inc., to act as information
agent in connection with the Tender Offer. Requests for copies of
the Offer to Purchase and Consent Solicitation Statement and
questions regarding the Tender Offer may be directed to:
D.F. King & Co., Inc.
1-800-859-8509
Pioneer has engaged Goldman, Sachs & Co. to act as dealer managers
in connection with the Tender Offer and as solicitation agent for
the consent solicitation. Questions regarding the Tender Offer
and the consent solicitation may be directed to:
Goldman, Sachs & Co.
1-800-828-3182
Pioneer Natural Resources Company -- http://www.pioneernrc.com/--
is a large independent oil and gas exploration and production
company with operations in the United States, Argentina, Canada
and Africa. Pioneer's headquarters are in Dallas, Texas.
Moody's rates Pioneer Natural's subordinated debt at Ba1 and
preferred stock at Ba2.
POTLATCH CORP: Plans to Restructure as REIT Starting January 1
--------------------------------------------------------------
Potlatch Corporation (NYSE:PCH) has approved a restructuring to
convert the company to a real estate investment trust, effective
January 1, 2006. The company expects its annual dividend, post
conversion, to be approximately $76 million, or $2.60 per share.
Potlatch also intends to issue a special, taxable dividend to
stockholders of its undistributed earnings and profits of
approximately $440-$480 million in the first quarter of 2006. In
addition, Potlatch provided information on two ongoing resource
initiatives that are expected to generate significant long-term
cash flow and earnings growth.
Under the conversion plan, income from the company's 1.5 million
acres of timberland assets will qualify for REIT tax treatment.
All of Potlatch's non-qualifying operations, including the
company's Wood Products, Pulp & Paperboard and Consumer Products
businesses, will be transferred into a wholly-owned taxable REIT
subsidiary and will continue to pay corporate level tax on
earnings.
"After carefully considering our options, our Board and management
team have concluded that placing Potlatch's timberland assets in a
tax-efficient ownership structure is the best way to unlock value
for our stockholders and better position the company for future
growth," said L. Pendleton Siegel, Potlatch's Chairman and CEO.
"Converting to a REIT structure will increase our cash flow,
facilitating a much larger annual distribution to stockholders.
It will also provide a lower cost of capital for future forestland
acquisitions, while continuing to allow us to maintain the
competitiveness of our TRS operations."
In compliance with tax rules applicable to REIT conversions, the
company intends to issue a special, taxable dividend to
stockholders of its undistributed earnings and profits of
approximately $440-$480 million. Stockholders will have the
opportunity to elect to receive this one-time dividend in cash,
stock or a combination of both, with the aggregate cash payment by
the company to be capped at 20 percent. The company expects the
E&P distribution to occur during the first quarter of 2006.
The company expects to pay its first regular quarterly dividend as
a REIT during the first quarter of 2006, consistent with its
normal quarterly payment schedule. The approximately $2.60 per
share annual dividend amount (or $0.65 per share, per quarter)
will be adjusted to reflect the additional shares that will be
issued in conjunction with the stock portion of the E&P
distribution.
In connection with the REIT conversion, Potlatch plans to
restructure its operations to facilitate its qualification as a
REIT. As part of that restructuring, Potlatch proposes to merge
with a newly formed, wholly owned subsidiary and expects to hold a
special meeting of stockholders in the fourth quarter of 2005 for
the purpose of voting on that proposed merger. Potlatch will file
a proxy statement/prospectus on Form S-4 with the Securities and
Exchange Commission, which describes the conversion plan and the
merger. The conversion plan and merger are subject to final
approval by the Potlatch Board of Directors prior to Dec. 31,
2005.
Significant Long-term Growth Initiatives
Potlatch also provided information on two ongoing resource
initiatives that are expected to generate meaningfully enhanced
cash flow and earnings growth over the long term. First, Potlatch
stockholders will begin benefiting from the company's 12-year,
approximately $100 million investment in its 17,000-acre Hybrid
Poplar plantation near Boardman, Oregon, as 2006 will mark the
first full year of the Boardman operation's sustainable 11-year
harvest cycle. The company is targeting high value, non-
structural lumber markets for the hybrid poplar hardwood sawlogs.
Second, the company intends to significantly increase production
over the next decade on portions of its 667,000 acres of
timberlands in northern Idaho. These timberlands contain
second- and third- growth trees that are outside Potlatch's normal
age range for harvesting. The increased harvest and enhanced
silviculture activities are intended to rebalance the age class
distribution of the Idaho timberland asset, while improving
species diversity and substantially adding to the asset's
long-term sustainable productivity.
"In addition to driving growth through future forestland
acquisitions, we expect to generate significant long-term internal
growth through the next phase of our hybrid poplar operations and
within our sustainable harvesting program for our Idaho
timberlands. These projects are a part of our forestry-driven
strategic plan and are unrelated to our change in corporate
structure. However, we are pleased to highlight them today, along
with our decision to convert to a REIT, because they will enhance
our ability to increase our dividend over the long term," added
Mr. Siegel.
Potlatch noted that both of these resource initiatives are
consistent with the company's environmental commitments.
Potlatch's forest management practices are independently
third-party certified by the Forest Stewardship Council(R) (FSC)
and the Sustainable Forestry Initiative(R) (SFI). In addition,
Potlatch has implemented an Environmental Management System (EMS),
which is third-party certified to the standards of the
International Organization for Standardization (ISO) 14001.
Principal advisors to the company related to the REIT conversion
are Goldman, Sachs & Co., Pillsbury Winthrop Shaw Pittman LLP, and
Skadden, Arps, Slate, Meagher & Flom LLP.
Potlatch Corporation -- http://www.potlatchcorp.com/-- owns and
manages approximately 1.5 million acres of timberlands and
operates 13 manufacturing facilities. The Company's timberland
and all of its manufacturing facilities are located within the
continental United States, primarily in Arkansas, Idaho, Minnesota
and Nevada. The Company is engaged principally in growing and
harvesting timber and converting wood fiber into two broad product
lines: (a) commodity wood products; and (b) bleached pulp
products.
* * *
As reported in the Troubled Company Reporter on Oct. 13, 2004,
Fitch Ratings removed Potlatch Corporation from Rating Watch
Evolving and affirmed the company's senior unsecured debt ratings
at 'BB+' and the senior subordinated ratings at 'BB'.
Fitch revised the Rating Outlook to Stable.
PRG-SCHULTZ: Taps Rothschild to Evaluate Financing Options
----------------------------------------------------------
PRG-Schultz International, Inc. (Nasdaq:PRGX) retained Rothschild,
Inc., to evaluate its financing alternatives. The Company noted
that it is likely that it will need additional financing before
year-end, and it has initiated a process to obtain the needed
financing. The Company also reiterated its previously announced
expectation that it will not meet its covenants under its existing
bank credit facility as of the end of the third quarter of this
year.
Credit Facility
The Company had outstanding borrowings of $12.5 million under the
Senior Credit Facility at June 30, 2005. The Company also had
Letters of Credit of $3.5 million under which no borrowings were
outstanding at June 30, 2005. As of June 30, 2005, the Company
had cash and cash equivalents of $12.2 million, and approximately
$8.9 million remained available under the Senior Credit Facility
for revolving loans, of which approximately $6.5 million was
available for Letters of Credit. As of Aug. 8, 2005,
approximately $7.7 million remains available for revolving loans,
of which approximately $6.5 million is available for Letters of
Credit, under the Senior Credit Facility.
The Company disclosed in its Form 10-Q for the quarter ended
June 30, 2005, filed with the Securities and Exchange Commission,
that it is in discussions with Bank of America about additional
borrowing availability under the Facility. The Company said it
has notified the lender of the potential for prospective covenant
breaches and is in talks concerning adjustments to the covenants.
Additionally, if Bank of America accelerates the payment of the
outstanding indebtedness under the Senior Credit Facility, cross
default provisions contained in the indenture governing the
Company's $125 million outstanding note issue, due Nov. 26, 2006,
would allow either the trustee or holders of 25% in interest of
the aggregate outstanding principal amount of the notes to provide
the Company with notice of a default under the notes. Failure of
the Company to repay the amounts outstanding under the Senior
Credit Facility within 30 days of the receipt of such notice would
result in an event of default under the indenture. In that event,
either the trustee or holders of 25% in interest of the aggregate
outstanding principal amount of the notes could accelerate the
payment of all $125 million of the outstanding notes.
On Nov. 30, 2004, PRG-Schultz USA, Inc. a wholly owned subsidiary
of PRG-Schultz International, entered into an amended and restated
credit agreement with Bank of America, N.A. Neither PRG
International nor any of its affiliates has any material
relationship with the lender apart from the indebtedness
outstanding under the Senior Credit Facility and PRGX's previous
credit facility.
Restructuring Plan
Separately, the Company said that development of its overhead
expense restructuring plan, announced on Aug. 19, 2005, is on
track for completion by early fourth quarter of this year. The
Company expects to announce the anticipated annual savings from
the completed plan, and any associated severance-related or other
charges associated with its implementation, when the plan is
completed.
Material Weaknesses
Based upon an evaluation on the effectiveness of the Company's
disclosure controls and procedures, the management concluded that
a material weakness in its internal controls exists relating to
revenue and the reserve for estimated refunds. The material
weakness, as originally reported in the Company's Annual Report on
Form 10-K/ A for the year ended December 31, 2004, related to
ineffective oversight and review over revenue and the reserve for
estimated refunds.
In the quarter ended June 30, 2005, management made significant
progress in remediating certain aspects of the deficiencies found,
specifically in the training of affected personnel and the
improvement of the amount and quality of evidence gathered to
calculate the reserve for estimated refunds. However, other
aspects of the deficiencies found are still in the remediation
process and appear to constitute a material weakness.
A material weakness in internal control over financial reporting
is a significant deficiency, or combination of significant
deficiencies, that result in a more than remote likelihood that a
material misstatement of the annual or interim financial
statements will not be prevented or detected.
There were no changes in the Company's internal control over
financial reporting identified that occurred during the quarter
ended June 30, 2005, that have materially affected, or are
reasonably likely to materially affect, the Company's internal
control over financial reporting.
The Company reported a second material weakness in its Annual
Report on Form 10-K/ A for the year ended Dec. 31, 2004, relating
to insufficient oversight and review of the Company's income tax
accounting practices. In the quarter ended March 31, 2005, the
Company established and implemented additional review steps by
management to detect errors in the calculation and roll forward of
its tax assets and valuation allowances. Management believes
these new procedures, and performance of the procedures, have
effectively remediated this material weakness.
Headquartered in Atlanta, PRG-Schultz International, Inc., is the
world leader in recovery auditing and a leading profit improvement
firm, providing clients throughout the world with insightful value
to optimize and expertly manage their business transactions.
Using proprietary software and expert audit methodologies, PRG
industry specialists review client purchases and payment
information to identify and recover overpayments.
QWEST COMMS: Will Issue New Shares of Stock to Reduce $17.5B Debt
-----------------------------------------------------------------
Qwest Communications International Inc., will issue new shares of
common stock as part of its efforts to reduce its $17.5 billion
debt, according to a report by Stephen Taub of CFO.com and a
regulatory filing delivered to the Securities and Exchange
Commission earlier this month.
The Company started to issue unregistered shares of its common
stock on June 30, 2005. Since then, the Company's various
transactions for issuing shares of common stock have only resulted
in reducing the Company's debt by $81 million.
In its Form 8-K report filed with the SEC on Sept. 12, 2005, the
Company stated that as of Sept. 15, 2005, it has issued
approximately 18.6 million shares of its common stock that were
not registered under the Securities Act of 1933, as amended, in
reliance on an exemption pursuant to Section 3(a)(9) of that Act.
The 18.6 million shares constitute 1% of the Company's total
issued and outstanding shares of common stock for the quarter
ended June 30, 2005. Those shares of common stock were issued in
a number of separately and privately negotiated direct exchange
transactions occurring on various dates since June 30, 2005 for
approximately $81 million in face amount of debt issued by Qwest
Capital Funding, Inc., a wholly owned subsidiary of Qwest, and
guaranteed by Qwest, and $.6 million of accrued interest.
The effective share price for the exchange transactions ranged
from $4.03 per share to $4.86 per share. The trading prices for
the Company's common stock at the time the exchange transactions
were consummated range from $3.66 per share to $4.09 per share.
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.
RESIDENTIAL PARTNERS: Case Summary & 20 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: Residential Partners, S.E.
116 Mimosa Street
Urb. Santa Maria
San Juan, Puerto Rico 00927
Bankruptcy Case No.: 05-09113
Chapter 11 Petition Date: September 20, 2005
Court: District of Puerto Rico (Old San Juan)
Judge: Gerardo Carlo Altieri
Debtor's Counsel: Alexis Fuentes Hernandez, Esq.
Charles A. Cuprill-Hernandez P.S.C. Law Offices
356 Fortaleza Street, Second Floor
San Juan, Puerto Rico 00901
Total Assets: $27,488,900
Total Debts: $18,481,054
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Municipio de Fajardo $1,661,535
P.O. Box 865
Fajardo, PR 00738
Fajardo Partners, S.E. Loans to debtor $1,084,266
Urb. Santa Maria
116 Mimosa Street
San Juan, PR 00927
Ten General Contractors, S.E. General contractors $1,013,656
251 Calle Rodrigo de Trana
Urb. Roosevelt
Haro Rey, PR 00918-2607
Caguas Equipment Rental, Inc. Soil movement $416,596
P.O. Box 7498
Caguas, PR
Carlos Lopategui Loans to debtor $143,516
CRC Drilling & Blasting, Inc. Drilling services $56,673
Constructora Minillas, Inc. Soil movement $55,775
Berrios & Longo Law Office Legal services $41,391
Ing. Carlos Oquendo Professional services $39,200
Eastern Developers Loans to debtor $35,582
JLS Ingenieros, CSP Professional services $22,500
Edras Construction Equipment $18,802
Desplau Associates Corp. Site studies $16,305
Electric Service Corp. Maintenance service $8,310
Maria A. Gaztambide Professional services $5,280
MSE Contractors, Inc. Construction services $5,221
Effective Security Services Security services $4,724
Lodo. Daniel Martinez Oquendo Legal services $4,350
Imreson Caribe, Inc. Advertising $3,390
Lodo. Freddie Barrios Perez Legal services $3,211
SAINT VINCENTS: Settles Cash Collateral Dispute With CCC
--------------------------------------------------------
Saint Vincent Catholic Medical Centers of New York, its debtor-
affiliates and the Comprehensive Cancer Corporation of New York,
Inc., have reached an agreement regarding the continued use of
CCC's cash collateral through October 18, 2005.
