/raid1/www/Hosts/bankrupt/TCR_Public/060224.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, February 24, 2006, Vol. 10, No. 47
Headlines
ACCO BRANDS: S&P Affirms BB- Rating & Says Outlook is Negative
ACTIVISION INC: S&P Affirms BB- Credit Rating With Neg. Outlook
ACURA PHARMA: Equity Deficit Multiplies 5x to $6.16MM at Dec. 31
ADDISON-DAVIS: Posts $1.1 Mil. Net Loss in Quarter Ended Dec. 31
ADM TRONICS: Dec. 31 Balance Sheet Upside-Down by $3.1 Million
AFC ENTERPRISES: Increases Share Repurchase Program to $115 Mil.
AHPC HOLDINGS: Receives Nasdaq Non-Compliance Notice
ALLIED HOLDINGS: CEO Hugh Sawyer Cuts Personal Salary by 15%
AMERICAN AIRLINES: Moody's Affirms Corp. Family Rating at B3
ANCHOR GLASS: Files First Amended Plan of Reorganization
ANDROSCOGGIN ENERGY: Committee Taps Phoenix as Financial Expert
ASARCO LLC: 12 Debtors Want Baker Botts as Bankruptcy Counsel
ASARCO LLC: Subsidiary Panel & FCR Want Legal Analysis as Advisor
ATA AIRLINES: Court Approves Sabre Restructuring Agreement
ATA AIRLINES: Court Okays to Use ATSB Lenders' Cash Collateral
AXCESS INT'L: December 31 Balance Sheet Upside-Down by $4.59 Mil.
BIOGEN IDEC: S&P Lifts Sr. Unsecured Debt Rating to BBB from BB+
BOYD GAMING: P. Chakmak Replacing CFO E. Landau Upon Retirement
BUFFALO MOLDED: Wants McDonald Hopkins as Substitute Counsel
BROOKLYN HOSPITAL: Court Fixes April 21 as Claims Bar Date
CALPINE CORP: Construction Finance Wants Waiver from Noteholders
CANWEST MEDIAWORKS: Moody's Confirms Sr. Subor. Bond Rating at B2
CARRINGTON MORTGAGE: Moody's Rates Class M-10 Certificates at Ba1
CASE NEW HOLLAND: Moody's Rates $350 Mil. Senior Notes at Ba3
CDC MORTGAGE: S&P Downgrades Rating on Class B Debt to B from BB
CENTENNIAL COMMS: Updates Financial Outlook for FY Ending May 31
CENTURYTEL: Moody's Affirms Preferred Shelf (P) Ba1 Rating
CHEMED CORP: Discloses Financial Results for Fourth Quarter
CHEMTURA CORP: Focusing on Performance Chemicals Business
COMDISCO INC: Makes Distribution to Contingent Rights Holders
CONNECTICARE INC: S&P Affirms Financial Strength Rating at BB+
CONTINENTAL AIRLINES: Moody's Affirms Corp. Family Rating at B3
COVAD COMMS: Completes Acquisition of NextWeb in Cash & Stock Deal
CSC HOLDINGS: Moody's Rates $2.4BB Proposed Sr. Facility at Ba3
CSC HOLDINGS: S&P Rates Proposed $2.4 Billion Facilities at BB
DATATEC SYSTEMS: Wants Claim Objection Period Extended to Sept. 30
DELTA AIRLINES: Court Okays Reinstatement of Severance Program
DIGITAL LIGHTWAVE: Owes Optel Capital $53.4 Million as of Feb. 15
DRESSER-RAND GROUP: Reduces Debt by $30 Million in Two Months
DRESSER-RAND GROUP: Restructures Steam Turbine Business
DTE ENERGY: 2005 Earnings Increase 25% to $537 Million
DYNTEK INC: Losses Continue in Quarter Ended December 31
EMMIS COMMUNICATIONS: Moody's Affirms Senior Debt Rating at B3
EPOCH INVESTMENTS: Creditors Must File Proofs of Claim by March 10
FIREARMS TRAINING: Dec. 31 Balance Sheet Upside-Down by $27.7 Mil.
