/raid1/www/Hosts/bankrupt/TCR_Public/060120.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, January 20, 2006, Vol. 10, No. 17
Headlines
AAIPHARMA INC: Court Denies Dr. Sancilio's Equity Panel Motion
ALLEGHENY ENERGY: S&P Upgrades Corporate Credit Ratings to BB+
ALLIED HOLDINGS: Has Until June 15 to Remove Actions
ALLIED HOLDINGS: Aspen & Sopris Support Equity Panel Appointment
AMERICAN MEDIA: Moody's Rates Proposed $510 Mil. Facilities at B1
ANDREW B_____: Case Summary & 6 Largest Unsecured Creditors
AOL LATIN: Has Until March 21 to Remove Civil Actions
ARLINGTON HOSPITALITY: Completes Sale of Assets to Sunburst & SJB
ASARCO LLC: 12 Debtors Will Meet Creditors on February 14
ASARCO LLC: Can Pay Pension Plan for Hourly & Salaried Employees
ASTORIA GENERATING: S&P Rates Proposed $950 Mil. Debts at Low-B
AURA SYSTEMS: Court Confirms Amended Reorganization Plan
BEAZER HOMES: Mortgage Unit Gets Access to $350MM Credit Facility
BETHLEHEM STEEL: Trust Hires Montage to Find Uncollected Accounts
BICC LIMITED: Case Summary & 40 Largest Unsecured Creditors
BIOVEST INTERNATIONAL: Aidman Piser Raises Going Concern Doubt
BOYDS COLLECTION: Wants Plan-Filing Period Stretched to May 15
BUFFETS HOLDINGS: S&P Places B- Corporate Credit Rating on Watch
CHRISTOPHER ALDARELLI: Case Summary & 17 Largest Unsec. Creditors
CLFX CORP: Moody's Rates New EUR27 Million Term Loan C at Ba3
COLLINS & AIKMAN: Considers Option to Remain a Stand-Alone Entity
CORRECTIONS CORP: Moody's Assigns Ba3 Rating to $150 Million Notes
CORRECTIONS CORP: S&P Rates Proposed $150 Mil. Sr. Notes at BB-
EARLE M. JORGENSEN: Reliance Merger Cues Moody's Ratings' Review
ENER1 INC: Dismisses Kevin Fitzgerald as Board Chairman & CEO
ENXNET INC: Gets 7% Stake in Gift Card Biz under Partnership Pact
EPICUS COMMS: Nov. 30 Balance Sheet Upside-Down by $18.4 Million
EXOPACK HOLDING: S&P Rates Proposed $235 Million Sr. Notes at B-
FORMICA BERMUDA: S&P Rates Proposed $270 Mil. Bank Facility at B
GENERAL DATACOMM: Eisner LLP Raises Going Concern Doubt
GEORGIA-PACIFIC: S&P Rates $8.5 Billion Credit Facilities at BB-
GITTO GLOBAL: Ch. 7 Trustee Collects $160,000 from Nancy Gitto
GRAND EAGLE: Liquidating Agent Wants Claims Objection Sustained
GRANITE BROADCASTING: Inks Pact to Buy CBS Unit for $45 Million
HASTINGS MANUFACTURING: Wants Van Dyke Gardner as Special Counsel
IMPAC FUNDING: Fitch Holds Junk Rating on Class M-3 Certificates
INTELSAT LTD: SES Global Plans to Buy Assets After PanAmSat Merger
INTELSAT LTD: Names Executives for Post-PanAmSat Merger Company
INZON CORP: George Brenner Raises Going Concern Doubt
ISTAR FINANCIAL: Fitch Lifts Preferred Stock Rating to BB+
KAISER ALUMINUM: Panel Asks Court to Overrule Sherwin's Objections
KAISER ALUMINUM: Looking for Replacement for One New Director
MAGNATRAX CORP: Wants Until May 12 to Object to Proofs of Claim
MANCHESTER ACQUISITION: List of 20 Largest Unsecured Creditors
MUSCLETECH RESEARCH: Chapter 15 Petition Summary
NATIONWIDE HEALTH: S&P Affirms Preferred Stock Rating at BB+
NATURADE INC: Laurus Increases Term Loan to $1.65M & Extends Term
NESCO INDUSTRIES: Chief Financial Officer Karen Nazzareno Resigns
NOMURA ASSET: Fitch Lifts $34 Mil. Class B-2 Certs. Rating to A
OPTINREALBIG.COM: Places $7 Million Microsoft Settlement in Escrow
O'SULLIVAN INDUSTRIES: Committee Objects to Disclosure Statement
O'SULLIVAN IND: Disclosure Statement Hearing Continued to Jan. 25
OVERLOOK FARMS: Case Summary & 7 Largest Unsecured Creditors
PHOTOCIRCUITS CORP: Will Auction All Assets on February 6
PHOTOWORKS INC: Equity Deficit Narrows to $189,000 at Sept. 30
PIXIUS COMMS: Court Confirms Second Amended Plan of Reorganization
PORTOLA PACKAGING: Balance Sheet Upside Down by $61MM at Nov. 30
QUINTUS CORP: Liquidation Plan Confirmation Hearing Set on March 2
SEQUOIA MORTGAGE: Fitch Lifts Two Cert. Classes' Ratings to B+
SPORTS CLUB: Sale of 5 Clubs Cues Moody's to Withdraw Junk Ratings
SPORTS CLUB: $100MM Notes Repayment Cues S&P to Withdraw Ratings
SUPERB SOUNDS: William J. Tucker Hired as Bankruptcy Counsel
SUPERB SOUNDS: Creditors Panel Hires Ice Miller as Bankr. Counsel
THREE-FIVE: U.S. Trustee Names Equity Security Holders Panel
TITANIUM METALS: Board Approves Two-for-One Common Stock Split
TITANIUM METALS: Sets Aside $3.4 Million to Remediate Nevada Plant
ULTIMATE ELECTRONICS: Wants Until March 7 to Remove Civil Actions
VISTEON CORP: Moody's Affirms Low-B Ratings With Negative Outlook
WHITE BIRCH: Moody's Affirms New $130 MM Term Loans' Low-B Ratings
XENONICS HOLDINGS: Posts $5 Mil. Net Loss in Fiscal Year 2005
YBM MAGNEX: Ernst & Young to File Plan of Distribution in February
* BOOK REVIEW: Business and Capitalism: An Introduction to
Business History
*********
AAIPHARMA INC: Court Denies Dr. Sancilio's Equity Panel Motion
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware denied the
request of Dr. Frederick D. Sancilio to direct the U.S. Trustee
for Region 3 to appoint an official committee of equity security
holders to serve in aaiPharma Inc., and its debtor-affiliates'
jointly administered chapter 11 cases. The Court entered its
decision on Jan. 12, 2006.
Dr. Sancilio is one of the Debtors' largest shareholders and the
founder of aiiPharma.
As reported in the Troubled Company Reporter on Dec. 12, 2005,
Dr. Sancilio says that the interests represented by Unsecured
Creditors' Committee are in conflict with the old equity's
interests, thus, the Creditors' Committee cannot be counted on to
represent the interests of the Debtors' public shareholders. In
light of these conflicts, Dr. Sancilio adds, the appointment of an
equity committee is necessary to protect the interests of the
company's public shareholders.
The Court's decision to deny Dr. Sancilio's motion is based on the
responses and objections against the motion filed by the Debtors,
the Ad Hoc Committee of Senior Secured Noteholders, the Unsecured
Creditors Committee and the U.S. Trustee.
The Court agrees with the position taken by the Unsecured
Creditors Committees' objection to Dr. Sancilio's motion that
appointing an equity panel in the Debtors' case is unrealistic and
very costly. The Committee's independent valuation of the Debtors
show that their enterprise value is only sufficient to pay their
secured creditors in full and provide a partial recovery for the
unsecured creditors.
The Committee was sure in its valuation that the Debtors lack
value to provide any recovery for old equity. The Debtors, the Ad
Hoc Committee and the U.S. Trustee also supported the Committee's
position.
Headquartered in Wilmington, North Carolina, aaiPharma Inc. --
http://aaipharma.com/-- provides product development services to
the pharmaceutical industry and sells pharmaceutical products that
primarily target pain management. AAI operates two divisions:
AAI Development Services and Pharmaceuticals Division.
The Company and eight of its debtor-affiliates filed for chapter
11 protection on May 10, 2005 (Bankr. D. Del. Case No. 05-11341).
Karen McKinley, Esq., and Mark D. Collins, Esq., at Richards,
Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan,
Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the
firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors
in their restructuring efforts. When the Debtors filed for
bankruptcy, they reported consolidated assets amounting to
$323,323,000 and consolidated debts totaling $446,693,000.
ALLEGHENY ENERGY: S&P Upgrades Corporate Credit Ratings to BB+
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
ratings on diversified energy company Allegheny Energy Inc. and
its subsidiaries to 'BB+' from 'BB-'.
The outlook is positive.
Allegheny, headquartered in Greensburg, Pennsylvania, owns about
10,850 MW of generation capacity and serves about 1.6 million
electric customers.
"The upgrade reflects the high likelihood that Allegheny's credit
measures will improve substantially in 2006 and 2007 due to debt
reduction and the repricing of its energy production toward market
rates," said Standard & Poor's credit analyst Tobias Hsieh.
The positive outlook reflects the expectation that Allegheny will
continue to execute its plan to improve its operations and reduce
interest expense.
ALLIED HOLDINGS: Has Until June 15 to Remove Actions
----------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia
gave Allied Holdings, Inc., and its debtor-affiliates until
June 15, 2006, to remove civil actions under Section 1452 of the
Judiciary Code.
As reported in the Troubled Company Reporter on Dec 26, 2005, the
Debtors are parties to numerous civil lawsuits in courts
throughout the United States and Canada. Majority of the causes
of action are for automobile and products liability claims.
Harris B. Winsberg, Esq., at Troutman Sanders, LLP, in Atlanta,
Georgia, tells the Bankruptcy Court that the extension will
provide the Debtors an opportunity to make informed decisions
concerning the removal of the causes of action and will assure
that the Debtors do not forfeit any of their rights under Section
1452. It will also permit them to continue focusing their time
and energy on reorganizing, Mr. Winsberg adds.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case No. 05-12515). Jeffrey W. Kelley, Esq., at Troutman Sanders,
LLP, represents the Debtors in their restructuring efforts. When
the Debtors filed for protection from their creditors, they
estimated more than $100 million in assets and debts.
ALLIED HOLDINGS: Aspen & Sopris Support Equity Panel Appointment
----------------------------------------------------------------
Aspen Advisors LLC and Sopris Capital Advisors, LLC, support Guy
W. Rutland III, Guy W. Rutland IV and Robert J. Rutland's request
for the appointment of an official committee of equity security
holders in Allied Holdings, Inc., and its debtor-affiliates
chapter 11 cases.
Aspen Advisors owns 244,800 shares or 2.73% of Allied Holding,
Inc.'s outstanding common stock. Sopris Capital Advisors owns
244,800 shares, representing 2.73% of Allied's outstanding common
stock.
As reported in the Troubled Company Reporter on Sept. 6, 2005, the
Rutlands stated that there are a sufficient number of shares and
shareholders to warrant the appointment of an official committee
of equity security holders. The equity security holders in the
Debtors' case have legitimate interests that need to be, and were
intended to be, adequately represented under Section 1102 of the
Bankruptcy Code.
As of March 5, 2005, the Rutlands are holders of about 30% of
Allied Holdings, Inc.'s outstanding common stock:
Holder Beneficial Ownership
------ --------------------
Robert J. Rutland 12.6%
Guy W. Rutland, III 9.5%
Guy W. Rutland, IV 7.3%
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they estimated more than $100 million in assets
and debts. (Allied Holdings Bankruptcy News, Issue No. 15;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
AMERICAN MEDIA: Moody's Rates Proposed $510 Mil. Facilities at B1
-----------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to American Media
Operations, Inc.'s proposed $510 million senior secured credit
facilities and affirmed other ratings. The rating actions are:
Ratings Assigned:
* $60 million senior secured revolving credit facility,
due 2012 -- B1
* $450 million senior secured term loan, due 2013 -- B1
Ratings Affirmed:
* Corporate Family rating -- B2
* $150 million 8.875% senior subordinated notes,
due 2011 -- Caa1
* $400 million 10.25% senior subordinated notes,
due 2009 -- Caa1
Ratings Affirmed, subject to withdrawal at closing:
* $60 million senior secured revolving credit facility,
due 2006 -- B1
* $3 million senior secured term loan tranche A, due 2006 -- B1
* $304 million (remaining amount) senior secured term loan
tranche C, due 2007 -- B1
* $133 million senior secured term loan tranche C-1,
due 2007 -- B1
The rating outlook is stable.
The ratings reflect America Media's high leverage and relatively
weak financial performance, which continue to fall short of
Moody's expectations. The ratings also recognize the challenges
which face management as it attempts to offset revenues lost from
eroding circulation of tabloid titles, by repositioning its
product offerings and increasing cover prices.
American Media faces:
* event risk,
* competitive pressure, and
* the limited prospects of circulation vitality as a result of
the demographics of its tabloid titles.
The stable rating outlook contemplates that growth in advertising
revenues, especially at Star, will lead to normalization in
financial performance. However the outlook could be changed to
negative if the company is unable to improve its top line and
reverse recent free cash flow losses.
Largely through the 2003 Weider acquisition, the 2004 re-launch of
Star, and title launches and re-launches during 2005, American
Media has succeeded in improving the contribution of advertising
revenues. However, these initiatives have been costly and have
failed to produce any meaningful improvement in consolidated top
line results.
At the end of September 2005, American Media reported its third
successive quarter of year-over-year revenue declines as well as a
modest increase in its debt burden. At the same time, the
company's reported LTM EBITDA of $118 million represented a 24%
decline over fiscal 2004 results. Its cash from operations was
insufficient to cover capital expenses, resulting in an LTM free
cash flow loss of $10 million at the end of September 2005.
Although American Media recorded $45 million undrawn under its $60
million revolver at the end of September 2005, the company could
have drawn only $14.5 million without breaching its senior secured
loan covenants. The existing revolving credit facility matures in
April 2006.
If successfully concluded, the new facility will address the
company's near-term liquidity pressure and alleviate amortization
pressure. Following the refinancing, the company will have no
significant debt maturities prior to 2009 (or 2008 if the early
prepayment clause is triggered under the proposed senior secured
facility). Accordingly, Moody's considers that payment default is
unlikely over the ratings horizon.
Although market circulation of celebrity news magazines continues
to enjoy solid growth, American Media competes with major rivals,
including:
* People,
* Entertainment Weekly (Time Warner),
* In Touch (Wenner),
* US Weekly (Bauer), and
* OK magazine (Northern & Shell) for similar content and
readership.
Management continues to move American Media away from a pure-play
group of tabloid titles (valued at closer to the 8 times multiple
of EBITDA paid by Evercore in 1999) and more towards a diversified
portfolio of celebrity and health related titles (with individual
titles valued closer to the 13 times EBITDA multiple which the
company paid for the Weider acquisition in 2003). Assuming a
blended valuation of 10 times EBITDA, the currently reported
leverage of approximately 8.5 times debt to EBITDA already
presents equity-like risks to junior debt holders. According to
Moody's standard adjustments, debt stood at 7.4 times LTM EBITDA
at the end of September 2005.
Since ratings are near the floor of the ratings band, a rebound in
financial performance is unlikely to result in any immediate
ratings lift. On the contrary, the current ratings can tolerate
only a modest degree of additional financial strain. Ratings
downgrade is likely if leverage is not on track to reduce below 7
times debt to EBITDA (using Moody's standard adjustments) by the
end of December 2006.
Headquartered in Boca Raton, Florida, American Media Operations is
a leading publisher of consumer magazines. The company recorded
sales of $517 million for the fiscal year ending March 2004.
ANDREW B_____: Case Summary & 6 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Andrew B_____
14 Sommerset Drive
Yaphank, New York 11980
Bankruptcy Case No.: 06-70096
Chapter 11 Petition Date: January 19, 2006
Court: Eastern District of New York (Central Islip)
Debtor's Counsel: Kenneth A. Reynolds, Esq.
Pryor & Mandelup, LLP
675 Old Country Road
Westbury, New York 11590
Tel: (516) 997-0999
Fax: (516) 333 7333
Estimated Assets: Less than $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 6 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Harbans LAL Gera $2,819,355
8 Orchard Lane
Old Westbury, NY 11568
R.I. Inc. dba Seating Solutions $450,000
63 Oser Avenue
Hauppauge, NY 11788
Ash Imports Inc. $210,000
96A West 49th Street
Bayonne, NJ 07002
Josephine Chiarelli Personal loan $72,000
14 Somerset Drive
Yaphank, NY 11980
Suffolk Federal Credit Union Car loan $9,000
P.O. Box 9005
Medford, NY 11763
John Petrocelli Unknown
100 Comac Street
Ronkonkoma, NY 11779-6930
[*** Debtor's name redacted on Oct. 10, 2008]
AOL LATIN: Has Until March 21 to Remove Civil Actions
-----------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extended,
until Mar. 21, 2006, the period within which AOL Latin America
Inc. aka America Online Latin America Inc. and its debtor-
affiliates may remove civil actions.
The Debtors tell the Court that the extension will protect their
right to remove prepetition civil actions which they deem
appropriate and afford them additional time to make fully informed
decisions concerning the removal of each pending prepetition civil
action.
Headquartered in Fort Lauderdale, Florida, America Online Latin
America, Inc. -- http://www.aola.com/-- offers AOL-branded
Internet service in Argentina, Brazil, Mexico, and Puerto Rico, as
well as localized content and online shopping over its proprietary
network. Principal shareholders in AOLA are Cisneros Group, one
of Latin America's largest media firms, Brazil's Banco Itau, and
Time Warner, through America Online. The Company and its debtor-
affiliates filed for chapter 11 protection on June 24, 2005
(Bankr. D. Del. Case No. 05-11778). Pauline K. Morgan, Esq., and
Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP and
Douglas P. Bartner, Esq., at Shearman & Sterling LLP represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed total assets of
$28,500,000 and total debts of $181,774,000.
ARLINGTON HOSPITALITY: Completes Sale of Assets to Sunburst & SJB
-----------------------------------------------------------------
Arlington Hospitality, Inc., and subsidiaries (Pink Sheets: HOST)
reported that, on Jan. 12, 2006, the company successfully
completed the sale of substantially all of the company's assets.
Sunburst Hotel Holdings, Inc., and its affiliates, and SJB
Equities, Inc., and its affiliates, both of which are unaffiliated
with one another and with Arlington Hospitality, Inc., purchased
substantially all of the company's assets, pursuant to separate
asset purchase agreements.
In addition, Cendant Corporation (NYSE: CD) consented to
Sunburst's assignment and assumption of the development agreement,
royalty-sharing agreement, and individual hotel franchise
agreements between Arlington and affiliates of Cendant.
The total consideration for the sale of the assets, and the
assumption of the Cendant Agreements, was approximately
$28.1 million, comprised of $9.5 million in cash and the
assumption of mortgage debt of approximately $18.6 million on the
purchased hotel assets.
Chanin Capital Partners served as Arlington's exclusive financial
advisor in connection with the sale of substantially all of
Arlington's assets.
Sunburst purchased substantially all the assets of the company,
and assumed certain contracts and agreements, except for two
wholly owned hotels, the company's corporate headquarters office
building, and those assets purchased and contracts assumed by SJB.
Sunburst declined to purchase the two hotel assets as permitted
under the purchase agreement, and as a result, both hotels where
immediately turned over by the company to the mortgage lender, PMC
Commercial Trust. SJB purchased ownership interests in four hotel
joint ventures, and assumed certain contracts and agreements,
including the construction contracts for an AmeriHost Inn hotel
being built in Columbus, Ohio.
Upon the closing of the purchase transactions, Arlington rejected
its 12 remaining hotel leases with PMC and is in the process of
relinquishing possession of these hotels.
Arlington is currently in the process of evaluating claims, and
attempting to divest its corporate headquarters office building,
and assign certain land purchase contracts where possible, so that
it may propose a liquidation plan to the U.S. Bankruptcy Court for
the Northern District of Illinois as soon as practicable. It is
unlikely that shareholders of Arlington will receive a cash
distribution pursuant to any liquidation plan since any remaining
cash will be used to settle creditors' claims and pay
administrative costs of the bankruptcy proceeding.
Arlington's corporate office building continues to be marketed for
sale by Cohen Financial, as approved by the Court. Parties
interested in purchasing the office building should contact the
managing directors for Cohen:
Richard Tannenbaum
Telephone (312) 803-5689
Email Address: rtannenbaum@cohenfinancial.com
Jon Simon
Telephone: (312) 803-5107
Email Address: jsimon@cohenfinancial.com
About Sunburst Hospitality
Sunburst Hospitality, based in Silver Spring, Maryland, is a
diversified real estate owner and operator, with interests in
hotels, golf course and residential developments, multi-family
communities and self-storage properties. Currently, Sunburst
Hospitality's hotel portfolio includes 47 hotels across the United
States.
About Arlington Hospitality, Inc.
Headquartered in Arlington Heights, Illinois, Arlington
Hospitality, Inc., and its affiliates develop and construct
limited service hotels and own, operate, manage and sell those
hotels. The Debtors operate 15 AmeriHost Inn Hotels under leases
from PMC Commercial Trust. Arlington Hospitality, Inc., serves as
a guarantor under these leases. Arlington Inns Inc., an
affiliate, filed for bankruptcy protection on June 22, 2005
(Bankr. N.D. Ill. Case No. 05-24749), the Honorable A. Benjamin
Goldgar presiding. Arlington Hospitality and additional debtor-
affiliates filed for chapter 11 protection on Aug. 31, 2005
(Bankr. N.D. Ill. Lead Case No. 05-34885). Catherine L. Steege,
Esq., at Jenner & Block LLP, provides the Debtors with legal
advice and Chanin Capital LLC serves as the company's investment
banker. As of March 31, 2005, Arlington Hospitality reported
$99 million in total assets and $94 million in total debts.
ASARCO LLC: 12 Debtors Will Meet Creditors on February 14
---------------------------------------------------------
The United States Trustee for Region 7, Richard W. Simmons, will
convene a meeting of creditors with respect to 12 Debtors on
Feb. 14, 2006, at 10:00 a.m., at 606 North Caranchua, Suite
1107, in Corpus Christi, Texas.
The 12 Debtors are:
* ALC, Inc.,
* American Smelting and Refining Company.
* AR Mexican Explorations, Inc.,
* AR Sacaton, LLC,
* Asarco Consulting, Inc.,
* ASARCO Master, Inc.,
* Asarco Oil and Gas Company, Inc.,
* Bridgeview Management Company, Inc.,
* Covington Land Company,
* Encycle, Inc.,
* Government Gulch Mining Company, Limited, and
* Salero Ranch, Unit III, Community Association, Inc.
This is the first meeting of the 12 Debtors' creditors under
Section 341(a) of the Bankruptcy Code.
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 officer 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 Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,
smelting and refining company. Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent. The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors,it listed $600 million in total assets and $1
billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered with
its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation. (ASARCO Bankruptcy News,
Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000).
ASARCO LLC: Can Pay Pension Plan for Hourly & Salaried Employees
----------------------------------------------------------------
The Internal Revenue Code and the Employee Retirement Income
Security Act of 1974 govern the operation of defined benefit
retirement plans. Section 412(a) of the IRC and Section 302(a)
of the ERISA require that for a plan to meet the minimum funding
standards, it must not have an accumulated funding deficiency as
of the end of each plan year. The IRC and the ERISA also impose
a quarterly contribution requirement.
ASARCO LLC maintains defined benefit pension plans for both its
hourly and salaried employees. The pension funding obligations
of ASARCO and its controlled group continue absent a plan
termination. ASARCO's bankruptcy filing did not cause the
termination of the plans.
Under the plans, a quarterly payment is due last Jan. 15, 2006,
Eric A. Soderlund, Esq., at Baker Botts LLP, in Dallas, Texas,
relates.
The Court has authorized ASARCO to make the quarterly pension
payments for "hourly" employees pursuant to the Memorandum of
Agreement with the Unions that settled the strike. The
Memorandum of Agreement, however, did not address ASARCO's plans
for salaried employees.