As reported in the Troubled Company Reporter, The Hon. Prudence
Carter Beatty of the U.S. Bankruptcy Court for the Southern
District of New York gave the Debtors authority, on an emergency
basis, to use the cash collateral securing repayment of
prepetition obligations to their Secured Creditors.
CCC Service Agreement
The Debtors and the CCC are parties to a Second Amended and
Restated Consulting and Administrative Services Agreement dated
April 11, 1996, wherein:
(a) the CCC provides development, consulting, administrative,
and other services to SVCMC with respect to the operation
of its outpatient cancer center at 111 Eight Avenue, in
New York.
(b) the CCC acquires all equipment, furnishings and supplies
necessary for the operation of the Cancer Center and makes
the equipment available to SVCMC for the provision of the
Cancer Center's patient care and treatment.
(c) the CCC, on behalf of SVCMC and as its agent, bills in
SVCMC's name and collects from the Cancer Center patients
and responsible third parties for services provided by the
Cancer Center.
(d) to secure the payment of fees due to the CCC under the
Agreement, SVCMC grants CCC a security interest in
substantially all revenue generated by the Cancer Center.
Collections on the CCC Receivables are either deposited directly
into an HFG lock box account or received by SVCMC in its accounts
and thereafter swept into the HFG lock box account. Thereafter,
the collections are moved into a segregated account at Fleet
National Bank, which account is subject to a control agreement
with the CCC. The funds in the Segregated Account are then paid
to SVCMC and the CCC pursuant to the terms of the Services
Agreement.
During 2004, collections on the CCC Receivables were distributed
in accordance with the Services Agreement on a monthly basis in
this order:
(1) $1.3 million was used to pay SVCMC's operating expenses
and fixed costs;
(2) $3.3 million was used to pay the CCC's operating expenses
and administrative and consulting fees; and
(3) 15% of any excess was distributed to SVCMC and the balance
was distributed to the CCC.
On May 21, 2004, the Debtors entered into a $100 million Loan
Agreement with HFG HealthCo-4 LLC, pursuant to which SVCMC
granted a security interest to HFG in substantially all of
SVCMC's receivables, including the CCC Receivables.
In connection with the prepetition Loan Agreement, HFG and the
CCC entered into an Intercreditor Agreement pursuant to which HFG
agreed that, notwithstanding the date, manner, or order of
perfection of the security interests granted to the parties, the
CCC's lien on the CCC Receivables was first, prior, and senior to
HFG's liens on the CCC Receivables.
In addition, SVCMC entered into an Implementation Agreement with
the CCC. The Agreement provides that:
(i) SVCMC will be paid by governmental and commercial payors
in a manner that commingles collections from the CCC
Receivables and collections from the HFG Receivables.
(ii) Cash proceeds from the CCC Receivables will be identified
by SVCMC based on the CCC's calculations and, via notice
to HFG, distributed by HFG to the CCC's Segregated
Account.
(iii) SVCMC grants a security interest to the CCC in and to all
cash and proceeds from the CCC Receivables deposited into
an account number at Fleet National Bank pursuant to a
Control Agreement dated as of May 21, 2004, between SVCMC,
the CCC, and Fleet National Bank.
Parties Settle Cash Collateral Dispute
On July 15, 2005, the CCC filed a preliminary objection to the
HFG Postpetition Financing, arguing that the Replacement Lien did
not adequately protect the CCC, as a secured creditor.
SVCMC and the CCC entered into negotiations, which culminated in
a short-term agreement providing that:
-- CCC is granted the Replacement Lien for the period from
July 5, 2005, to September 7, 2005;
-- Pending a further hearing on the CCC Objection, SVCMC will
pay $1.3 million as adequate protection to the CCC for the
period from July 5, 2005, to July 31, 2005, retroactively,
plus $650,000 on August 15, 2005; and
-- The adequate protection payments will be credited against
the CCC's prepetition claim.
In a Court-approved stipulation, the Debtors agree to grant the
CCC:
(a) Replacement Lien on all postpetition proceeds of the CCC
Receivables, which is enforceable to the extent of any
diminution in value of the CCC's interest in the CCC
Receivables since the Petition Date;
(b) a superpriority claim under Section 507(b) of the
Bankruptcy Code to the extent that the Replacement Lien
is inadequate;
(c) an administrative claim pursuant to Section 503(b) for all
services rendered by the CCC postpetition to SVCMC under
the terms and conditions of the Services Agreement, which
will not affect the non-recourse nature of the Services
Agreement; and
(d) a payment of $1 million to be credited as an advance
against SVCMC's postpetition payment obligations to the
CCC with respect to the Services Agreement. The CCC will
also receive $1.95 million as partial adequate protection
payment.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, represent the Debtors in their restructuring efforts.
As of Apr. 30, 2005, the Debtors listed $972 million in total
assets and $1 billion in total debts. (Saint Vincent Bankruptcy
News, Issue No. 10; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SALTON INC: Completes Sale of Tabletop Assets for $14.2 Million
---------------------------------------------------------------
Salton, Inc. (NYSE: SFP) completed the sale of certain tabletop
assets to Lifetime Brands, Inc. (NASDAQ: LCUT) for approximately
$14.2 million. Under the transaction, Salton will divest the
Block(R) and Sasaki(R) brands, licenses to market Calvin Klein(R)
and NapaStyle(TM) tabletop products and distribution of upscale
crystal products under the Atlantis(R) brand. In addition, Salton
will enter into a new license with Lifetime Brands enabling it to
market tabletop products under the Stiffel(R) brand.
"The divestiture of our tabletop assets represents another step in
our plans to improve our balance sheet and focus on our core
business," said Leon Dreimann, Salton's CEO. "This transaction,
combined with the announced sale of our stake in Amalgamated
Appliance and our recently completed Exchange Offer, improves the
Company's liquidity and allows Salton to allocate resources to
businesses in our core competencies."
Salton, Inc. is a leading designer, marketer and distributor of
branded, high-quality small appliances, electronics, home decor
and personal care products. Its product mix includes a broad
range of small kitchen and home appliances, electronics for the
home, tabletop products, time products, lighting products, picture
frames and personal care and wellness products. The company sells
its products under a portfolio of well recognized brand names such
as Salton(R), George Foreman(R), Westinghouse (TM),
Toastmaster(R), Mellitta(R), Russell Hobbs(R), Farberware(R),
Ingraham(R) and Stiffel(R). It believes its strong market
position results from its well-known brand names, high-quality and
innovative products, strong relationships with its customer base
and its focused outsourcing strategy.
* * *
Salton's 10-3/4% Senior Subordinated Notes due 2005 carry Moody's
Investors Service's junk ratings.
SANTA RITA: Case Summary & 12 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Santa Rita Professional Properties, Inc.
Cond. Caribe Medical Plaza, Oficina 304
Vega Alta, Puerto Rico 00692
Bankruptcy Case No.: 05-09156
Chapter 11 Petition Date: September 21, 2005
Court: District of Puerto Rico (Old San Juan)
Debtor's Counsel: Alexis Fuentes-Hernandez, Esq.
Charles A. Cuprill, P.S.C.
356 Fortaleza Street, Second Floor
San Juan, Puerto Rico 00901
Tel: (787) 977-0515
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 12 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Banco Santander Mortgage $2,926,575
P.O. Box 362589 Value of security:
San Juan, PR 00936-2589 $1,162,000
Cabo Caribe Development, S.E. Mortgage $683,279
P.O. Box 1360 Value of security:
Vega Alta, PR 00692-1360 $895,000
Santander Leasing Chattel mortgage $628,922
P.O. Box 362589 Value of security:
San Juan, PR 00936-2589 $600,000
Cabo Caribe Development, S.E. Loans $310,000
P.O. Box 1360
Vega Alta, PR 00692-1360
Jaime Rodriguez Solis Certificate of deposit $120,000
Milton Morales Certificate of deposit $120,000
Municipio de Vega Alta Patents $20,520
Vega Alta Medical Services Construction Cost $14,541
Unlimited Caribbean, Corp. Loans $11,084
Departamento de Hacienda Taxes $10,329
Asoc. Condomines Caribe Medica Maintenance $8,419
CRIM Property tax $7,503
SBC COMMS: FCC May Okay $8.5B Verizon Deal as DoJ Raises Issues
---------------------------------------------------------------
The Wall Street Journal reports that Federal Communications
Commission Chairman Kevin Martin is reportedly pressing for the
approval of Verizon Communications Inc.'s acquisition of:
* MCI Inc. for $8.5 billion; and
* SBC Communications for $16 billion.
On the other hand, the Department of Justice has concluded that
the companies must sell some assets to preserve competition. The
companies are still negotiating with anti-trust enforcers on this
matter.
SBC Communications Inc. -- http://www.sbc.com/-- is a Fortune 50
company whose subsidiaries, operating under the SBC brand, provide
a full range of voice, data, networking, e-business, directory
publishing and advertising, and related services to businesses,
consumers and other telecommunications providers. SBC holds a 60
percent ownership interest in Cingular Wireless, which serves more
than 50.4 million wireless customers. SBC companies provide high-
speed DSL Internet access lines to more American consumers than
any other provider and are among the nation's leading providers of
Internet services. SBC companies also now offer satellite TV
service.
* * *
As reported in the Troubled Company Reporter on Feb. 2, 2005,
Fitch Ratings has placed the 'A+' senior unsecured debt rating of
SBC Communications, Inc. on Rating Watch Negative and placed the
'BB+' senior unsecured debt rating of AT&T Corp. on Rating Watch
Positive following the announcement of SBC's proposed acquisition
of AT&T for approximately $15 billion in SBC common stock and the
assumption of approximately $6 billion of net debt.
SELECT MEDICAL: Moody's Affirms Junk Rating on $175 Million Notes
-----------------------------------------------------------------
Moody's Investors Service affirmed the Caa1 rating assigned to the
proposed offering of senior unsecured notes by Select Medical
Holdings Corporation, the parent company of Select Medical
Corporation on September 7, 2005. This action follows the
announcement by the company that it had reduced the size of the
offering from $250 million to $175 million. The proceeds of the
offering will be used to redeem a portion of the preferred equity
contributed to the company by a financial sponsor group consisting
of Welsh Carson Anderson & Stowe and Thoma Cressey Equity Partners
in the leveraged buy-out of Select Medical that closed in February
2005.
The ratings of Select Medical's existing debt were also affirmed.
The outlook for the ratings remains negative.
The negative outlook continues to reflect high financial leverage
which is outside Moody's expectation following the LBO
transaction. The originally proposed transaction would have
resulted in a return to leverage similar to that incurred in the
LBO. While the reduction of the offering results in slightly less
financial leverage, it nevertheless indicates management's
acceptance of the risks and reduced flexibility associated with
operating at the higher levels.
Moody's believes that financial flexibility is especially
important during this period in which Select Medical is facing a
potential decrease in Medicare reimbursement in 2006 from the
proposed re-weighting of long-term acute care hospital diagnostic
related groups and changes in Medicare regulations affecting long-
term acute care hospital-within-hospital providers (HIH). If the
company refrains from increasing financial leverage, continues to
reduce the amount of debt outstanding, and shows continued
progress in transitioning affected HIH facilities over the near-
term, Moody's would likely change the outlook back to stable.
Ratings affirmed:
Select Medical Holdings Corporation (Parent):
* $175 million senior unsecured notes due 2015
(unguaranteed), rated Caa1
* Corporate family rating, B1
Select Medical Corporation (Operating Company):
* $300 million senior secured revolving credit facility, B1
* $580 million senior secured term loan, B1
* $660 million 7.625% senior subordinated notes due 2015, B3
* Speculative Grade Liquidity rating, SGL-2
Select Medical Corporation, headquartered in Mechanicsburg,
Pennsylvania, operates:
* 98 long-term acute care hospitals,
* four inpatient rehabilitation facilities, and
* over 740 outpatient rehabilitation clinics.
For the twelve months ended June 30, 2005, the company recognized
net revenues of approximately $1.8 billion.
SHOPKO STORES: Special Shareholders Mtg. to Reconvene on Oct. 10
----------------------------------------------------------------
ShopKo Stores, Inc. (NYSE: SKO) disclosed that its special meeting
of shareholders to approve the merger of ShopKo with an affiliate
of Goldner Hawn Johnson & Morrison, Incorporated, which was
adjourned on Sept. 14, 2005, will be reconvened on Oct. 10, 2005.
ShopKo disclosed that a supplement to the definitive proxy
statement relating to the merger would be mailed soon to describe
in more detail the amendments to the merger agreement previously
announced on Sept. 9, 2005. Only shareholders of record as of
Aug. 1, 2005, will be entitled to vote at the reconvened meeting
and will receive the supplemental proxy materials.
As previously disclosed, the amendment to the merger agreement
provides, among other things, that each outstanding share of
ShopKo's common stock will be converted into the right to receive
$25.00 in cash upon completion of the merger. ShopKo currently
has approximately 30.2 million shares of common stock outstanding,
excluding options.
ShopKo urges shareholders to sign, date and return the white proxy
card voting FOR the proposal to approve the merger agreement.
Shareholders with any questions regarding the proxy materials
should contact ShopKo's proxy solicitor, Georgeson Shareholder
Communications, toll free at 1-800-280-7183.