FORD CREDIT: S&P Puts BB Rating on $59.1 Million Class D Notes
FORD CREDIT: Fitch Puts BB+ Rating on $59.1 Million Class D Notes
GLOBE LIFT: Case Summary & Largest Unsecured Creditor
GRANITE BROADCASTING: Marketing WB TV Stations to More Buyers
GS MORTGAGE: Fitch Lifts Class G Certs.' Rating to BBB- from B+
GUITAR CENTER: Posts $76.7-Mil. of Net Income in Fiscal Year 2005
HARD ROCK: S&P Places B+ Corporate Credit Rating on CreditWatch
HOVNANIAN ENTERPRISES: Moody's Affirms Low-B Ratings on Securities
HOVNANIAN ENTERPRISES: Fitch Rates $250 Million Sr. Notes at BB+
IASIS HEALTHCARE: Moody's Affirms $475MM Sr. Notes Rating at B3
INDIGITA CORP: Case Summary & 9 Largest Unsecured Creditors
INTEGRATED ELECTRICAL: Can Obtain DIP Financing on Interim Basis
INTEGRATED ELECTRICAL: Can Use Cash Collateral on Interim Basis
INTEGRATED ELECTRICAL: Disclosure Statement Hearing Set on Mar. 10
INTEGRATED HEALTH: Balks at Abe Briarwood's Move to Release $1.5MM
INTEGRATED HEALTH: Court Delays Entry of Final Decree to Oct. 30
ISLE OF CAPRI: Earns $4.1 Mil. Net Income in Quarter Ended Jan. 22
J.P. MORGAN: Moody's Affirms Low-B Ratings on Eight Cert. Classes
KERZNER INTERNATIONAL: Earns $7.1 Million in Fourth Quarter
KNOLL INC: Buying Back Common Shares Through Banc of America
KNOLL INC: Declares $0.10 Quarterly Cash Dividend on Common Shares
LASERSIGHT: CFO & Secretary Resigns & Z. Tang Named as Successor
LB COMMERCIAL: Fitch Junks $17.3 Million Class L Certs.' Ratings
LIBERTY MEDIA: Completes Acquisition of Provide Commerce, Inc.
MERIDIAN AUTOMOTIVE: Foley Okayed Despite U.S. Trustee's Protest
MERISTAR HOSPITALITY: Moody's Junks Subordinate Debt Ratings
MORGAN STANLEY: S&P Puts Three Debt Classes' Low Ratings on Watch
MUSCLETECH RESEARCH: Court Sets Feb. 28 to Hear Monitor's Request
NCI BUILDING: S&P Says BB Credit Rating Unaffected by Merger Plan
NES RENTAL: S&P Places B+ Corporate Credit Rating on CreditWatch
NETWORK PLUS: Hires Recovery Services as Collection Agent
NOBLE DREW: Court Okays N. Cheng's Retention as Accountants
NVIDIA CORP: Earns $98.1 Million of Net Income in Fourth Quarter
ONE PRICE: Chapter 7 Trustee Wants Weiser as Expert Witness
OREGON ARENA: Liquidating Trustee Prepares to Sue Paul Allen
PANTRY INC: Names President & CEO Peter J. Sodini Board Chairman
PAPERSWEEP INC: Creditors Must File Claims by April 4
PARKWAY HOSPITAL: Taps Loeb & Troper for Auditing Services
PERFORMANCE TRANSPORTATION: Hires Sitrick as PR Consultant
PHOTOCIRCUITS CORP: Court Approves $1MM Sale of All Estate Assets
PLUM POINT: S&P Puts Preliminary B Rating on $760 Million Debts
PRICE OIL: Creditors Committee Hires Pachulski Stang as Counsel
PRICELINE.COM INC: Earns $3.8 Million in Fourth Quarter
QUESTRON TECH: Plan Trustee Has Until April 24 to Object to Claims
RADNET MANAGEMENT: S&P Junks $60 Mil. 2nd-Lien Term Loan's Rating
SALOMON BROTHERS: Fitch Junks $8.8 Million Class M Certs.' Ratings
SATCON TECHNOLOGY: Posts $1.3 Mil. Loss in Quarter Ended Dec. 31
SHULLSBURG CREAMERY: Pursues Going-Concern Sale of Assets
SUPRESTA: Poor Credit Metrics Prompt Moody's B1 Debt Ratings
STONE ENERGY: Unable to Tap Bank Line Until Default Is Cured
TECHALT INC: Closes Agreement to Acquire Cypher Wireless
TRIMAS CORP: Weak Balance Sheet Cues Moody's Rating Downgrades
UAL CORP: Provides Status Report on Plan Consummation
US AIRWAYS: Incurs $261 Million Net Loss in Fourth Quarter
USN CORP: Equity Deficit Tops $9 Million at December 31
USN CORP: Wants to Make Changes to Confirmed Plan
VENDTEK SYSTEMS: October 31 Balance Sheet Upside-Down by $712,000
VIRGINIA DEVLIN: Case Summary & 6 Largest Unsecured Creditors
WELLCARE HEALTH: S&P Revises Outlook to Positive from Stable
WESTON NURSERIES: Has Until March 1 to Decide on Unexpired Leases
WESTON NURSERIES: Has Until March 13 to File Chapter 11 Plan
WILD OATS: Earns $3.6 Million in Quarter Ended Dec. 31
WINN-DIXIE: DIP Credit Agreement Amended on January 31
WINN-DIXIE: Court Okays Rejection of Nine Equipment Contracts
WINN-DIXIE: Wants to Reject 13 Contracts & Leases by March 9
WORLDCOM INC: Settles Dispute Over APCC's $44.9MM Unsecured Claim
* Robert Manzo Joins Capstone Advisory Group
* SEC Proposes Deregistration Process for Foreign Private Issuers
* BOOK REVIEW: Falling Through the Safety Net: Insurance Status
and Access to Health Care
*********
ACCO BRANDS: S&P Affirms BB- Rating & Says Outlook is Negative
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on office
products manufacturer ACCO Brands Corp. to negative from stable.