Accordingly, ASARCO sought and obtained the Court's permission to
make a $351,503 quarterly pension plan payments on account of
salaried employees due on Jan. 15, 2006. A portion of the
payment is on account of prepetition obligations.
Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,
smelting and refining company. Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent. The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors,it listed $600 million in total assets and $1
billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered with
its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation. (ASARCO Bankruptcy News,
Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000).
ASTORIA GENERATING: S&P Rates Proposed $950 Mil. Debts at Low-B
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned a preliminary 'BB-'
rating and '1' recovery rating to Astoria Generating Company
Acquisitions LLC's proposed $430 million first-lien term loan B
due in 2013 on the seventh anniversary of the closing.
In addition, a 'BB-' preliminary rating and '1' preliminary
recovery rating were assigned to Astoria Gen's first-lien $100
million working-capital facility and its $120 million synthetic
LOC facility. A 'B' preliminary rating and '3' preliminary
recovery rating have been assigned to the issuer's proposed
second-lien $300 million term loan C, due seven and a half years
from closing. The outlook is stable.
The 'BB-' rating and '1' recovery rating on the term loan B,
working-capital facility, and synthetic LC facility indicate an
expectation of the full recovery of principal in the event of a
payment default. The 'B' rating and '3' recovery rating on the
term loan C indicate an expectation of (50% to 80%) recovery of
principal post default.
The stable outlook reflects the near-term predictable net revenues
(through 2008) provided by the Morgan Stanley hedges. Post 2008,
the company is exposed to the merchant power markets in New York
City.
"A downgrade or a change in the outlook to negative could occur if
there are significant changes to the capacity market in New York
City that result in capacity pricing less than forecast," said
Standard & Poor's credit analyst Arleen Spangler. "Rating
upgrades are unlikely, due to the project's sizable refinancing
risk and the relatively high capacity prices the company would
need to break even under Standard & Poor's power and gas price
assumptions scenario," she continued.
AURA SYSTEMS: Court Confirms Amended Reorganization Plan
--------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
confirmed the First Amended Plan of Reorganization of Aura
Systems, Inc. The effective date of the plan is expected to be on
Jan. 31, 2006.
The reorganized Company will have approximately 23,000,000 issued
and outstanding common shares and the total debt will be
approximately $2.5 million dollars payable over five years,
including 7% simple interest with no payments scheduled for the
first year.
The reorganized Company's bylaws prohibit the Company from issuing
any preferred stock or any convertible instruments without the
prior approval of the shareholders.
The Company shall have an initial five-member board consisting of:
* Melvin Gagerman as Chairman of the Board,
* Marc Hoffman as President and Chief Operating Officer,
* Richard Armbrust,
* Dr. Arthur Schwartz and
* Sheldon Appel.
"The Company has gone through some difficult times, including a
Chapter 11 reorganization," Mr. Gagerman said. "We now have a new
Company with a clean balance sheet and a capital structure that
includes the participation of both old and new investors coupled
with an incredible worldwide-patented technology and
commercialized and proven products. One of my first tasks will be
to establish continuously accurate information flow from the
Company to all of our shareholders and investors, in order to keep
everyone aware of material developments as we proceed to build a
world class Company."
"I have been involved in motors and generators for a significant
portion of my career, but I have never before seen such an
incredible opportunity," Mr. Marc Hoffman said. "We design,
assemble and sell the AuraGen(R), our patented integrated mobile
power generator that installs in any motor vehicle and delivers
on-location, plug-in electricity for any end use, including
industrial, commercial, recreational and military applications.
Compared to the traditional solutions addressing the $8 billion
on-site power market, the AuraGen(R) uniquely and conveniently
provides cleaner electricity with more reliability and more
flexibility at a lower cost. The traditional mobile power
solution has not changed in over 50 years and is a very mature
technology where the economics are based on the cost of copper,
steel, aluminum and the cost of a small gasoline or diesel engine.
Our approach uses a fraction of the same materials with simple
manufacturing techniques to provide clean electrical power
suitable for brute force applications such as compressors and
tools and simultaneously is also suitable for digital devices and
instruments such as computers and modern communication devices and
sensors. This is a paradigm shift that should allow our Company
to be very successful in one of the world's largest industries."
Summary of First Amended Plan
The Reorganized Debtor will continue to be a publicly traded
company under the Plan, with approximately 23 million shares of
common stock to be issued and 5,230,000 warrants reserved for
issuance. The group of people and entities known as the New Money
Investors will contribute $3,045,000 to the Reorganized Debtor on
the effective date of the Plan.
On the effective date of the Plan, a total of 3,807,319 of
warrants will be issued to the New Money Investors, the Aries
Group, the DIP Lenders, General Unsecured Claims, Series B
Interests and Series A Interests. The purpose of the warrants if
to create a greater vested interest by the entities that
contributed to the Reorganized Debtor and to provide an additional
vehicle for the Reorganized Debtor to obtain additional working
capital.
In exchange for the new money contribution, the New Money
Investors will receive 3,349,000 shares of the Reorganized
Debtor's Common Stock, plus approximately 669,000 warrants.
Treatment of Claims
All allowed administrative claims, totaling approximately
$1,086,600 and all allowed priority claims, totaling approximately
$54,482 will be paid in full, in cash on the effective date from
the new money contribution.
The secured claims of the Koyah Entities, totaling approximately
$5.5 million will receive 1,134,000 shares of the Reorganized
Debtor Common Stock and 259,900 of the Koyah Entities warrants.
The secured claims of Ezra Meyer, totaling approximately $105,000
will be paid in full.
All allowed unsecured claims, totaling approximately $8.3 million
will receive on a pro rata basis 4,729,499 shares of the
Reorganized Debtor Common Stock and up to 945,000 of the warrants.
Holders of allowed unsecured claims also have the right to elect
to receive a cash distribution equal to 5% of the amount of their
allowed claims in lieu of receiving any Reorganized Debtor Common
Stock.
Headquartered in El Segundo, California, Aura Systems, Inc.
-- http://www.aurasystems.com/-- develops and sells AuraGen(R)
mobile induction power systems to the industrial, commercial and
defense mobile power generation markets. The Company filed for
chapter 11 protection on June 24, 2005 (Bankr. C.D. Calif. Case
No. 05-24550). Ron Bender, Esq., at Levene Neale Bender Rankin &
Brill LLP, represent the Debtor in its restructuring efforts.
When the Debtor filed for bankruptcy, it reported $18,036,502 in
assets and $28,919,987 in debts.
BEAZER HOMES: Mortgage Unit Gets Access to $350MM Credit Facility
-----------------------------------------------------------------
Beazer Mortgage Corporation, a subsidiary of Beazer Homes USA,
Inc., entered into a 364-day credit agreement to fund the
origination of residential mortgage loans.
The Company inked the agreement with:
* Guaranty Bank as agent;
* JPMorgan Chase Bank, N.A., as syndication agent;
* U.S. Bank National Association as documentation agent; and
these other lenders:
* Bank of America, N.A.;
* Washington Mutual Bank;
* National City Bank of Kentucky;
* Comerica Bank;
* Colonial Bank, N.A., Calyon New York Branch; and
* BNP Paribas
The Credit Agreement provides for a maximum available borrowing
capacity of $250 million to $350 million. The borrowing capacity
is:
-- based on commitment periods; and
-- subject to compliance with the mortgage loan eligibility
requirements.
The Credit Agreement is secured by certain mortgage loans held for
sale and related property and is not guaranteed by Beazer Homes
USA, Inc., or any of its subsidiaries that are guarantors of other
indebtedness of Beazer Homes USA, Inc. Beazer Mortgage pays
interest on the outstanding balance at a fluctuating per annum
rate equal to one month LIBOR plus a margin of 1%.
The lenders may terminate their commitments under the Credit
Agreement and demand the immediate full payment of the outstanding
amounts including all accrued interest and unpaid fees, in the
event of a default.
A full-text copy of the Credit Agreement is available for free at
http://ResearchArchives.com/t/s?466
Indenture Amendments
Beazer Mortgage was declared an unrestricted subsidiary and was
released from its subsidiary guarantees under the Company's
indentures governing:
* 8-5/8% Senior Notes due 2011;
* 8-3/8% Senior Notes due 2012;
* 6-1/2% Senior Notes due 2013; and
* 6-7/8% Senior Notes due 2015.
A full-text copy of the 8-5/8% Senior Notes Indenture is available
for free at http://ResearchArchives.com/t/s?467
A full-text copy of the Indenture for the:
* 8-3/8% Senior Notes,
* 6-1/2% Senior Notes, and
* 6-7/8% Senior Notes
is available for free at http://ResearchArchives.com/t/s?468
Headquartered in Atlanta, Beazer Homes USA, Inc. --
http://www.beazer.com/-- is one of the country's ten largest
single-family homebuilders with operations in Arizona, California,
Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland,
Mississippi, Nevada, New Jersey, New Mexico, New York, North
Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas,
Virginia and West Virginia and also provides mortgage origination
and title services to its homebuyers. Beazer Homes, a Fortune 500
company, is listed on the New York Stock Exchange under the ticker
symbol "BZH."
* * *
As reported in the Troubled Company Reporter on Nov. 30, 2005,
Fitch Ratings has affirmed the issuer default rating and senior
unsecured debt, including revolving credit facility, rating of
'BB+' for Beazer Homes USA, Inc. (NYSE:BZH). The rating applies
to:
* $1.1 billion in outstanding senior notes,
* $180 million of senior convertible notes, and
* $750 million revolving credit agreement.
Fitch said the Rating Outlook is Stable.
BETHLEHEM STEEL: Trust Hires Montage to Find Uncollected Accounts
-----------------------------------------------------------------
As reported in the Troubled Company Reporter on Oct. 7, 2005, the
Liquidating Trust sought approval from the U.S. Bankruptcy Court
for the Southern District for the Contingent Fee Engagement
Agreement with Montage Partners, LLC.
Montage Partners, a Nevada limited liability company, has proposed
to locate otherwise uncollected assets which previously
constituted Bethlehem Steel Corporation and its debtor-affiliates'
assets for which the Bethlehem Steel Corporation Liquidating Trust
has not collected.
Thus, pursuant to a Contingent Fee Engagement Agreement, the
Liquidating Trust will engage Montage as an independent contractor
to locate the Specified Assets and realize on and collect those
assets through commercial, legal or judicial process for the
benefit of the Trust. Montage will furnish to the Liquidating
Trust a detailed description of the Specified Assets.
Montage will bear all collection costs, finders' or other fees,
charges, commissions, or expenses attendant to the location,
realization or collection of the Specified Assets. Montage will
also shoulder all counsel fees and litigation expenses, if any,
attendant to the location, realization or collection of the
Specified Assets. However, if the Commission under the Agreement
minus all Litigation Costs incurred by Montage will result in
Montage recovering less than 40% of the gross recovery, then the
Liquidating Trust and Montage will each bear one-half of any
additional Litigation Costs incurred once the Minimum Commission
Recovery is obtained.
* * *
Judge Burton Lifland approved the Debtors' motion.
Headquartered in Bethlehem, Pennsylvania, Bethlehem Steel
Corporation -- http://www.bethlehemsteel.com/-- was the second-
largest integrated steelmaker in the United States, manufacturing
and selling a wide variety of steel mill products including hot-
rolled, cold-rolled and coated sheets, tin mill products, carbon
and alloy plates, rail, specialty blooms, carbon and alloy bars
and large diameter pipe. The Company filed for chapter 11
protection on October 15, 2001 (Bankr. S.D.N.Y. Case No. 01-
15288). Jeffrey L. Tanenbaum, Esq., and George A. Davis, Esq., at
WEIL, GOTSHAL & MANGES LLP, represent the Debtors in their
restructuring, the centerpiece of which was a sale of
substantially all of the steelmaker's assets to International
Steel Group. When the Debtors filed for protection from their
creditors, they listed $4,266,200,000 in total assets and
$4,420,000,000 in liabilities. Bethlehem obtained confirmation of
a chapter 11 plan on October 22, 2003, which took effect on Dec.
31, 2003. (Bethlehem Bankruptcy News, Issue No. 60; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
BICC LIMITED: Case Summary & 40 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: BICC Limited Partnership
dba Brandermill Inn
dba Brandermill Inn & Conference Center
dba Brandermill Resort & Marina
13550 Harbour Pointe Parkway
Midlothian, Virginia 23112
Bankruptcy Case No.: 06-30101
Debtor affiliate filing separate chapter 11 petition:
Entity Case No.
------ --------
The Lexington Group, Inc. 06-30104
Type of Business: The Debtors operate a conference center,
a hotel, and a resort. See
http://www.brandermillinn.com/
James Edward Moyler, III, Lexington Group's
president, filed for chapter 11 protection on
Jan. 17, 2006 (Bankr. E.D. Va. Case No.
06-30087).
Chapter 11 Petition Date: January 18, 2006
Court: Eastern District of Virginia (Richmond)
Debtors' Counsel: Lynn L. Tavenner, Esq.
Tavenner & Beran, PLC
20 North Eighth Street, Second Floor
Richmond, Virginia 23219
Tel: (804) 783-8300
Fax: (804) 783-0178
Estimated Assets Estimated Debts
---------------- ---------------
BICC Limited Partnership $1 Million to $1 Million to
$10 Million $10 Million
Total Assets Total Debts
------------ -----------
The Lexington Group, Inc. Unknown $5,266,377
A. BICC Limited Partnership's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Dominic J. Garcia $165,000
P.O. Box 1155
Virginia Beach, VA 23451
John Malone Trust $138,500
6012 Moss Creek Road
Midlothia, VA 23112
Yancy Jones $106,500
11311 Dairy Lane
Ashland, VA 23005
Sunset Commercial Group, LLC $74,236
Marita Hagegard $68,750
IRS $42,650
Charles J. McCall $39,750
Patricia T. Howland $36,750
Accelerated Assets $30,000
Mrs. J.J. McCarthy, M.D. $30,000
Stanley Holcomb $28,500
Commissioner Revenue $26,400
Baybridge Builders $24,000
Britt & Peak $18,675
Interval International $17,500
Jimmy Antich $17,475
MBNA-cc $13,525
Chesterfield County $13,413
GE Capital $12,858
VEC $12,308
B. The Lexington Group, Inc.'s 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Dominic J. Garcia $165,000
P.O. Box 1155
Virginia Beach, VA 23451
John Malone Trust $138,500
6012 Moss Creek Road
Midlothia, VA 23112
Yancy Jones $106,500
11311 Dairy Lane
Ashland, VA 23005
Sunset Commercial Group, LLC $74,236
Marita Hagegard $68,750
IRS $42,650
Charles J. McCall $39,750
Virginia Dominion Power $39,750
Patricia T. Howland $36,750
Accelerated Assets $30,000
Stanley Holcomb $28,500
Commissioner Revenue $26,400
Baybridge Builders $24,000
Britt & Peak $18,675
Interval International $17,500
Jimmy Antich $17,475
MBNA-cc $13,525
Chesterfield County $13,413
GE Capital $12,858
VEC $12,308
BIOVEST INTERNATIONAL: Aidman Piser Raises Going Concern Doubt
--------------------------------------------------------------
Aidman Piser & Co., PA, expressed substantial doubt about Biovest
International, Inc.'s ability to continue as a going concern after
it audited the Company's financial statements for the fiscal years
ended Sept. 30, 2005, and 2004. The auditing firm pointed to the
Company's significant losses and working capital deficit at
Sept. 30, 2005.
Fiscal Year 2005 Results
Biovest International incurred a $11,479,000 net loss on
$5,077,000 of revenue for the fiscal year ended Sept. 30, 2005,
versus a $8,996,000 net loss on $2,145,000 of revenue in the prior
year.
Total sales for the fiscal year ended Sept. 30, 2005, in the core
business of contract cell culture manufacturing, instrumentation
and cultureware sales, were approximately $5.1 million. This
represents an 11% decrease in revenue from the year ended Sept.
30, 2004.
The most significant area of change was in the contract services
cell culture segment where revenues declined by approximately $1
million, or 47% from 2004 to 2005. This decline was due partially
to a shifting in emphasis by our personnel away from revenue-
producing contract services work to non-revenue producing research
and development related to the BiovaxID vaccine project.
The Company's balance sheet showed $4,164,000 in total assets and
liabilities of $9,326,000, resulting in a stockholders' deficit of
approximately $5,162,000. At Sept. 30, 2005, the Company had a
deficit in working capital of $7.2 million compared to a deficit
in working capital of $3.1 million a year earlier.
BioVest International, Inc. -- http://www.biovest.com/-- is a
biotechnology company that provides cell culture services to
research institutions and the biopharmaceutical industry. BioVest
also develops, manufactures and markets cell culture systems. For
over 10 years the company has been designated, by the National
Institutes of Health, as the National Cell Culture Center.
Through its proprietary technology, BioVest provides cell culture
services to research institutions, biotechnology companies and the
pharmaceutical industry. The company is the holder of a
Cooperative Research and Development Agreement with the National
Cancer Institute for the commercialization of a personalized
biologic therapeutic cancer vaccine for the treatment of non-
Hodgkin's lymphoma currently in its phase III pivotal trial.
BOYDS COLLECTION: Wants Plan-Filing Period Stretched to May 15
--------------------------------------------------------------
The Boyds Collection, Ltd., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Maryland to extend until
May 15, 2006, its exclusive period to file a chapter 11 plan. The
Debtor also wants until July 13, 2006, to solicit acceptances of
that plan.
The Debtors cite three reasons why an extension is warranted:
1. The Debtors' cases are large and complex;
2. The Debtors are progressing in their good faith attempt to
formulate a viable plan; and
3. The Debtors are making the required postpetition payments.
Headquartered in McSherrystown, Pennsylvania, The Boyds
Collection, Ltd. -- http://www.boydsstuff.com/-- designs and
manufactures unique, whimsical and "Folksy with Attitude(SM)"
gifts and collectibles, known for their high quality and
affordable pricing. The Company and its debtor-affiliates filed
for chapter 11 protection on Oct. 16, 2005 (Bankr. Md. Lead Case
No. 05-43793). Matthew A. Cantor, Esq., at Kirkland & Ellis LLP
represents the Debtors in their restructuring efforts. As of
June 30, 2005, Boyds reported $66.9 million in total assets and
$101.7 million in total debts.
BUFFETS HOLDINGS: S&P Places B- Corporate Credit Rating on Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Eagan,
Minnesota-based Buffets Holdings Inc., including its 'B-'
corporate credit rating, on CreditWatch with developing
implications.
The rating action follows the company's announcement that it has
engaged financial advisors to assist in exploring strategic
alternatives to maximize shareholder value.
"Ratings could be raised, lowered, or affirmed," said Standard &
Poor's credit analyst Robert Lichtenstein, "depending on the
company's chosen strategic alternative and its impact on the
company's financial profile."
CHRISTOPHER ALDARELLI: Case Summary & 17 Largest Unsec. Creditors
-----------------------------------------------------------------
Debtor: Christopher M. Aldarelli
P.O. Box 2092
Asbury Park, New Jersey 07712-2092
Bankruptcy Case No.: 06-10368
Chapter 11 Petition Date: January 17, 2006
Court: District of New Jersey (Trenton)
Judge: Raymond T. Lyons Jr.
Debtor's Counsel: Timothy P. Neumann, Esq.
Broege, Neumann, Fischer & Shaver
25 Abe Voorhees Drive
Manasquan, New Jersey 08736
Tel: (732) 223-8484
Total Assets: $925,784
Total Debts: $3,300,541
Debtor's 17 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Crown Bank, NA $582,335
715 Route 70
P.O. Box 130
Brick, NJ 08723-0130
Attn: Harry S. McEhane
Tel: (732) 451-9000
RLI Insurance Company $69,100
9025 North Lindbergh Drive
Peoria, IL 61615-1431
c/o Steven Katz
Wolf & Samson
One Boland Drive
West Orange, NJ 07052
Tel: (973) 530-2057
Steve Kreiger $27,052
21 Dwight Drive
Ocean, NJ 07712-3624
Lincoln General Insurance Company $21,135
4902 Eisenhower Boulevard, Suite 190
Tampa, FL 33634
c/o Paul Algoni, Esq.
Algoni & Associate
119 Littleton Road
Parsippany, NJ 07054-1849
Tel: (973) 331-0630
Ford Motor Credit $11,912
P.O. Box 220564
Pittsburgh, PA 15257-2564
c/o Morgan Bernstein
1236 Brace Road
Cherry Hill, NJ 08034-3229
Tel: (856) 795-2200
General Motor Acceptance Corporation $8,365
2740 Arthur Street
Saint Paul, MN 55113-1303
Carol Amrany and Daniel Amrany $5,900
Waretown, NJ 08758
c/o Nelson Fromer & Crocco
2300 State Route 66
Neptune, NJ 07753-4069
Tel: (732) 774-6443
Charles Surmonte, P.E. $5,440
1500 Allaire Avenue
Ocean, NJ 07712-7603
Tel: (732) 660-0606
MBNA $5,263
P.O. Box 15137
Wilmington, DE 19886-5137
G E Money Bank $5,179
P.O. Box 960061
Orlando, FL 32896-0061
c/o Arrow Financial Ser
P.O. Box 1206
Oaks, PA 19456-1206
Truxs & Equipment Parts Company Inc. $4,000
Long Branch, NJ 07740
c/o James E. Berube Jr., Esq.
Twelve Reckless Place
Red Bank, NJ 07701
MBNA $3,696
P.O. Box 15026
Wilmington, DE 19850-5026
Chalres Patore $3,596
Kerderson Zelishi
P.O. Box 616
Asbury Park, NJ 07712-0616
Kenderian Zilinski Associates PA $3,423
1955 State Route 34, Suite 1A
Belmar, NJ 07719-9703
Sears Gold Mastercard $3,082
P.O. Box 182156
Columbus, OH 43202-0156
Brett Riel Spudic $2,390
58 West Main Street
Freehold, NJ 07728-2131
Liberty Line Striping, Inc. $580
244 Broad Street
Red Bank, NJ 07701-2003
CLFX CORP: Moody's Rates New EUR27 Million Term Loan C at Ba3
-------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to CLFX
Corporation's new EUR27 million Term Loan C. Colfax, a global
manufacturer of flow control products, is the parent company of
Allweiler Group GmBH, the primary obligor of the loan.
Additionally, Moody's has affirmed Colfax's existing Ba3 corporate
family rating as well as the Ba3 ratings on the existing senior
secured credit facilities. The ratings reflect the company's
overall financial leverage, which increases as a result of the
Transaction and the projected cash costs associated with on-going
asbestos litigation and with future pension funding requirements
offset by Colfax's niche market positions and good free cash flow
generation.
New ratings assigned:
* EUR27 million Term Loan C, due 2011 (issued at Allweiler
subsidiary), rated Ba3.
Ratings affirmed:
* Corporate Family Rating Ba3;
* $125 million Term Loan B (up-sized from $113.8 million),
due 2011, rated Ba3; and
* $50 million Revolving Credit Facility, due 2008, rated Ba3.
The ratings outlook remains stable.
At the end of 2005, Colfax borrowed EUR27 million at Allweiler in
order to take advantage of the American Jobs Creation Act.
Proceeds from the loan were used to finance the repatriation of
approximately EUR20 million from Allweiler to its U.S. based
parent as well as to term out existing Euro-denominated revolver
borrowings. Colfax used this dividend, together with an increase
in the existing Term Loan B commitment from $113.8 to $125
million, to pre-fund a portion of its pension obligations and to
term out existing USD-denominated revolver borrowings. The
Transaction created a natural currency hedge for Colfax's Euro-
denominated cash flows and provided a tax-efficient means of
financing near-term pension obligation funding requirements,
essentially exchanging one form of liability for another.
The ratings are supported by Colfax's:
* strong brand names and defensible;
* niche market positions in the global pump market;
* modest financial leverage; and
* solid interest coverage.
On the other hand, the ratings are constrained by:
* the company's exposure to cyclical end-markets;
* its acquisitive growth strategy;
* its associated integration risks; and
* sizable asbestos and pension liabilities.
The new Term Loan C is secured by a perfected lien on
substantially all of Allweiler's assets and by a perfected
security interest in all capital stock and inter-company notes.