ShopKo Stores, Inc. -- http://www.shopko.com/-- is a retailer of
quality goods and services headquartered in Green Bay, Wisconsin,
with stores located throughout the Midwest, Mountain and Pacific
Northwest regions. Retail formats include 140 ShopKo stores,
providing quality name-brand merchandise, great values, pharmacy
and optical services in mid-sized to larger cities; 223 Pamida
stores, 116 of which contain pharmacies, bringing value and
convenience close to home in small, rural communities; and three
ShopKo Express Rx stores, a new and convenient neighborhood
drugstore concept. With more than $3 billion in annual sales,
ShopKo Stores, Inc., is listed on the New York Stock Exchange
under the symbol SKO.
* * *
As reported in the Troubled Company Reporter on April 18, 2005,
Moody's Investors Service placed the long-term debt ratings of
ShopKo Stores, Inc., on review for possible downgrade following
the company's announcement that it had signed a definitive merger
agreement to be acquired by an affiliate of Goldner Hawn Johnson &
Morrison. The downgrade reflects the anticipated significant
increase in leverage as a result of the proposed transaction.
The transaction is valued at slightly more than $1 billion and is
expected to be funded predominantly from debt with only $30
million of the purchase price to be funded by equity. The company
has received a commitment from Bank of America to provide $700
million in real estate financing and additional commitments from
Bank of America and Back Bay Capital Funding LLC to provide $415
million in senior debt financing.
The proceeds from these financings along with the $30 million of
equity will be used to pay the merger consideration, refinance the
borrowings under the existing revolving credit facility, fund the
amounts due under the expected tender offer for the $100 million
senior unsecured notes due 2022, plus all fees and expenses.
In addition, the financing will be used to cover all future
working capital needs. If substantially all of the senior notes
are tendered the rating on those notes will be withdrawn. The
review will focus on the debt protection measures of ShopKo post
acquisition as well as the company's business strategy going
forward.
These ratings are placed on review for possible downgrade:
* Senior implied of B1;
* Issuer rating of B2; and
* Senior unsecured notes due 2022 of B2.
SILVERADO FINANCIAL: Sallmann Yang Express Going Concern Doubt
--------------------------------------------------------------
Sallmann, Yang & Alameda, independent auditors for Silverado
Financial Inc., raised substantial doubt about the Company's
ability to continue as a going concern based on its review of the
Company's financial statements for the quarterly periods ended
June 30, 2005 and 2004.
At June 30, 2005, the Silverado's balance sheet shows assets of
$4,345,834, an accumulated deficit of $11,068,291, and a
$1,286,382 working capital deficit of working capital of. The
company has reported recurring losses for years.
Silverado Financial -- http://www.silveradofinancial.com/--
provides first and second mortgage products to borrowers in
California through its subsidiary, Silverado Mortgage Corporation.
The Company is a mortgage banking company focused on providing
non-prime borrowers, (individuals who generally do not satisfy the
credit, documentation or other underwriting standards set by more
traditional sources of mortgage credit), with access to capital
for the purchase and refinancing of one to four-family residential
properties. The Company originates mortgage loans, which include
fixed and adjustable-rate loans, for purposes such as debt
consolidation, refinancing, education, home improvement and real
estate purchase.
As of June 30, 2005, the Company has three wholly owned
subsidiaries:
1) Financial Software, Inc.;
2) Silverado Mortgage Corporation; and
3) Core One Mortgage, Inc.
SIRIUS SATELLITE: Expects Revenues to Grow to $230MM by Year-End
----------------------------------------------------------------
SIRIUS Satellite Radio Inc. informs the Securities and Exchange
Commission in an 8-K filing that it expects to report revenues for
the year ending December 31, 2005, of approximately $230 million,
an increase from its previous guidance of $225 million, and report
strong revenue growth in 2006.
Patrick L. Donnelly, the Company's Executive Vice President,
General Counsel and Secretary, tells SEC that on September 15,
2005, the Company had 2,076,582 subscribers.
The Company reiterates its guidance that it expects:
* to have 3 million subscribers on December 31, 2005;
* to generate positive free cash flow for the full year 2007;
and
* the Company's first quarter of positive free cash flow could
be reached as early as the fourth quarter of 2006.
SIRIUS Satellite Radio Inc. delivers more than 120 channels of the
best commercial-free music, compelling talk shows, news and
information, and the most exciting sports programming to listeners
across the country in digital quality sound. SIRIUS offers 65
channels of 100% commercial-free music, and features over 55
channels of sports, news, talk, entertainment, traffic and weather
for a monthly subscription fee of only $12.95. SIRIUS also
broadcasts live play-by-play games of the NFL and NBA, and is the
Official Satellite Radio partner of the NFL.
* * *
As reported in the Troubled Company Reporter on Aug. 4, 2005,
Standard & Poor's Ratings Services assigned its 'CCC' rating to
Sirius Satellite Radio Inc.'s proposed $500 million Rule 144A
senior unsecured notes maturing in 2013. At the same time,
Standard & Poor's affirmed its existing ratings on the New York,
New York-based satellite radio broadcasting company, including its
'CCC' corporate credit rating. The new proposed notes will
replace the company's previously proposed $250 million senior
unsecured note offering, which was postponed in the second quarter
of 2005. Standard & Poor's 'CCC' rating on the $250 million
senior note issue was withdrawn. S&P says the outlook remains
stable.
Proceeds will be used to repay $57.4 million in debt and to boost
liquidity. On a June 30, 2005, pro forma basis, Sirius had nearly
$1.1 billion in debt.
SPORTS COURTS: List of 5 Largest Unsecured Creditors
----------------------------------------------------
Sports Courts of Lincoln, Inc. released a list of its 5 Largest
Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Harry Meginnis Loan $640,000
2242 Van Dorn
Lincoln, NE 68502
Harry Meginnis Loan $385,000
2242 Van Dorn
Lincoln, NE 68502
David Meisinger Real estate taxes $63,000
31507 Kimberly Drive
Ashland, NE 68003
Priority 1 Fitness Equipment repair $1,550
3120 Pine Lake Road, Suite 9
Lincoln, NE 68516
David Meisinger Lease assigned to Unknown
31507 Kimberly Drive Chad Bowman for
Ashland, NE 68003 collection
Headquartered in Lincoln, Nebraska, Sports Courts of Lincoln, Inc.
-- http://www.sportscourts.com/-- operates a sports and fitness
center. The Company filed for chapter 11 protection Aug. 5, 2005
(Bankr. D. Nebr. Case No. 05-43123). John C. Hahn, Esq. at
Jeffrey, Hahn, Hemmerling & Zimmerman, represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it estimated assets between $50,000 and
$100,000 and estimated debts between $1 million and $10 million.
SPIEGEL INC: Eddie Bauer Wants Until Nov. 18 to Object to Claims
----------------------------------------------------------------
In accordance with the confirmed Plan of Reorganization, Eddie
Bauer Holdings, Inc., was established as a holding company for
the Reorganized Spiegel, Inc. Debtors and certain of Spiegel's
non-debtor subsidiaries. After all the conditions precedent to
the Plan's effectiveness were met, 100% of the equity interest in
reorganized Eddie Bauer was transferred to Eddie Bauer Holdings.
Eddie Bauer Holdings assumed the obligation to pay all allowed
administrative claims and was granted the right to "make, file
and prosecute objections to administrative claims, professional
fee claims and priority tax claims."
James L. Garrity, Jr., Esq., at Shearman & Sterling LLP, in New
York, explains that, in resolving Administrative Claims,
claimants that were not paid as of the Effective Date were
required to file a written request for payment with the
Bankruptcy Court and serve it on Eddie Bauer Holdings' counsel no
later than August 5, 2005.
Pursuant to the Plan, Eddie Bauer Holdings is required to file
any objection to an Administrative Claim on or before the later
of:
-- September 19, 2005, which is the date that is 90 days after
the Effective Date; and
-- 90 days after the date the relevant Administrative Claim
was filed.
Mr. Garrity says that Eddie Bauer Holdings reserves the right to
seek an extension of that time to object.
Accordingly, Eddie Bauer Holdings asks the Court to extend the
Administrative Claims Objection Deadline from Sept. 19, 2005,
through the later of Nov. 18, 2005, pursuant to Section
105(a) of the Bankruptcy Code.
Eddie Bauer Holdings tells Judge Lifland that it has reviewed all
of the Administrative Claims that have been filed to date, and
has objected to those alleged "invalid" claims in an Objection
filed with the Court on September 16, 2005.
However, Mr. Garrity notes that since Eddie Bauer Holdings has
focused its time and resources almost entirely on matters
associated with the Debtors' emergence from their bankruptcy
cases, it has afforded only minimal resources to the process of
reconciling each of the outstanding Administrative Claims with
the Debtors' records. Mr. Garrity asserts that to verify that it
has reviewed each outstanding Administrative Claim with a
reasonable level of certainty, Eddie Bauer Holdings requires at
least an additional 60 days to complete the reconciliation
process.
Eddie Bauer Holdings contends that without the requested
extension, there is a strong possibility that any party that has
filed an unmeritorious or overstated Administrative Claim -- to
which Eddie Bauer Holdings would not be entitled to object
pursuant to the Plan -- could receive a windfall and would be
unjustly enriched.
Headquartered in Downers Grove, Illinois, Spiegel, Inc. --
http://www.spiegel.com/-- is a leading international general
merchandise and specialty retailer that offers apparel, home
furnishings and other merchandise through catalogs, e-commerce
sites and approximately 560 retail stores. The Company filed for
Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No.
03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq.,
at Shearman & Sterling, represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $1,737,474,862 in assets and
$1,706,761,176 in debts. The Court confirmed the Debtors'
Modified First Amended Joint Plan of Reorganization on May 23,
2005. Impaired creditors overwhelmingly voted to accept the Plan.
(Spiegel Bankruptcy News, Issue No. 52; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
SUPER VENTURES: List of 8 Largest Unsecured Creditors
-----------------------------------------------------
Super Ventures, Inc. released a list of its 8 Largest Unsecured
Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Zion's First National Bank 1st Lien $840,000
Agent for JP Morgan Chase Value of security:
Bank $640,000
Gateway Tower East, 5th Floor
10 East South Temple
Salt Lake City, UT 84133
Washington Mutual 1st Lien $400,000
3200 Southwest Fairway Value of security:
Suite 1701 $60,000
Houston, TX 77027
Raz Ali Business debt $70,000
101 East Main
Gun barrel, TX 75146
JP Morgan Chase Bank, NA Business debt $26,755
American Express Bank FSB Business debt $19,384
North Texas Mesbic Inc. Business debt $14,522
Wells Fargo Bank NA Business debt $9,273
Abu T. Tariq Business debt $0
Headquartered in Granbury, Texas, Super Ventures, Inc., d/b/a
J-Mart, operates a convenience store. The Company filed for
chapter 11 protection on Aug. 1, 2005 (Bankr. N.D. Tex. Case No.
05-38625). Arthur I. Ungerman, Esq., represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated assets and debts between $1 million
and $10 million.
SWAN TRANSPORTATION: Court Okays Federal Settlement Agreement
-------------------------------------------------------------
The Swan Asbestos and Silica Settlement Trust and Reorganized Swan
Transportation Company sought and obtained from the Honorable
Peter J. Walsh of the U.S. Bankruptcy Court for the District of
Delaware:
-- approval of a Settlement Agreement among the Trust,
Reorganized Swan and Federal Insurance Company; and
-- permission to partially withdraw the reference to modify
the Channeling Injunction to include Federal Insurance
Company as a Settling Insurer.
Federal Settlement Agreement
As previously reported in the Troubled Company Reporter on
June 29, 2005, under the Debtor's Plan of Reorganization, proceeds
received under the Insurance Settlement Agreements will be
transferred to the Swan Asbestos and Silica Settlement Trust
established under the Plan to direct the liquidation, resolution,
payment, and satisfaction of all unsecured claims, including tort
claims.
The Federal Settlement Agreement will provide additional funding
to the Trust for the liquidation, resolution, payment, and
satisfaction of all Unsecured Claims pursuant to the Plan
Documents.
The terms of the Federal Settlement Agreement are confidential.
The parties have asked the Court to order that any copy of the
Settlement Agreement filed or tendered at a hearing be kept under
seal.
The Trust and the Reorganized Swan contends that the Federal
Settlement Agreement should be approved because:
(a) it resolves in full any and all disputed issues between the
Trust and Reorganized Swan and Federal Insurance Company
with respect to insurance claims under insurance policies
issued by Federal Insurance Company either to Swan or to
any other person under which Swan is, or may claim to be
insured, including, but not limited to, the liability
insurance policies to the Federal Settlement Agreement;
(b) the Trust will receive a sum of money for payment of
Unsecured Claims that would otherwise not be available for
payment of those claims;
(c) the terms of the Federal Settlement Agreement are fair and
reasonable; and
(d) Reorganized Swan can avoid the uncertainty, costs and delay
of coverage litigation with Federal Insurance Company to
the benefit of its creditors.
Channeling Injunction
As part of the Federal Settlement, the Trust and Reorganized Swan
have sought and obtained from the United States District Court for
the District of Delaware to modify the Channeling Injunction of
the Settling Insurers to include Federal Insurance Company as a
Settling Insurer.
Under the Plan, the Bankruptcy Court and the District Court issued
the Channeling Injunction to the Settling Insurers to permanently
stay, restrain and enjoin claims against the Settling Insurance
Companies based upon, relating to, or arising out of, or in any
way connected with Swan, the Tyler Pipe Foundry, TYI of Texas,
Inc., Tyler Sand Company, or TC's involvement with, or ownership,
supervision or control of the Tyler Pipe Foundry or any insurance
coverage that may apply to such claims.
Swan Transportation Company filed for chapter 11 protection on
Dec. 20, 2001 (Bankr. D. Del. Case No. 01-11690. Tobey Marie
Daluz, Esq., Kurt F. Gwynne, Esq. at Reed Smith LLP, and Samuel M.