At the same time, Standard & Poor's affirmed all its outstanding
ratings on the Lincolnshire, Illinois-based company, including its
'BB-' corporate credit rating. Total debt outstanding at
Dec. 31, 2005, was about $942 million.
The outlook revision follows ACCO's weaker-than-expected operating
performance for its fiscal year ended December 2005 and its
revised guidance for fiscal 2006. Standard & Poor's had
previously expected improvements in operating performance through
cost savings from merger synergies and the company's continued
focus on cost containment. However, despite a 3% increase in pro
forma net sales, pro forma EBITDA declined by about 11% versus the
prior year due to:
* unfavorable pricing in certain office products categories;
* higher raw material costs; and
* double-digit increases in distribution and freight costs.
"As such, credit protection measures have weakened, and we now
believe that the company may be challenged to strengthen credit
protection measures to levels more appropriate for the current
ratings as previously expected," said Standard & Poor's credit
analyst David Kang.
ACTIVISION INC: S&P Affirms BB- Credit Rating With Neg. Outlook
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
video game publisher Activision Inc. to negative from stable,
reflecting challenges associated with the video game console
transition and the underperformance of two key titles over the
holiday season. At the same time, Standard & Poor's affirmed its
'BB-' corporate credit rating on the company. Activision has no
debt outstanding as of Dec. 31, 2005.
"The negative outlook reflects our expectation that 2006 will be a
soft year for video game publishers, including Activision," said
Standard & Poor's credit analyst Andy Liu.
The rating on Activision reflects:
-- some product lifecycle and seasonality risks;
-- its earnings concentration in key titles;
-- the hit-driven nature of the business; and
-- the highly competitive video game market.
These factors are partially offset by the company's stable of
franchise titles and its cash cushion.
The demand for current-generation console titles was weak in the
December 2005 quarter as consumers continued to wait for next-
generation consoles to become available before making significant
purchases of new titles. With Xbox 360 in very limited supply and
the launch of Sony Corp.'s PlayStation3 anticipated in mid- or
late-2006, the demand for next-generation titles was insufficient
to offset the weakness experienced by current-generation titles.
Heightened competitive pressure, which is also a function of the
console transition, led to aggressive discounting by video game
publishers. Many top-selling games were discounted to $39.99 from
$49.99. For Activision, the demand weakness associated with
console transition and the heightened competitive pressure were
compounded by the underperformance of two key titles:
* True Crime: New York City, and
* GUN.
All these factors led to a significant decrease in Activision's
profitability. In light of the projected small installed base of
next-generation consoles, Activision has reduced its release slate
and projected revenues in 2006. However, in 2007, when both
consoles are available and assuming in sufficient quantity,
Activision is likely to resume its revenue and profit growth.
ACURA PHARMA: Equity Deficit Multiplies 5x to $6.16MM at Dec. 31
----------------------------------------------------------------
Acura Pharmaceuticals, Inc. (OTC.BB-ACUR), reported a $7.1 million
net loss for the quarter ending December 31, 2005, compared to a
$2.1 million net loss for the same period in 2004.
For calendar year 2005 the Company had a net loss of $12.1 million
compared to a net loss of $70.0 million in 2004. The 2004 net
loss includes a charge of $72.5 million for amortization of
debt discount and private debt offering costs, and a gain of
$14.6 million from debt restructuring and divestment of non-
strategic assets.
As of February 1, 2006, the Company had cash and cash equivalents
of approximately $647,000. The Company estimates its current cash
reserves will be sufficient to fund the development of OxyADF(TM)
tablets and related operating expenses through mid-to-late March,
2006. To continue operating, the Company must raise additional
financing or enter into appropriate collaboration agreements with
third parties providing for cash payments to the Company. No
assurance can be given that the Company will be successful in
obtaining any financing or in securing collaborative agreements
with third parties on acceptable terms, if at all, or if secured,
that financing or collaborative agreements will provide for
payments to the Company sufficient to continue funding operations.
In the absence of financing or third-party collaborative
agreements, the Company will be required to scale back or
terminate operations or seek protection under applicable
bankruptcy laws.
A full text copy of the Company's Annual Report inform 10-K filed
with the Securities and Exchange Commission is available for free
at http://ResearchArchives.com/t/s?5bf
Acura Pharmaceuticals, Inc. -- http://www.acurapharm.com/--
together with its subsidiaries, is an emerging pharmaceutical
technology development company specializing in proprietary opioid
abuse deterrent formulation technology.