In addition, the Term Loan C shares, on a pari passu basis, in the
collateral that secures the domestic facilities. The Term Loan C
enjoys senior secured upstream guarantees from Colfax's European
operating subsidiaries as well as downstream guarantees from its
parent companies. In assigning the Ba3 rating to the Term Loan C,
Moody's considered the Term Loan C's structural seniority relative
to the Allweiler assets but viewed it as neutral to the existing
Corporate Family Rating in light of the increased financial
leverage resulting from the Transaction.
Pro forma for the Transaction as if it occurred on Dec. 31, 2005,
Colfax had on-balance debt of approximately $159 million, or 2.7
times pro forma 2005 estimated EBITDA. Adjusting for the under-
funding of the U.S. pension obligations (approximately $46
million) and operating leases, adjusted debt would be
approximately $226 million, or 3.9 times EBITDA.
2005 estimated EBITDA covered pro forma interest expense over 8
times. Given high margins and fairly modest capital expenditure
requirements (approximately $9 million a year going forward),
Colfax should generate relatively good cash flow over the next
twelve months. Pension cash contributions and asbestos
settlements, however, remain a significant offset to Colfax's cash
flow generation.
The stable rating outlook reflects Moody's expectation of a
favorable sales and order trends in many of Colfax's sector and
geographic (particularly Asian) end markets as well as the
potential for further operational improvements. These favorable
trends are offset by the company's substantial asbestos
liabilities and the risks associated with its debt-financed
acquisitive growth strategy.
Factors that could cause Moody's to consider a negative rating
action include:
* an unexpected deterioration in the company's major end-
markets;
* a higher-than-expected increase in its asbestos liabilities;
and
* settlement costs and/or material acquisitions that result in
a substantially more aggressive financial profile.
Factors that could cause Moody's to consider a positive rating
action include:
* a demonstrated commitment to financial de-leveraging
reflected in a more conservative capital structure with total
debt to book capitalization below 60%; and
* a material decrease in asbestos liabilities.
Moody's notes that Colfax has substantial asbestos liabilities
although they are partially mitigated by insurance coverage and
reserves. As of Sept. 30, 2005, there were 47,588 pending claims,
up 5% from year-end 2004. Colfax maintains substantial primary
and secondary insurance coverage and has also recorded a sizable
accrued asbestos liability based on estimated claim costs to be
paid over the next 15 years. Actual cash payment for 2005 are
estimated to have been approximately $7 million, compared to
payments of approximately $6 million in 2004.
In addition, Colfax has substantial under-funded U.S. pension
liabilities of approximately $46 million at the end of 2005 after
taking into account the $19 million in 2006 pre-funding financed
with the proceeds of the Transactions. Colfax estimates required
contributions between $8 and $12 million in 2007.
CLFX Corporation, based in Richmond, Virginia, is a global
manufacturer of flow control products, with estimated, pro forma
revenues in excess of $335 million for the year ended
Dec. 31, 2005.
COLLINS & AIKMAN: Considers Option to Remain a Stand-Alone Entity
-----------------------------------------------------------------
Frank Macher, President and Chief Executive Officer of Collins &
Aikman Corporation confirmed that the company remains on its
previously stated dual-track route to emergence from bankruptcy
protection that includes the distinct possibility of remaining a
stand-alone entity. Additionally, through its advisors, the
company has also begun the process of marketing portions or all of
the company's assets to determine their market value for a
potential sale, merger or equity infusion from investors.
"We are in the midst of developing a comprehensive business plan
that includes detailed, three-year projections to determine our
base value," said Mr. Macher. "From there, we will evaluate the
benefits of structuring the Company as a stand-alone entity or
explore the possible sale or merger of our assets to a third
party. Ultimately, we will choose the path that creates the most
value for our stakeholders."
The company noted that they remain in the preliminary stages of
developing a Plan of Reorganization.
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.
CORRECTIONS CORP: Moody's Assigns Ba3 Rating to $150 Million Notes
------------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Correction
Corporations of America's $150 million new senior unsecured notes
due 2014. The outlook for all of the firm's ratings was revised
to positive, from stable. According to Moody's, this outlook
revision reflects a substantially reduced secured debt burden as
well as improving leverage and coverage statistics. CCA maintains
its industry leadership position as the USA's largest owner and
operator of private correctional facilities.
The new notes are retiring a similar amount of secured term loan
debt, and CCA's new credit facility will consist of a $150 million
revolver secured by receivables, which will be undrawn initially.
As such, this would nearly eliminate the firm's secured debt
burden. In addition, as a result of this financing, the next
significant debt maturity becomes 2011. This maturity laddering,
combined with balance sheet cash and ample revolver capacity,
provide CCA with good liquidity. CCA is more profitable and has
better coverage ratios than its peers, primarily due to its higher
margin owned-and-managed facility business model (versus managed-
only). The firm has maintained operating margins in the mid-20%
range, improving to 26.3% in 3Q05 from 24.8% in 3Q04.
CCA's average compensated occupancy decreased to 90.8% 9M05, from
95.6% during the same period in 2004 due to the firm increasing
capacity at a number of facilities in anticipation of future
demand, while the 3Q05 figure improved over 2Q05, 92.7% versus
90.1%. CCA had a 69,236 average bed capacity at 3Q05 versus
64,933 at 3Q04.
The rating agency noted that there are approximately 6,200
available beds in various facilities for which the company has
either identified prospective contractors or secured contracts.
Importantly, CCA has had a 95% contract retention rate over the
last 18 months. During 2H05 several states, as well as the Bureau
of Prisons and the Bureau of Immigration and Customs Enforcement,
extended existing contracts and provided guarantees for a minimum
number of inmates.
Moody's would expect to raise CCA's ratings one notch should
Debt/EBITDA decline below 4X and interest coverage increase above
4X. Secured debt will also need to be mostly absent from the
firm's balance sheet, with modest increases as the revolver is
drawn to fund interim cash flow needs. The rating agency would
likely return the outlook to stable should CCA fail to accomplish
any of these goals above within the next twelve months.
In addition, downward ratings pressure would likely result from:
* development representing more than 10% of gross assets;
* sustained occupancy below 90%; or
* a sudden and material loss of contracts.
This rating was assigned with a positive outlook:
Corrections Corporation of America:
* Ba3 $150 million senior unsecured notes due 2014.
These ratings were affirmed with a positive outlook:
Corrections Corporation of America:
* Ba2 senior secured debt rating;
* Ba3 senior unsecured debt rating;
* (P)Ba2 senior secured debt shelf;
* (P)Ba3 senior unsecured debt shelf;
* (P)B1 senior subordinate shelf; and
* (P)B2 preferred shelf.
In its previous rating actions with respect to CCA, Moody's raised
the company's senior secured rating to Ba2 and senior unsecured
rating to Ba3 (from Ba3 and B1, respectively), and changed the
outlook to stable on Sept. 1, 2005.
Corrections Corporation of America [NYSE: CXW], headquartered in
Nashville, Tennessee, USA, is the nation's largest owner and
operator of privatized correctional and detention facilities and
one of the largest prison operators in the United States, behind
only the federal government and three states.
CCA currently operates 63 facilities, including 39 company-owned
facilities, with a total design capacity of approximately 71,000
beds in 19 states and the District of Columbia. CCA specializes
in:
* owning, operating and managing prisons and other correctional
facilities; and
* providing inmate residential and prisoner transportation
services for governmental agencies.
CORRECTIONS CORP: S&P Rates Proposed $150 Mil. Sr. Notes at BB-
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating
Corrections Corp. of America's proposed $150 million senior
unsecured notes due 2014.
At the same time, Standard & Poor's affirmed its ratings on the
prison and corrections services company, including its 'BB-'
corporate credit rating.
Proceeds of the notes will be used to refinance the remaining
balance of the company's senior secured term loan E due in March
2006, and pay related fees and expenses. The company also plans
to enter into a new $150 million senior secured revolving credit
facility due in 2011 that will replace the existing $125 million
revolver due in March 2006.
Upon completion of the refinancing, Standard & Poor's will
withdraw the 'BB' rating on the company's existing senior secured
credit facility. The new facility will not be rated.
EARLE M. JORGENSEN: Reliance Merger Cues Moody's Ratings' Review
----------------------------------------------------------------
Moody's Investors Service placed the ratings for Earle M.
Jorgensen Company under review with direction uncertain following
the announcement that the company and Reliance Steel & Aluminum
Co. (Reliance, unrated by Moody's) have entered into a definitive
merger agreement pursuant to which Reliance will acquire EMJ.
Consideration for the acquisition includes Reliance stock valued
at approximately $327 million, cash, and the assumption of
approximately $291 million of debt at EMJ.
Holders of EMJ's $250 million of 9.75% senior secured notes are
protected by a change of control put. The Boards of Directors of
both companies have unanimously approved the merger, which is
subject to:
* the approval of EMJ's stockholders;
* customary regulatory and lender approvals; and
* the registration of the new Reliance common shares.
Moody's will leave EMJ's ratings under review with direction
uncertain until there is certainty regarding the outcome of the
merger and the treatment of the senior notes as a result of the
acquisition.
These ratings are affected by this action:
Earle M. Jorgensen Company:
* Ba3 corporate family rating
* B1 rating for its $250 million of 9.75% senior secured
notes due 2012
It has been reported that the cash portion of Reliance's
consideration, approximately $384 million, which includes the cash
out of certain EMJ options and estimated transactions costs, will
be financed under Reliance's $600 million syndicated credit
facility. As of Sept. 30, 2005, Reliance had total debt of $414
million. If the acquisition closes as announced, Reliance's debt
would rise to approximately $1.1 billion and its debt to total
capitalization ratio would be around 45%.
Over the 12 months ended Sept. 30, 2005, Reliance reported sales
and EBITDA of $3.2 billion and $360 million, respectively, and EMJ
reported sales and EBITDA of $1.7 billion and $170 million,
respectively.
ENER1 INC: Dismisses Kevin Fitzgerald as Board Chairman & CEO
-------------------------------------------------------------
Ener1, Inc., dismissed its chairman and chief executive officer,
Kevin Fitzgerald, effective Jan. 9, 2006.
The Company's board of directors has appointed Ronald Stewart --
currently the Company's interim chief financial officer -- to
serve as chairman and chief executive officer on an interim basis.
Mr. Stewart has served as general counsel of the Company since
April 2002 and executive vice president since September 2003.
The Company has experienced net operating losses since 1997 and
negative cash flows from operations since 1999, and had an
accumulated deficit of $157 million as of Sept. 30, 2005.
Management says that the Company could continue to incur negative
cash flows through Sept. 30, 2006.
The Company's balance sheet showed $13,957,000 in total assets at
Sept. 30, 2005, and liabilities of $94,834,000, resulting in a
stockholders' deficit of $80,877,000.
As of Sept. 30, 2005, the Company had a $62 million working
capital deficit. Working capital included $7 million in cash and
$700,000 in prepaid expenses, offset by $1.6 million in accounts
payable, accrued expenses and accrued exit costs and $67.5 million
in derivative liabilities on conversion features of securities.
Ener1, Inc. (OTCBB: ENEI) -- http://www.ener1.com/-- is an
alternative energy technology company. The company's interests
include: 80.5% of EnerDel -- http://www.enerdel.com/-- a lithium
battery company in which Delphi Corp. owns 19.5%; 49% of
Enerstruct, a Japanese lithium battery technology company in which
Ener1's strategic investor ITOCHU owns 51%; wholly owned
subsidiary EnerFuel, a fuel cell testing and component company --
http://www.enerfuel.com/-- and wholly owned subsidiary NanoEner
-- http://www.nanoener.com//-- which develops nanotechnology-
based materials and manufacturing processes for batteries and
other applications.
ENXNET INC: Gets 7% Stake in Gift Card Biz under Partnership Pact
-----------------------------------------------------------------
EnXnet, Inc. (OTCBB: EXNT - News; German WKN# A0HMDW) entered into
a strategic relationship with Interactive Affinities, Inc., and
received a 7% equity interest the company.
Interactive Affinities, which was founded in 2003 and located in
North Richland Hills, Texas, markets gift cards and other stored
value media. Under the terms of the acquisition agreement, EXNT
was granted 72,000 shares of Interactive Affinities, Inc., common
stock, which is equal to a 7% equity interest in the company.
The shares of stock, which are subject to certain provisions and
restrictions, were provided to EXNT as consideration for the
previously announced Marketing and Royalty Agreement entered into
between the two companies. Interactive Affinities will market a
distinctively designed interactive, multi-media gift card, under
the trade name, SurfCard(TM) which will be manufactured by EXNT,
incorporating the Company's proprietary ThinDisc(c) technology.
Interactive Affinities will target a variety of commercial
customers, including the "closed-loop" market, where the
SurfCard(TM) will be able to be redeemed at virtually all
merchants that accept major credit cards.
Ryan Corley, the Company's President commented, "We are extremely
pleased to partner with Interactive Affinities, as we continue to
consolidate our position and capitalize on opportunities as the
industry's leading provider of specialized stored value gift card
products and technologies."
As indicated by the more than $18 billion spent on gifts using
stored value cards during several weeks preceding the 2005 holiday
season and the 40% growth exhibited during the entire year 2005,
stored value cards and similar varieties of media are a major
force in the market impacting merchants and consumers alike. The
use of stored value cards is projected to increase to more than
$250 billion in the U.S. by 2008.
EnXnet, Inc., offers video compression services for distribution,
downloading, and streaming of video and audio content for use on
the Internet, advertising applications, television and cable
broadcasting companies, and standard content media such as DVDs.
At Sept. 30, 2005, the company's balance sheet showed a $786,870
stockholders' deficit, compared to a $812,905 deficit at March 31,
2005.
Going Concern Doubt
The company said in its latest quarterly report filed with the
Securities and Exchange Commission that its working capital
deficit and incurred losses since inception raise substantial
doubt about its ability to continue as a going concern.
EPICUS COMMS: Nov. 30 Balance Sheet Upside-Down by $18.4 Million
----------------------------------------------------------------
Epicus Communications Group, Inc. (OTCBB: EPCG) reported that
revenues for the second quarter of 2005 were $3,367,000, compared
to $3,909,000 in the first quarter of 2005 and $3,593,000 for the
second quarter of 2004.
Operating costs decreased to $1,167,000, compared to $1,304,000 in
the first quarter of 2005 and $3,287,000 in the second quarter
2004.
Net loss for the second quarter of 2005 was $1,479,000 as compared
to a net loss of $676,000 in the first quarter of 2005 and a net
loss of $3,921,000 in the second quarter of 2004.
Gross margin remained constant at 19% of net revenues in the
second quarter of 2005 from the first quarter of 2005 and
increased from no margin or a gross loss in the second quarter of
2004.
As of Jan. 12, 2006, Epicus had 10,068,000 common shares
outstanding.
Epicus in recent months announced it had emerged from its Chapter
11 bankruptcy proceedings as a newly reorganized company,
operating as a Competitive Local Exchange Carrier and providing
telecommunications services to approximately 21,000 business and
residential customers.
Epicus also entered into a letter of intent to acquire Freedom
Communications USA, a reseller and facilities based CLEC located
in Nashville, Tennessee. The acquisition is expected to close in
late January 2006 and be accretive to 2006 earnings, adding an
estimated $2,500,000 in revenue.
In a move designed to increase Epicus' operating cash available to
grow the company's customer base, on Jan. 3, 2006, its board of
directors unanimously agreed to amend Epicus' revised convertible
debenture agreement. This action resulted in the conversion of
$3,750,000 in ordinary notes to convertible preferred stock.
"We are encouraged by the organization's progress in key several
areas," Mark Schaftlein, Epicus' CEO, said. "Most notably, our
groundwork during the second quarter enabled us to emerge from
Chapter 11 with the support of our creditors and institutional
investors as a promising CLEC."
Epicus' quarterly report for the period ending Nov. 30, 2005 is
available for free at http://ResearchArchives.com/t/s?465
Headquartered in West Palm Beach, Florida, Epicus Group is a
holding company with a primary goal of investing in its current
telecommunications assets. Epicus, Inc., it's a wholly-owned
subsidiary is an integrated communications provider with voice and
data service in the continuous 48 states, international long
distance in 240 countries with local exchange services in 8
southeastern states. The Debtors filed for chapter 11 protection
on Oct. 25, 2004 (Bankr. S.D. Fla Case Nos. 04-34915 and
04-34916). Alvin S Goldstein, Esq., represents the Debtors in
their restructuring efforts.
The Court confirmed Epicus' Plan of Reorganization on
Sept. 30, 2005. On Dec. 7, 2005, the company emerged from
Chapter 11 bankruptcy proceedings as a newly reorganized company.
As of Nov. 30, 2005, Epicus Communications Group's balance sheet
showed a stockholders' deficit of $18,423,576, compared to
$15,252,179 deficit at Nov. 30, 2004.
EXOPACK HOLDING: S&P Rates Proposed $235 Million Sr. Notes at B-
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' corporate
credit rating to plastic- and paper-packaging producer Exopack
Holding Corp. At the same time, Standard & Poor's assigned its
'B-' rating to the company's proposed $235 million senior
unsecured notes due 2014.
Total debt, pro forma for the transaction, including present value
of capitalized leases is $242 million at fiscal year ended
Dec. 31, 2005. The outlook is stable.
"The ratings reflect a vulnerable business position in a
fragmented and highly competitive market, a highly leveraged
financial profile, and information, integration, and execution
risks associated with the consolidation of three separate
businesses into Exopack," said Standard & Poor's credit analyst
Paul Kurias.
Spartanburg, South Carolina-based Exopack is a holding company for
three recently acquired packaging businesses that have been
consolidated as operating subsidiaries of Exopack. The company
produces flexible packaging products serving a range of end
markets including:
* consumer,
* food service, and
* industrial applications.
Exopack focuses mainly on the North American region through its
16 manufacturing locations, in the U.S. and Canada. Pro forma for
the consolidation, adjusted revenues and EBITDA were about $598
million and $53 million, respectively, for the 12 months ended
Sept. 30, 2005.
Exopack's products reflect some strengths in printing and barrier
technologies, but the portfolio includes mainly lower value-added
products with commodity-like pricing characteristics. The company
has only a small presence in high value-added segments such as
meat and cheese packaging. As a result, adjusted EBITDA margins
of about 8% for the 12 months ended Sept. 30, 2005, are lower than
historical margins achieved by its larger, rated competitors with
more established track records and stronger and more diverse
product portfolios.
Consequently, the company is more vulnerable than most of its
rated peers to a potential decline in margins from increasing
input costs, or other unexpected operating challenges, such as the
loss of a key customer. There is a moderate level of customer
concentration with the top 10 customers accounting for about 40%
of total revenue.
FORMICA BERMUDA: S&P Rates Proposed $270 Mil. Bank Facility at B
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Formica Bermuda Holdings Ltd., a manufacturer of
high-pressure laminate and other surfacing materials. The outlook
is stable.
At the same time, Standard & Poor's assigned its 'B' senior
secured bank loan rating and '3' recovery rating to the proposed
$270 million bank facility of the company's subsidiaries, based on
preliminary terms and conditions. The facility is comprised of:
* a $60 million revolving credit facility due in 2012; and
* a $210 million first-lien term loan due in 2013.
The bank loan rating and recovery rating indicate the expectation
of meaningful (50%-80%) recovery of principal in the event of a
payment default.
Proceeds from the new bank facility will be used to:
a) refinance existing bank debt incurred when Formica's U.S.
subsidiaries emerged from bankruptcy in June 2004; and
b) pay a $30 million dividend to its equity holders, primarily
Cerberus Capital Management L.P. and Oaktree Capital
Management LLC, both unrated.
"Formica's performance should benefit from the continued gradual
recovery in commercial construction and improved operating
efficiencies," said Standard & Poor's credit analyst Kenneth L.
Farer. "Ratings could be lowered if liquidity is tighter than
expected because of rising raw material costs or the company's
inability to raise prices; or credit metrics deteriorate because
of soft sales from a faltering recovery in commercial construction
or an economic decline in one or more of the company's major
markets. Ratings upside is limited by the company's high debt
leverage and very aggressive financial policies, demonstrated by
the payment of a dividend to equity sponsors less than two years
after emerging from bankruptcy and before the company has returned
to profitability. However, the outlook could be revised to
positive if management reduces operating costs further, maintains
higher margins over a sustained period of time, generates
sufficient cash flow to reduce leverage closer to 4x, and adopts a
less aggressive financial policy."
At the closing of the bank financing, Formica will have total debt
of $337 million (including about $70 million of unfunded pension
obligations, $9 million in other postretirement obligations, and
$21 million of capitalized operating leases) and a very aggressive
total debt to EBITDA ratio of 4.8x. The company will have little
tangible net worth, owing to the planned dividend and about $65
million of intangible assets -- primarily trademarks. Net income
is expected to be minimal over the next several years, with
somewhat improved cash flow generation because of working capital
management.
Formica's surfacing materials are used in a variety of
applications including:
* countertops;
* furniture;
* store fixtures; and
* specialty products such as:
-- bowling lane floors, and
-- mobile home interiors.
Liquidity is limited. At closing, the company will have $9
million in cash and approximately $55 million available under its
$60 million revolving credit facility after outstanding letters of
credit of about $5 million. Borrowings under the revolving credit
facility should peak in the January to May timeframe, coincident
with the company's seasonal working-capital buildup. Peak
working-capital borrowings are expected to be less than $20
million but will depend in part on raw material price increases
and Formica's ability to pass on these costs.
The borrowers are indirect, wholly owned operating subsidiaries of
Formica Bermuda Holdings:
* Formica Corp. in the U.S.;
* Formica Ltd. in the United Kingdom;
* Formica Canada Inc.; and
* Formica Espanola S.A. in Spain.
The bank facility consists of:
a) a $60 million six-year first-lien revolving credit facility
(of which up to $20 million is available to Formica Ltd. in
sterling or euros with the remainder available to Formica
Corp. in U.S. dollars); and
b) a $210 million seven-year first-lien term loan B (with
amortization of 1% per year, payable quarterly, until
maturity).
The term loan B is divided into these tranches:
a) US$110 million borrowed by Formica Corp.;
b) US$50 million equivalent of British pounds borrowed by
Formica Ltd.;
c) US$25 million equivalent of Canadian dollars borrowed by
Formica Canada Inc.; and
d) US$25 million equivalent of euros borrowed by
Formica Espanola S.A.
GENERAL DATACOMM: Eisner LLP Raises Going Concern Doubt
-------------------------------------------------------
Eisner LLP expressed substantial doubt about General DataComm
Industries, Inc.'s ability to continue as a going concern after it
audited the Company's financial statements for the years ended
Sept. 30, 2005 and 2004. The auditing firm pointed to the
Company's:
-- working capital and stockholders' deficits at Sept. 30, 2005;
-- limited ability to obtain new financing; and
-- probable inability to comply with financial loan covenants
related to its restructured secured indebtedness.
General DataComm emerged from bankruptcy proceedings pursuant to a
Plan of Reorganization under Chapter 11 of the Bankruptcy Code on
Sept. 15, 2003. Under the Plan of emergence, the Company intends
to pay all creditors 100% of their allowed claims based upon a
five-year business plan.
The Company voluntarily filed for protection under Chapter 11 of
the Bankruptcy Code on Nov. 2, 2001, after incurring seven
consecutive years of losses and selling three of its four
operating divisions in 2001.
Fiscal Year 2005 Results
For the fiscal year ended Sept. 30, 2005, General DataComm earned
$3,292,000 of net income on $14,429 of revenue, in contrast to a
$1,396,000 net loss on $15,381 of revenue in the prior year.
The Company's balance sheet showed $10,698,000 in total assets at
Sept. 30, 2005, and liabilities of $45,440,000, resulting in a
stockholders' deficit of $34,742,000. At Sept. 30, 2005, the
Company had a $37,943,000 working capital deficit as compared to a
$40,938,000 working capital deficit a year earlier.
General DataComm has virtually no current ability to borrow
additional funds and must fund operations from cash balances and
cash generated from operating activities. The Company also has
significant short-term obligations including payment of
bankruptcy-related and other professional fees, delinquent
property taxes, priority tax claims and monthly payments of
principal and interest, currently totaling approximately $290,000
monthly, under its senior loan agreement.
Further, the Company has significant outstanding obligations to
pay both interest and principal on total long-term debt
approximating $45.2 million.