Stricklin, Esq. at Neligan, Tarpley, Stricklin, Andrews & Folley,
LLP, and Kelly Gordon, Esq., Tobey M. Daluz, Esq., at Ballard
Spahr Andrews & Ingersoll, LLP represent the Debtor. When the
Company filed for protection from its creditors, it listed assets
and debts of over $100 million. On May 30, 2003, the Bankruptcy
Court confirmed the Debtor's Plan of Reorganization and that Plan
became effective on July 21, 2003.
TATER TIME: Court Okays Jeffers Danielson as Special Counsel
------------------------------------------------------------
The Honorable John A. Rossmeissl of the U.S. Bankruptcy Court for
the Eastern District of Washington gave Tater Time Potato Company,
LLC, and its debtor-affiliates permission to employ Jeffers,
Danielson, Sonn & Aylward, P.S., as their special counsel.
Jeffers Danielson will represent the Debtors in the matter against
Cenex Harvest States and CHS-FIN AG for alleged negligent chemical
application, Consumer Protection Act violations, breach of
warranty, and other damages. $2,400,000 is due from Cenex and
$1,800,000 is due from CHS.
James M. Danielson, Esq., a shareholder at Jeffers, Danielson,
Sonn & Aylward, P.S., discloses that the Firm will receive:
* 33-1/3% of the amount recovered by the Debtors from Cenex;
and
* 25% of the reduced claim amount by settlement or trial.
In the event that a new trial or an appeal will commence, the Firm
will receive:
* 40% of the gross amount collected and finally recovered, and
* 31-2/3% of the amount Cenex and CHS's claims are reduced.
The current hourly rates of the Firm's professionals are:
Professional Hourly Rate
------------ -----------
Garfield R. Jeffers, Esq. $270
James M. Danielson, Esq. $270
J. Patrick Aylward, Esq. $270
Peter A. Spadoni, Esq. $270
David E. Sonn, Esq. $260
J. Kirk Bromiley, Esq. $255
Donald L. Dimmitt, Esq. $250
Stanley A. Bastian, Esq. $250
Robert C. Nelson, Esq. $235
Robert R. Siderius, Jr., Esq. $235
Theodore A. Finegold, Esq. $235
Douglas J. Takasugi, Esq. $225
Mitchell P. Delabarre, Esq. $225
William F. Baldwin, Esq. $225
Gregory A. Lair, Esq. $220
Michael E. Vannier, Esq. $220
Todd M. Kiesz, Esq. $185
Kari D. Kube, Esq. $185
Brian C. Huber, Esq. $185
Kyle S. Karinen, Esq. $140
Darren T. Burchill, Esq. $135
Lisa C. Lui, Esq. $125
With 20 attorneys in Wenatchee and Moses Lake, Jeffers, Danielson,
Sonn & Aylward, P.S. -- http://www.jdsalaw.com/-- is the largest
law firm providing services in the most comprehensive practice
areas in North Central Washington.
The Debtors believe that Jeffers, Danielson, Sonn & Aylward, P.S.,
is disinterested as that term is defined in Section 101(14) of the
U.S. Bankruptcy Code.
Headquartered in Warden, Washington, Tater Time Potato Company,
LLC, packs and ships potatoes. The Company and its debtor-
affiliates filed for chapter 11 protection on January 24, 2005
(Bankr. E.D. Wash. Case No. 05-00509). Dan O'Rourke, Esq., at
Southwell & O'Rourke, P.S., represents the Debtors in their
restructuring efforts. When the Debtor filed for protection from
its creditors, it reported total assets of $11,312,000 and total
debts of $7,639,184.
TENET HEALTHCARE: Fitch Removes Ratings From Watch Negative
-----------------------------------------------------------
Fitch Ratings has removed Tenet Healthcare Corp.'s ratings from
Rating Watch Negative after the company has filed its quarterly
report Form 10-Q with the Securities and Exchange Commission for
the period ended June 30, 2005. Tenet's Rating Outlook remains
Negative in deference to ongoing operational and legal challenges.
Fitch placed Tenet on Watch Negative on Aug. 26, 2005 after the
company received a notice of default from holders of a portion of
the company's 6 7/8% senior unsecured notes due 2031 following
Tenet's failure to file its Form 10-Q on a timely basis with the
SEC and the notes' Trustee.
Today's 10-Q filing falls within the 90-day cure period and
therefore cures the defaults as defined under the indentures
governing the senior notes and Tenet's letter of credit facility
that stemmed from not meeting the original filing deadline.
Tenet has approximately $4.8 billion in debt outstanding, mostly
senior unsecured notes with the earliest maturity being the 6 3/8
senior unsecured notes due 2011. Tenet's unrestricted cash
balance at June 30, 2005 was approximately $1.6 billion.
Tenet's current ratings include:
-- Senior unsecured notes 'B-';
-- Issuer Default Rating 'B-';
-- Recovery Rating 'R4'.
TERAFORCE TECHNOLOGY: Court Okays $750,000 DIP Financing Facility
-----------------------------------------------------------------
The Honorable Barbara J. Houser of the Northern District of Texas,
Dallas Division, gave Teraforce Technology Corporation and DNA
Computing Solutions, Inc., authority to enter into a $750,000
postpetition financing agreement with a consortium of lenders
comprised of:
* Robert E. Garrison, II;
* Steven A. Webster;
* James R. Hawkins;
* Peter W. Badger;
* John H. Styles; and
* Donald R. Campbell.
As previously reported in the Troubled Company Reporter on
Sept. 7, 2005, these creditors have also purchased the
prepetition secured debt of Encore Bank.
The Debtors require postpetition financing to preserve and
maximize their assets, to preserve their going concern values,
and to enable their reorganization for the benefit of their
creditors. Without postpetition financing, the Debtors will not
be able to pay their employees, vendors, and lessors, close a
proposed sale of their assets, and otherwise continue any
postpetition operations and attempts at reorganization.
To protect the lenders' interests, the Debtors granted them:
a) a superpriority administrative expense claim;
b) first priority perfected liens on all assets of the
estates not encumbered with liens; and
c) perfected priming liens on all assets taking priority
over all other liens and security interests.
The loan is expected to mature on Dec. 1, 2005.
Headquartered in Richardson, Texas, Teraforce Technology
Corporation -- http://www.teraforcetechnology.com/-- markets the
products and services of DNA Computing Solutions, Inc. DNA
Computing -- http://www.dnacomputingsolutions.com/-- designs,
produces and sells board-level products that deliver high
performance computing capabilities for embedded applications in
the military/aerospace, industrial, and commercial market sectors.
The Companies file for chapter 11 protection on Aug. 3, 2005
(Bankr. N.D. Tex. Case Nos. 05-38756 through 05-38757). Davor
Rukavina, Esq., at Munsch, Hardt, Kopf & Harr, PC, represents the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $4.3 million in
total assets and $14.2 million in total debts.
TESORO PETROLEUM: Fitch Changes Outlook to Positive
---------------------------------------------------
Fitch Ratings has revised the Rating Outlook on Tesoro Petroleum
Corporation to Positive from Stable. Fitch rates Tesoro's debt:
-- Senior secured revolving credit facility 'BB';
-- Senior secured notes 'BB';
-- Senior subordinated notes 'B+'.
The revision in Outlook reflects the continued improvement in the
company's credit profile, the strong industry fundamentals and the
diversity of the company asset base. With the prepayment of the
remaining $96 million under the company's senior secured term loan
in April 2005, Tesoro has reduced balance sheet debt to
approximately $1.1 billion at June 30, 2005 with $96 million of
cash on hand. This represents a nearly $1.0 billion reduction
since peaking at just under $2.1 billion at the time of the Golden
Eagle refinery acquisition in May 2002.
The company also continues to benefit from the robust industry
wide margins. Crack spreads have peaked in recent days from
already high levels due to the impact of Hurricane Katrina and
several refinery outages in California including a fire at Golden
Eagle's cat cracker. The company's earnings are expected to
remain strong, continuing to reflect a greater balance between the
company's six refineries while giving the company additional
financial flexibility.
The company has reached a point where further debt reduction is no
longer a priority, but fits within the company's broader strategy
to focus on:
-- Strategic capital investments;
-- The recent initiation of a dividend on the company's common
stock;
-- Further reduce debt;
-- Build cash reserves;
-- Repurchase common shares.
Due to the generation of substantial free cash flows, the company
is now able to pursue strategic investments such as the $175
million coker project at the Anacortes, Washington refinery which
is expected to be completed in April 2007. Despite these
investments and ongoing maintenance, Fitch expects the company to
show a significant cash build through the remainder of 2005.
Given these expectations, the company has mentioned a possible
stock buyback program to compete with other uses of cash. Further
debt reduction is also possible as the remaining $211 million of
9-5/8% senior subordinated notes become callable in November 2005
and the $373 million of 8% senior secured notes are callable
beginning in April 2006.
Offsetting factors include the risk of further primarily debt
financed acquisitions, the company's significant level of off-
balance sheet debt and the impact on earnings of both planned and
unplanned shutdowns. While the potential for future acquisitions
is uncertain, particularly given the run-up in the prices of
refining assets in recent quarters, Tesoro should have
significantly better success incorporating equity into any
financing than previous transactions.
Similar to other refiners, Tesoro maintains a significant level of
off-balance sheet debt including tanker charters. Based on eight
times gross rental expense, Fitch estimates the off-balance sheet
financings at approximately $900 million. As noted with the
recent fire at Golden Eagle, earnings have been impaired in recent
quarters due to unplanned refinery outages. While the strong
margins and the diversity of the company's six refineries have
helped to offset these issues, these outages remain a key concern
with Tesoro.
The company is also subject to industry wide risks including the
volatility of refining margins, the significant ongoing
expenditures required to maintain its facilities as well as
uncertainties involving future environmental regulations and
ongoing litigation issues such as lawsuits pertaining to MTBE.
A positive rating action will be considered in coming quarters if
Tesoro continues to generate the substantial earnings and strong
credit metrics reflective of the company's improved balance sheet
and the stronger industry fundamentals. A positive rating action
will also be considered if the company makes further improvements
to its balance sheet.
Tesoro owns and operates six crude oil refineries with a rated
crude oil capacity of approximately 560,000 barrels per day. Four
of Tesoro's refineries are on the West Coast, with facilities in
California, Alaska, Hawaii, and Washington. Tesoro also has
refineries in Salt Lake City, Utah and Mandan, North Dakota.
Tesoro sells refined products wholesale or through approximately
500 branded retail outlets.
TRUMP HOTELS: AIG Said Cure Amounts Not Determined
--------------------------------------------------
Since May 1997, National Union Fire Insurance Company of
Pittsburgh, Pennsylvania, and other affiliates of American
International Group, Inc., provided insurance coverage to Trump
Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts,
Inc., and its debtor-affiliates pursuant to an insurance program.
The Debtors agreed to pay to the AIG Companies specified premium,
loss reimbursements, deposits and other fees and expenses.
The Insurance Program is loss sensitive, thus the amount of
premium due by the Debtors to the AIG Companies under the
Insurance Program may be revised, up or down, based on ongoing
claims experience under the Policies and Program Agreements.
Some of the Policies in the Insurance Program are subject to
audit and the amount of premium due to the AIG Companies may be
revised to reflect changes like the number of employees, payroll,
sales levels and number of automobiles.
On Jan. 15, 2005, the AIG Companies filed, as unliquidated,
Claim Nos. 1559 to 1586. On March 11, 2005, the Debtors filed
their assumption schedule reflecting the contracts that were
assumed pursuant to their Plan of Reorganization. The Debtors
allege that the cure amount owed to the AIG Companies is $0.
Michael S. Davis, Esq., at Zeinchner Ellman & Krause LLP, in New
York, asserts that the relief sought by the Debtors contradicts
the Plan, which provides that the Debtors may satisfy cure
amounts pursuant to Section 365(b)(1) of the Bankruptcy Code by
payment on the later of:
-- the Effective Date,
-- as due in the ordinary course of business, or
-- on other terms as the parties may agree.
Because the Plan provides that any cure amounts due the AIG
Companies may be paid on the later of three dates, including in
the ordinary course of business, the cure obligations will only
become due in accordance with the parties' Program Agreements in
the ordinary course.
According to Mr. Davis, the Claims are unliquidated because the
amounts depend on future events that are necessarily uncertain,
which events include the reporting, adjusting and settling of
claims and possibly the completion of audits.
Furthermore, the Program Agreements provide for the amounts due
to be paid in the ordinary course of business because the amounts
are determined by periodic adjustments based on losses valued as
of specified valuation dates.
Accordingly, Mr. Davis concludes that the Debtors' efforts to
determine the cure amounts are premature.
The Program Agreements also provide for arbitration of disputes.
Pursuant to Section 1 of the U.S. Arbitration Act, any dispute
concerning the cure amount must be referred for arbitration.
Hence, the AIG Companies ask Judge Wizmur to:
1. deny the relief sought by the Debtors;
2. find that the cure amounts due have not been determined;
and
3. direct that the future resolution of any dispute concerning
the amount of cure will not be determined in a manner that
violates the Plan or the parties' rights to arbitration.
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. 28; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
TRUMP HOTELS: BET Investments Gets World's Fair Site for $25 Mil.
-----------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
July 12, 2005, Trump Plaza Associates, LLC, and the Official
Committee of Equity Security Holders jointly seek authority from
the U.S. Bankruptcy Court for the District of New Jersey to sell
the World's Fair Site in Atlantic City, New Jersey, to Robino
Stortini Holdings, LLC, and its assigns, for $12,500,000 pursuant
to a purchase agreement, subject to higher and better bids.
Pursuant to the Reorganized Debtors' Plan of Reorganization, the
Equity Committee obtained the right to sell the World's Fair Site
pursuant to a motion under Section 363 of the Bankruptcy Code.