As of December 31, 2005, the Company's equity deficit widened to
$6,162,000 from a $1,085,000 deficit at December 31, 2004.
ADDISON-DAVIS: Posts $1.1 Mil. Net Loss in Quarter Ended Dec. 31
----------------------------------------------------------------
Addison-Davis Diagnostics, Inc., delivered its financial results
for the quarter ended Dec. 31, 2005, to the Securities and
Exchange Commission on Feb. 21, 2006.
During the three months ended Dec. 31, 2005, Addison-Davis
incurred a $1,189,262 net loss on zero revenues, compared to a
$520,240 net loss on $1,811 of revenue during the three months
ended Dec. 31, 2004.
While acknowledging that it failed to generate any revenue during
the quarter, the Company's management said that they are
encouraged about the Company's future prospects. Management
reports that the Company is focused on:
a) selling and marketing its Drug Stop product to the
institutional market;
b) supporting its Licensee in efforts to sell and market Drug
Stop in the over-the-counter market; and
c) taking the appropriate steps to contain general business
overhead
The Company's balance sheet at Dec. 31, 2005, showed $1,183,071 in
total assets and $3,083,724 in total liabilities, resulting in a
stockholders' deficit of $1,884,713. The Company had a $629,832
working capital deficit at Dec. 31, 2005.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?5bd
Going Concern Doubt
Armando C. Ibarra, Jr., CPAs, expressed substantial doubt about
Addison-Davis' ability to continue as a going concern after it
audited the Company's financial statements for the fiscal year
ended June 30, 2005. The auditing firm pointed to the Company's
continuing losses from operations.
Addison-Davis' former auditor, Corbin & Company, LLP, also raised
substantial doubt about the Company's ability to continue as a
going concern after auditing its financial statements for the
fiscal year ended June 30, 2004. Apart from recurring losses, the
auditing firm pointed to the Company's failure to preserve patent
rights on NICOWater(TM), which had been its sole revenue-
generating product.
About Addison-Davis
Based in Westlake Village, California, Addison-Davis Diagnostics,
Inc. -- http://www.addisondavis.com/-- offers quick response
diagnostic tests that are user friendly, produce fast simple
results and are less costly, less problematic and less time
consuming. The Company is currently focused on bringing fast and
reliable "Point-of-care" Diagnostic Testing through the use of its
patented technology to Healthcare Professionals, Hospitals,
certain branches of the Government and the Workplace environment
for drugs-of-abuse and medical conditions and diseases.
ADM TRONICS: Dec. 31 Balance Sheet Upside-Down by $3.1 Million
--------------------------------------------------------------
ADM Tronics Unlimited, Inc., delivered its financial results for
the quarter ended Dec. 31, 2005, to the Securities and Exchange
Commission on Feb. 21, 2006.
For the three months ended Dec. 31, 2005, ADM reported a $746,821
net loss, compared to a $1,682,098 net loss for the three months
ended Dec. 31, 2004.
The Company generated $470,671 of revenue for the three months
ended Dec. 31, 2005, a 41% increase versus $334,183 of revenue for
the comparable period in 2004. Revenues from the Company's
chemical activities decreased by $10,106, offset by an increase of
$146,594 in the Company's medical technology activities in the
2005 period as compared to the 2004 period. The decrease in
revenue from chemical activities primarily resulted from a
significant customer of the Company's chemical products ceasing
operations in August 2005, resulting in no orders during the
quarter ended Dec. 31, 2005.
The Company's balance sheet at Dec. 31, 2005, showed $3,277,542 in
total assets and liabilities of $6,443,681, resulting in a
stockholders' deficit of $3,166,139.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?5c1
Going Concern Doubt
Raich Ende Malter & Co. LLP expressed substantial doubt about ADM
Tronics' ability to continue as a going concern after it audited
the Company's financial statements for the fiscal year ended March
31, 2005. The auditing firm pointed to the Company's recurring
losses from operations and stockholders deficiency.
About ADM Tronics
Headquartered in Northvale, New Jersey, ADM Tronics Unlimited,
Inc., -- http://www.admtronics.com/-- produces and markets
chemical products for industrial users. The Group also
manufactures, markets and leases medical equipment and medical
devices.
AFC ENTERPRISES: Increases Share Repurchase Program to $115 Mil.
----------------------------------------------------------------
AFC Enterprises, Inc. (Nasdaq: AFCE) reported that its Board of
Directors has approved increasing its share repurchase program,
expanding the program from $100 million to $115 million, effective
immediately.
The program, which is open-ended, allows the Company to repurchase
its shares on the open market from time to time in accordance with
the requirements of the Securities and Exchange Commission.