Headquartered in Middlebury, Connecticut, General DataComm
Industries, Inc. -- http://www.gdc.com/-- is a worldwide provider
of wide area networking and telecommunications products and
services, and it designs, assembles, markets, installs, and
maintains products that enable telecommunications common carriers,
corporations, and government to build, improve, and more cost
effectively manage their global telecommunication networks. The
Company and its debtor-affiliates filed for chapter 11 protection
on Nov. 2, 2001 (Bankr. D. Del. Case No. 01-11101-PJW). Curtis J.
Crowther, Esq., at Young Conaway Stargatt & Taylor LLP, represents
the Debtor. When the Debtor filed for chapter 11 protection, it
listed total assets of $64 million and total debts of $94 million.
General DataComm Industries, Inc., emerged from bankruptcy on
Sept. 15, 2003
GEORGIA-PACIFIC: S&P Rates $8.5 Billion Credit Facilities at BB-
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' senior
secured bank loan rating and '2' recovery rating to the
$8.5 billion senior secured first-lien credit facilities of forest
products producer Georgia-Pacific Corp. (GP) (BB-/Positive/B-2).
These ratings reflect an expectation of substantial (80%-100%)
recovery of principal in the event of a payment default. Standard
& Poor's also assigned its 'B+' senior secured bank loan rating
and '3' recovery rating to GP's $2.5 billion senior secured
second-lien credit facility, indicating expectations of meaningful
recovery (50%-80%) of principal in the event of a payment default.
Proceeds from the bank facilities were used to partially finance
the acquisition of GP by unrated Koch Industries Inc.
At the same time, Standard & Poor's lowered its senior unsecured
debt ratings on Atlanta, Georgia-based GP two notches, to 'B' from
'BB-' and removed them from CreditWatch, where they were placed on
Nov. 14, 2005, with negative implications. The unsecured debt
rating indicates a disadvantaged position relative to bank lenders
and other priority liabilities.
All other ratings on GP, including its 'BB-' corporate credit
rating, and its subsidiaries were affirmed. The outlook is
positive. GP's total debt at closing was about $17 billion.
The ratings of Koch Cellulose were withdrawn following completion
of Koch's acquisition of GP and repayment of Koch Cellulose's
debt.
The first-lien facilities are comprised of:
* a five-year $1.5 billion revolving credit facility;
* a $2 billion five-year term loan A; and
* a $5 billion seven-year term loan B.
Georgia-Pacific Corp. is the borrower under the revolving credit
facility, term loan B, and term loan C. The borrowers under term
loan A include:
* Georgia-Pacific Corp. in the amount of $1.51 billion;
* Georgia-Pacific Canada Consumer Products, Inc. at
CDN$117 million;
* Georgia-Pacific Expansion S.A.S. at EUR198 million; and
* Georgia-Pacific S.A.R.L. at EUR131 million.
GP Cellulose LLC (formerly Koch Cellulose) and the majority of
GP's domestic subsidiaries guarantee all of the first-lien and
second-lien facilities. Georgia-Pacific's foreign subsidiaries
and certain of GP Cellulose's foreign subsidiaries guarantee only
the non-U.S. portion of the first-lien facilities, totaling about
$495 million.
The first-lien facilities are secured by a first-priority lien and
security interest in all assets of the borrowers and the majority
of their subsidiaries, including:
* accounts receivables,
* net of amounts sold under the company's accounts receivable
securitization facility,
* inventory,
* intangibles (primarily brand names and trademarks),
* property,
* plant, and
* equipment to the extent not restricted by the company's
existing bond indentures.
The first-lien facilities are also secured by a first-priority
pledge of 100% of the company's domestic subsidiary stock, to the
extent not restricted by the existing bond indentures, and by 65%
of the capital stock of the majority of the company's foreign
subsidiaries. Although foreign borrowings are secured by
additional collateral and have guarantees not available to
domestic borrowers, a provision for the purchase and sale of
participations ensures the ratable distribution of recovery
amounts following a default.
The second-lien facility is secured by all of the same assets and
subsidiary stock as the first-lien facilities on a second-priority
basis. These facilities are subject to an inter-creditor
agreement that provides for a 180-day standstill on collateral
enforcement. In addition, there is a three-quarters-turn cushion
in maximum leverage and a one-quarter-turn cushion on minimum
interest coverage.
"Because only a moderate downturn in GP's business could still
result in a default in view of its significant leverage, we
believe the company would maintain viable prospects for
reorganization, reflecting its leading market shares, attractive
brand names, broad product diversity, and large-scale
manufacturing capabilities," said Standard & Poor's credit analyst
Pamela Rice.
Although GP's consumer products business lends some stability to
its financial performance, the company also participates in
cyclical and oversupplied paper and wood products markets.
"Fairly favorable near-term market conditions in most segments, as
well as expected cost reductions, should facilitate satisfactory
cash flow generation to reduce debt," Ms. Rice said. "A one-notch
upgrade within the next two years would be predicated on the
ability to realize and execute cost savings and proceeds from
asset sales in excess of our current expectations. Alternatively,
a revision of the outlook to stable would occur if expectations
for cost-saving initiatives and asset-sale proceeds are not
exceeded and/or are delayed or if there is an unexpected industry
downturn in the near term because of an economic recession or a
sharp decline in residential construction."
GITTO GLOBAL: Ch. 7 Trustee Collects $160,000 from Nancy Gitto
--------------------------------------------------------------
Nancy Gitto-Panagiotes, the sister of former Gitto Global
Corporation CEO Gary Gitto, will pay $160,000 to the Debtor's
estate in full and final satisfaction of all claims asserted by
Mark G. DeGiacomo, the chapter 7 Trustee appointed in the Debtor's
bankruptcy case. The U.S. Bankruptcy Court for the District of
Massachusetts, Western Division, approved the stipulation
outlining the terms of the settlement on Jan. 12, 2006.
The chapter 7 Trustee commenced an adversary proceeding against
Ms. Gitto-Panagiotes in order to recover approximately $381,868 in
salary allegedly paid to her during the four-year period prior to
the Debtor's bankruptcy filing.
Mr. DeGiacomo had claimed that Ms. Gitto-Panagiotes did not serve
as a full time employee of the Debtor during this period. Ms.
Gitto-Panagiotes disputed the chapter 7 Trustee's allegation and
stated that she was a full time employee at Gitto Global up until
December 2003, when her brother terminated her employment.
In exchange for the $160,000 payment, Mr. DeGiacomo discharges Ms.
Gitto-Panagiotes from all claims and causes of actions, whether
known or unknown, filed against her as of Dec. 14, 2005, the date
of the settlement agreement.
Mr. DeGiacomo clarifies that the releases afforded to Ms. Gitto-
Panagiotes do not extend to claims filed against her husband,
Steven Panagiotes. Mr. Panagiotes had served as the Gitto
family's lawyer.
Headquartered in Lunenburg, Massachusetts, Gitto Global
Corporation -- http://www.gitto-global.com/-- manufactured
polyvinyl chloride, polyethylene, polypropylene and thermoplastic
olefinic compounds. The Company filed for chapter 11 protection
on September 24, 2004 (Bankr. D. Mass. Case No. 04-45386). Andrew
G. Lizotte, Esq., at Hanify & King P.C., represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it estimated assets between $10 million to
$50 million and debts between $50 million to $100 million.
On March 4, 2005, the Court converted the Debtor's chapter 11 case
to a chapter 7 proceeding. Mark G. DeGiacomo serves as the
Chapter 7 Trustee.
GRAND EAGLE: Liquidating Agent Wants Claims Objection Sustained
---------------------------------------------------------------
Glenn C. Pollack, the liquidating agent for Grand Eagle, Inc.,
wants the U.S. Bankruptcy Court for the Northern District of Ohio,
Eastern Division, to sustain his objection to two claims, totaling
$528,931, filed by the Internal Revenue Service, and disallow
these claims as priority tax claims, pursuant to Rule 37(d) of the
Federal Rules of Civil Procedure.
In the alternative, Mr. Pollack asks the Bankruptcy Court to bar
the government agency from using certain documents or proffering
testimony at the evidentiary hearing on Feb. 14, 2006, as a
sanction for the government's failure to produce documents
required by the liquidating agent to assess the validity of the
disputed tax claims.
Liquidating Agent's Objection
On May 17, 2005, the liquidating agent filed his Fifth Omnibus
Objection to allowance of administrative claims. In his
objection, Mr. Pollack sought to deny priority treatment of two
of the IRS's claims and to disallow certain amendments made by the
government agency because these claims were purportedly filed
after the bar date.
The government agency disputed the liquidating agent's claim
saying that they filed had properly filed the claims prior to the
bar date.
Further, the government agency explained that the post bar date
amendments to the claims are allowed and necessary to correct an
understatement of tax on the original tax returns. The IRS
contended that the Debtors' misrepresentation of material matters
in their original returns for the affected periods justified the
allowance of the amended proofs of claim.
To resolve the tax dispute, the Bankruptcy Court set the
February 14 evidentiary hearing and directed the IRS to produce,
by Dec. 23, 2005, documents supporting the amendments to its
proofs of claim.
The liquidating agent says that the government has not served
responsive documents as ordered by the Bankruptcy Court.
Government Wants Objection Dismissed
Heather L. Richtarcsik, Esq., of the U.S. Department of Justice's
Tax Division, tells the Bankruptcy Court that the liquidating
agent's objection should be dismissed because:
a) the liquidating agent did not properly serve either the
Rule 37(d) motion or the Fifth Omnibus Objection on the
government agency; and
b) the liquidating agent's most recent submission suggests
that the relief he seeks is more appropriate for a section
505 motion to determine tax, and not an objection to claim
proceeding.
Ms. Richtarcsik says that service should have been made upon the
government by mailing copies of the relevant materials to the
civil process clerk at the office of the United States Attorney
for the district in which the action is brought and by mailing
copies to the Attorney General of the United States at Washington,
District of Columbia. Ms. Richtarcsik maintains that the
liquidating agent failed to follow this protocol.
Grand Eagle Companies, Inc., a privately held company, used to be
North America's largest independent motor, switchgear, and
transformer services provider. The Company filed for chapter 11
protection on Dec. 7, 2001 (Bankr. N.D. Ohio Case No. 01-54821).
Subsequently, Grand Eagle sold all of its assets and is no longer
an operating business providing any goods or services and no
longer operates a business office. Jeffrey Baddeley, Esq.,
at Benesch Friedlander Coplan & Aronoff, represents the Debtors.
GRANITE BROADCASTING: Inks Pact to Buy CBS Unit for $45 Million
---------------------------------------------------------------
Granite Broadcasting Corporation (OTC Bulletin Board: GBTVK) has
entered into a definitive agreement to acquire the assets of WBNG,
Channel 12, the CBS-affiliated television station serving
Binghamton and Elmira, New York, for $45 million in cash, before
closing adjustments. Binghamton is ranked by Nielsen Media
Research as the nation's 156th largest market, and Elmira is
ranked 173rd.
The transaction is subject to FCC approval and other closing
conditions and is expected to close during the second quarter of
2006. The Company expects to use a portion of the proceeds from
the sales of its two WB affiliates to fund this acquisition. The
sales of both WB affiliates are expected to close before the end
of January 2006.
Commenting on the announcement, W. Don Cornwell, Chief Executive
Officer of Granite Broadcasting Corporation, said, "WBNG is a very
strong station with a long history as the market's leading news
provider and complements our other upstate New York stations in
nearby Syracuse and Buffalo. This acquisition is a terrific fit
with our stated strategy of capitalizing on our core strength of
operating news-oriented, Big Three network-affiliated stations in
the nation's mid-sized markets. We believe it is an excellent use
of proceeds to be received from the sales of our two WB
affiliates, and is another positive step in the execution of our
strategic plan to realign our asset mix and substantially
strengthen our capital structure.
"With t[he] announcement, we continue to improve our competitive
and financial position. We will continue to seek additional
opportunities to prudently invest proceeds from the sales of the
WB affiliates, and we look forward to updating you as we execute
on these strategic initiatives."
Granite Broadcasting Corporation (OTC Bulletin Board: GBTVK) owns
and operates, or provides programming, sales and other services to
13 channels in the following 8 markets: San Francisco, California,
Detroit, Michigan, Buffalo, New York, Fresno, California,
Syracuse, New York, Fort Wayne, Indiana, Peoria, Illinois, and
Duluth, Minnesota-Superior, Wisconsin. The Company's station
group includes affiliates of the NBC, CBS, ABC, WB and UPN
networks, and reaches approximately 6% of all U.S. television
households.
* * *
As reported in the Troubled Company Reporter on Sept. 13, 2005,
Moody's Investors Service affirmed the long-term ratings of
Granite Broadcasting Corporation, including its Caa1 corporate
family rating and changed the outlook to negative, following the
company's announcement that it had signed a definitive agreement
to sell its two WB affiliate stations (San Francisco, California
and Detriot, Michigan) for a total consideration of $180 million,
$177.5 million in cash and $2.5 million in equity. Moody's
expects the company to either reinvest the proceeds from this
transaction in replacement assets over the next 270 days or offer
to redeem part of the outstanding 9.75% senior secured notes due
2010, per the terms of its bond indenture. Moody's said the
rating outlook is negative.
HASTINGS MANUFACTURING: Wants Van Dyke Gardner as Special Counsel
-----------------------------------------------------------------
Hastings Manufacturing Company asks the U.S. Bankruptcy Court for
the Western District of Michigan for permission to employ Van
Dyke, Gardner, Linn & Burkhart, LLP, as its special counsel.
Van Dyke Gardner will:
(a) evaluate, procure, maintain, enforce, license and counsel
the Debtor with regards to all intellectual proper
matters;
(b) prepare, file and prosecute U.S. patent and trademark
applications before the U.S. Patent and Trademark Office;
(c) oversee the preparation, filing and prosecution of foreign
patent and trademark applications through various foreign
associates that act before their respective patent and
trademark offices;
(d) prepare, file and prosecute maintenance fee payments or
renewal applications regarding existing patent and
trademarks issued or registered by the U.S. Patent and
Trademark Office;
(e) oversee the preparation, filing and prosecution of
maintenance fee payments or renewal applications regarding
existing patents and trademarks issued or registered by
foreign patent and trademark offices through appropriate
foreign associates; and
(f) advise the Debtor with respect to agreements that include
intellectual property provisions.
Daniel Van Dyke, Esq., a partner at Van Dyke Gardner, tells the
Court that he bills $335 per hour. Mr. Van Dyke discloses that
the Firm's other professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Terence J. Linn, Esq. Partner $335
Karl Ondersma, Esq. Associate $180
Karla J. Charles Paralegal $125
Mr. Van Dyke assures the Court that the Firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Van Dyke, Gardner, Linn & Burkhart, LLP represents clients
worldwide and has a wide range of technological backgrounds
providing significant litigation experience in the federal and
state courts and in the International Trade Commission, along with
extensive prosecution experience in the United States and numerous
foreign patent and trademark offices. All of the attorneys are
licensed to practice before the United States Patent and Trademark
Offices. The firm can be reached at:
Van Dyke, Gardner, Linn, & Burkhart, LLP
Suite 207, 2851 Charlevoix Drive Southeast
P.O. Box 888695
Grand Rapids, Michigan 49588-8695
Tel: (616) 975-5500
Fax: (616) 975-5505
Headquartered in Hastings, Michigan, Hastings Manufacturing
Company -- http://www.hastingsmanufacturing.com/-- makes piston
rings for the automotive aftermarket and for OEM's. Through a
joint venture, the Company sells additives for engines,
transmissions, and cooling systems under the Casite brand name.
Hastings Manufacturing distributes its products throughout the US
and Canada. The Company filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. W.D. Mich. Case No. 05-13047). Stephen B.
Grow, Esq., at Warner Norcross & Judd, LLP represents the Debtor
in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed total assets of
$26,797,631 and total debts of $28,625,099.
IMPAC FUNDING: Fitch Holds Junk Rating on Class M-3 Certificates
----------------------------------------------------------------
Fitch Ratings took rating actions on these Impac Funding Corp.
mortgage pass-through certificates issues:
Impac SAC mortgage pass-through certificates, series 1998F-1:
* Class A affirmed at 'AAA'
* Class B-1 affirmed at 'AAA'
* Class B-2 upgraded to 'AA' from 'BB'
Impac SAC mortgage pass-through certificates, series 2000-3:
* Class A affirmed at 'AAA'
* Class M-1 affirmed at 'AAA'
* Class M-2 affirmed at 'BBB+'
* Class M-3 remains at 'C'
Impac SAC mortgage pass-through certificates, series 2001-2:
* Class A affirmed at 'AAA'
* Class M-1 affirmed at 'AA+'
* Class M-2 affirmed at 'A+'
* Class B affirmed at 'BBB'
Impac SAC mortgage pass-through certificates, series 2001-4:
* Class A affirmed at 'AAA'
* Class M-1 affirmed at 'AA+'
* Class M-2 affirmed at 'A+'
* Class B affirmed at 'BB+'
Impac SAC mortgage pass-through certificates, series 2001-5:
* Class A affirmed at 'AAA'
* Class M-1 upgraded to 'AAA' from 'AA+'
* Class M-2 affirmed at 'A+'
* Class B affirmed at 'BBB'
Impac SAC mortgage pass-through certificates, series 2001-6:
* Class A affirmed at 'AAA'
* Class M-1 affirmed at 'AA+'
* Class M-2 affirmed at 'A+'
* Class B affirmed at 'B'
Impac SAC mortgage pass-through certificates, series 2001-7:
* Class A affirmed at 'AAA'
* Class M-1 affirmed at 'AA+'
* Class M-2 affirmed at 'A+'
* Class B affirmed at 'BBB'
Impac SAC mortgage pass-through certificates, series 2001-8:
* Class A affirmed at 'AAA'
* Class M-1 affirmed at 'AAA'
* Class M-2 upgraded to 'AA+' from 'AA'
* Class M-3 upgraded to 'A' from 'BBB'
Impac SAC mortgage pass-through certificates, series 2002-1:
* Class A affirmed at 'AAA'
* Class M-1 affirmed at 'AA+'
* Class M-2 affirmed at 'A+'
* Class B affirmed at 'BBB'
Impac CMB Trust series 2002-6F:
* Class A affirmed at 'AAA'
* Class M-1 affirmed at 'AA'
* Class M-2 affirmed at 'A'
Impac CMB Trust series 2002-8:
* Class A affirmed at 'AAA'
* Class B affirmed at 'BBB'
Impac CMB Trust series 2002-9F:
* Class A affirmed at 'AAA'
* Class M-1 affirmed at 'AA'
* Class M-2 affirmed at 'A'
* Class B affirmed at 'BBB'
Impac CMB Trust series 2003-2F:
* Class A affirmed at 'AAA'
* Class M-1 affirmed at 'AA'
* Class M-2 affirmed at 'A'
* Class B affirmed at 'BBB'
Impac CMB Trust series 2003-5:
* Class A affirmed at 'AAA'
* Class M-1 affirmed at 'AAA'
* Class M-2 affirmed at 'AA'
* Class B affirmed at 'BBB'
The upgrades, affecting $10.85 million of outstanding
certificates, are being taken as a result of low delinquencies and
losses, as well as significantly increased credit support levels.
As of the December 2005 distribution date, the credit enhancement
(CE) levels for the upgraded classes have grown at least 3.0 times
original CE levels since closing. The affirmations, affecting
over $540.50 million of certificates, indicate stable collateral
performance and moderate growth in CE. Credit enhancement for
series SAC 1998F-1, SAC 2000-3 and SAC 2001-8 are provided by
subordinated certificates. CE for all the other deals are
provided by:
* subordination,
* overcollateralization, and
* excess interest cashflow.
The pools are seasoned from a range of 32 to 91 months. The pool
factors (current principal balance as a percentage of original)
range from approximately 4% to 45% outstanding.
The mortgage loans in the nine SAC transactions were originated
under Impac Funding Corp.'s Progressive Series programs or
Progressive Express programs. The Progressive Series programs are
intended to assess the borrower's ability and willingness to repay
the mortgage loan obligation and to assess the adequacy of the
mortgaged property as collateral for the mortgage loan.
The Progressive Express program underwrites loans with a focus on
the borrower's credit score, ability and willingness to repay the
mortgage loan obligation, and assesses the adequacy of the
mortgage property as collateral for the mortgage loan. The pools
consist primarily of fixed-rate first-lien mortgages.
Weighted-average credit scores at issuance ranged from 673
(2001-2) to 687 (2002-1). WAVG loan-to-values ranged at issuance
ranged from 78.60% (2001-8) to 82.9% (2001-2). Loans with LTVs
greater than 80% typically have mortgage insurance. Average loan
balances at issuance ranged from $79,959 (1998F-1) to $192,077
(2002-1).
The mortgage loan performance of the SAC transactions has
generally been consistent with expectations. The percentage of
loans over 60 days delinquent ranges from 9.54% to 14.9%. The
cumulative loss as a percentage of the initial pool balance ranges
from 0.24% to 1.64%.
The mortgage loans in the five CMB transactions were originated or
acquired by Impac Mortgage Holdings and subsequently sold to the
parent company, Impac Mortgage Holdings, Inc., a real estate
investment trust. The pools consist primarily of adjustable-rate
mortgages, unless the series name is denoted with an 'F' (fixed-
rated). WAVG credit scores at issuance ranged from 682 (2002-6F)
to 715 (2003-2F). WAVG LTVs ranged at issuance ranged from 68.85%
(2003-2F) to 81.72% (2002-6F). Loans with LTVs greater than 80%
typically have mortgage insurance. Average loan balances at
issuance ranged from $184,975 (2002-6F) to $261,988 (2002-8).
The mortgage loan performance of the CMB transactions has
generally been consistent with expectations. The percentage of
loans over 60 days delinquent ranges from 1.0% to 6.8%. The
cumulative loss as a percentage of the initial pool balance ranges
from 0% to 0.23%.
The SAC transactions are failing their delinquency trigger tests,
which have prevented the subordinate bonds from receiving
principal and is allowing CE to grow as a percentage of the
outstanding balance. The CMB transactions pay pro rata and
generally do not have performance trigger tests.
The loans are currently master serviced, by Impac Funding
Corporation, which does not have a servicer rating by Fitch.
INTELSAT LTD: SES Global Plans to Buy Assets After PanAmSat Merger
-----------------------------------------------------------------
SES Global SA, the world's biggest satellite operator, is
interested in buying the assets that rival Intelsat, Ltd., may put
up for sale after it takes over Holding Corp.
In August 2005, Intelsat and PanAmSat signed a definitive merger
agreement under which Intelsat will acquire PanAmSat for
$25 per share in cash or $3.2 billion.
SES Chief Financial Officer Mark Rigolle said he expected
Intelsat's private equity owners to sell off pieces to de-
leverage the combined company once the deal had gained
regulatory approval.
About PanAmSat
Through its owned and operated fleet of 25 satellites, PanAmSat
Holding Corp. (NYSE: PA) -- http://www.panamsat.com/-- is a
leading global provider of video, broadcasting and network
distribution and delivery services. It transmits 1,991 television
channels worldwide and, as such, is the leading carrier of
standard and high-definition signals. In total, the Company's in-
orbit fleet is capable of reaching over 98 percent of the world's
population through cable television systems, broadcast affiliates,
direct-to-home operators, Internet service providers and
telecommunications companies. In addition, PanAmSat supports
satellite-based business networks in the U.S., as well as
specialized communications services in remote areas throughout the
world.
About Intelsat, Ltd.
Intelsat, Ltd., offers telephony, corporate network, video and
Internet solutions around the globe via capacity on 25
geosynchronous satellites in prime orbital locations. Customers
in approximately 200 countries rely on Intelsat's global
satellite, teleport and fiber network for high-quality
connections, global reach and reliability.
* * *
As reported in the Troubled Company Reporter on Nov. 16, 2005,
Intelsat, Ltd.'s announcement of its results for the third quarter
ended Sept. 30, 2005, does not affect the ratings of Intelsat,
wholly owned subsidiary Intelsat (Bermuda), Ltd., and operating
subsidiary Intelsat Subsidiary Holding Company Ltd. The company
remains on Rating Watch Negative.