The World's Fair Site will be sold according to procedures as are
mutually agreed between the Debtors and the Equity Committee
subject to a negative covenant, which prevents future owners or
any transferee, assignee, occupant or lessee from developing any
gaming activities on the Property.
Equity Committee Seeks Clarification
The Official Committee of Equity Security Holders understands
that an order approving the sale of the World's Fair Site will
provide for the allocation of the cash purchase price to be paid
by the successful bidder at closing. Pursuant to the Debtors'
Plan of Reorganization, certain expenses may be deducted from the
Purchase Price, with the net proceeds to be distributed to the
Debtors' non-insider shareholders.
The Equity Committee also understands that the expenses to be
deducted from the purchase price would be limited to:
* the fees and costs of Cushman & Wakefield of Pennsylvania,
Inc., the broker employed to market the Site;
* the pro-rated, pre-closing, portion of any sale, transfer or
document taxes associated with the sale; and
* customary closing costs associated with the sale.
Daniel K. Astin, Esq., at The Bayard Firm, in Wilmington,
Delaware, relates that the Equity Committee understands that the
World's Fair Sale Expenses would exclude any professional fees
and costs, whether incurred on behalf of the Equity Committee,
the Debtors, or any other party.
As provided in the Plan, Mr. Astin notes, C&W's fees and costs
will be treated as World's Fair Expenses. The Plan makes no
mention of any other professional's fees and costs being
similarly included. Therefore, the Equity Committee concludes,
the Plan excludes professional fees and costs, other than C&W,
from being treated as World's Fair Expenses.
In addition, Mr. Astin points out, the Plan did not indicate any
professional fees and expenses being paid from any other source,
including the World's Fair Sale Proceeds. Therefore, other than
C&W's Fees, the default under the Plan is that all professional
fees and costs will be paid by the Reorganized Debtors, Mr. Astin
contends.
The Plan does not provide any mechanism for professional fees and
expenses to be reviewed for reasonableness by the Equity
Committee, Mr. Astin observes. While the portion of the
Reorganized Debtors' fees and costs related to the sale should be
minimal, the Equity Committee notes it does not have any
opportunity to assess the extent to which the Debtors' post-
Effective Date fees and costs relate to the sale of the World's
Fair Site, much less whether they are reasonable. The Plan's
omission of any review mechanism confirms that those fees and
costs must be excluded from the World's Fair Sale Expenses, Mr.
Astin insists.
Accordingly, the Equity Committee asks the Court to clarify in
the Sale Order that the World's Fair Sale Expenses will exclude
fees and costs incurred by any professional other than C&W,
whether incurred on behalf of the Equity Committee, the Debtors,
or any other party.
Debtors Respond
The Reorganized Debtors assert that the Equity Committee is
attempting to foist their postpetition fees and expenses on them.
The Equity Committee's attempt cannot find support in the Plan or
any other Court order, Charles A. Stanziale, Jr., Esq., at
McElroy, Deutsch, Mulvaney & Carpenter, LLP, in Newark, New
Jersey, argues.
While the issue of what fees and expenses they must bear is not
before the Court, the Reorganized Debtors did not want the Court
to make any rulings on the issue in connection with the World's
Fair Site sale hearing. Moreover, the Reorganized Debtors
believe that the Equity Committee has misread certain provisions
of the Plan.
Mr. Stanziale tells the Court that a provision in the Plan on the
"Payment of Professional Fees" applies only to fees and expenses
incurred by the Debtors -- not some other entity. Therefore, he
concludes, the Equity Committee's bald statement that "the
default under the Plan is that all professional fees and costs
will be paid by the Debtors" finds no support in the Plan or
elsewhere.
The Reorganized Debtors insist that the definition of "World's
Fair Sale Expenses" is not limited solely to costs of a broker
and the Debtors' portion of sale, transfer and document taxes.
Mr. Stanziale attests that the lead-in to the definition provides
that expenses "may include" broker fees and the Debtors' taxes.
The definition does not state that World's Fair Sale Expenses
"only" include broker fees and the Debtors' taxes. In contrast,
the only express exclusion to World's Fair Sale Expenses in the
definition is for "obligation of the Debtors to any income taxing
authorities arising from the sale of the World's Fair Site," Mr.
Stanziale adds.
Since there is no exclusion for the fees and expenses of
professionals associated with the Sale of the World's Fair Site,
the fees and expenses should be added to the World's Fair
Expenses, the Reorganized Debtors conclude.
The Reorganized Debtors contend that they should not
independently bear the fees and expenses of the Equity
Committee's professionals when all the work associated with the
World's Fair Site is for the benefit of the Equity Committee's
constituents.
By a Court order, Mr. Stanziale says, the World's Fair Site Sale
proceeds will be escrowed pending resolution of the motion by
certain shareholders to compel further distributions under the
Plan. Therefore, he continues, the Equity Committee will have
sufficient time after the hearing on the sale to assert whatever
rights exist vis-a-vis the sale proceeds.
Nonetheless, the Equity Committee wants a specific finding in the
Sale Order that the World's Fair Sale Expenses should exclude
fees and costs incurred by any professional other than C&W. That
finding, Mr. Stanziale says, is at odds with the Plan. Moreover,
the Reorganized Debtors reserve their rights to challenge any
attempt to compel them to pay the fees and expenses of the Equity
Committee professionals beyond what was expressly provided in the
Plan.
BET Investments Submits Highest Bid -- $25+ Million
At the conclusion of the auction, the Equity Committee, with
Trump Plaza Associates, LLC, identified:
* the final bid of BET Investments, Inc., to be the highest
and best offer for World's Fair Site; and
* the final bid of Trump Boardwalk Partners, LLC, to be the
next highest bidder.
Court Approves BET Purchase Agreement
Consequently, on Sept. 13, 2005, BET and Trump Plaza entered
into an agreement for the sale of the World's Fair Site.
Among others, the BET Purchase Agreement provides for a purchase
price of $25,150,000. The stalking horse bidder, Robino Stortini
Holdings, LLC, had made an initial offer of $12,500,000.
BET will deliver $875,000 to the escrow agent, The Bayard Firm.
The sale of the Property will be:
-- free and clear of all liens, claims, encumbrances and
interests, except for certain permitted exceptions; and
-- subject to the World's Fair Negative Covenant, as defined
in the Plan.
A full-text copy of the BET Purchase Agreement is available
without charge at http://ResearchArchives.com/t/s?1ae
Judge Wizmur finds that the terms and conditions of the BET
Purchase Agreement have been negotiated at arm's-length and
agreed in good faith. The Court also finds the purchase price
and other terms and conditions to be fair and reasonable in all
respects.
Accordingly, the Court approves the sale of the World's Fair Site
to BET pursuant to the BET Purchase Agreement. Judge Wizmur
authorizes the Equity Committee and each person having duties and
responsibilities under the Purchase Agreement to carry out all of
its provisions.
BET will not have any liability for any obligation of the Equity
Committee related to the World's Fair Site.
The sale of the Property pursuant to the BET Purchase Agreement
is an "as-is" sale, and, under no circumstances will Trump Plaza
or any of the Debtors have any liability for any breach of any
representation and warranty.
The Court makes it clear that the Sale Order does not grant
authorization for the Equity Committee or any other party to
assume or assign any interest in (i) the East Hall Easement, and
(ii) the Sublease Interest. Approval for any proposed assumption
or assignment of the rights of the Equity Committee in the East
Hall Easement or the Sublease Interest will be sought by way of a
separate motion, which may be brought by BET, provided that:
-- the outcome of any motion will have no effect on the
obligation of BET to close the Sale; and
-- the costs of prosecuting any motion will have no effect on
the Purchase Price or the World's Fair Sale Proceeds be
distributed pursuant to the Plan.
In the event of a failure to consummate the sale to BET
Investments, without further Court order:
a. Trump Boardwalk will be deemed the Successful Bidder;
b. the purchase agreement with Trump Boardwalk will be
deemed to be the approved Purchase Agreement;
c. the sale to Trump Boardwalk pursuant to the Sale Order is
authorized;
d. the Equity Committee will file a copy of the Trump
Boardwalk Purchase Agreement with the Court within 10 days
of the Closing; and
e. Trump Boardwalk will proceed to closing pursuant to the
Purchase Agreement without any defenses or delay, and will
be entitled to all the rights and privileges and subject to
all obligations of the Successful Bidder.
* * *
Judge Wizmur said she will clarify the definition of "World's
Fair Sale Expenses" in a subsequent final order with respect to
reasonable post-Effective Date fees and expenses incurred by
counsel for the Equity Committee.
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. 28; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
TRUMP HOTELS: Wants Bodner's Request to Extend Bar Date Denied
--------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
Sept. 8, 2005, James M. Clancy, Esq., at Bafundo, Porter, Borbi &
Clancy, LLC, in New Jersey, asks Judge Wizmur of the U.S.
Bankruptcy Court for the District of New Jersey to extend the
Claims Bar Date for a sufficient time to allow him to file a claim
on behalf of his client, Edna Bodner.
Mr. Clancy relates that on Feb. 4, 2000, 75-year old Edna
Bodner tripped and fell while on the premises of the Trump Plaza
Hotel. A lawsuit relating to the accident was filed in the
Superior Court of New Jersey in February 2002.
According to Mr. Clancy, he represented Ms. Bodner in the New
Jersey litigation since December 2002. Thus, Mr. Clancy says,
the Debtors were well aware of Ms. Bodner's injury claim and his
representation of her. However, he tells the Court that he never
received a proof of claim or a notice of the claims bar date from
the Debtors.
Reorganized Debtors Respond
Charles A. Stanziale, Jr., Esq., at McElroy, Deutsch, Mulvaney &
Carpenter, LLP, in Newark, New Jersey, tells the Court that mail
packages sent to Edna and Jack Bodner and their counsel
containing notices of the commencement of the Debtors' cases and
the Bar Date, and a proof of claim form were not returned to The
Trumbull Group LLC. The Reorganized Debtors assert that a
properly addressed notice placed in the mail arrived at its
destination and was received by the party to whom it was
addressed.
As previously reported, the Bodners' counsel, James Clancy, Esq.,
admits receiving the Commencement Notice, but denies receiving a
proof of claim form or a Bar Date Notice. The statement is
disingenuous as the Notices were sent in the same envelope, Mr.
Stanziale states. If the Bodners' counsel received the
Commencement Notice, then he clearly received the Bar Date
Notice. Even if Mr. Clancy did not receive the Bar Date Notice
he is without an excuse as the Commencement Notice specified that
the Bar Date was January 18, 2005, Mr. Stanziale points out.
The Bodners failed to establish a reason that justifies the
delay, the Reorganized Debtors insist. The failure to review a
notice lacks any merit as a valid reason for the failure to file
a timely proof of claim. The Bodners also failed to display
excusable neglect, and thus the filing of a claim was in their
reasonable control with no acceptable reason given for the delay.
The burden of proving that allowing a late-filed claim will not
prejudice the Debtors lies with the Bodners, Mr. Stanziale
asserts. The Bodners' bald statement, unsupported by evidence or
analysis, wholly fails to meet the burden.
The Reorganized Debtors rely on the Bar Date and its provision
for an orderly administration of their Chapter 11 cases.
Allowance of the Late Claim could signal that the Bar Date will
not be strictly enforced, thus disrupting the orderly progress of
the Reorganized Debtors' post-confirmation efforts and forcing
the Reorganized Debtors to defend a plethora of litigation
matters, many of which may be frivolous, Mr. Stanziale argues.
The Reorganized Debtors believe that there could be large numbers
of mostly meritless personal injury claims that will be asserted
if the Bar Date is not enforced by plaintiffs seeking to take
unfair advantage of the Reorganized Debtors' resources. If the
Bar Date is not enforced, time, energy and financial resources of
the Reorganized Debtors' officers, staff and counsel will be
significantly diverted from carrying out their necessary post-
confirmation duties.
Therefore, the Reorganized Debtors ask the Court to deny Mr.
Clancy's request.
Extend Bar Date, James Clancy Insists
In a letter to the Reorganized Debtors' counsel, Mr. Clancy
asserts that the Commencement Notice he received is different
from the exhibit presented by the Reorganized Debtors in their
response.
Mr. Clancy insists that the Bar Date should be extended to allow
the Bodners to file a proof of claim.
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. 28; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
UAL CORP: Wants Court Nod to Enter Pegasus Sale/Leaseback Deal
--------------------------------------------------------------
UAL Corporation and its debtor-affiliates seek the U.S. Bankruptcy
Court for the Northern District of Illinois permission to enter
into a letter agreement with Pegasus Aviation Finance Company.
Under the Letter Agreement, the Debtors will sell six Boeing 767-
300ER Aircraft and 12 Pratt & Whitney PW 4060 engines to Pegasus,
and Pegasus will lease the Aircraft back to the Debtors.
The Aircraft bear Tail Nos. N642UA, N643UA, N644UA, N646UA,
N647UA, and N661UA.
The lease price schedule for the leases is based on the purchase
price that Pegasus pays the Debtors for the Aircraft.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago,
Illinois, explains that the Debtors' Letter Agreement with
Pegasus is not duplicative of their Letter Agreement with GE
Commercial Aviation Services LLC. Instead, the Pegasus Letter
Agreement will serve as back-up financing for the 767 Aircraft,
in case the financing provided for under the GECAS Letter
Agreement does not come to fruition.
Similarly, the terms of the Pegasus Letter Agreement are fair and
reasonable, Mr. Sprayregen says. The Debtors will obtain
financing for the Aircraft under terms that are superior to both
the prepetition lease agreements and the Public Debt Group's
lease proposals. The Letter Agreement will also replenish the
Debtors' liquidity.
The Debtors also ask Judge Wedoff declare that the Pegasus Letter
Agreement is binding on them and their successors and permitted
assigns, including any trustee appointed under Chapter 7 of the
Bankruptcy Code or otherwise.