Since AFC announced its initial share repurchase program in 2002,
the Company has repurchased an aggregate of 5.4 million shares of
common stock for approximately $100 million under this program,
including approximately 1.5 million shares of common stock for
approximately $19.4 million during 2005. The Company now has $15
million available for repurchases under the program.
As of February 22, 2006, there were 30.2 million shares of the
Company's common stock outstanding.
AFC Enterprises, Inc. -- http://www.afce.com/-- is the franchisor
and operator of Popeyes(R) Chicken & Biscuits, the world's second-
largest quick-service chicken concept based on number of units.
As of Dec. 25, 2005, Popeyes had 1,828 restaurants in the United
States, Puerto Rico, Guam and 24 foreign countries. AFC has a
primary objective to be the world's Franchisor of Choice(R) by
offering investment opportunities in its Popeyes Chicken &
Biscuits brand and providing exceptional franchisee support
systems and services.
At Oct. 2, 2005, AFC Enterprises, Inc.'s balance sheet showed a
$44.2 million stockholders' deficit compared to $140.9 million of
positive equity at Dec. 26, 2005.
AHPC HOLDINGS: Receives Nasdaq Non-Compliance Notice
----------------------------------------------------
AHPC Holdings, Inc. (Nasdaq: GLOV) reported the receipt of a
Nasdaq Staff Deficiency letter from The Nasdaq Stock Market
indicating the Company is not in compliance with Nasdaq's
requirements for continued listing because the Company's
shareholders equity amount is below the minimum requirement of
$2.5 million and, accordingly, does not comply with Marketplace
Rule 4310(c)(2)(B). The Company is currently considering its
options.
In the event that the Company is unable to deliver a plan to
achieve and sustain compliance with all Nasdaq listing
requirements that is acceptable to Nasdaq, the Company expects to
receive notification that its securities will be delisted. At
that time, the Company may appeal the Staff's decision to a Nasdaq
Listing Qualifications Panel.
There can be no assurance that the Nasdaq Listing Qualifications
Panel will decide to allow the Company to remain listed or that
any Company actions to attempt to comply with alternative listing
criteria will prevent the delisting of its common stock from the
Nasdaq SmallCap Market.
Going Concern Doubt
As reported in the Troubled Company Reporter on Oct. 26, 2005,
Grant Thornton LLP expressed substantial doubt about American
Health Products Corporation's ability to continue as a going
concern after it audited the Company's financial statements for
the fiscal years ended June 30, 2005, and 2004. The auditing firm
points to the Company's recurring losses, including the $1,151,549
net loss incurred for the year ended June 30, 2005. AHPC
Holdings, Inc., fka WRP Corporation, operates through American
Health Products, its wholly owned subsidiary.
About the Company
Headquartered in Glendale Heights, AHPC Holdings, Inc. --
http://www.ahpc.com/-- markets disposable medical examination,
foodservice and retail gloves. The Company's wholly owned
subsidiary, American Health Products Corporation, supplies branded
and private label disposable gloves to the healthcare,
foodservice, retail and industrial markets nationwide.
ALLIED HOLDINGS: CEO Hugh Sawyer Cuts Personal Salary by 15%
------------------------------------------------------------
Allied Holdings, Inc. (Pink Sheets: AHIZQ.PK) reported that its
President and Chief Executive Officer, Hugh E. Sawyer, has
volunteered to take a 15% cut in his annual salary. The salary
reduction will begin on Mar. 1, 2006.
Hugh E. Sawyer, Allied Holdings' President and Chief Executive
Officer, stated, "Our objective is to use the bankruptcy process
to lower our debt, reduce the multi-year cost increases associated
with our contract with our Teamster-represented employees in the
U.S. and address certain customer pricing issues. While progress
has been made and many of our key constituencies have already
sacrificed greatly in an effort to allow our Company to emerge
from bankruptcy, there is still work to be done. All of our
constituencies must sacrifice in a manner necessary to permit our
Company to emerge from bankruptcy."
"I recognize that the decision to reduce my annual salary by 15%
is a modest step in terms of our Company's overall cost structure,
but I believe this decision is appropriate given my commitment to
shared sacrifice and the values upon which our Company was
founded," Mr. Sawyer continued. Mr. Sawyer already contributes a
portion of the cost for his health care benefits in a manner
consistent with all other non-bargaining employees.
Details regarding 2005 total compensation will not be released
until the spring, but Mr. Sawyer stated that he would not receive
any bonus or equity compensation for 2005.
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. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor. Anthony J. Smits,
Esq., at Bingham McCutchen LLP, provides the Official Committee of
Unsecured Creditors with legal advice and Russell A. Belinsky at
Chanin Capital Partners, LLC, provides financial advisory services
to the Committee. When the Debtors filed for protection from
their creditors, they estimated more than $100 million in assets
and debts.