As reported in the Troubled Company Reporter on Sept. 1, 2005,
Moody's Investors Service has affirmed Intelsat, Ltd.'s ratings
and changed the outlook for all ratings to developing from
negative following the company's announcement that it is acquiring
PanAmSat for $3.2 billion plus the assumption of PanAmSat's debt
($3.2 billion). The transaction, which Moody's expects to be
largely, if not entirely, financed with new debt, would
significantly increase Intelsat's pro forma leverage thereby
increasing credit risk for Intelsat debt holders and pressuring
the rating downwards. Therefore, Moody's anticipates placing all
ratings on review for possible downgrade or lowering the ratings
once the timing and structure of the transaction and resolution of
regulatory review becomes more certain.
Moody's has affirmed these ratings:
Intelsat:
* Corporate family rating -- B2
* $400 Million 5.25% Global notes due in 2008 -- Caa1
* $600 Million 7.625% Sr. Notes due in 2012 -- Caa1
* $700 Million 6.5% Global Notes due in 2013 -- Caa1
Intelsat Subsidiary Holding Company Ltd.:
* $300 Million Sr. Secured Revolver due in 2011 -- B1
* $350 Million Sr. Secured T/L B due in 2011 -- B1
* $1 Billion Sr. Floating Rate Notes due in 2012 -- B2
* $875 Million Sr. 8.25% Notes due in 2013 -- B2
* $675 Million Sr. 8.625% Notes due in 2015 -- B2
Intelsat (Bermuda) Ltd.:
* $478.7 Million Sr. Unsecured Discount Notes due 2015 -- B3
Moody's has changed the outlook to developing from negative.
INTELSAT LTD: Names Executives for Post-PanAmSat Merger Company
---------------------------------------------------------------
Intelsat, Ltd., disclosed its key executive appointments that will
be effective following the closing of Intelsat's planned
acquisition of PanAmSat Holding Corporation. At the time that the
acquisition was announced, in August 2005, the companies stated
that David McGlade, Intelsat's current Chief Executive Officer,
would be the CEO of the company, and that Joe Wright, PanAmSat's
current CEO, would be Chairman of Intelsat's board, after the
transaction closes.
Mr. McGlade intends to appoint James Frownfelter, currently Chief
Operating Officer of PanAmSat, as Chief Operating Officer of
Intelsat upon the closing. Mr. Frownfelter will replace current
Intelsat Chief Operating Officer Ramu Potarazu and Intelsat Global
Service Corporation President Kevin Mulloy, who have submitted
their resignations from Intelsat, effective February 9 and
Jan. 27, 2006, respectively.
As Chief Operating Officer of Intelsat, Mr. Frownfelter will have
responsibility for sales and marketing functions, engineering and
operations, and major program procurement. During his tenure at
PanAmSat, he directed 16 successful satellite launches and
instituted a renewed focus on core competencies, resulting in
significant improvement in PanAmSat's network reliability. Since
becoming an officer of the company in 2001, Mr. Frownfelter has
led the transformation of PanAmSat from a satellite operator to a
well-managed, higher quality, and more profitable communications
company with expanded services for global distribution
applications.
Mr. McGlade also announced that Phillip Spector will continue in
his current role as General Counsel of Intelsat following the
closing of the PanAmSat acquisition. He will retain
responsibility for all legal and regulatory matters, as well as
human resources, facilities, and security. Mr. Spector joined
Intelsat in February 2005 from the international law firm of Paul,
Weiss, Rifkind, Wharton & Garrison LLP, where he was managing
partner of the Washington office and Chairman of the firm's
Communications & Technology Group. He has over 20 years of legal
experience in the satellite and telecommunications industries, and
earlier in his career clerked at the Supreme Court and served in
the White House.
In disclosing these appointments, Mr. McGlade said, "The
combination of Intelsat and PanAmSat will result in a premier
satellite company that will be a leader in the delivery of video
content, the transmission of corporate data and the provisioning
of government communications solutions. Jim Frownfelter and Phil
Spector have between them many decades of experience in the
satellite sector, and they both have strong records of success.
These appointments are the first phase in assembling a new team
and signal our clear intention to take the company to the next
level in terms of customer service and operational excellence.
"At the same time, I would like to thank Ramu Potarazu for his
significant contributions to Intelsat and the satellite industry
over the past two decades, including his leadership roles in
Intelsat's 2001 privatization, the acquisitions of Comsat General
and Intelsat Americas assets, the sale of Intelsat to our current
owners in 2005, and most recently the PanAmSat transaction. Kevin
Mulloy also contributed greatly to Intelsat's success, including
the development of Intelsat's post-privatization strategy and the
technical integration of the Intelsat Americas fleet. We wish
them every success in their future endeavors."
Acting Intelsat Chief Financial Officer Robert Medlin will
continue in that role at Intelsat until a permanent CFO is named.
Current PanAmSat General Counsel James Cuminale and Chief
Financial Officer Michael Inglese will stay with PanAmSat until
the transaction closes.
"I would like to congratulate Jim Frownfelter on his future role
at Intelsat and feel very confident that he will have the same
level of success in transforming and integrating the new company
as he did at PanAmSat. While we will miss Jim Cuminale and Mike
Inglese, we greatly appreciate the extraordinary roles they have
played in building PanAmSat into the company it is today. Jim
Cuminale was here from the creation of PanAmSat and has been a key
architect of almost every major event that has occurred at this
company. Mike Inglese oversaw internal and external financial
transactions that were, in many cases, firsts for our industry,"
PanAmSat CEO Joe Wright said.
On Aug. 29, 2005, Intelsat and PanAmSat disclosed that the two
companies signed a definitive merger agreement under which
Intelsat will acquire PanAmSat for $25 per share in cash, or
$3.2 billion. The transaction is currently expected to close in
the second or third quarter of 2006.
About PanAmSat
Through its owned and operated fleet of 25 satellites, PanAmSat
Holding Corp. (NYSE: PA) -- http://www.panamsat.com/-- is a
leading global provider of video, broadcasting and network
distribution and delivery services. It transmits 1,991 television
channels worldwide and, as such, is the leading carrier of
standard and high-definition signals. In total, the Company's in-
orbit fleet is capable of reaching over 98 percent of the world's
population through cable television systems, broadcast affiliates,
direct-to-home operators, Internet service providers and
telecommunications companies. In addition, PanAmSat supports
satellite-based business networks in the U.S., as well as
specialized communications services in remote areas throughout the
world.
About Intelsat, Ltd.
Intelsat, Ltd., offers telephony, corporate network, video and
Internet solutions around the globe via capacity on 25
geosynchronous satellites in prime orbital locations. Customers
in approximately 200 countries rely on Intelsat's global
satellite, teleport and fiber network for high-quality
connections, global reach and reliability.
* * *
As reported in the Troubled Company Reporter on Nov. 16, 2005,
Intelsat, Ltd.'s announcement of its results for the third quarter
ended Sept. 30, 2005, does not affect the ratings of Intelsat,
wholly owned subsidiary Intelsat (Bermuda), Ltd., and operating
subsidiary Intelsat Subsidiary Holding Company Ltd. The company
remains on Rating Watch Negative.
As reported in the Troubled Company Reporter on Sept. 1, 2005,
Moody's Investors Service has affirmed Intelsat, Ltd.'s ratings
and changed the outlook for all ratings to developing from
negative following the company's announcement that it is acquiring
PanAmSat for $3.2 billion plus the assumption of PanAmSat's debt
($3.2 billion). The transaction, which Moody's expects to be
largely, if not entirely, financed with new debt, would
significantly increase Intelsat's pro forma leverage thereby
increasing credit risk for Intelsat debt holders and pressuring
the rating downwards. Therefore, Moody's anticipates placing all
ratings on review for possible downgrade or lowering the ratings
once the timing and structure of the transaction and resolution of
regulatory review becomes more certain.
Moody's has affirmed these ratings:
Intelsat:
* Corporate family rating -- B2
* $400 Million 5.25% Global notes due in 2008 -- Caa1
* $600 Million 7.625% Sr. Notes due in 2012 -- Caa1
* $700 Million 6.5% Global Notes due in 2013 -- Caa1
Intelsat Subsidiary Holding Company Ltd.:
* $300 Million Sr. Secured Revolver due in 2011 -- B1
* $350 Million Sr. Secured T/L B due in 2011 -- B1
* $1 Billion Sr. Floating Rate Notes due in 2012 -- B2
* $875 Million Sr. 8.25% Notes due in 2013 -- B2
* $675 Million Sr. 8.625% Notes due in 2015 -- B2
Intelsat (Bermuda) Ltd.:
* $478.7 Million Sr. Unsecured Discount Notes due 2015 -- B3
Moody's has changed the outlook to developing from negative.
INZON CORP: George Brenner Raises Going Concern Doubt
-----------------------------------------------------
George Brenner, CPA, expressed substantial doubt about InZon
Corporation's ability to continue as a going concern after he
audited the Company's financial statements for the year ended
Sept. 30, 2005, and the period May 14, 2004 (inception) through
Sept. 30, 2004. Mr. Brenner pointed to the Company's losses from
start-up operations, substantial need for working capital and
accumulated deficit of $1,394,670 at Sept. 30, 2005.
The Company's auditor can be reached at:
George Brenner, CPA
10680 W. Pico Boulevard, Suite 260
Los Angeles, California 90064
Phone: 310/202-6445
Fax: 310/202-6494
Fiscal Year 2005 Results
InZon recorded a $1,182,340 net loss from continued operations for
the fiscal year ended Sept. 30, 2005, as compared to a $212,330
net loss for the fiscal year ended Sept. 30, 2004. Management
attributes the increase loss to the start up of operations after
the merger with W-J International, Inc.
For the years ended Sept. 30, 2005, and 2004, the Company reported
total operating revenues of $556,344 and zero respectively. The
Company was dormant until the merger on Oct. 1, 2004, and did not
initiate sales until August 2005.
InZon's balance sheet showed $1,457,137 in total assets and
liabilities of $1,682,632 at Sept. 30, 2005, resulting in a
stockholders' deficit of $225,495.
Based in Delray Beach, Florida, InZon Corporation provides
telecommunication services in the United States. The company
offers voice over Internet protocol (VoIP) services to tier 1 and
tier 2 carriers. Its VoIP technology provides voice, fax, data,
conference call, and Internet services over a private Internet
protocol network to international carriers and other communication
service providers.
ISTAR FINANCIAL: Fitch Lifts Preferred Stock Rating to BB+
----------------------------------------------------------
Fitch Ratings upgraded iStar Financial Inc.'s senior unsecured
debt rating to 'BBB' from 'BBB-'. Fitch also raised iStar's
preferred stock rating to 'BB+' from 'BB'. The Rating Outlook is
Stable. This action affects $4.2 billion of securities.
The rating action was based in part on iStar's success at
migrating toward an unsecured capital structure over the past
several years and, more recently, through the repayment of its on
balance sheet securitizations (STARS transactions) in late 2005.
This was achieved during a period in which the company maintained
solid operating performance and leverage metrics. As of
Sept. 30, 2005, just 8.3% of the company's capital base was
secured, while over 94% of its asset base was unencumbered. In
Fitch's view, this profile provides a foundation for strong
operating and financial flexibility. Fitch expects that
management will operate the company at between 8% and 16% secured
capital to total capital over the long term.
Fitch has also evaluated the impact of iStar's Oak Hill and Falcon
Financial transactions, which were made in early 2005. The
investment in Oak Hill appears to be yielding some contribution to
iStar's credit evaluation efforts, while it has not, and is not
expected to, resulted in the company making alternative
investments such as investments in subordinated CDO tranches.
iStar also continues to make loans to automobile dealerships under
its Autostar platform, which expanded following the Falcon
Financial acquisition. Over the initial term of the Autostar
program, the loan-to-real estate value ratios of these assets have
been lower than Fitch had originally expected.
iStar's core credit strengths center on its ability to maintain
strong asset quality despite a highly competitive commercial real
estate market. For the credit tenant lease (CTL) portfolio, the
weighted average lease term increased to 11.4 years at
Sept. 30, 2005, while over 46% of lessees bear investment-grade
credit profiles. For the loan portfolio, the loan-to-value ratio
of the company's mortgage and real estate-backed corporate loan
assets declined to 65% as of Sept. 30, 2005 from the 66% to 68%
range in prior years.
While Fitch believes that the strength of some of these asset
quality metrics has come at the expense of asset growth and profit
margin, they demonstrate significant management discipline and are
a benefit for unsecured debt investors. However, Fitch does not
believe that iStar has changed its risk-return equation.
Fitch continues to believe that iStar's leverage and
capitalization are solid for the rating category. The company's
ratio of debt to undepreciated book equity was 1.82 times (x) at
Sept. 30, 2005, which is up from 1.69x and 1.57x at the end of
fiscal 2004 and 2003, respectively. Management has targeted
higher leverage over the next several years, which Fitch expects
will also be acceptable for the current rating.
However, this will be carefully monitored. Fitch analyzes iStar
using a dynamic risk-adjusted capital model that risk weights each
asset class based on expected loss. Despite higher traditional
leverage metrics, the model continues to show that iStar is well
capitalized from a risk-adjusted standpoint.
Operating performance also remains solid for the rating category.
Adjusted recurring fixed-charge coverage declined to 1.96x for the
first nine months of 2005 from 2.10x for the same period of 2004.
This ratio subtracts CTL capital expenditures and deferred rent
income from EBITDA and also excludes the impact of nonrecurring
income and expenses such as debt prepayment expenses and gains on
the sale of assets. The ratio declined in 2005 mainly as a
function of excess liquidity in the commercial real estate market
and higher leverage on the company's balance sheet. This may
improve modestly in the future as iStar repays more expensive debt
issued when the company had a 'BB+' senior unsecured debt rating
as well as to the extent that some liquidity exits the commercial
real estate market, which may make pricing conditions more
favorable.
Fitch's concerns about the company center on the complex nature of
many of its investments. While many loans have low loan-to-value
ratios in the 60% to 70% range, they are typically more complex
than standard loans originated by insurance companies or
commercial mortgage backed securities market participants. For
example, under certain circumstances, iStar's position in an
investment involves a certain degree of calculated property
repositioning risk. Management believes this risk is mitigated by
a loan basis that is below replacement cost, as well as other
structural features, such as prefunded reserves or limited
recourse guarantees from the property's equity sponsor.
The company also provides capital under conditions where there are
few other market participants. Should market conditions abruptly
weaken, iStar would likely find these investments to be less
liquid than most traditional mortgage assets. This risk is
mitigated by the company's strong track record and substantial
real estate and structuring acumen. The company's lack of any
significant charge-offs also helps to support this conclusion.
Fitch also remains concerned that substantial liquidity in the
commercial real estate market has led to very high market
valuations across geographical sectors and property types. During
this time period iStar has generated substantial new business
volume, and it is likely that some assets are on the company's
books at or near peak market valuations. To the extent that some
liquidity begins to leave the market, loan default and loss
recovery trends may weaken, and refinancing or asset sales
activity may be more difficult to execute. iStar is somewhat
protected from this risk due to many of the structural
characteristics of its loans, which often include letter of credit
or cash reserve requirements for weaker borrowers. The company is
also insulated by virtue of the long lease terms and strong tenant
quality in its CTL portfolio.
Headquartered in New York City, iStar provides structured
financing and corporate leasing of commercial real estate
nationwide. iStar leverages its expertise in real estate, capital
markets, and corporate finance to serve corporations with
sophisticated financing requirements. As of Sept. 30, 2005, iStar
had $8.3 billion of undepreciated real estate assets and
$2.8 billion of undepreciated book equity.
KAISER ALUMINUM: Panel Asks Court to Overrule Sherwin's Objections
------------------------------------------------------------------
As previously reported, Sherwin Alumina, LP, reserved its right to
object to the confirmation of Kaiser Aluminum Corporation and its
debtor-affiliates' Second Amended Plan of Reorganization and to
seek continuation of the hearing to confirm the Plan.
On behalf of the Official Committee of Unsecured Creditors,
William P. Bowden, Esq., at Ashby & Geddes, in Wilmington,
Delaware, asserts that Sherwin lacks standing to object to
confirmation of the Plan. Sherwin has neither filed, nor
asserted, claims against any of the Reorganizing Debtors. It only
filed a proof of claim against Kaiser Bauxite Company, which is
not one of the Reorganizing Debtors.
Mr. Bowden asserts that Sherwin's allegations that the Debtors'
intercompany claims settlement agreement was approved without
proper notice to it, rendered KBC penniless and was tainted by
conflicts of interest, are meritless and irrelevant to whether the
Plan was proposed in good faith under Section 1129 (a)(3).
Mr. Bowden notes that Sherwin was provided with ample notice of
the ISA and did not object. Hence, Sherwin's arguments
surrounding the ISA have been waived.
Sherwin misunderstands the factual and legal bases surrounding the
ISA, Mr. Bowden argues. Contrary to Sherwin's allegation that no
creditor represented KBC during the ISA negotiations, Pension
Benefit Guaranty Corporation was actively involved in those
negotiations. PBGC is KBC's biggest creditor, Mr. Bowden points
out.
In response to Sherwin's allegations that the ISA stripped KBC of
over $880,000,000 in assets without meaningful consideration, Mr.
Bowden points out that the ISA represented an equitable balancing
of a multitude of issues affecting each of the Debtors' estates.
According to Mr. Bowden, the parties to the ISA negotiations have
agreed that all of the prepetition intercompany claims should be
treated identically, including KBC's prepetition Intercompany
Claim against KACC. With regard to the other KBC assets, Mr.
Bowden relates that the assets were sold at arm's-length
negotiations with third parties.
Moreover, Sherwin's substantive consolidation arguments are also
meritless because, among other things:
* KBC is not one of the reorganizing Debtors and has not filed
a plan of reorganization or plan of liquidation;
* substantive consolidation will not have a negative impact on
Sherwin;
* Sherwin had more than adequate notice that the Debtors'
estates will be substantively consolidated; and
* substantive consolidation is proper under the recent test
articulated by the U.S. Court of Appeals for the Third
Circuit in In re Owens Corning, 419 F.3d 195 (3d Cir. 2005).
The Debtors agree with the Creditors' Committee.
"It is simply too late to attack the ISA," Kimberly Newmarch,
Esq., at Richards, Layton & Finger, in Wilmington, Delaware, tells
the U.S. Bankruptcy Court for the District of Delaware. Sherwin
had ample opportunity to object to the ISA and to take discovery
before the Court approved it, but failed to do so, Ms. Newmarch
says.
The ISA, which has the support of all of the Debtors' major
creditor constituencies, became effective on February 28, 2005,
and has been substantially consummated.
Sherwin should not now be allowed to delay the confirmation
hearing and seek to unwind the ISA that was approved long ago
simply because Sherwin failed to object to the ISA when it had the
opportunity. Any attempt by Sherwin to delay confirmation of the
Plan should be denied.
The Debtors and the Creditors Committee ask the Court to overrule
Sherwin's Objection.
Insurers Insist They Have Standing
Certain insurers contend that they have a "practical stake" in the
confirmation proceeding, and should be afforded broad standing to
object to confirmation of the Debtors' Plan of Reorganization:
* AIU Insurance Company;
* American Re-Insurance Company;
* Columbia Casualty Insurance Company;
* Continental Insurance Company;
* Executive Risk Indemnity Company, as successor-in-interest
to American Excess Insurance Company;
* Granite State Insurance Company;
* Harbor Insurance Company;
* Hudson Insurance Company;
* Insurance Company of the State of Pennsylvania;
* Landmark Insurance Company;
* Lexington Insurance Company;
* National Union Fire Insurance Company of Pittsburgh, Pa.;
* New Hampshire Insurance Company;
* Republic Indemnity Co. and Transport Co.;
* TIG Insurance Company, successor by merger with
International Insurance Company; and
* Transcontinental Insurance Company.
The Insurers point out that the Debtors admitted that the
insurance proceeds will be "the vast majority of the ultimate
value of the PI Trust Assets" and are "critical to the recoveries
of the tort claimants." Hence, it is indisputable that the
Debtors' Plan of Reorganization:
(1) affects the policy rights and liabilities of the insurers,
particularly because the Debtors seek to assign the
insurers' policies without their consent; and
(2) cuts off the insurers' rights to assert contribution
claims against settling insurers pursuant to the proposed
Section 524(g) injunction.
The Insurers also assert that the contribution of 94% of
reorganized Kaiser Trading's Common Stock to the Trust does not
comply with Section 524(g)(2)(B)(i)(III) of the Bankruptcy Code.
Under Section 524(g)(2)(B)(i)(III), the Asbestos PI Trust must own
or be entitled to own 51% of the stock of:
(1) "each such debtor";
(2) "the parent corporation of each such debtor"; or
(3) "a subsidiary of each such debtor that is also a debtor."
The Plan Proponents, however, contend that "each such debtor" in
Section 524(g)(2)(B)(i)(III) refers to debtors whose securities
are provided to the Trust.
"Each such debtor" refers to each Reorganized Debtor seeking
Section 524(g) relief, the Insurers tell the Court.
The Insurers maintain that the Plan Proponents' interpretation:
-- does not comport with Section 524(g)'s legislative history
and Congressional intent in enacting the statute;
-- is not supported by the Third Circuit's opinion in
Combustion Engineering, 391 F.3d. 190 (3rd Cir. 2004);
-- renders portions of Section 524(g)(2)(B)(i)(III)
unnecessary and superfluous in violation of Supreme Court
and Third Circuit precedent.
Additionally, the Insurers also contend that "[n]othing in section
524(g) authorizes, let alone compels, the Insurers to pay claims
on terms other than those provided in the Policies, nor does the
1994 addition to the [Bankruptcy] Code otherwise purport to alter
pre-existing contract rights."
The Plan Proponents' interpretation of Section 524(g) is also
contrary to the Supreme Court's proscription against compulsory
settlements in Ortiz v. Fibreboard Corp., 527 U.S. 815, 864
(1999); and Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 627
(1997).
Republic Indemnity also argues that Section 541 does not operate
to allow assignment of the PI Insurance Assets. The PI Insurance
Assets are not defined in the Plan to include the insurance
policies, but only certain rights and proceeds accruing to the
Debtors under the policies. However, the Debtors have identified
no assignable property interests or contractual rights, contingent
or otherwise, which arise under the policies and have actually
accrued.
Republic Indemnity's attorney Christopher M. Winter, Esq., at
Duane Morris LLP, in Wilmington, Delaware, says Section
1123(a)(5) does not have wide preemptive scope. Section
1123(a)(5) is simply "a directive to a plan proponent about what
must go into a plan."
Mr. Winter points out that the Plan Proponents and the Official
Committee of Unsecured Creditors have pointed to no provision that
would provide the substantive authority to assign the PI Insurance
Assets to the Trust. While Section 363(1) provides that
substantive authority, its specific and more limited preemption
provision would not preempt the state laws barring the assignment
of insurance rights.
For these reasons, the Insurers ask Judge Judith Fitzgerald to
find that preemption does not apply to an assignment of the
insurance policies and thus those rights should be considered by a
non-bankruptcy court.
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company filed for chapter 11 protection on
February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold
off a number of its commodity businesses during course of its
cases. Corinne Ball, Esq., at Jones Day, represents the Debtors
in their restructuring efforts. On June 30, 2004, the Debtors
listed $1.619 billion in assets and $3.396 billion in debts.
(Kaiser Bankruptcy News, Issue No. 88; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
KAISER ALUMINUM: Looking for Replacement for One New Director
-------------------------------------------------------------
As reported in the Troubled Company Reporter on Nov. 8, 2005,
Kaiser Aluminum has selected the individuals who will serve as
directors of the company after it emerges from Chapter 11 in early
2006. The new board -- which consists of labor leaders; finance,
accounting and governance professionals; and leaders with
experience in metals, energy, aerospace, engineering and
manufacturing industries -- was selected by a committee of
advisors including management and representatives of principal
creditor interests in the Chapter 11 case.
Upon emergence from Chapter 11, members of the Kaiser Aluminum
board will include:
* George Becker,
* Carl Frankel,
* Teresa Hopp,
* Bill Murdy,
* Al Osborne,
* Georganne Proctor,
* Jack Quinn,
* Tom Van Leeuwen, and
* Brett Wilcox.
George Becker Seeks Replacement
Kaiser issued a statement attributed to Jack Hockema, president
and chief executive officer:
"For health reasons, George Becker has asked the USW to designate
another person to replace him as one of the four USW nominees on
Kaiser Aluminum's post-emergence board of directors. George is an
outstanding individual with a tremendous breadth and depth of
experience that will be difficult to replace. However, we intend
to work closely with USW representatives to select George's
replacement as quickly as possible and are pleased that George has
confirmed his commitment to serve on the post-emergence board of
directors until a replacement is identified."