The Debtors further ask the Court to:
-- modify and lift the automatic stay and make Section 1110
applicable to the leases to permit enforcement of remedies
under the Letter Agreement and related agreements;
-- approve the transaction free and clear of all liens, claims
and encumbrances;
-- find that Pegasus is a good faith purchaser entitled to the
protection of Section 363(m); and
-- grant Pegasus a junior security interest in pre-existing
collateral to secure the Debtors' obligations under the
new leases.
Mr. Sprayregen notes that the terms of the Letter Agreement are
of a highly confidential and sensitive nature to both the Debtors
and Pegasus. The Debtors have provided the details of the Letter
Agreement to counsel for the Official Committee of Unsecured
Creditors, non-recused members of the Creditors' Committee and
the DIP Lenders. When the Court grants authority to enter into
the Letter Agreement, the Debtors will provide documentation to
counsel for the DIP Lenders and counsel for the Creditors'
Committee and, if required, will file these documents with the
Court under seal.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. (United Airlines
Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
UAP HOLDING: Streamlining Operations as Part of Restructuring
-------------------------------------------------------------
UAP Holding Corp. (Nasdaq: UAPH) disclosed a streamlining of its
organization and management structure. Over the past four years,
the company has engaged in a focused effort to reduce expenses and
enhance operational efficiencies.
As part of this restructuring, the company will:
-- consolidate ten of its regional distribution organizations
into five;
-- close one regional finance center; and
-- further centralize and consolidate various accounting and
administrative functions.
The company's organizational changes will be implemented
immediately and the financial benefit should offset any one-time
costs incurred in fiscal year 2006 and will be fully realized in
UAP's fiscal 2007.
"This streamlining will improve operating efficiencies and allow
us the financial flexibility to support the sales growth and
strategic initiatives that will enhance long-term shareholder
value," said L. Kenny Cordell, UAP Holding Corp.'s President and
Chief Executive Officer. "As we come to the end of a good crop
year for our growers, now is the best time to make the appropriate
internal changes that will allow us to focus on our core
competencies, while aggressively addressing the new opportunities
we have in the marketplace."
UAP Holding Corp. -- http://www.uap.com/-- is the holding company
of United Agri Products, Inc., the largest independent distributor
of agricultural and non-crop inputs in the United States and
Canada. United Agri Products markets a comprehensive line of
products, including crop protection chemicals, seeds and
fertilizers, to growers and regional dealers. United Agri
Products also provides a broad array of value-added services,
including crop management, biotechnology advisory services, custom
blending, inventory management and custom applications of crop
inputs. United Agri Products maintains a comprehensive network of
approximately 330 distribution and storage facilities and three
formulation and blending plants, strategically located throughout
the United States and Canada.
* * *
The Company's 10-3/4% senior discount notes due 2012 carry Moody's
Investors Service's and Standard & Poor's single-B ratings.
UNITED FLEET: Judge Clark Converts Chapter 11 Cases to Chapter 7
----------------------------------------------------------------
The Hon. Letitia Z. Clark of the U.S. Bankruptcy Court for the
Southern District of Texas converted United Fleet Maintenance,
Inc.'s chapter 11 cases to chapter 7 liquidation proceedings.
Judge Clark signed the order on August 25, 2005.
Judge Clark also denied the Debtor's motion for joint
administration of this case with Case No. 05-41243-JB without
prejudice.
On August 17, 2005, Texas Mutual Insurance Company, a creditor to
the Debtor and Ellynn Ann Ogilvie, asked the Court to:
a) dismiss the chapter 11 case with prejudice;
b) convert the Debtors' cases to chapter 7; and
c) order the chapter 11 case jointly administered with the
individual chapter 7 case filed by Ellynn Ann Ogilvie, the
Debtor's president.
Texas Mutual is currently suing the Debtor, Ogilvie and others,
including its affiliates, in a suit pending in the 200th Judicial
District Court of Travis County, Texas.
Texas Mutual told the Court that the parties have been engaged in
a pattern of fraudulent behavior designed to evade payment of
lawful premiums due for workers compensation insurance coverage.
Texas Mutual added that the Debtor and its management cannot be
said to have "clean hands," that the chapter 11 case was filed for
the sole purpose of preventing the immediate production of
documents and payment of sanctions, and the delay of the trial of
the lawsuit scheduled on November, 2005.
Furthermore, they considered the Debtor's chapter 11 case as bad
faith filing, which involve an entity created or revitalized on
the eve of foreclosure to isolate property and creditors.
Headquartered in Houston, Texas, United Fleet Maintenance, Inc.,
filed for chapter 11 protection on July 22, 2005 (Bankr. S.D. Tex.
Case No. 05-41222). Richard L. Fuqua, Esq., at Fuqua & Keim,
L.L.P., represents the Debtor in its restructuring efforts. When
the Debtor filed for protection from its creditors, it listed
estimated assets of $10 million to $50 million and estimated debts
of $1 million to $10 million.
UNITED FLEET: Chapter 7 Trustee Taps Munsch Hardt as Counsel
------------------------------------------------------------
Janet S. Casciato-Northrup, the chapter 7 trustee appointed in
United Fleet Maintenance, Inc.'s chapter 7 case, asks the Court
for permission to employ Munsch Hardt Kopf & Harr, P.C., as her
general counsel.
Munsch Hardt will:
a) analyze, institute and prosecute causes of action that are
property of the estate;
b) analyze, institute and prosecute actions regarding asset
transfers, foreclosure sales, disclaimers, insider
transactions and third-party dealings;
c) analyze business associations of the Debtor and determine
the interest of the estate and institute and prosecute
actions to effect the recovery of such interests;
d) evaluate all claims or potential causes of action and take
the necessary steps to preserve the estate's rights;
e) analyze, institute and prosecute actions, including the
recovery of property of the estate and proceeds derived from
property of the estate;
f) assist the Trustee, where necessary, negotiate and
consummate non-routine sales of assets of the estate,
including sales free and clear of liens, claims and
encumbrances, and institute any proceedings related; and
g) assist the Trustee, where necessary to negotiate and
prosecute non-routine objections to claims.
The firm's professionals current hourly rates:
Designation Hourly Rate
----------- -----------
Shareholder/Partner $300 - $490
Counsel $340 - $355
Associate $140 - $315
Clerk $60 - $215
The Chapter 7 Trustee believes that Munsch Hardt is disinterested
as that term is defined in Section 101(14) of the U.S. Bankruptcy
Code.
Headquartered in Houston, Texas, United Fleet Maintenance, Inc.,
filed for chapter 11 protection on July 22, 2005 (Bankr. S.D. Tex.
Case No. 05-41222). Richard L. Fuqua, Esq., at Fuqua & Keim,
L.L.P., represents the Debtor in its restructuring efforts. When
the Debtor filed for protection from its creditors, it listed
estimated assets of $10 million to $50 million and estimated debts
of $1 million to $10 million.
US AIRWAYS: Raising $297 Mil. from New Stock & Private Offering
---------------------------------------------------------------
US Airways Group Inc. disclosed in a regulatory filing on Monday
its intention to sell convertible notes, due 2020, valued at $125
million. The company also expects to raise $172.5 million from the
sale of 9.78 million shares.
Merrill Lynch will handle the stock offering, which will take
place after the America West merger closes.
The interest rate, conversion rights (including the terms upon
which the notes will be convertible into US Airways Group, Inc.
common stock) and offering price are to be determined by
negotiations between US Airways Group, Inc. and the initial
purchasers of the notes.
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 CAN: Plans to Restate 2002, 2003 & 2004 Financial Statements
---------------------------------------------------------------
The Audit Committee of U.S. Can Corporation's Board of Directors
agreed with management's recommendation to restate the Company's
financial statements as of December 31, 2003, and for the years
ended December 31, 2002, 2003 and 2004 and for the quarterly
periods ended April 4, 2004, and July 4, 2004, for the effects of
changing the Company's inventory policy from LIFO to FIFO.
Securities and Exchange Commission's staff sent a comment letter
to the Company requesting information relating to U.S. Can
Corporation's accounting change from LIFO to FIFO during the
second quarter of 2004 and the application of APB Opinion No. 20.
The principal effects of the Restatement are:
* a decrease in the reported amount of cost of goods sold for
the year ended December 31, 2002, causing a corresponding
decrease in net loss of $0.1 million for 2002;
* an increase in the reported amount of cost of goods sold for
the year ended December 31, 2003, causing a corresponding
increase in net loss of $0.6 million for 2003;
* decreases in the reported amounts of cost of goods sold,
causing corresponding decreases in net loss of $0.5 million,
$0.3 million and $0.2 million for the year ended Dec. 31,
2004, and for the quarterly periods ended April 4, 2004 and
July 4, 2004.
As a result of the Restatement, the Company's published financial
statements for the years ended December 31, 2002, 2003 and 2004
and subsequent interim periods and all earnings releases and other
communications relating to its financial results for such time
periods should not be relied upon until the issuance by the
Company of restated and audited financial statements for 2002,
2003 and 2004 and restated financial statements for subsequent
interim periods. The Company expects to file revised financial
statements on or around September 30, 2005. Management and the
Audit Committee have discussed these matters with the Company's
independent accountants.
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 balance sheet showed a $413,743,000
equity deficit, compared to a $398,429,000 deficit at Dec. 31,
2004.
VARIG S.A.: Presents Restructuring Plan To Brazilian Court
----------------------------------------------------------
Viacao Aerea Rio-Grandense, S.A., filed a restructuring plan with
the Commercial Bankruptcy and Reorganization Court in Rio de
Janeiro, in Brazil, on September 12, 2005.
VARIG will hold a meeting with its creditors September 24 to form
a committee that will represent their interests.
The Plan outlines VARIG's goal to renegotiate its debt and cut
13% of its work force by the end of 2006, according to published
reports.
The Plan contemplates a temporary breaking up of VARIG into two
separate companies to attract investors:
1. The first unit will manage most of VARIG's current
operational units, including the regional airline
subsidiaries Nordeste Linhas Aereas, S.A., and Rio Sul
Linhas Aereas, S.A.; and
2. The second unit will include VARIG's existing
administrative units and manage the company's debts and
debt negotiations.
The two divisions will be merged, possibly within two years,
after the debt issues are resolved.
VARIG owes BRL7.7 billion -- $3.3 billion -- to the Brazilian
government and private creditors, including BRL4.5 billion --
$1.9 billion -- in taxes and duties. VARIG plans to sell shares
in the new company and use the proceeds to pay debt and make
investments in new businesses, Chairman David Zylberstajn told
reporters in Rio de Janeiro.
VARIG intends to pay as much as BRL100 million of unsecured debt
over a two-year period. According to Mr. Zylberstajn, the new
company will allow creditors to swap debt for equity and
investors to put cash into the airline to help it reorganize its
fleet and improve business.
The Fundacao Ruben Berta, VARIG's major shareholder, will
relinquish its majority stake under the Plan. The Foundation
currently owns 56% of VARIG, according to The Associated Press.
Bloomberg News says the Foundation controls 87% of VARIG shares.
Bloomberg News also reports that VARIG has won a Brazilian
Supreme Court ruling ordering the federal government to
compensate it for more than BRL2.5 billion of forgone profits
triggered by price controls during the 1980s and early 1990s.
VARIG intends to pay its debt with damages won in court from the
government.
VARIG will use proceeds from the sale of its logistics arm,
VarigLog, to MatlinPatterson to address immediate cash flow
needs. VARIG is selling the unit for $38 million in cash plus
$65 million to be paid from VarigLog receipts later.
VARIG expects to save about $168 million annually from the
layoffs, according to AP.
The Plan must be accepted by creditors and approved by the
Brazilian court. Creditors have until December 17, 2005, to
approve or reject the Plan, AP says.
VARIG Pension Fund May Reject Plan
VARIG's largest creditor, Brazilian pension fund Aerus, will
probably reject the airline's plan to stop paying debts for a
year, Bloomberg News reports, citing local newspaper O Estado de
S. Paulo.
Bloomberg News reporter Romina Nicaretta said Odilon Junqueira,
Aerus' president, told the newspaper that the fund wants VARIG to
resume payments of $3.9 million a month to the fund as of January
to avert a cash shortfall.
VARIG stopped making payments to its pension fund in April, and
currently owes about BRL2 billion to the fund.
Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin America.
VARIG's principal business is the transportation of passengers and
cargo by air on domestic routes within Brazil and on international
routes between Brazil and North and South America, Europe and
Asia. VARIG carries approximately 13 million passengers annually
and employs approximately 11,456 full-time employees, of which
approximately 133 are employed in the United States.
The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a competitive
landscape, high fuel costs, cash flow deficit, and high operating
leverage. The Debtors may be the first case under the new law,
which took effect on June 9, 2005. Similar to a chapter 11
debtor-in-possession under the U.S. Bankruptcy Code, the Debtors
remain in possession and control of their estate pending the
Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de
Advocacia Sergio Bermudes, represents the carrier in Brazil.
Each of the Debtors' Boards of Directors authorized Vicente Cervo
as foreign representative. In this capacity, Mr. Cervo filed a
Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case
Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury
Winthrop Shaw Pittman LLP represents Mr. Cervo in the United
States. As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts. (VARIG Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
VARIG S.A.: Shareholders Favor VarigLog Sale to MatlinPatterson
---------------------------------------------------------------
In a meeting in Porto Alegre, Brazil, shareholders of VARIG, S.A.,
approved the sale of Varig Logistica, S.A., to the U.S. investment
fund MatlinPatterson Global Advisers, LLC, for $38 million,
Bloomberg News reports.
However, the Sale still has to be approved by the maximum body
of the Fundacao Ruben Berta, VARIG's major shareholder, in a
meeting scheduled for September 20, 2005.
As reported in the Troubled Company Reporter, VARIG S.A. and its
debtor-affiliates asked the Commercial Bankruptcy and
Reorganization Court in Rio de Janeiro for authority to sell 95%
of VarigLog's shares pursuant to the terms established in a
proposal filed by MatlinPatterson. VarigLog , a wholly owned
subsidiary of VARIG, has its own fleet of 18 cargo airplanes under
leasing agreements entered into with international lessors.