AMERICAN AIRLINES: Moody's Affirms Corp. Family Rating at B3
------------------------------------------------------------
Moody's Investors Service affirmed all debt ratings of AMR Corp.,
and its primary subsidiary American Airlines, Inc. -- corporate
family rating at B3 -- as well as all tranches of the Enhanced
Equipment Trust Certificates supported by payments from American
and the SGL-2 Speculative Grade Liquidity Rating. The outlook has
been changed to stable from negative.
The stable outlook reflects Moody's expectation of steadily
improving operating and financial performance during 2006
resulting primarily from yield-driven revenue growth while
maintaining control of the growth of unit costs. The company
should generate sufficient cash from operations to meet scheduled
debt maturities as well as planned capital spending without adding
additional debt.
American has had some success reducing its non-fuel costs, and
Moody's anticipates the airline will be able to control costs
given expectations of a modest volume increase. Supporting the
revenue growth expectation are the recent success in yield, and
higher traffic to international markets where the company has more
pricing power relative to its domestic markets, as well as the
company's efforts to broaden its product offerings and expand
revenue sources.
Moody's also notes that American has substantial cash on hand, and
the approximate $3.8 billion balance is adequate to cushion any
shortfall from operations for the near term debt requirements and
non-aircraft capital spending. Moody's expects American will
lower its debt by at least $1.25 billion -- the scheduled
maturities for 2006 -- while maintaining a cash balance in line
with the recently reported level. Also supporting the outlook is
American's demonstrated ability to access the capital markets with
recent bond and equity offerings.
AMR's ratings reflect its position as the world's largest
passenger airline, with a substantial international network with
particular strengths servicing Latin America and Europe.
Nonetheless, EBIT margin of 2.9% during 2005 was down somewhat
from the prior year, and the company reported a net loss of $860
million.
Higher fuel costs offset much of the cost savings achieved. As
well, American is highly leveraged, with debt to EBITDA of 11.0
times at FY 2005, which is high for its rating category. Moody's
anticipates that the leverage metrics will improve measurably
going forward as the company lowers debt with improving cash flow
from operations. American's rating could improve with sustained
net income, with an EBIT margin greater than 10%, and debt to
EBITDA approaching 7x to 8x.
According to American international ASM's are expected to increase
by approximately 4% in 2006 by increasing frequencies in existing
markets, principally China, India and Japan. To date, the company
has reported higher international bookings and yields exceeding
those of the prior year. Moody's expects continued RASM growth in
2006, in part achieved through an overall decrease to the
company's capacity. Domestic ASM's are expected to decline 4% as
American plans to eliminate service to certain low-density cities.
At the same time, measures to enhance productivity will be
expanded such as simplification of pilot scheduling, shorter
ground and taxi times at its hub airports, and seeking more cost-
efficient distribution channels, which should more than offset
some cost increases.
In affirming the SGL-2 Speculative Grade Liquidity rating, Moody's
noted that AMR reported approximately $3.8 billion in unrestricted
cash and equivalents as of Dec. 31, 2005, and that with
anticipated improvements in operating cash flows, the company
should maintain a good liquidity profile over the coming 12
months.
The company bolstered its cash balances during 2005 through a $450
million bond offering, a primary equity offering of $223 million,
and a $130 million engine-backed EETC. Moody's expects the
company to preserve a high level of cash going forward, even after
$1.2 billion in scheduled debt maturities in 2006. Capital
expenditures are expected to approximate $600 million in 2006,
less than historic levels, as American reduces its new aircraft
deliveries.
American will take delivery of two mainline aircraft in 2006, but
thereafter no scheduled mainline or regional aircraft deliveries
will occur until 2013. Although the average age of AMR's mainline
fleet is relatively high, the company is taking measures to
accelerate retirement of older aircraft such as the MD-80 and A300
series.
Additionally, the company expects to contribute approximately $250
million to its pension plans. Barring an unforeseen worsening to
the operating environment, Moody's expects that the company will
remain in compliance with all its debt covenants in the near term.
American Airlines Inc., and its parent company, AMR Corporation,
are headquartered in Fort Worth, Texas.
ANCHOR GLASS: Files First Amended Plan of Reorganization
--------------------------------------------------------
Anchor Glass Container Corporation delivered its First Amended
Plan of Reorganization and Disclosure Statement to the U.S.
Bankruptcy Court for the Middle District of Florida on Feb. 15,
2006.
Mark S. Burgess, chief executive officer of Anchor Glass Container
Corporation, discloses that on confirmation of the Amended Plan,
Reorganized Anchor Glass' total long-term outstanding debt
obligations will be $135,000,000, which consists of the New Term
Credit Facility. In addition, Anchor Glass will have available to
it a $65,000,000 New Revolving Credit Facility, a portion of which
will be drawn on or about the Effective Date to fund the payments
under the Plan.
According to Mr. Burgess, based on Anchor Glass' current level of
operations, it will have sufficient cash flow to meet its needs at
least through the period ending April 30, 2006, after taking into
account the fact that interest payments on the Senior Notes will
not be due during the pendency of the Chapter 11 Case.