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company filed for chapter 11 protection on
February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold
off a number of its commodity businesses during course of its
cases. Corinne Ball, Esq., at Jones Day, represents the Debtors
in their restructuring efforts. On June 30, 2004, the Debtors
listed $1.619 billion in assets and $3.396 billion in debts.
(Kaiser Bankruptcy News, Issue No. 88; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MAGNATRAX CORP: Wants Until May 12 to Object to Proofs of Claim
---------------------------------------------------------------
Magnatrax Corporation and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to extend, until
May 12, 2006, the deadline by which they can file objections to
proofs of claim filed against their estates.
Since the effective date of their confirmed chapter 11 Plan, the
Reorganized Debtors have made significant progress in analyzing
all claims filed against their estates and to date, they have
filed 11 omnibus objections.
The Reorganized Debtors says the extension is necessary because
there are still numerous remaining claims that they need to
properly analyze and carefully evaluate to ensure that the claims
analysis process is accurate and comprehensive. The Reorganized
Debtors says the extension is in the best interests of the
Debtors' estates to ensure that the correct amount will be paid to
their creditors.
Headquartered in Alpharetta, Georgia, Magnatrax Corporation is a
diversified North American manufacturer and marketer of engineered
building products and services for non-residential and residential
construction markets. The Debtor and its affiliates filed for
chapter 11 protection on May 12, 2003 (Bankr. D. Del. Case No. 03-
11402). Joel A. Waite, Esq., at Young Conaway Stargatt & Taylor,
LLP represents the Debtors. When the Debtor filed for protection
from its creditors, it listed total assets of $207,000,000 and
total debts of $326,000,000. The Court confirmed the Debtors'
chapter 11 Plan on Nov. 17, 2003, and the Plan took effect on
Jan. 20, 2004.
MANCHESTER ACQUISITION: List of 20 Largest Unsecured Creditors
--------------------------------------------------------------
Manchester Acquisition Partners, L.P., submitted a list of its
20 largest unsecured creditors to the U.S. Bankruptcy Court for
the Eastern District of Missouri, disclosing:
Entity Claim Amount
------ ------------
Jackson County Manager of Finance $49,933
P.O. Box 219747
Kansas City, MO 64121-9747
Zerjav & Co., PC $5,446
1830 Craig Park Court
St. Louis, MO 63146
The Home Depot $4,604
P.O. Box 9903
Macon, GA 31297
Metropolitan Patrol, LLC $3,150
Techni-Serve, Inc. $2,811
Crown Termite & Pest Control $2,293
Marcone Appliance Center $1,835
Deffenbaugh Disposal Service $1,354
Cooper Craft Plumbing $1,311
Charley D. Jones $1,304
ICU Deluxe Paint Center $1,290
Loews Company $996
UPS $991
Office Depot $872
For Rent Magazine $704
AT&T $609
Reisner Lawn Care $600
Gish Pettyjohn $600
Classic Roofing Co. $520
Home Service Unlimited $515
Manchester Acquisition Partners, LP, owns and operates an
apartment in Kansas City, Missouri. The Debtor and its debtor-
affiliate filed for Chapter 11 protection on Dec. 1, 2005 (Bankr.
E.D. Mo. Case No. 05-62040 & 05-62041). Peter D. Kerth, Esq., at
Gallop, Johnson & Neuman, LC, represents the Debtors in their
restructuring efforts. When the Debtors filed for bankruptcy,
they reported estimated assets and debts at $1 million to
$10 million.
MUSCLETECH RESEARCH: Chapter 15 Petition Summary
------------------------------------------------
Petitioner: RSM Richter Inc.
Canadian Court-Appointed Monitor and
Foreign Representative
Lead Debtor: MuscleTech Research and Development Inc.
5100 Spectrum Way
Mississauga, Ontario L4W 5S2
Canada
Case No.: 06-10092
Debtor-affiliates filing separate chapter 15 petitions:
Entity Case No.
------ --------
1619005 Ontario Ltd. 06-10093
ACE Formulations Ltd. 06-10094
ACE US Trademark Ltd. 06-10096
Cell Formulations Ltd. 06-10097
GENERAL Formulations Ltd. 06-10098
HC Canadian Trademark Ltd. 06-10100
Comida Inc. d/b/a Ideya 06-10101
HC Foreign Trademark Ltd. 06-10102
HC Formulations Ltd. 06-10103
HC Trademark Holdings Ltd. 06-10104
HC US Trademark Ltd. 06-10105
MESO Formulations Ltd. 06-10106
MISC Formulations Ltd. 06-10107
MT Canadian Supplement Trademark Ltd. 06-10108
MT Foreign Supplement Trademark Ltd. 06-10109
NITRO Formulations Ltd. 06-10110
Type of Business: MuscleTech Research and Development Inc. was
incorporated under the laws of the Province of
Ontario, Canada, on Dec. 5, 1997. MDI is a
privately held Canadian company and is the
parent company of the other Debtors.
The other Debtors can be divided into:
(a) Formulation Companies that own or owned
certain product formulations, trade secrets,
know-how and patents associated with some
health supplement, weight-loss and sports
nutrition products formerly sold by MDI, and
(b) Trademark Companies that own or owned the
trademarks associated with some products
formerly sold by MDI and some other
miscellaneous trademarks, some of which are
Canadian, U.S. or foreign trademarks.
The Debtors are in bankruptcy because of the
product liability lawsuits pending throughout
the United States against some of the Debtors.
MDI already ceased production and sale of
products containing ephedra and prohormones in
December 2002.
Chapter 15 Petition Date: January 18, 2006
Canadian Court: Ontario Superior Court of Justice
U.S. Court: Southern District of New York (Manhattan)
U.S. Judge: James M. Peck
Petitioner's Counsel: Kenneth P. Coleman, Esq.
Daniel Guyder, Esq.
Kelle Gagne, Esq.
Allen & Overy LLP
1221 Avenue of Americas
New York, New York 10022
Tel: (212) 610-6300
Fax: (212) 610-6399
Financial Condition as of December 26, 2005:
Total Assets: $7,108,204
Total Debts: $29,000,000
NATIONWIDE HEALTH: S&P Affirms Preferred Stock Rating at BB+
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its:
* 'BBB-' corporate credit rating;
* 'BBB-' senior unsecured debt rating; and
* 'BB+' preferred stock rating
on Nationwide Health Properties Inc.
The affirmations affect approximately $570 million in outstanding
senior unsecured notes and $197 million in preferred stock. The
outlook is stable.
Standard & Poor's credit analyst Tom Taillon explained, "The
affirmed ratings reflect Nationwide's strengthened investment
portfolio, which is characterized by improving rent coverage
measures, long lease maturities, and good occupancy levels.
Furthermore, a higher level of private payments, coupled with the
current government reimbursement environment, should provide
good near-term visibility for relative stability among
Nationwide's operators."
At the same time, Mr. Taillon noted, "The company's recently more
aggressive growth appetite presents some additional risk, as using
debt to acquire assets has resulted in higher leverage ratios. In
addition, concentration among tenants will continue to expose the
company to credit risks, which can be amplified by potential
shifts in government policy."
The stable outlook is supported by a good operator base with
improving rent coverage measures, along with a relatively
supportive environment for health care reimbursement. The
company's rapid investment growth could place downward pressure on
the ratings should debt leverage climb or cash flow coverage
measures weaken significantly from current levels. Conversely, a
prudent pursuit of acquisitions that improves tenant diversity,
efforts to craft a more conservative financial profile, and
continued operator stability would drive ratings improvement.
NATURADE INC: Laurus Increases Term Loan to $1.65M & Extends Term
-----------------------------------------------------------------
Naturade, Inc., and Laurus Master Fund, Ltd., amended their
July 26, 2005, Security and Purchase Agreement.
The amendments:
-- increased the Secured Term Loan from $1 million, of which
$909,000 was outstanding at January 11, 2006, to
$1.65 million. Over advances totaling $650,000 were
transferred from the Secured Revolving Note to the Term Loan
with the remaining $91,000 utilized as a reduction of the
amount outstanding under the Revolver;
-- modified the payments on the Term Loan from $30,000 per
month beginning November 1, 2005, payable in shares of the
Company's common stock or $30,900 per month if paid in cash,
to $50,000 per month in cash beginning April 1, 2006;
-- eliminated the Minimum Borrowing Note outstanding of
$500,000;
-- eliminated Laurus' ability to convert the Term Loan, the
Revolver, and the Minimum Note into the Company's common
shares;
-- extended the term of the Agreement from three years ending
on July 26, 2008, to three years ended January 6, 2009.
-- modified the prepayment provisions of the Revolver and the
Term Loan from an early payment fee of 35% of the loan
amounts if paid prior to the termination date, to 5% if
retired before January 6, 2007, 4% if retired prior to
January 6, 2008, and 3% if retired prior to January 6, 2009.
A full-text copy of the Amended and Restated Security and Purchase
Agreement is available for free at
http://ResearchArchives.com/t/s?469
A full-text copy of the Amended and Restated Secured Term Note is
available for free at http://ResearchArchives.com/t/s?46a
A full-text copy of the Amended and Restated Secured Revolving
Note is available for free at http://researcharchives.com/t/s?46b
In consideration for entering into the Agreement, the Company
issued to Laurus, 1.05 million common shares and reimbursed
Laurus' expenses (including legal fees) totaling $22,750.
Amended and Restated
Registration Rights Agreement
The shares are subject to an Amended and Restated Registration
Rights Agreement providing Laurus with certain rights to require
the Company to register the 1.05 million common shares and
additional common shares issuable to them upon the exercise of the
warrant or the option, previously granted to Laurus in connection
with the original Security and Purchase Agreement.
A full-text copy of the Registration Rights Agreement is available
for free at http://ResearchArchives.com/t/s?46c
Naturade Inc. is a branded natural products marketing company
focused on growth through innovative, scientifically supported
products designed to nourish the health and well being of
consumers. The Company primarily competes in the overall market
for natural, nutritional supplements. Nutrition Business Journal,
a San Diego-based research publication that specializes in this
industry, reports that sales for the overall $58 billion
"Nutrition" industry were up 7% in 2004 versus 2003. Naturade
primarily competes in the $19 billion segment defined by NBJ as
Supplements, which grew 3.8% in 2004. In addition, the report
points out that sales of supplements were growing at similar rates
in both the mass market channel and health food and natural
product stores at approximately 3.5%.
As of Sept. 30, 2005, Naturade Inc.'s balance sheet reflects a
$12,428,842 stockholders' deficit, compared to a $3,031,548
deficit at Dec. 31, 2004.
NESCO INDUSTRIES: Chief Financial Officer Karen Nazzareno Resigns
-----------------------------------------------------------------
Nesco Industries, Inc.'s Chief Financial Officer, Karen Nazzareno,
resigned from her position.
The resignation was disclosed by the Company's Chief Executive
Officer, Matthew L. Harriton, in an 8-K filing with the Securities
and Exchange Commission.
No explanation for the resignation was disclosed. Neither was the
name of the replacement reported.
Mr. Harriton also informed the SEC through a FORM 12b-25 filing
delivered on December 14, 2005, that the Company could not file
its financial statements for the quarter ending October 31, 2005,
in a timely manner.
At July 31, 2005, Nesco's balance sheet showed $1,613,816 in total
assets and liabilities of $7,431,665, resulting in a stockholders'
deficit of $5,817,849. The Company had a working capital deficit
of approximately $6,986,000 and an accumulated deficit of
approximately $19,771,000, at July 31, 2005.
Going Concern Doubt
Rothstein, Kass & Company, PC, expressed substantial doubt about
the Company's ability to continue as a going concern after it
audited the Company's financial statements for the fiscal year
ended April 30, 2005. The auditing firm pointed to the Company's
cumulative losses and working capital and stockholders' deficit.
Nesco Industries, Inc., develops, manufactures and markets high
water content, electron beam cross-linked, aqueous polymer
hydrogels used for wound care, medical diagnostics, transdermal
drug delivery and cosmetics.
NOMURA ASSET: Fitch Lifts $34 Mil. Class B-2 Certs. Rating to A
---------------------------------------------------------------
Fitch Ratings upgrades Nomura Asset Securities Corp.'s commercial
mortgage pass-through certificates, series 1996-MDV as:
* $33.7 million class B-2 to 'A' from 'BB+'
In addition, Fitch affirms these classes' ratings:
* $11.2 million class A-1A at 'AAA'
* $352.0 million class A-1B at 'AAA'
* $7.5 million class A-1C at 'AAA'
* Interest-only classes CS-1 and CS-2 at 'AAA'
* $45.0 million class A-2 at 'AAA'
* $52.4 million class A-3 at 'AAA'
* $48.7 million class A-4 at 'AAA'
* $11.2 million class A-5 at 'AAA'
* $48.7 million class B-1 at 'AAA'
The class S-1 is paid in full.
Fitch does not rate class B-2H.
The upgrades are due to the full defeasance of the Horizon loan
(9.1%).
As of the January 2006 distribution date, the pool's total
principal balance has been reduced by 22.0% to $603.2 million from
$773.7 million at issuance, due to the repayment of one loan and
amortization on eight of the nine remaining fixed-rate loans. The
collateral consists of government securities (96.2%) from the full
defeasance of eight loans and one crossed pool loan secured by
eight geographically diverse properties.
The Innkeepers Portfolio loan (3.8%) is collateralized by eight
extended stay hotels. Although the Fitch adjusted net cash flow
(NCF) for year-end 2004 has declined 26.5% since issuance, the
loan exposure is low at $28,000 per room. Due to amortization of
the loan, the corresponding debt service coverage ratio remains
strong at 2.35 times compared to 2.41x at issuance. Year-to-date
September 2005 revenue per available room improved slightly (2%)
over YTD September 2004.
As part of its review, Fitch analyzed the performance of the loan
and the underlying collateral. Fitch compared the loan's stressed
DSCR for the year ended December 2004 to the DSCR at issuance.
DSCR is based on Fitch adjusted net cash flow and a stressed debt
service based on the current loan balance.
OPTINREALBIG.COM: Places $7 Million Microsoft Settlement in Escrow
------------------------------------------------------------------
U.S. Bankruptcy Court for the District of Colorado approved
OptinRealBig.com, LLC, and its owner, Scott Allen Richter's
request to place settlement funds in escrow.
The Debtors tell the Court that during their bankruptcy
proceedings, they have reached settlements with Microsoft
Corporation and American family Mutual Insurance Company. The
Debtors say that the terms of the settlements call for the Debtors
to request dismissal of their bankruptcy cases and close the
settlements after dismissal.
Microsoft Settlement
As previously reported in the Troubled Company Reporter, after
several meetings and negotiations, the Debtors and Microsoft
agreed that:
a) the Debtors will pay Microsoft $7 million within 24 hours
after the chapter 11 cases are dismissed;
b) the Debtors will consent to a permanent injunction
requiring their continued compliance with certain
applicable laws;
c) the Debtors and Microsoft will issue a press release
announcing the terms of the settlement and will refrain
from giving any statements which are not in conformity with
the prepared statement.
The Debtors tell the Court that they are willing to pay the
$7 million amount but they cannot transfer funds without Court
approval. For tax reasons, the Debtors argue, it would in the
best interest of the creditors and the estate to place the
settlement funds due to Microsoft in segregated, escrow accounts
with the Debtor's counsel or a nationally chartered bank. The
Debtors want to place $1.5 million and $5.5 million in escrow and
the funds will only be forwarded to Microsoft after the Court
either:
* dismisses the Debtors' chapter 11 cases, or
* approves the transfer of the funds.
Headquartered in Westminster, Colorado, OptinRealBig.com, LLC, is
an e-mail marketing company. The Company filed for chapter 11
protection on March 25, 2005 (Bankr. D. Colo. Case No. 05-16304).
John C. Smiley, Esq., at Lindquist & Vennum P., LLP, represents
the Debtor. When the Debtor filed for protection from its
creditors, it listed estimated assets of $1 million to $10 million
and estimated debts of $50 million to $100 million.
O'SULLIVAN INDUSTRIES: Committee Objects to Disclosure Statement
----------------------------------------------------------------
The Official Committee of Unsecured Creditors contends that the
Amended Disclosure Statement has not remedied the inadequacies of
the Initial Disclosure Statement. The Amended Disclosure
Statement fails to:
a) provide adequate information regarding the allowed
senior secured notes claim;
b) identify and value the unencumbered assets of the
estates including:
* the description of the Avoidance Claims;
* information as to the value of the Avoidance Claims;
and
* how the Avoidance Claims will be prosecuted;
c) identify, analyze and value Litigation Claims;
d) adequately describe the ongoing transformation of
O'Sullivan Industries Holdings, Inc., and its debtor-
affiliates' business;
e) disclose the detailed assumptions, calculations or
analysis supporting the alleged enterprise value of the
Debtors;
f) provide adequate information regarding the Debtors' net
operating losses;
g) provide adequate information about critical operative
documents;
h) provide a liquidation analysis for each Debtor or
include the Avoidance Recoveries; and
i) identify, value or explain the discriminatory treatment
of Intercompany Claims.
James R. Sacca, Esq., at Greenberg Traurig LLP, in Atlanta,
Georgia, points out that the Amended Disclosure Statement notes
certain changes made in response to comments of the Securities and
Exchange Commission but fails to describe all matters raised by
the SEC or whether any issues remain. The Amended Disclosure
Statement has also deleted references to potential restructuring
transactions.
Mr. Sacca also asserts that the Amended Disclosure Statement
should provide more information regarding the 2006 Incentive
Program, and describe the prepetition negotiations with certain
noteholders.
Mr. Sacca says the Debtors' Amended Plan of Reorganization cannot
be confirmed as a matter of law. Additionally, the approval of
the Amended Disclosure Statement is a waste of judicial resources
and an inappropriate burden on the estates, Mr. Sacca insists.
Debtors Respond
"Continuing its obfuscatory, 'scorched earth' approach to these
cases, the Committee has yet again attempted to derail the
Debtors' confirmation process to obtain leverage, with the hope of
extracting value from senior creditors," James C. Cifelli,
Esq., at Lamberth, Cifelli, Stokes & Stout, P.A., in Atlanta,
Georgia, argues.
Mr. Cifelli contends that the Committee chose not to even
recognize that the Debtors filed an amended Disclosure Statement
in advance of the objection deadline. Rather, Mr. Cifelli notes,
the Committee had the audacity to object to a version of the
Disclosure Statement that it knew three days earlier was outdated,
including deliberately failing to acknowledge many changes that
had already addressed the Committee's objections.
It is quite apparent, Mr. Cifelli says, that the Committee does
not seek fair and adequate disclosure, but rather seeks to avoid
disclosure altogether, and any ensuing plan confirmation, because
it does not like the economic outcome.
Furthermore, Mr. Cifelli points out that:
a) the Committee's Objection fails to suggest specific
revisions to the Disclosure Statement;
b) many of the Committee's Objections were already addressed
and resolved in the Amended Disclosure Statement;
c) many of the Committee's Objections are Plan-related and
are not appropriate at this stage of the Debtors' Chapter
11 cases; and
d) the remaining objections of the Committee must fail as a
matter of law and policy.
The Debtors ask the U.S. Bankruptcy Court for the Northern
District of Georgia to overrule the Committee's Objection.
Mr. Cifelli assures the Court that the Debtors have provided and
will provide more than enough information to meet the required
"adequate information" standard. Mr. Cifelli notes that the
Debtors will try to accommodate the Creditors Committee's demands,
to the extent practicable, by adding information either in the
Disclosure Statement or in a Plan Supplement.
Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings,
Inc. -- http://www.osullivan.com/-- designs, manufactures, and
distributes ready-to-assemble furniture and related products,
including desks, computer work centers, bookcases, filing
cabinets, home entertainment centers, commercial furniture, garage
storage units, television, audio, and night stands, dressers, and
bedroom pieces. O'Sullivan sells its products primarily to large
retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and
Office Depot. The Company and its subsidiaries filed for chapter
11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No.
05-83049). On September 30, 2005, the Debtor listed $161,335,000
in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000)
O'SULLIVAN IND: Disclosure Statement Hearing Continued to Jan. 25
-----------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
Jan. 12, 2006, the Official Committee of Unsecured Creditors ask
the U.S. Bankruptcy Court for the Northern District of Georgia to
continue the Disclosure Hearing until Feb. 2, 2006, to allow
sufficient time to undertake its independent analysis of
O'Sullivan Industries Holdings, Inc., and its debtor-affiliates'
Amended Plan and Disclosure Statement and to prepare a responsive
pleading.
James R. Sacca, Esq., at Greenberg Traurig, LLP, in Atlanta,
Georgia, pointed out that the Debtors' case is not a case where
business exigencies require a truncated timetable. Moreover,
there is nothing compelling a "fast track" in these cases other
than the desire to curtail the rights of interested parties.
There is no legitimate reason why the Creditors Committee and the
Court should be held hostage to an artificially created deadline
which has no business necessity, especially in a complex case in
which the plan and disclosure statement remain moving targets.
Furthermore, Mr. Sacca told the Court that by allowing the
Creditors Committee time to complete its due diligence review with
respect to the Amended Plan and Disclosure Statement, the
Debtors' opportunity to confirm a plan of reorganization is not
jeopardized, rather, the voices of other parties-in-interest to be
heard are merely allowed.
* * *
In a stipulation approved by the Court, the Debtors, the Official
Committee of Unsecured Creditors, and the Ad Hoc Senior Secured
Noteholders Committee -- GoldenTree Asset Management L.P., Mast
Credit Opportunities I, (Master) Ltd., and Breakwater Fund
Management, LLC -- agree to continue the hearing on the adequacy
of the Amended Disclosure Statement explaining the Debtors' Plan
of Reorganization to Jan. 25, 2006, at 9:30 am.
Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings,
Inc. -- http://www.osullivan.com/-- designs, manufactures, and
distributes ready-to-assemble furniture and related products,
including desks, computer work centers, bookcases, filing
cabinets, home entertainment centers, commercial furniture, garage
storage units, television, audio, and night stands, dressers, and
bedroom pieces. O'Sullivan sells its products primarily to large
retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and
Office Depot. The Company and its subsidiaries filed for chapter
11 protection on Oct. 14, 2005 (Bankr. N.D. Ga. Case No.
05-83049). On Sept. 30, 2005, the Debtor listed $161,335,000 in
assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000)
OVERLOOK FARMS: Case Summary & 7 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Overlook Farms, Inc.
113 Lyons Lane
Milton, New York 12547
Bankruptcy Case No.: 06-35030
Type of Business: The Debtor is a fruit and vegetable farm.
Chapter 11 Petition Date: January 19, 2006
Court: Southern District of New York (Poughkeepsie)
Judge: Cecelia G. Morris
Debtor's Counsel: Lewis D. Wrobel, Esq.
12 Raymond Avenue
Poughkeepsie, New York 12603
Tel: (845) 473-5411
Fax: (845) 473-3430
Total Assets: $885,000
Total Debts: $2,937,132
Debtor's 7 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Farm Service Agency All real property $2,700,000
225 Dolson Avenue, Suite 206 is encumbered
Middletown, NY 10940 by mortgage to
Farm Service
Agency
Internal Revenue Service Taxes $49,555
Attn: Special Procedures
P.O. Box 266, Room 309
Buffalo, NY 14201
Orange County Commercial Finance Land & School $42,000
265 Main Street Taxes for Town
Goshen, NY 10924 of Newburgh
Parcels
Ulster County Treasurer Land & School $20,000
P.O. Box 1800 Taxes for Cold
Kingston, NY 12402-1800 Storage Plant
New York State $16,717
Unemployment Insurance/
New York State Dep't. of Labor
Harriman State Office Campus
Building 12, Room 244
Albany, NY 12240
New York State Taxes $1,195
Department of Tax & Finance
Bankruptcy Section
P.O. Box 5300
Albany, NY 12205-0300
Household Credit Services Inc. Unknown
1421 Kristina Way
Chesapeake, VA 23320
PHOTOCIRCUITS CORP: Will Auction All Assets on February 6
---------------------------------------------------------
Photocircuits Corporation received approval from U.S. Bankruptcy
Court for the Eastern District of New York to proceed with the
auction of substantially all of its assets, including the
assumption of certain liabilities to a long-term equity investor.