On August 31, 2005, Judge Giselle Bondim Lopes Ribeiro, of the
federal labor court in Rio de Janeiro, Brazil, blocked VARIG, from
selling its VarigLog to MatlinPatterson at the request of the
National Federation of Civil Aviation Workers, known as Fentac.
Judge Ribeiro suspended the proposed sale after Fentac claimed
that the sale was fraudulent and harmful to workers. In
addition, the Local Court said that the $100 million valuation
agreed by VARIG and MatlinPatterson is lower than VarigLog's
$300 million estimated value.
VARIG is appealing the Local Court's decision that granted the
injunction against the VarigLog sale. VARIG president David
Zylberstajn warned that if the Local Court maintains a suspension
of the VarigLog sale, VARIG could halt operations. The sale of
VarigLog is the airline's only alternative to resolve its short-
term cash difficulties.
Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin America.
VARIG's principal business is the transportation of passengers and
cargo by air on domestic routes within Brazil and on international
routes between Brazil and North and South America, Europe and
Asia. VARIG carries approximately 13 million passengers annually
and employs approximately 11,456 full-time employees, of which
approximately 133 are employed in the United States.
The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a competitive
landscape, high fuel costs, cash flow deficit, and high operating
leverage. The Debtors may be the first case under the new law,
which took effect on June 9, 2005. Similar to a chapter 11
debtor-in-possession under the U.S. Bankruptcy Code, the Debtors
remain in possession and control of their estate pending the
Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de
Advocacia Sergio Bermudes, represents the carrier in Brazil.
Each of the Debtors' Boards of Directors authorized Vicente Cervo
as foreign representative. In this capacity, Mr. Cervo filed a
Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case
Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury
Winthrop Shaw Pittman LLP represents Mr. Cervo in the United
States. As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts. (VARIG Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
VARIG S.A.: Tap Air Still Interested in Alliance
------------------------------------------------
TAP Air Portugal reaffirmed its interest in forming a deal with
VARIG, S.A., after the Brazilian flagship carrier presented its
restructuring plan, reports Dow Jones Newswires.
TAP first expressed interest months ago in taking a 20% stake
VARIG, but backed out after VARIG's controlling shareholder, the
Ruben Berta Foundation, balked at ceding control.
Pursuant to the plan, the Ruben Berta Foundation will reduce its
controlling stake to a minority position.
TAP spokesman Antonio Monteiro said TAP will now examine VARIG's
restructuring plan before deciding how or when the companies
might develop a deal.
The two airlines already have a code-sharing deal on some trans-
Atlantic flights, and analysts have said they could both cut
costs by eliminating overlapping routes.
As reported in the Troubled Company Reporter, TAP hired the
investment bank J.P. Morgan as a financial adviser for the
proposed purchase. Diario Economico, citing an unidentified VARIG
insider, reported that TAP would have to pay about $400 million to
buy the 20% stake in the airline company.
Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin America.
VARIG's principal business is the transportation of passengers and
cargo by air on domestic routes within Brazil and on international
routes between Brazil and North and South America, Europe and
Asia. VARIG carries approximately 13 million passengers annually
and employs approximately 11,456 full-time employees, of which
approximately 133 are employed in the United States.
The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a competitive
landscape, high fuel costs, cash flow deficit, and high operating
leverage. The Debtors may be the first case under the new law,
which took effect on June 9, 2005. Similar to a chapter 11
debtor-in-possession under the U.S. Bankruptcy Code, the Debtors
remain in possession and control of their estate pending the
Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de
Advocacia Sergio Bermudes, represents the carrier in Brazil.
Each of the Debtors' Boards of Directors authorized Vicente Cervo
as foreign representative. In this capacity, Mr. Cervo filed a
Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case
Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury
Winthrop Shaw Pittman LLP represents Mr. Cervo in the United
States. As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts. (VARIG Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
WELLS FARGO: Fitch Places Low-B Rating on Two Certificate Classes
-----------------------------------------------------------------
Fitch rates Wells Fargo Mortgage Securities Corp.'s mortgage pass-
through certificates, series 2005-AR16:
-- $724,023,000 classes VII-A-1 and VII-A-2, 'AAA';
-- $15,005,000 class VII-B-1, 'AA';
-- $4,502,000 class VII-B-2, 'A';
-- $2,626,000 class VII-B-3, 'BBB';
-- $1,500,000 class VII-B-4, 'BB'; and
-- $1,126,000 class VII-B-5, 'B'.
The 'AAA' rating on the senior certificates reflects the 3.50%
subordination provided by the 2.00% class VII-B-1 certificates,
0.60% class VII-B-2 certificates, 0.35% class VII-B-3
certificates, 0.20% privately offered class VII-B-4 certificates,
0.15% privately offered class VII-B-5 certificates and the 0.20%
privately offered class VII-B-6 certificates. The class VII-B-6
certificates are not rated by Fitch.
Fitch believes the amount of credit enhancement available will be
sufficient to cover credit losses. The ratings also reflect the
high quality of the underlying collateral, the integrity of the
legal and financial structures and the servicing capabilities of
Wells Fargo Bank, N.A. (WFB; rated 'RPS1' by Fitch).
The transaction is secured by seven pools of mortgage loans, which
consist of fully amortizing, one- to four-family, adjustable-rate
mortgage loans that provide for a fixed interest rate during an
initial period of approximately 10 years. Thereafter, the
interest rate will adjust on an annual basis to the sum of the
weekly average yield on US Treasury Securities adjusted to a
constant. 73.2% of the Group VII mortgage loans are interest only
loans, which require only payments of interest until the month
following the first adjustment date.
The mortgage loans in group VII have an aggregate principal
balance of approximately $750,282,762 as of the cut-off date
(Sept. 1, 2005), an average balance of $528,368, a weighted
average remaining term to maturity of 359 months, a weighted
average original loan-to-value ratio of 69.70% and a weighted
average coupon of 5.524%. Rate/Term and cashout refinances
account for 19.10% and 18.13% of the loans, respectively. The
weighted average FICO credit score of the loans is 747. Owner
occupied properties and second homes comprise 92.74% of the loans.
The states that represent the largest geographic concentration are
California (44.09%), and Maryland (5.03%). All other states
represent less than 5% of the aggregate pool balance as of the
cut-off date.
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,
please see the press release issued May 1, 2003 entitled 'Fitch
Revises Rating Criteria in Wake of Predatory Lending Legislation',
available on the Fitch Ratings web site at
http://www.fitchratings.com/
All of the mortgage loans were generally originated in conformity
with underwriting standards of Wells Fargo Home Mortgage, Inc.
WFHM sold the loans to Wells Fargo Asset Securities Corporation, a
special purpose corporation, who deposited the loans into the
trust. The trust issued the certificates in exchange for the
mortgage loans. WFB, an affiliate of WFHM, will act as servicer,
master servicer and custodian, and Wachovia Bank, N.A. will act as
trustee and paying agent. For federal income tax purposes,
elections will be made to treat the trust as three separate real
estate mortgage investment conduits.
WESCO INT'L: Moody's Rates $125 Million Senior Debentures at B2
---------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to both WESCO
International, Inc.'s proposed guaranteed senior convertible
debentures due 2025 and WESCO Distribution, Inc.'s proposed
guaranteed senior subordinated notes due 2017. Moody's also
assigned a Ba3 corporate family rating to WESCO International and
withdrew the Ba3 corporate family rating of WESCO Distribution.
Proceeds from the offerings will be used to partly finance the
acquisition of the Carlton-Bates Company by WESCO Distribution and
refinance existing debt.
The ratings assignment reflects Moody's expectation that credit
metrics will strengthen to pre-acquisition levels over the next 12
to 18 months as operating performance improves and post
acquisition debt levels are reduced. The ratings also reflect:
* the company's geographic reach;
* product breadth;
* minimal capital requirements; and
* relatively extensive base of both customers and suppliers.
However, the ratings also incorporate:
* the company's higher leverage post the acquisition;
* the potential for further acquisitions given the fragmented
nature of the industry;
* relatively high level of supplier concentration; and
* significant amount of intangibles.
Moody's rating actions were:
Ratings Assigned:
WESCO International, Inc.
* Corporate Family rating rated Ba3
* US$125 million, guaranteed convertible senior debentures,
due 2025, rated B2,
WESCO Distribution, Inc.:
* $150 million, guaranteed senior subordinated notes,
due 2017, rated B2
Ratings Withdrawn:
WESCO Distribution, Inc.:
* Corporate Family rating rated Ba3
Ratings affirmed:
WESCO Distribution, Inc.:
* $270 million, 9.125% guaranteed senior subordinated notes,
due June 1, 2008 rated B2.
The outlook is stable.
WESCO's operating performance has steadily improved due to
continued growth in:
* integrated supply and national accounts;
* MRO business; and
* small to medium sized project business.
Although the company has not seen a meaningful improvement in the
large more complex longer lead time projects, the company expects
to see some improvement going forward. However, gross margins
have deteriorated from the previous year due to more stable
commodity pricing and lower margin product mix. This has been
mitigated to a certain degree by a continued focus on cost
reductions, in part through the company's LEAN initiatives, and
the ability to pass through higher material prices (copper,
steel).
The Carlton-Bates acquisition should fit well with the company's
current operations and strengthen its position in the OEM segment
directly. In addition, the LADD division of Carlton-Bates will
also give WESCO a new product category and distribution channel.
WESCO stated that on an LTM basis as of June 30, 2005, sales and
EBITDA for Carlton-Bates were approximately $292 million and $27
million.
WESCO has a reasonable competitive position for its products
compared to its peers, but the industry in which WESCO operates
continues to be highly fragmented. In 2004, the four national
distributors in the electrical distribution sector, including
WESCO, accounted for only 16% of total industry sales. As a
result of such fragmentation, consolidation has been a natural
avenue of growth for many companies such as WESCO, which itself
completed 25 acquisitions from 1995 to 2001, in addition to the
Fastec and Carlton-Bates acquisitions in 2005.
In aggregate, the first 25 acquisitions accounted for roughly $1.3
billion of 2004 total revenues and also generated approximately
$400 million of balance sheet intangibles resulting in marginally
positive tangible book equity. Although the company expects to
continue to make strategic acquisitions in the future, at this
point in time Moody's ratings only incorporate smaller tuck-ins
acquisitions that will not meaningfull increase leverage or weaken
debt protection measurements.
On June 30, 2005, total debt, adjusted for the A/R securitization
and leases was approximately $785 million with LTM EBITDAR of
approximately $196 million. As a result, leverage on an adjusted
debt to LTM EBITDAR basis was approximately 4.0x while coverage
was about 3.3x. The improvement was driven by stronger operating
earnings and debt reduction that was funded in part by equity
proceeds of approximately $100 million in December 2004. However,
pro forma for the acquisition of Carlton-Bates and associated
financings, debt levels will increase to approximately $874
million, excluding leases.
As part of the transaction, the company intends to increase the
availability under its account receivable securitization facility
to $400 million and its revolving credit facility to $275 million
from $250 million, while retaining the similiar covenant package.
Proceeds from the debt offerings along with borrowings under the
A/R securitization facility and the revolving credit facility will
be used to help finance the acquisition of Carlton-Bates and
repurchase the outstanding 9.125% notes due June 1, 2008.
Although this will reduce the near-term availability under the A/R
facility, WESCO's primary source of liquidity going forward will
remain the $275 million revolving credit facility (not rated).
However, Moody's does not anticipate the company utilizing this
facility in any material amount over the intermediate term.
The B2 rating on the senior subordinated notes of WESCO
Distribution reflects their subordination to a significant amount
of secured debt, including the company's A/R securitization
facility (proposed $400 million), revolving credit facility
(proposed $275 million), and various mortgage debt.
Although the guaranteed convertible debentures are being issued by
the parent holding company, WESCO International, they are rated
the same as the subordinated notes at WESCO Distribution
reflecting the benefit derived from a senior subordinated
guarantee from WESCO Distribution. In addition, the subordinated
notes of WESCO Distribution benefit from a senior unsecured
guarantee from WESCO International resulting in the two debt
obligations being pari passu and rated at the same level.
The stable outlook reflects Moody's expectation that WESCO's
credit metrics will strengthen as operating performance continues
to improve and post acquisition debt levels are reduced. At the
current rating levels Moody's would expect leverage to moderate
towards 4.0x, with coverage exceeding 3.5x, and retained cash flow
(before working capital) to total adjusted debt of at least 10% to
15%. Factors that would negatively impact the ratings and/or
outlook would be an inability to improve credit statistics within
a reasonable time period (12 to 18 months) or deterioration in
liquidity, due in part to competitive pressures, additional
acquisitions, or the loss of a significant customer.
WESCO Distribution Inc., headquartered in Pittsburgh,
Pennsylvania, is a leading North American provider of electrical
construction products and electrical and industrial maintenance,
repair and operating supplies.
WESTERN SKIES: List of 20 Largest Unsecured Creditors
-----------------------------------------------------
Western Skies Dialysis, Inc. released a list of its 20 Largest
Unsecured Creditors:
Entity Claim Amount
------ ------------
Frenesius USA Marketing, Inc. $280,000
c/o Rebecca K. O'Brien, Esq.
Rusing & Lopez, PLLC
6262 North Swan Road, Suite 200
Tucson, AZ 85718
Metro Medical Supply Co. $227,749
P.O. Box 415000
Nashville, TN 37241
United Healthcare $214,000
c/o Larraine Tompkins
CDR Associates, LLC
9690 Deereco Road, Suite 300
Timonium, MD 21093
Walter Loster $101,268
Ronald Goetz $47,000
Safe Ride Services, Inc. $45,120
Foundation Medical Staffing, LLC $43,911
R. Braun Medical, Inc. $34,614
Rockwell Medical Technologies $23,239
Quik Travel Staffing, Inc. $18,484
Premier healthcare, Inc. $18,445
Henry Schein, Inc. $17,687
Lee Medical International, Inc. $15,232
Renal Temporary Services, LLC $14,210
Baxter Heathcare Corp. $12,258
Midwest Medical Supply $10,902
Velos, Inc. $8,565
ESRD/ROYCO Inc. $6,905
Healthcare Medical Waste Services $5,642
Osmonics $4,689
Headquartered in Casa Grande, Arizona, Western Skies Dialysis,
Inc. filed for chapter 11 protection on Aug. 26, 2005 (Bankr. D.