A valuation analysis was not included in the papers filed with the
Bankruptcy Court last week. They will be filed at a later date,
Mr. Burgess says.
Anchor Glass proposes that the Court fix January 31, 2006, as the
date for determining which Holders of Senior Notes are entitled to
vote on the Plan. The Senior Notes Indenture Trustee will not
vote on behalf of the individual noteholders.
Classification of Claims
Anchor Glass amended its estimates of Administrative Claims, Other
Priority Claims, GE Capital Secured Claims and Other Secured
Claims against the estates:
Original Amended
Class Description Estimated Amt. Estimated Amt.
----- ----------- ------------- --------------
N/A Administrative $32,700,000 $34,735,000
Claims
1 Other Priority 500,000 160,000
Claims
3 GE Capital 9,500,000 9,659,574
Secured Claim
4 Other Secured 1,000,000 830,000
Claims
The Plan outlines this scheme for classifying claims in accordance
with 11 U.S.C. Sec. 1122:
Class Description Estimated Amt. Impairment
----- ----------- -------------- ----------
N/A Administrative $34,735,000 Unimpaired
Claims
N/A Note Purchase $125,000,000 Unimpaired
Agreement Claims
N/A Priority Tax $4,500,000 Unimpaired
Claims
1 Other Priority $160,000 Unimpaired; deemed to
Claims have accepted the Plan
2 Senior Note $368,302,778 Impaired; entitled to
Secured Claims vote
3 GE Capital $9,659,574 Unimpaired; deemed to
Secured Claim have accepted the Plan
4 Other Secured $830,000 Unimpaired; deemed to
Claims have accepted the Plan
5 General $120,000,000 Impaired; entitled to
Unsecured Claims vote
6 Common Stock Impaired; deemed to
Interests have rejected the Plan
Noteholders Will Own the Reorganized Company
The Plan proposes that holders of Class 2 Senior Note Secured
Claims will receive all shares of the New Common Stock, subject to
dilution by exercise of the New Equity Incentive Options.
Existing Securities Will Be Cancelled
Class 6 Common Stock Interest Holders will not receive nor retain
any property on account of their Common Stock Interests.
On the Effective Date, the Existing Securities of Anchor Glass
will be deemed cancelled. All of Anchor Glass' obligations under
the Existing Securities will be consequently discharged.
However, the Senior Notes Indenture will continue in effect solely
to allow a Senior Notes Representative to make the distributions
under the Plan and permit the Representative to maintain any
rights it may have for fees, costs and expenses under the Senior
Notes Indenture. In addition, the cancellation of the Senior
Notes Indenture will not impair the rights and duties under all
agreements between the Senior Notes Trustee and the beneficiaries
of the trust created.
New Securities to be Issued
Reorganized Anchor Glass will:
(a) on the Effective Date, authorize 25,000,000 shares of New
Common Stock;
(b) on the Distribution Date, issue up to 10,000,000 shares of
New Common Stock for distribution to holders of Allowed
Senior Notes Claims; and
(c) reserve for issuance the number of shares of New Common
Stock necessary to satisfy the required distributions of
options granted under the New Equity Incentive Plan.
The New Common Stock issued under the Plan will be subject to
dilution based on:
(i) the issuance of New Common Stock pursuant to the New
Equity Incentive Plan; and
(ii) any other shares of New Common Stock issued post-
emergence.
Releases
As of the Effective Date, Anchor Glass and all Holders of Claims
against Anchor Glass will be deemed to forever release, waive and
discharge all claims, demands, debts, rights, causes of action,
or liabilities then existing or thereafter arising against:
(i) the Debtor,
(ii) Reorganized Anchor Glass,
(iii) Anchor Glass' directors and officers,
(iv) the Ad Hoc Committee of Senior Noteholders,
(v) the Note Purchasers, and
(vi) the members, agents, representatives, and professionals
for the Senior Noteholders and the Note Purchasers.
A full-text copy of Anchor Glass' First Amended Plan of
Reorganization is available for free at:
http://researcharchives.com/t/s?5c2
A full-text copy of Anchor Glass First Amended Disclosure
Statement is available for free at:
http://researcharchives.com/t/s?5c3
Disclosure Statement Hearing
Judge Paskay will convene a hearing on February 28, 2006, to
consider approval of the Debtor's First Amended Disclosure
Statement.