This sale is to be conducted in accordance with Section 363 of
Chapter 11 of the U.S. Bankruptcy Code.
The company said that a private equity investor has submitted a
bid for the whole of the company's business and has been selected
as the lead bidder in the auction process. The private equity
firm has stated its intention to operate Photocircuits business
with the Company's current management team and employees. It is
committed to building on Photocircuits' focus on quick-turn,
prototype, and military PCB manufacturing, with high volume
production via Photocircuits' relationship with PC Asia, a China
based manufacturing venture.
The final purchase price for the company's business is subject to
higher and better offers at the formal Court auction to be held on
Feb. 6, 2005. For details on the auction process, interested
parties should contact:
Triax Capital Advisors, LLC
620 Fifth Avenue, Second Floor
New York, NY 10020
Attn: Joe Sarachek
Ken Beiser
Tel: (212) 332-4010,
Triax is the financial advisor to Photocircuits.
Photocircuits said this step brings it nearer to the completion of
its reorganization under Chapter 11 of the U. S. Bankruptcy Code,
and the Company is gratified that the sale of its business
operations will enable it to continue to provide its customers
with the same quality of service and delivery that it has provided
for over 50 years. It remains committed to developing new
products and services, providing exceptional support, and
manufacturing products that continue to meet the highest standards
of quality and timely delivery. The company will continue to
enhance its domestic manufacturing capacity to meet the needs of
customers seeking prototype and military production, while
furthering its efforts to support customers who are transitioning
demand to the Company's China manufacturing partner, PC Asia.
Headquartered in Glen Cove, New York, Photocircuits Corporation
-- http://www.photocircuits.com/-- was the first independent
printed circuit board fabricator in the world. Its worldwide
reach comprises facilities in Peachtree City, Georgia; Monterrey,
Mexico; Heredia, Costa Rica; and Batangas, Philippines. The
Company filed for chapter 11 protection on Oct. 14, 2005 (Bankr.
E.D.N.Y. Case No. 05-89022). Gerard R Luckman, Esq., at Silverman
Perlstein & Acampora LLP, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated more than $100 million in assets and
debts.
PHOTOWORKS INC: Equity Deficit Narrows to $189,000 at Sept. 30
--------------------------------------------------------------
PhotoWorks, Inc. (OTCBB: PHTW) reported results for the fourth
quarter of fiscal year 2005 ended Sept. 30, 2005.
The Company:
-- completed outsourcing of entire production & wrote off all
assets related to legacy film processing business;
-- significantly reduced operating cost;
-- has a new capital structure including elimination of all
long term debts;
-- has a new sales driven website;
-- has a new product range and marketing capabilities;
-- completed new leadership team;
"We are pleased with the results of our turnaround effort in
2005," said Philippe Sanchez, the Company's Chairman and CEO. "We
successfully changed the company from a legacy mail order film
processing business to an internet based digital photo-publishing
company. We are excited by the performance of our new photo book
products and other digital-photo publishing sales during the
holiday season and we believe the Company is well positioned to
deliver on our growth objectives for fiscal year 2006."
Total net revenues decreased 32% to $13,723,000 in fiscal 2005
compared to $20,160,000 in fiscal 2004. The decrease in total net
revenues is due to the industry-wide decline in film-based
processing volumes, a trend which will continue. However, and
more importantly, net revenues from digital-based processing
increased in fiscal 2005 by 24% to $3,785,000 compared to
$3,054,000 in fiscal 2004.
Gross margin as a percentage of net revenues for fiscal 2005
increased to 28.7% compared to 27.6% in fiscal 2004 and 24.8% in
fiscal 2003.
The Company reported a net loss of $7,370,000, or a loss of
$.96 per share, for the fiscal year 2005 compared to a net loss of
$1,672,000, or a net loss of $.50 per share for the fiscal year
2004. Net loss for fiscal 2005 is the result of the decrease in
total net revenues, unabsorbed overhead costs, non-cash interest
expenses related to the capital restructuring in 2005, accruals
for reorganization expenses related to the outsourcing of the
entire production capacity, the move to new offices and losses on
impairment of assets.
Significantly Lowered Operating Costs
The Company eliminated all production overhead costs by
outsourcing its film processing operations during the 2nd and 3rd
quarter 2005 and by outsourcing its digital print operation during
the 4th quarter 2005. As of September 24, 2005, the Company
employed a staff of 55 consisting primarily of web engineers,
marketing professionals, customer service and a small
administration department. This is down from 248 employees in
October 2003, most of them were in manufacturing capacity.
Furthermore, PhotoWorks has successfully terminated its lease of
substantial excess manufacturing space and is re-locating to
better and more efficient headquarters at lower costs. Costs
related to the layoffs, shut down and write off of redundant
process equipments as well as costs related to the move are
provided for in the 4th quarter of the 2005 accounts.
Re-organized Capital Structure
In July 2005, PhotoWorks secured shareholders approval for a
recapitalization plan negotiated with the holders of the
subordinated debt and holders of the preferred shares. This plan
resulted in:
-- a $4 million cash investment;
-- the conversion of the existing $2.5 million subordinated
debt to common stock;
-- the conversion of $12.5 million of Preferred Stock to common
stock;
-- 1:5 reverse common stock split in August 2005;
As a result, the Company emerged with a strengthened balance
sheet, free of long-term debt and a single class common stock
capital structure.
New Sales Driven Website and
New digital Imaging Platform
During 2005, PhotoWorks focused its web development efforts on
improving the customer experience online and, in October 2005,
launched a new service that significantly improves the ease of
creating hardbound photo books for both PC and Mac users. Through
the course of 2005, the Company also completed the migration of
more than 275 million customer images to a cost efficient and
highly scalable storage platform.
New Product Range and Marketing Capabilities
In anticipation of the Holiday season, PhotoWorks unveiled a new
line of unique books, industry defining signature cards and Photo
Clutch(TM) -- a small hardback photo book encased in a leather
wallet. PhotoWorks' products appeared in a variety of media
including: The TODAY Show, the Washington Post, Real Simple
Magazine, InStyle Magazine, PC Magazine and MacWorld.
Completed New Leadership Team
PhotoWorks augmented its leadership team with the appointment of
Werner Reisacher as Vice President, CFO and COO in June 2005.
Mr. Reisacher joined Tom Kelley, VP and CMO and Jerry Barber, VP
and CTO who joined the team in 2004. Sixteen key management
positions were also filled in 2005 and two directors joined a
newly restructured Board.
Business Outlook
Fiscal year 2005 marks the completion of the restructuring phase,
where the Company's focus was on disbanding the legacy film
business, streamlining its operations and building its core
competencies in the digital photo-publishing business. Looking
ahead, management believes PhotoWorks is well positioned to gain
share in the rapidly growing digital photography market and will
focus its effort on accelerating growth in fiscal year 2006 while
continuing to optimize operations for sustained performance.
Going Concern Doubt
Williams & Webster, P.S., the Company's auditor, expressed
substantial doubt about the Company's ability to continue as a
going concern after it audited the financial statements for the
year ending September 30, 2005.
Williams & Webster points to the Company's net losses and cash
flow shortages.
A copy of the Company's financial statements for the year ending
September 24, 2005, is available for free at
http://ResearchArchives.com/t/s?46d
PhotoWorks(R), Inc. (OTCBB:FOTO) -- http://www.photoworks.com/--
is an online photography services company. Every day,
photographers send film, memory cards and CDs, or go to
http://www.photoworks.com/to upload, organize and email their
pictures, order prints, and create Signature Photo Cards and
Custom Photo Books. Offering a 100% satisfaction guarantee,
PhotoWorks has been awarded an "Outstanding" rating by The Enderle
Group technology analysis firm.
As of Sept. 24, 2005, PhotoWorks' equity deficit narrowed to
$189,000 from a $536,000 deficit at Sept. 25, 2004.
PIXIUS COMMS: Court Confirms Second Amended Plan of Reorganization
------------------------------------------------------------------
The Honorable Rubert E. Nugent of the U.S. Bankruptcy Court for
the District of Kansas confirmed Pixius Communications, LLC's
Second Amended Plan of Reorganization on Jan. 12, 2006.
Judge Nugent determined that the Plan satisfies the 13 standards
for confirmation required under Section 1129(a) of the Bankruptcy
Code.
Terms of the Plan
The Debtor's Plan provides for the continuation of its business
under current management, with restructured debt and equity.
Bruce Chapin is replaced by Jay S. Maxwell as chief financial
officer
The Debtor may borrow from insiders or otherwise to fund cash
dividends to creditors, which may be converted to equity.
Additional debt to equity conversions may be approved
Claims Treatment
Administrative and priority claims will be paid in full.
General Electric Capital Corp. holds a purchase money security
interest on the Debtor's telephone system in Junction City,
Kansas. It will be paid $16,800 with 6% annual interest over a
three-year period. GECC will retain its lien on the telephone
system pending full payment of its claim.
The U.S. Dept. of Agriculture, Rural Utilities Service's claim
will be paid $1,270,275 in cash on the Plan's effective date, and
the balance of $5,087,511 will be discharged.
Ellis Davis, asserting a $2,882,114 claim, will be paid a total of
$500,000 in cash, over a five-year period. Mr. Davis will
also get a 100,000 membership units in the Reorganized Debtor, and
receive the artwork located in Bumsville, Minnesota.
The Debtor's former employees asserting wage claims will be paid
at most $4,925 each, on the effective date.
Unsecured creditors will receive periodic dividends (projected to
total 17%) without interest over a five-year period.
Existing equity securities will be cancelled, and new equity
ownership in the Reorganized Debtor will be issued.
Headquartered in Wichita, Kansas, Pixius Communications, LLC --
http://www.pixiuscorp.com/-- provides broadband internet service
at speeds from 364 Kbps to 45 Mbps. The Company filed for
chapter 11 protection on Dec. 14, 2004 (Bankr. D. Kans. Case No.
04-16825). William B. Sorensen, Jr., Esq., at Morris Laing Evans
Brock & Kennedy, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it estimated between $100,000 to $500,000 in total assets and
between $10 million to $50 million in total debts.
PORTOLA PACKAGING: Balance Sheet Upside Down by $61MM at Nov. 30
----------------------------------------------------------------
Portola Packaging, Inc., reported results for its first quarter of
fiscal year 2006, ended Nov. 30, 2005.
Portola reported sales of $65.9 million for the first quarter of
fiscal year 2006 compared to $62.8 million for the first quarter
of fiscal year 2005, an increase of 4.9%.
Portola reported operating income of $2.1 million for the first
quarter of fiscal year 2006, compared to operating income of
$1.6 million for the first quarter of fiscal year 2005, an
increase of 31.3%.
Portola reported a net loss of $3.3 million for the first quarter
of fiscal year 2006 compared to a net loss of $1.7 million for the
first quarter of fiscal year 2005.
EBITDA decreased $1.6 million to $6 million in the first quarter
of fiscal year 2006 compared to $7.6 million in the first quarter
of fiscal year 2005.
Adjusted EBITDA, which excludes the effect of restructuring
charges, (gains) or losses on the sale of assets, one-time
relocation costs and costs relating to the dissolution of our
Management Deferred Compensation Plan, decreased $1.1 million or
14.3% to $6.6 million in the first quarter of fiscal year 2006
compared to $7.7 million in the first quarter of fiscal year 2005.
Improvements in operations of $0.8 million were before a charge of
$0.3 million was recorded relating to the dissolution of the
Company's Management Deferred Compensation Plan, which occurred in
December 2005. In addition, earnings were negatively impacted by
the difference of $2.2 million in foreign exchange versus the same
quarter last year. The Company reported a foreign exchange loss
of $0.2 million for the first quarter of fiscal year 2006 as
compared to a $2 million gain reported in the first quarter of
fiscal 2005. The majority of the foreign exchange is non-cash
related.
Portola Packaging Inc. -- http://www.portpack.com/-- is a leading
designer, manufacturer and marketer of tamper evident plastic
closures used in dairy, fruit juice, bottled water, sports drinks,
institutional food products and other non-carbonated beverage
products. The Company also produces a wide variety of plastic
bottles for use in the dairy, water and juice industries,
including various high density bottles, as well as five-gallon
polycarbonate water bottles. In addition, the Company designs,
manufactures and markets capping equipment for use in high speed
bottling, filling and packaging production lines. The Company is
also engaged in the manufacture and sale of tooling and molds used
in the blow molding industry.
As of Nov. 30, 2005, Portola Packaging's equity deficit widened to
$61 million from a $57.7 million deficit at Aug. 31, 2005.
QUINTUS CORP: Liquidation Plan Confirmation Hearing Set on March 2
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware will
convene a confirmation hearing at 9:30 a.m., on March 2, 2006, for
the Joint Plan of Liquidation filed by Kurt F. Gwynne, Esq., and
the Official Committee of Equity Security Holders in Quintus
Corporation and its debtor-affiliates' chapter 11 cases.
Mr. Gwynne is the chapter 11 Trustee for the Debtors' estates.
Summary of Joint Plan
On or after the effective date of the Plan, the chapter 11 Trustee
or the Plan Trustee will continue to liquidate the Debtors'
remaining assets and continue to prosecute the Underwriter
Litigation and the Avaya Litigation. All net proceeds of that
liquidation will be added to the available cash and used for
distribution to creditors and expenses for the Plan's
implementation.
On the effective date, Mustang.com, Inc. and Acuity Corp. will be
merged into Quintus Corp. pursuant to the applicable laws of the
State of Delaware. All allowed claims against Mustang.com or
Acuity Corp. will become the allowed claims against the estate of
Quintus, the surviving entity after the effective date.
Treatment of Claims and Interests
A) Priority claims will be paid with interest on the later of the
effective date or on another date as agreed upon by the holders
of those claims and the chapter 11 Trustee or the Plan Trustee.
B) All secured claims have been previously paid and will not
receive any payments under the Plan. Unsecured claims
previously paid in full will also not receive any payments
under the Plan.
C) Unsecured claims that have not been previously paid will be
paid their unpaid balance with interest on the later of the
effective date or on another date as agreed upon by holders of
those claims and the chapter 11 Trustee or the Plan Trustee.
D) Claims of Members of the Settlement Class in the Securities
Class Action will be eligible to receive payments of their
allocable share of the proceeds from the settlement of the
Securities Class Action upon compliance with the requirements
of the Notice of the Class Settlement.
E) Claims of plaintiffs in the California Securities Action will
be paid an aggregate sum of $2,650,000 on the effective date,
while the claims of Plaintiffs in the Texas Securities Action
will be paid an aggregate sum of $275,000.
E) Directors and officers claims will not receive anything under
the Plan in view of their participation in the Global
Settlement. Subordinated interests will not receive any
payments under the Plan.
F) Subordinated claims will receive their pro rata share of the
Subordinated Claim Distribution Amount up to the maximum amount
their claims. Allowed equity interests will receive their pro
rata share of the remaining available cash in exchange for
their allowed interests.
A full-text copy of the Disclosure Statement is available for a
fee at:
http://www.researcharchives.com/bin/download?id=060119030135
Objections to the Joint Plan, if any, must be filed and served by
Feb. 13, 2006.
Headquartered in Dublin, California, Quintus Corporation,
develops and provides comprehensive electronic customer
relationship management (eCRM) software, applications and
services. The Company and its affilicates filed for chapter 11
protection on Feb. 22, 2001 (Bankr. D. Del. Case Nos. 01-00501
through 01-00503). When the Debtors filed for bankruptcy, the
Debtors reported total assets of $72,809,000 and total liabilities
of $31,090,000. Quintus previously sold substantially all of its
assets for $30 million to Avaya, Inc., in 2001. Kurt F. Gwynne,
Esq., is the chapter 11 Trustee for the Debtors' estates.
Kimberly E.C. Lawson, Esq., at Reed Smith LLP represents the
chapter 11 Trustee.
SEQUOIA MORTGAGE: Fitch Lifts Two Cert. Classes' Ratings to B+
--------------------------------------------------------------
Fitch Ratings took rating actions on these Sequoia mortgage trust
pass-through certificates:
Series 2004-1:
* Class A affirmed at 'AAA'
* Class B-1 upgraded to 'AA+' from 'AA'
* Class B-2 upgraded to 'A+' from 'A'
* Class B-3 upgraded to 'BBB+' from 'BBB'
* Class B-4 upgraded to 'BB+' from 'BB'
* Class B-5 upgraded to 'B+' from 'B'
Series 2004-2:
* Class A affirmed at 'AAA'
* Class B-1 upgraded to 'AA+' from 'AA'
* Class B-2 upgraded to 'A+' from 'A'
* Class B-3 upgraded to 'BBB+' from 'BBB'
* Class B-4 upgraded to 'BB+' from 'BB'
* Class B-5 upgraded to 'B+' from 'B'
The underlying collateral for the Sequoia Mortgage transactions
consists of 30-year traditional and hybrid adjustable-rates
mortgages extended to prime borrowers. As of December 2005
distribution date, series 2004-1 is 23 months seasoned and series
2004-2 is 22 months seasoned. The pool factors (current mortgage
loan principle outstanding as a percentage of the initial pool)
are 46% and 47% for series 2004-1 and 2004-2, respectively. The
Sequoia Mortgage Trust loans are acquired from various originators
by a subsidiary of Redwood Trust Inc., a mortgage real estate
investment trust that invests in residential real estate loans and
securities. The master servicer for the deals above is Wells
Fargo Bank Minnesota, which is currently rated 'RPS1' by Fitch.
The affirmations reflect satisfactory collateral performance with
general stable credit enhancement and affect approximately $565
billion outstanding certificate. The upgrades reflect an
improvement in the relationship of CE to future loss expectations
and affect approximately $44.6 million of certificates. The CE
levels for all upgraded classes have more than doubled their
original enhancement levels since the closing date.
SPORTS CLUB: Sale of 5 Clubs Cues Moody's to Withdraw Junk Ratings
------------------------------------------------------------------
Moody's Investors Service withdrew the ratings of The Sports Club
Company, Inc., following the completion of the sale of five of its
nine sports and fitness clubs to an affiliate of Millennium
Entertainment Partners for $80 million. Concurrent with the asset
sale, Sports Club also completed a $60 million financing (not
rated by Moody's) of its Sports Club/LA -- Los Angeles property.
Proceeds from these transactions were used to retire the $100
million senior secured notes that were due to mature in March
2006.
Moody's withdrew these ratings:
* $100 million 11.375% Senior Secured Notes due 2006, Caa2
* Corporate family rating, Caa2
Headquartered in Los Angeles, California, The Sports Club Company,
Inc. operates high-end fitness clubs in the United States.
SPORTS CLUB: $100MM Notes Repayment Cues S&P to Withdraw Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on The
Sports Club Co. Inc. following the repayment of the company's
$100 million senior secured notes due March 2006. Sports Club
funded the repayment by selling five of its nine fitness clubs for
$80 million and borrowing against its Sports Club/LA-Los Angeles
property for $60 million.
SUPERB SOUNDS: William J. Tucker Hired as Bankruptcy Counsel
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana
gave Superb Sounds, Inc., authority to employ William J. Tucker &
Associates, LLC, as its bankruptcy counsel.
As reported in the Troubled Company Reporter on Nov. 18, 2005,
William J. Tucker will:
(a) provide the Debtor counsel and legal advice with respect
to its powers and duties as Debtor;
(b) prepare on behalf of the Debtor the necessary petitions,
pleadings, notices, orders, applications, documents,
reports, and other legal documents as may be required
throughout these proceedings;
(c) perform all other legal services for the Debtor, as
Debtor, which may be necessary herein, including the
development of a plan for reorganization of the
Debtor's business; and
(d) prepare, file and prosecute all pleadings
necessary to obtain confirmation of a plan of
reorganization.
The Debtor discloses that the Firm's professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
William J. Tucker, Esq. Partner $350
Steven K. Dick, Esq. Partner $260
Jeffrey M. Hester, Esq. Partner $250
C. Abraham Murphy, Esq. Attorney $200
Kathy Shamblin Legal Assistant $110
Tracy Wilkerson Legal Assistant $100
Kristine Steiner Paralegal $80
Headquartered in Indianapolis, Indiana, Superb Sound, Inc. --
http://www.ovation-av.com/-- is an audio, video and mobile
electronics specialist. The company filed for chapter 11
protection on Oct. 14, 2005 (Bankr. S.D. Ind. Case No. 05-29137).
William J. Tucker, Esq., at William J. Tucker & Associates, LLC,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed
$9,416,642 in assets and $14,546,796 in debts.
SUPERB SOUNDS: Creditors Panel Hires Ice Miller as Bankr. Counsel
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Superb Sounds,
Inc., sought and obtained permission from the U.S. Bankruptcy
Court for the Southern District of Indiana to employ Ice Miller,
LLP, as its bankruptcy counsel.
Ice Miller will:
a) give the Committee legal advice with respect to its rights,
powers and duties under Chapter 11 and keep the Committee
apprized of developments in the Debtor's case and of the
Debtor's business operations and prospects;
b) assist and advise the Committee in its consultations with
the Debtors, the Office of the U.S. Trustee, and parties-in-
interest in the Debtors' case regarding the administration
of this case;
c) assist the Committee in the review, analysis, and
negotiation of any financing and cash use agreements;
d) prepare all necessary motions, applications, answers,
orders, reports and papers in support of positions taken by
the Committee;
e) assist and advise the Committee in the review, analysis,
negotiation and preparation of any plan(s) of reorganization
that may be filed and to assist the Committee in the review,
analysis, negotiation and preparation of the disclosure
statement accompanying any chapter 11 plan(s);
f) provide expertise with respect to the Debtor's case and
provide guidance regarding any procedural rules and local
rules applicable to the case;
g) perform all others services for the Committee that are
necessary for its counsel to perform;
Jeffrey A. Hokanson, Esq., a partner at Ice Miller, disclosed the
Firm's professionals bill:
Professional Hourly Rate
----------- -----------
Partners $260 - $390
Associates $165 - $260
Paralegals $120 - $190
To the best of the Committee's knowledge, Ice Miller does not hold
or represent any interest adverse to the Debtor or its estate.
Founded in 1910, Ice Miller LLP -- http://www.icemiller.com/-- is
a full-service law firm.
Headquartered in Indianapolis, Indiana, Superb Sound, Inc. --
http://www.ovation-av.com/-- is an audio, video and mobile
electronics specialist. The company filed for chapter 11
protection on Oct. 14, 2005 (Bankr. S.D. Ind. Case No. 05-29137).
William J. Tucker, Esq., at William J. Tucker & Associates, LLC,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed
$9,416,642 in assets and $14,546,796 in debts.
THREE-FIVE: U.S. Trustee Names Equity Security Holders Panel
------------------------------------------------------------
Pursuant to Section 1102 of the Bankruptcy Court, the United
States Trustee for Region 14 appointed four shareholders to serve
on an Equity Security Holders Committee in Three-Five Systems
Inc.'s Chapter 11 case:
1. David Buchanan
6301 East Huntress Drive
Paradise Valley, Arizona 85253
Tel: (480) 998-8063
Fax: (480) 596-3487
2. Robert Nahom
8141 East Del Plomo
Scottsdale, Arizona 85258
Tel: (602) 224-0603
Fax: (602) 224-0323
3. Dan Schott
5342 East Lafayette Boulevard
Phoenix, Arizona 85018
Tel: (602) 840-4668
4. Fred Silverman
18 Twin Ponds Drive
Bedford Hills, New York 10507
Tel: (914) 241-3077
Fax: (914) 244-3707
The Equity Security Holders Committee represents the interests of
shareholders in this bankruptcy proceeding.
Headquartered in Tempe, Arizona, Three-Five Systems, Inc. --
http://tfsc.com/-- provides specialized electronics manufacturing
services to original equipment manufacturers. TFS offers a broad
range of engineering and manufacturing capabilities. The Company
filed for chapter 11 protection on Sept. 8, 2005 (Bankr. D. Ariz.
Case No. 05-17104). Thomas J. Salerno, Esq., at Squire, Sander &
Dempsey, LLP, represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it listed
$11,694,467 in total assets and $2,880,377 in total debts.