Ariz. Case No. 05-04828). Donald W. Powell, Esq., at Carmichael &
Powell, P.C., represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it
estimated assets and debts between $1 million and $10 million.
WEX PHARMACEUTICALS: COO Donna Shum Departs Due to Restructuring
----------------------------------------------------------------
WEX Pharmaceuticals Inc. (TSX:WXI) reported the departure of Donna
Shum, Chief Operating Officer, as a consequence of corporate
restructuring of the Company.
Ms. Shum was named Chief Operating Officer in the year 2000 after
acting as Chief Financial Officer and holding the positions of
Controller and Corporate Secretary.
"We would like to thank Donna for her many contributions," said
Dr. Edge Wang, Interim CEO. "We wish her all the best in her
future endeavors."
The Company's lead product TectinTM is currently undergoing a
Phase IIb/III clinical study in over 25 clinical centers across
Canada and a Phase II study in China.
WEX Pharmaceuticals Inc. is dedicated to the discovery,
development, manufacture and commercialization of innovative drug
products to treat moderate to severe acute and chronic pain,
symptom pain relief associated with addiction withdrawal from
opioid abuse and medicines designed for local anaesthesia. The
Company's principal business strategy is to derive drugs from
naturally occurring toxins and develop proprietary products for
the global market. The Company's Chinese subsidiary sells generic
products manufactured at its facility in China.
* * *
As reported in the Troubled Company Reporter on Aug. 22, 2005, WEX
Pharmaceuticals Inc. was issued a request for early redemption of
its unsecured convertible debentures in the aggregate principal
amount of US$5.1 million that were issued in June 2004 by the
Company's wholly owned subsidiary, Wex Medical Ltd., to 3
investment funds managed by a major Asian financial institution.
The Institution alleges that the Company breached certain
representations and warranties contained in the agreements in
regards to the registered ownership of the drug withdrawal patent
"Use of Amino Quinazoline Hydride Compound and its Derivative for
Abstaining from Drug Dependence". As the debentures may now be
due on demand, in accordance with Canadian generally accepted
accounting principles, for financial statement purposes they have
been reclassified as current liabilities as at June 30, 2005.
Going Concern Doubt
Management believes that with the existing cash resources there
are sufficient resources for the Company's current programs to
fund operations until early Q1 in fiscal 2007. At June 30, 2005,
the Company had incurred significant losses and had an accumulated
deficit of $49 million. The Company's ability to continue as a
going concern is uncertain and dependent upon its ability to
achieve profitable operations, obtain additional capital and
dependent on the continued support of its shareholders.
Management is planning to raise additional capital to finance
expected growth. The outcome of these matters cannot be predicted
at this time. If the Company is unable to obtain adequate
additional financing, management will be required to curtail the
Company's operations.
The Company's contractual commitments are related to the lease of
the Company's office space and operating leases for office
equipment, plus clinical and non-clinical research. Payments
required under these agreements and leases are:
-- pursuant to the license agreement referred to in note 12 to
the consolidated financial statements, the Company is
jointly responsible for development costs in excess of
$40 million (EUR 25 million), if any.
-- pursuant to certain People's Republic of China
regulations, the Company's subsidiary is likely required to
transfer certain percentages of its profit, as determined
under the PRC accounting regulations, to certain statutory
funds. To date, the subsidiary has not recognized any
statutory reserves as it has not been profitable. Should
the subsidiary become profitable in the future, it will be
required to recognize these statutory accounts and
accordingly, a portion of the subsidiary's future earnings
will be restricted in use and not available for
distribution.
WORLDCOM INC: Moves for Summary Judgment on Holley Clark's Claim
----------------------------------------------------------------
On June 30, 1999, Holley Clark filed a civil action against
WorldCom, Inc. and its debtor-affiliates, asserting retaliation.
Ms. Clark's case was later removed to the U.S. District Court for
the Eastern District of California.
The Debtors filed a request for summary judgment on Ms. Clark's
Claim, and the California District Court granted the Debtors'
request. The District Court dismissed Ms. Clark's civil action.
Ms. Clark took an appeal of the District Court's decision to the
Ninth Circuit Court of Appeals. The Ninth Circuit affirmed the
District Court's ruling.
The time to file a petition for rehearing on the Ninth Circuit's
Order expired on December 1, 2004. The time to file a petition
for writ of certiorari with the Supreme Court likewise expired on
February 15, 2005.
Ms. Clark did not seek review of the Ninth Circuit's Order.
Instead, Ms. Clark filed Claim No. 10798 for $250,000 against the
Debtors, using "retaliation" as the basis for her claim.
Patricia A. Konopka, Esq., at Stinson Morrison Hecker, LLP, in
Kansas City, Missouri, asserts that Claim No. 10798 is based
solely on Ms. Clark's retaliation allegation against the Debtors
that was already litigated before the District Court and affirmed
by the Ninth Circuit.
"The District Court and Ninth Circuit made final determinations
that, as a matter of law, the Debtors are not liable to Ms. Clark
for retaliation," Ms. Konopka points out.
Accordingly, res judicata and collateral estoppel bar Ms. Clark
from re-litigating the same retaliation claim, Ms. Konopka
contends.
Accordingly, the Debtors ask the Court grant them summary judgment
and disallow Claim No. 10798 in its entirety.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on
October 31, 2003, and on April 20, 2004, the company formally
emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom
Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
XRG INC: June 30 Balance Sheet Upside-Down by $3.39 Million
-----------------------------------------------------------
XRG Inc. delivered its quarterly report on Form 10-QSB for the
quarter ending June 30, 2005, to the Securities and Exchange
Commission on Sept. 1, 2005.
The Company reported a net loss of $2,741,255 for the three month
period ended June 30, 2005 compared with a net loss of $3,046,910
for the three month period ended June 30, 2004. This decrease in
the Company's net loss of $304,655 or 10.0% is the result of
management implementing their interim operating plan and new
business strategy.
Restructuring Plans
In order to achieve a more streamlined and efficient operation,
the Company has established a profit improvement plan. Part of
the plan, the Company says, is identifying saving s opportunities
associated mostly with redundancies and economies of scale. The
Company is focusing these efforts on improvement in operating
ratios and tractor utilization (average revenue
per tractor per week.)
The first stage of this plan included the restructuring of the
Company's Express Freight Systems, Inc., acquisition on August 16,
2004 from an asset-based provider to a non-asset based agency
transaction. In addition, the Company restructured its asset
purchase of Carolina Truck Company during April 2005 to permit CTC
to restructure to a non-asset based agency transaction and during
June 2005 restructured the Highway Transport, Inc. transaction to
a non-asset based agency arrangement.
These restructurings fix the Company's operating costs associated
with the EFS and Highway companies through an agency arrangement
under terminal agreements and permits CTC to elect to do an agency
agreement if CTC prefers. The Company's profit improvement plan
may decrease its operating losses in the future; however, there is
no assurance that this plan will be effective in obtaining
profitability for the Company. Failure to accomplish these plans
could have an adverse impact on the Company's liquidity, financial
position and future operations.
Convertible Notes in Default
The Company is currently in default under approximately $155,000
of convertible notes due to six note holders. The $155,000 of
notes bear default interest of 15%. These notes matured on
December 31, 2004. The Company owes $50,000 to one note holder.
This note matured on February 1, 2005. The Company owes this note
holder 10,000 shares per month for each month the loan is not paid
off. The Company owes $10,000 to two note holders. $5,000 matured
on September 2004 and $5,000 matured on October 2004, The notes
bearing 12% interest totaling $20,000 have become due and are in
default.
Barron Promissory Note
On May 20, 2005, XRG entered into a Promissory Notes Modification
Agreement with Barron, extending the due date of all of the above
Notes, until December 31, 2005. In connection with this
arrangement, Barron agreed to subordinate its right of payment and
interest on such Notes and other future indebtedness to Kenneth A.
Steel, Jr., who is the holder of a $500,000 Promissory Note of
XRG. XRG is obligated to use at least 70% of the proceeds from
any debt on equity financings to repay these notes. In order to
satisfy its interim working capital requirements, XRH has borrowed
funds from Barron, its largest shareholder.
Overdraft Status
XRG currently maintains an overdraft status with its bank, which
is repaid for whatever has been presented on a daily basis.
However, this allows the Company to operate for the cost of bank
charges pending the daily receipt of funds from its factoring line
of credit.
Going Concern Doubt
Mahoney Cohen & Company, CPA, P.C. expressed substantial doubt XRG
Inc.'s ability to continue as a going concern after it audited the
Company's financial statements for the year ended March 31, 2005.
The auditing firm points to the Company's:
* working capital deficiency;
* loss from continuing operations; and
* deficiency in assets.
The Company's management repeats those doubts in its latest
quarterly filing citing:
* operating losses of approximately $2,742,000 for the three
months ended June 30, 2005;
* an accumulated deficit at June 30, 2005 of approximately
$38,127,000, which consists of approximately $15,405,000
from unrelated dormant operations and $22,722,000 from
current operations;
* a tangible negative net worth of approximately $4,066,000 as
of June 30, 2005.
* a negative working capital of approximately $4,132,000 at
June 30, 2005; and
* has used approximately $612,000 of cash from operations for
the three months ended June 30, 2005.
A full-text copy of XRG Inc.' latest quarterly report is available
at no charge at http://ResearchArchives.com/t/s?1af
XRG Inc. -- http://www.xrginc.com/-- provides a wide range of
truckload freight and logistics services in the United States.
The Company focuses on providing time-definite and other
responsive services through strategic acquisitions of truckload
carriers that have teams of dedicated and committed employees
supported by state-of-the-art technology and information systems.
Through the strength of its subsidiaries, XRG offers a wide range
of services including time definite pick up and delivery,
expedited carriage, and performance reporting.
At June 30, 2005, XRG Inc.'s balance sheet showed a $3,390,289
stockholders' deficit, compared to a $3,323,701 deficit at
Mar. 31, 2004.
YUKOS OIL: Three Shareholders to Sell Interests in Some Banks
-------------------------------------------------------------
Shareholders of Yukos Oil subsidiaries -- Irkutsknefteprodukt,
Novokuibyshev Refinery, and Syzran Refinery -- want to sell their
stake in a number of commercial banks, RosBusinessConsulting
reported, citing official company documents. The shares will be
offered at market value to be determined by an independent
assessor, according to the report.
Headquartered in Houston, Texas, Yukos Oil Company is an open
joint stock company existing under the laws of the Russian
Federation. Yukos is involved in the energy industry
substantially through its ownership of its various subsidiaries,
which own or are otherwise entitled to enjoy certain rights to oil
and gas production, refining and marketing assets. The Company
filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex.
Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq.,
Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton,
Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent
the Debtor in its restructuring efforts. When the Debtor filed
for protection from its creditors, it listed $12,276,000,000
in total assets and $30,790,000,000 in total debts. On
Feb. 24, 2005, Judge Letitia Z. Clark dismissed the Chapter 11
case. (Yukos Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
* Sheppard Mullin Adds Scott Hudson to Expand New York Office
-------------------------------------------------------------
Scott N. Hudson has joined the New York office of Sheppard,
Mullin, Richter & Hampton LLP as a partner in the Corporate
practice group. Mr. Hudson was most recently with Paul, Hastings,
Janofsky & Walker in New York, where he was an integral part of
that firm's Global Telecommunications and Media practice group.
Mr. Hudson's practice focus is mergers, acquisitions,
divestitures, joint ventures, equity investments and general
corporate matters. He represents clients in matters across a
broad array of industries, including software and consumer
marketing and has extensive experience in telecommunications,
cable television and media.
"We're very pleased to welcome Scott to the firm and to the New
York office," said James J. McGuire, managing partner of the
firm's New York office. "Firmwide Sheppard Mullin has a strong
transactional practice and Scott is a valuable addition to the
Corporate practice group and will be an integral part of its
continuing growth and expansion in New York."
Commented Mr. Hudson, "I am excited about joining Sheppard Mullin
and look forward to building strong relationships with the firm's
practices and clients. The firm has a top-notch Corporate group
and a blue chip media and entertainment client base. I am looking
forward to expanding Sheppard Mullin's presence on the East
Coast."
Mr. Hudson has represented clients in multiple corporate
acquisitions and financing transactions including cable television
and communication towers companies in acquisitions and equity
investments, a U.S. television broadcaster in connection with the
negotiation of a joint venture with a Mexican joint venture
partner, a publicly traded telecommunications company in software
acquisitions and an international telecommunications company in
its privatization.
Mr. Hudson earned his law degree from Stanford Law School in 1994
and his undergraduate degree from the Hampton University in 1990.
Sheppard, Mullin, Richter & Hampton LLP --
http://www.sheppardmullin.com/-- is a full service AmLaw 100 firm
with 435 attorneys in nine offices located throughout California
and in New York and Washington, D.C. The firm's California
offices are located in Los Angeles, San Francisco, Santa Barbara,
Century City, Orange County, Del Mar Heights and San Diego.
Sheppard Mullin provides legal expertise and counsel to U.S. and
international clients in a wide range of practice areas, including
Antitrust, Corporate and Securities; Entertainment and Media;
Finance and Bankruptcy; Government Contracts; Intellectual
Property; Labor and Employment; Litigation; Real Estate/Land Use;
Tax, Employee Benefits, Trusts and Estate Planning; and White
Collar Defense. The firm was founded in 1927.
*********
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.
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