TITANIUM METALS: Board Approves Two-for-One Common Stock Split
--------------------------------------------------------------
Titanium Metals Corporation's (NYSE: TIE) Board of Directors has
approved a two-for-one split of TIMET's common stock, $0.01 par
value per share. The stock split will be effected in the form of
a stock dividend. The Record Date for the stock split has been
set as the close of business on February 6, 2006. Holders of
record on the Record Date will receive one additional share for
each share held on the Record Date. The additional shares will be
distributed by the Company's transfer agent, American Stock
Transfer and Trust Company, and the distribution date will be
February 16, 2006, provided certain regulatory requirements are
satisfied.
As a result of the stock split, the conversion rate of the
Company's 6-3/4% Series A Preferred Stock will be changed to six
and two-third shares of common stock for each share of Series A
Preferred Stock, and the conversion rate of the of 6-5/8%
Convertible Preferred Securities, Beneficial Unsecured Convertible
Securities (BUCS) issued by TIMET Capital Trust I will be changed
to 2.678 shares of common stock for each BUCS.
The Board of Directors and the Company's stockholders holding more
than a majority of the outstanding shares of common stock have
approved an amendment to the Company's Certificate of
Incorporation increasing the Company's authorized common stock to
200 million. The Company intends to distribute to its
stockholders an information statement describing the amendment at
least 20 days prior to its filing of the amendment.
Headquartered in Denver, Colorado, Titanium Metals Corporation --
http://www.timet.com/-- is a worldwide producer of titanium metal
products.
* * *
As reported in the Troubled Company Reporter on Mar. 18, 2005,
Standard & Poor's Ratings Services raised its corporate credit
rating on Denver, Colorado-based Titanium Metals Corp., to 'B+'
from 'B'. Standard & Poor's also raised its preferred stock
rating to 'CCC+' from 'CCC'. S&P says the outlook is stable.
TITANIUM METALS: Sets Aside $3.4 Million to Remediate Nevada Plant
------------------------------------------------------------------
Titanium Metals Corporation expects to pay $3.4 million in accrued
expenses based on undiscounted cost estimates of the probable
costs for remediation of its active plant site in Henderson,
Nevada, over a period of up to 30 years, while continuing
assessment work on the site.
In November 2004, the Company and Basic Management, Inc., entered
into several agreements pursuant to which the Titanium conveyed
certain of its land adjacent to the Henderson plant site on which
the Company operated settling ponds to BMI.
Subsequent to the conveyance, the Company, pursuant to a lease
with BMI, continued to use some of the TIMET Pond Property until
May 2005, at which time all usage ceased. Based on the terms of
the conveyance agreement, BMI assumed the Company's obligation for
certain potential environmental issues related to the TIMET Pond
Property.
At Sept. 30, 2005, the Company had accrued an aggregate of about
$3.6 million for environmental matters. The Company estimates the
upper end of the range of reasonably possible costs to remediate
these matters to be $6 million.
Headquartered in Denver, Colorado, Titanium Metals Corporation --
http://www.timet.com/-- is a worldwide producer of titanium metal
products.
* * *
As reported in the Troubled Company Reporter on Mar. 18, 2005,
Standard & Poor's Ratings Services raised its corporate credit
rating on Denver, Colorado-based Titanium Metals Corp., to 'B+'
from 'B'. Standard & Poor's also raised its preferred stock
rating to 'CCC+' from 'CCC'. S&P says the outlook is stable.
ULTIMATE ELECTRONICS: Wants Until March 7 to Remove Civil Actions
-----------------------------------------------------------------
Ultimate Electronics, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to extend, until
March 7, 2006, their time to file notices of removal with respect
to prepetition civil actions pursuant to 28 U.S.C. and Rules 9006
and 9027 of the Federal Rules of Bankruptcy Procedure.
The Debtors are parties to numerous judicial and administrative
proceedings currently pending in various state and federal courts
and administrative agencies throughout the country. The civil
actions include securities, discrimination, employment, contract
and personal injury claims.
The Debtors give the Court three reasons supporting the extension:
1) the Debtors' time and resources in recent months were
focused in obtaining confirmation of their chapter 11 plan,
completing the sale of most of their assets to Ultimate
Acquisition Partners, L.P., and conducting other going out
of business sales;
2) it will give the Debtors more opportunity to make fully
informed decisions concerning the civil actions and protect
their valuable right to adjudicate lawsuits pursuant to
28 U.S.C. Section 1452; and
3) it will not prejudice the rights of the Debtor's adversaries
in the civil actions because any party to a civil action
that is removed may seek to have it remanded to the
appropriate court pursuant to 28 U.S.C. Section 1452(b).
The Court will convene a hearing at 1:30 p.m., on Jan. 30, 2006,
to consider the Debtors' request.
Headquartered in Thornton, Colorado, Ultimate Electronics, Inc.
-- http://www.ultimateelectronics.com/-- is a specialty retailer
of consumer electronics and home entertainment products located in
the Rocky Mountain, Midwest and Southwest regions of the United
States. The Company operates 65 stores and focuses on mid-to
high-end audio, video, television and mobile electronics products.
The Company and its debtor-affiliates filed for chapter 11
protection on January 11, 2005 (Bankr. D. Del. Case No. 05-10104).
J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represents the Debtors in their restructuring efforts. When
the Debtor filed for protection from its creditors, it listed
total assets of $329,106,000 and total debts of $160,590,000. The
Court confirmed the Debtors' chapter 11 Plan on Dec. 9, 2005, and
the Plan took effect on Jan. 11, 2006.
VISTEON CORP: Moody's Affirms Low-B Ratings With Negative Outlook
-----------------------------------------------------------------
Moody's Investors Service affirmed the long-term ratings of
Visteon Corporation (Corporate Family, B2; Senior Unsecured, B3),
but changed the ratings outlook to negative. The outlook change
results from:
* ongoing structural uncertainties in the automotive industry
in North America;
* the impact of anticipated cash expenditures of its
restructuring program on the company's free cash flow
generation; and
* lowered expectations of near-term profitability.
Despite these intermediate challenges, the company's near term
liquidity profile has improved as a result of:
* several recent actions designed to support the company
through its restructuring efforts; and
* Visteon's Speculative Grade Liquidity Rating has been raised
to SGL-3 from SGL-4.
These actions include:
* Visteon sourcing of a new $350 million term loan;
* becoming current in its financial reporting requirements; and
* obtaining amendments to financial covenants in its bank
credit facilities which improve its prospective compliance
headroom as well as increase effective availability under the
revolving credit.
In 2006, the company's operating performance and debt protection
measures may weaken from prior expectations. These changes in
part are based on lower forecasts of North American production by
Visteon's principal customer, Ford Motor Company. Elevated
leverage may persist for a longer period of time until significant
savings are realized from revitalizing the company's profitability
and free cash flow.
Ratings affirmed:
Visteon Corporation:
* Corporate Family, B2
* Senior Unsecured Notes, B3
* Shelf ratings for senior unsecured, subordinated and
preferred (P)B3, (P)Caa2, and (P)Caa3 respectively
Short Term rating, not prime.
Visteon Capital Trust I:
* Shelf rating for trust preferred, (P)Caa2
Ratings changed:
Visteon Corporation:
* Speculative Grade Liquidity to SGL-3 from SGL-4
Outlook, negative.
Visteon's secured bank credit facilities are not rated.
Lower volumes and continued margin pressure arising from raw
material costs and agreed price-downs are anticipated to reduce
Visteon's profitability and operating cash flow generation in 2006
below previous expectations. At the same time, expenditures for
headcount reductions and facility closings associated with the
restructuring initiatives (the majority of which will effectively
be reimbursed under both a Ford funded escrow account, covering
the bulk of the near-term actions, and a sharing provision with
Ford for certain other actions) could create additional calls on
cash. Consequently, it is expected that leverage will remain
elevated for a protracted period of time. The combination of
these factors will both constrain Visteon's operating
profitability and free cash flow in 2006 below levels previously
anticipated by Moody's and result in the revised rating outlook.
Moody's ratings for Visteon continue to recognize the company's
substantial scale and market position, as well as the competitive
advantages provided by its continued research and development
spending and global manufacturing footprint. These aspects of
Visteon's credit are viewed similarly to those of higher rated
credits under Moody's rating methodology for auto parts suppliers.
Visteon's historic concentration of business with Ford and its
weak credit metrics have been viewed as relative weaknesses as
part of the rating process.
The restructuring initiatives being undertaken by the company
should help to improve Visteon's customer and geographic
distribution of revenues during the near term. While these
restructuring initiatives should also help to improve margins, the
magnitude of improvement in credit metrics will be constrained
during the near term as a result of continued weakness in
automotive demand and cash outlays for restructuring costs.
Consequently, Moody's anticipates that Visteon's coverage ratios,
leverage ratios and return on assets (key credit metrics utilized
in Moody's rating methodology) may persist at weak levels that are
consistent with a Corporate Family rating of no greater than a B2.
Developments that could lead to a ratings downgrade include
further deterioration in expected financial performance or any
evidence that the expected improvements in the company's cost
structure under the restructuring initiatives will be delayed or
unachievable. Moreover, persistent negative free cash flow,
leverage deteriorating beyond 6 times EBITDA, or any diminishment
of the company's liquidity profile would likely adversely affect
the rating.
Developments that could lead to stronger ratings include
achieving:
* sustained FCF/debt of 5% or higher;
* EBIT/Interest greater than 1 time; and
* debt/EBITDA consistently below 4.5 times.
Visteon's Speculative Grade Liquidity Rating has been raised to
SGL-3 from SGL-4. The company recently closed on a $350 million
eighteen month term loan. The improved liquidity also follows the
company concluding its accounting investigation, becoming current
in its reporting obligations through filing restated financials
with the SEC and creditors, and obtaining covenant relief under
its bank credit facilities. Use of proceeds from the term loan
includes repayment of borrowings under its term revolving credit
facility, effectively freeing up additional external availability.
In the amendment to the bank credit facilities, the company's net
debt/EBITDA covenant was adjusted to provide greater headroom.
The SGL-3 rating represents adequate liquidity over the next 12
months. The rating considers Visteon's:
* substantial balance sheet cash;
* improved availability under its revolving credit agreements;
* extended debt maturity profile; and
* additional cushion under its financial covenants.
The rating also incorporates expectations of close to break-even
cash flow, and limited scope to develop alternative liquidity
arrangements given the secured nature of the bank credit
agreements. The company's bank credit facilities mature in June
2007. Borrowings under those facilities will be reported as
current obligations at the end of the second quarter in 2006.
Visteon Corporation is a leading full-service supplier that
delivers consumer-driven technology solutions to automotive
manufacturers worldwide and through multiple channels within the
global automotive aftermarket. On a pro forma basis, Visteon is
expected to have revenues of $11.3 billion and has operations
located in 24 countries.
WHITE BIRCH: Moody's Affirms New $130 MM Term Loans' Low-B Ratings
------------------------------------------------------------------
Moody's Investors Service affirmed the B2 rating for White Birch
Paper Company's proposed US$89 million tack-on to the guaranteed
1st lien senior secured term loan B and the B3 rating for the
company's proposed US$41 million tack-on to the guaranteed 2nd
lien senior secured term loan C. Proceeds from the tack-on term
loans will be used to acquire Papier Masson Ltee. The tack-on
financing increases the face amount of the term loans first issued
in April 2005 to US$364 million and US$166 million, respectively.
The tack-on loans will be governed by the same credit agreement as
the existing term loans.
Moody's also affirmed the B1 rating to the company's proposed
US$90 million guaranteed senior secured bank revolver, and the B2
corporate family rating. At the same time, however, Moody's
upgraded the company's speculative grade liquidity rating to
SGL-2. The ratings assume that the transaction will close in the
amounts and along the terms as presented. White Birch's rating
outlook was changed to stable from developing.
The B2 corporate family rating reflects the company's:
* high leverage;
* reliance on newsprint as its single commodity product; and
* the challenges continuing to impact the paper sector such as:
-- over capacity,
-- relatively weak demand,
-- elevated costs for energy and transportation,
-- significant competitive pressures, and
-- a challenging foreign exchange environment for Canadian
producers.
However, the ratings also reflect:
* the improved price environment for newsprint at this time;
* good liquidity;
* a relatively low cost position; and
* the expectation that operating costs should improve as
various cost initiatives are completed over the near term at
all four of White Birch's mills.
The ratings incorporate the uncertainty of operating cash flows
that result from the pricing volatility associated with a
commodity product. Despite improved newsprint prices over the
past several quarters, due in part to the idling or conversion of
newsprint capacity by the larger newsprint producers and a slight
improvement in demand, pricing remains below historic peak levels.
Moreover, Moody's believes further price increases over the near
term will be a challenge as significant excess capacity still
exists and continued supply side management will be necessary to
support and maintain prices over the long term. As a result,
sustainable margin expansion could be limited even after cost
initiatives and synergies with PML are completed.
Although White Birch will be the third largest newsprint producer
in North America after this transaction, competitive pressures
from market leaders, Abitibi and Bowater, which have substantially
greater resources than White Birch, still exist. Although these
market leaders are impacted by the same industry fundamentals,
including foreign exchange issues, Moody's believes they may have
greater flexibility in meeting challenges due to the scale and
diversity of their operations and greater access to sources of
financing, including public equity.
However, with the current market price of newsprint at
approximately US$635 per tonne, White Birch should be able to
generate reasonable operating cash flow given the relatively
favorable cost position of its mills. White Birch benefits from a
relatively low cash cost position when compared to its North
American peers with all four of its mills estimated to be in the
lower half of the industry cost curve. Although the Stadacona and
the PML mill are not at the same efficiency level as the Bear
Island or Soucy mills, the company has ongoing cost saving
initiatives that should narrow this variance over time.
The company can also mitigate the negative newsprint industry
issues with the production of directory paper. Two of Stadacona's
four machines can produce up to approximately 175,000 tonnes of
either newsprint or directory paper depending on market demand.
The stable outlook reflects Moody's expectation that:
* White Birch's operating performance will improve as current
cost initiatives are realized;
* newsprint prices will at least remain stable at current
levels over the near term; and
* good liquidity will be maintained.
The ratings or outlook would be negatively impacted by a sustained
deterioration in newsprint prices or increases in energy costs,
which would result in a decline in operating performance and/or
liquidity. Also, a material debt-financed acquisition or a shift
in newsprint strategy within the industry may negatively impact
the rating or outlook.
As of Dec. 31, 2005, pro forma for the PML acquisition, White
Birch's consolidated leverage on a gross debt to EBITDA basis was
approximately 5.4x with coverage on an EBITDA to gross interest
basis of about 2.2x. However, if the pricing environment for
newsprint remains at current levels or strengthens further, White
Birch should be able to improve its credit metrics on a
sustainable basis by reducing current debt levels.
If the company improves its credit metrics on a sustainable basis,
with leverage migrating towards the 4.5x level, coverage of over
2.0x, and retained cash flow to gross debt exceeding 10%, while
maintaining good liquidity the ratings would likely improve.
The upgrade of the speculative liquidity rating to SGL-2 reflects
Moody's improved outlook for the company's cash flow over the next
12 months and the resulting cushion this provides for White
Birch's interest coverage covenant. Moody's believes that the
company will generate positive free cash flow over the next year
and will maintain reasonable availability under its US$90 million
revolver (increased from $70 million). Although Moody's believes
covenant compliance is likely, the cushion is modest and could
tighten if newsprint pricing slips or margins deteriorate due to
increased input costs. In addition, Moody's believes that balance
sheet cash will remain modest over the next 12 months and that the
company does not currently own significant assets that can be
monetized in the near term to satisfy liquidity needs.
The B2 rating on the 1st lien term loan B recognizes its majority
position in the capital structure resulting in the risk to these
bank lenders being not materially different from that of the
corporate entity as a whole. As a result, the 1st lien term loan
B is rated at the corporate family level. The notes also benefit
from senior unsecured guarantees from several operating
subsidiaries with the exception of the Soucy operations. The 1st
lien term loan B will be secured by a perfected first priority
pledge in all property plant and equipment and capital stock of
the borrowers and guarantors and the US$125 million Soucy
intercompany note.
The B3 rating on the 2nd lien term loan C reflects its
subordination to both the US$364 million 1st lien term loan B and
US$90 million asset based revolver. The 2nd lien term loan C will
be secured by a perfected second priority pledge in all property
plant and equipment and capital stock of the borrowers and
guarantors and the US$125 million Soucy intercompany note.
The B1 rating on the guaranteed senior secured revolving credit
facility reflects the benefit derived from a security interest in
all accounts receivables and inventories of the borrowers and
guarantors. Neither the 1st lien term loan B nor 2nd lien term
loan C will have a secured interest in the accounts receivables or
inventories of the company.
White Birch Paper Company, headquartered in Greenwich,
Connecticut, is a producer of newsprint and directory paper in
North America.
XENONICS HOLDINGS: Posts $5 Mil. Net Loss in Fiscal Year 2005
-------------------------------------------------------------
Eisner LLP expressed substantial doubt about Xenonics Holdings,
Inc.'s ability to continue as a going concern after it audited the
Company's financial statements for the years ended Sept. 30, 2005
and 2004. The auditing firm pointed to the Company's net loss and
accumulated deficit at Sept. 30, 2005.
Fiscal Year 2005 Results
Xenonics reported a $5,004,000 net loss for the fiscal year ended
Sept. 30, 2005, as compared to $1,476,000 of net income in the
prior year. For the 2005 fiscal year, the Company posted
$4,434,000 of revenue, versus $11,927,000 of revenue for the
fiscal year ended Sept. 30, 2004.
Net income was impacted by non-recurring items such as an
adjustment to finished goods inventory of $1,953,000 and
$1,052,000 of compensation and consulting expense related to the
issuance of common stock and warrants and options granted during
the year.
Xenonics' balance sheet at Sept. 30, 2005, showed $2,466,00 in
total assets and $700,000 of liabilities. At Sept. 30, 2005, the
Company had an accumulated deficit of $12,485,000.
Management says the Company will continue to focus on providing
products for the Army, Navy, Coast Guard and Marine Corps as a
near term strategic imperative.
"New opportunities in 2006 will be focused on international sales
and an expansion into new business areas to provide security
solutions as the prime contractor or a key hardware integrator,"
stated Richard J. Naughton, CEO.
Xenonics Holdings, Inc., through its subsidiary, Xenonics, Inc. --
http://www.xenonics.com/-- develops and produces advanced,
lightweight and compact ultra-high intensity illumination products
for military, law enforcement, public safety, and commercial and
private sector applications. Currently, NightHunters are in use by
every branch of the U.S. Armed Forces as well as a wide variety of
law enforcement and security agencies.
YBM MAGNEX: Ernst & Young to File Plan of Distribution in February
------------------------------------------------------------------
Ernst & Young YBM Inc. discloses that the proof of claims process
approved by the Court of Queen's Bench of Alberta in Canada has
been completed. Ernst & Young is the Court approved Receiver and
Manager of the assets, property and undertaking of YBM Magnex
International, Inc.
Ernst & Young reports that it has prepared a plan of distribution
for approval by the Court. Under the plan, net receipts in the
possession of Ernst & Young, less a holdback for anticipated fees
and disbursements relating to administering the plan, will be
distributed to:
(a) shareholders and former shareholders with proven claims
who have provided Ernst & Young with a current mailing
address;
(b) Sumitomo Special Metals Co., Ltd., in connection with a
settlement; and
(c) the U.S. Department of Justice in connection with an
outstanding $1 million fine.
Ernst & Young says that the U.S. DOJ will share pro rata with the
eligible claimants.
Ernst & Young reports that given the state of financial reporting
by YBM, it is unable to reconstruct YBM's books and records.
Ernst & Young says that the plan provides that distributions be
made without deduction for any taxes that might be owing in
respect of YBM or any of its subsidiaries.
If the plan is approved, Ernst & Young reports, all claims,
including, without limitation, potential claims of taxing
authorities, against YBM and Ernst & Young, will be permanently
stayed.
Ernst & Young will file a motion for approval of the plan and
other relief before the Court in February 2006 or such later date
as the Court requires. Parties interested to be heard on the said
motion must:
(1) serve Ernst & Young with a Notice of Appearance by
Jan. 27, 2006 and
(2) file with the Court in Court File No. 9801-16691 in
Calgary, Alberta, Canada.
Parties who have proven claims and wish to receive a distribution
must have their current address in Ernst & Young's records.
Parties who wish to confirm if they are eligible to receive a
distribution or update their address may contact:
Ernst & Young YBM Inc.
Ernst & Young Tower, Toronto-Dominion Centre,
P.O. Box 251, 222 Bay Street
Toronto, Ontario, Canada M5K 1J7
Attention: Ms. Francea Mazzulla
Tel: (416) 943-3132
Fax: (416) 943-3300
E-mail: ybm@ca.ey.com
Any address changes should be registered at a Web site at
http://www.ybmclassaction.com/
Parties who wish to receive a copy of the Plan of Distribution, a
copy of the Receiver's Motion Record, or to serve the Receiver
with a Notice of Appearance may contact the same address.
YBM Magnex International Inc. was a magnet and bicycle maker.
YBM had been a top performer on the Toronto Stock Exchange until
earlier in 1998 when allegations of management links to the
Russian mafia surfaced. Ernst & Young YBM Inc. is the company's
court-approved Receiver.
* BOOK REVIEW: Business and Capitalism: An Introduction to
Business History
-----------------------------------------------------------
Author: N.S.B Gras
Publisher: Beard Books
Paperback: 428 pages
List Price: $34.95
Order your personal copy at
http://amazon.com/exec/obidos/ASIN/1587981939/internetbankrupt
Gras' book is as relevant and enlightening to the fundamentals,
practices and trends of today's business world as it was when it
was first published in 1939. This was a time when the value and
resiliency of capitalism were being challenged from without by
communism and other ideologies and also from within by the
depression. But such is the breadth and soundness of Gras's
history, that he is able to put these threats into perspective
even in his own day. Obviously, capitalism survived; whereas the
threats to it of Gras's day, as he saw them did not much affect
the basics of business and capitalism.
From Gras' point of view, business and capitalism cannot be put
aside by revolution or political change or superseded by utopian
societies because they are inextricably rooted in history, human
nature and society, particularly social needs and aspirations.
Rudiments of business can be found in primitive and ancient
societies. Gras focuses of these much as anthropologists focus on
the religious rituals and family structures of early societies.
He sees in some of these a cultural nomadic economy, and in
others, a pastoral nomadic economy. Herds of animals, for
example, were the capital in the cultural nomadic economy; in the
pastoral nomadic economy, the capital was field of crops.
The "business man" is differentiated from the primitive shepherd
in that the shepherd raises his sheep mainly to feed himself and a
small number of others, only occasionally trading them outside
this small circle. By contrast, the business man is not directly
involved in production; he administers labor and resources to
produce something that can be exchanged, i.e., sold. Gras
stresses that "business is administration that looks toward
exchange." "Petty capitalism," is the first stage of the
intertwined business and capitalism that takes up most of Gras's
lengthy history and analysis, formed in early towns on all
continents. The names of many of these towns are well known:
Babylon, Athens, Rome, London, Paris, Amsterdam. That they were
centers of petty capitalism of their bourgeoisie is a principal
reason they had significant roles in history.
Peddlers, shopkeepers, and tradesmen represented this petty
capitalism. This first stage of capitalist business became more
highly organized in the course of history, and more multifaceted.
The petty capitalism was succeeded by mercantile capitalism,
represented by merchants who entered into partnerships with other
merchants, issued stock in their businesses and developed
sophisticated bookkeeping practices. Later came industrial
capitalism with its large factories, complex production processes,
and widespread, and in some cases, international markets.
Industrial capitalism spawned financial capitalism involving
diversified practices and services of stock markets and banks to
meet the big and sometimes unexpected financial requirements to
sustain it and allow it to grow.
Today's diversified, vibrant, and global US economy can be seen as
the high point of Gras's industrial capitalism mixed with his
financial capitalism. He ends his economic history with a chapter
on the national capitalism practiced by Nazism and Fascism which,
at the time, challenged the centuries of business progress based
on private capitalism. But these challenges were turned back in
World War II.
Economic historian N.S.B Gras was a professor of business history
at Harvard's Graduate School of Business. In 1926, he founded the
Business History Society along with its "Journal of Business
History."
*********
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 A. Soriano-Baaclo, Marjorie C. Sabijon, Terence
Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo
Junior M. Pinili, Tara Marie A. Martin and Peter A. Chapman,
Editors.
Copyright 2006. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $725 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***