Headquartered in Tampa, Florida, Anchor Glass Container
Corporation is the third-largest manufacturer of glass containers
in the United States. Anchor manufactures a diverse line of flint
(clear), amber, green and other colored glass containers for the
beer, beverage, food, liquor and flavored alcoholic beverage
markets. The Company filed for chapter 11 protection on Aug. 8,
2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano,
Esq., at Carlton Fields PA, represents the Debtor in its
restructuring efforts. Edward J. Peterson, III, Esq., at
Bracewell & Guiliani, represents the Official Committee of
Unsecured Creditors. When the Debtor filed for protection from
its creditors, it listed $661.5 million in assets and $666.6
million in debts. (Anchor Glass Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ANDROSCOGGIN ENERGY: Committee Taps Phoenix as Financial Expert
---------------------------------------------------------------
The Official Committee of Unsecured Creditors in Androscoggin
Energy LLC's chapter 11 case asked the U.S. Bankruptcy Court for
the District of Maine, five days prior to the hearing confirming
the Company's Plan of Reorganization, for permission to employ
Phoenix Management Services, Inc., as its financial expert, to:
1) render expert witness testimony on certain financial issues,
including the capitalization of the Debtor at the time that
Calpine Northbrook Corp. of Maine, Inc., and Calpine Eastern
Corp., contributed capital to the Debtor for which it now
asserts as an unsecured claims and the proper classification
of the Calpine claims; and
2) perform all other necessary financial expert and investment
banking services to the Committee in connection with the
Debtor's chapter 11 case.
Vincent J. Colista, a managing director and partner at Phoenix
Management, is one of the lead professionals from the Firm
performing services to the Committee. Mr. Colista charges $395
per hour for his services.
Bankruptcy Court records don't show Phoenix Management's
professionals' compensation rates.
Phoenix Management assures the Court that it does not represent
any interest materially adverse to the Debtor or its estate and
the Firm is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code and as modified by Section
1107(b).
Headquartered in Boston, Massachusetts, Androscoggin Energy LLC,
owns, operates, and maintains an approximately 150-megawatt,
natural gas-fired cogeneration facility in Jay, Maine. The
Company filed for chapter 11 protection on November 26, 2004
(Bankr. D. Me. Case No. 04-12221). Michael A. Fagone, Esq., at
Bernstein, Shur, Sawyer & Nelson represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed total assets of $207,000,000 and total
debts of $157,000,000. The Bankruptcy Court confirmed the
Debtor's Second Amended Chapter 11 Plan of Reorganization on
Feb. 15, 2006.
ASARCO LLC: 12 Debtors Want Baker Botts as Bankruptcy Counsel
-------------------------------------------------------------
Certain subsidiaries of ASARCO LLC seek authority from the U.S.
Bankruptcy Court for the Southern District of Texas in Corpus
Christi to employ Baker Botts LLP to serve as their bankruptcy
counsel. The Subsidiary Debtors' Chapter 11 cases are jointly
administered with ASARCO's case.
The Subsidiary Debtors are:
(1) Encycle, Inc.;
(2) ASARCO Consulting, Inc.;
(3) ALC, Inc.;
(4) American Smelting and Refining Company;
(5) AR Mexican Explorations, Inc.;
(6) AR Sacaton, LLC;
(7) ASARCO Master, Inc.;
(8) ASARCO Oil and Gas Company, Inc.;
(9) Bridgeview Management Company, Inc.;
(10) Covington Land Company;
(11) Government Gulch Mining Company, Limited; and
(12) Salero Ranch, Unit III, Community Association, Inc.
Baker Botts serves as bankruptcy counsel to ASARCO. Hence, Baker
Botts is familiar with the complex financial affairs and business
operations of ASARCO and its entire network of subsidiaries.
Thomas L. Aldrich, the Subsidiary Debtors' Officer, contends
that, if the Subsidiary Debtors are not permitted to engage Baker
Botts, they will be deprived of the economics and efficiencies of
utilizing counsel who possess a wealth of accumulated knowledge
and information.
Baker Botts will:
(a) assist the Subsidiary Debtors in exploring restructuring
alternatives and developing and implementing a
reorganization strategy;
(b) develop, negotiate, and promulgate a Chapter 11 plan of
reorganization and disclosure statement for the Subsidiary
Debtors;
(c) advise the Subsidiary Debtors with respect to their rights
and obligations as debtors and other areas of bankruptcy
law;
(d) protect and preserve the Subsidiary Debtors' estates,
including, the prosecution, defense, negotiations and
prosecutions of all actions on filed for or against the
Subsidiary Debtors and their estates;
(e) prepare all necessary applications, motions, answers,
orders, briefs, reports and other papers in connection
with the administration of their estates;
(f) represent the Subsidiary Debtors at all hearings and
proceedings;
(g) perform all other necessary legal services in connection
with their Chapter 11 cases; and
(h) render general, non-bankruptcy legal services as the
Subsidiary Debtors may from time to time request,
including, without limitation, environmental, corporate,
real estate, litigation, tax, and other matters.
Given the fact that most of the Subsidiary Debtors have no assets
and current operations, compensation for Baker Botts' services
will be paid by ASARCO.
Baker Botts will not keep separate time entries for each of the
Subsidiary Debtors from the time records with services provided
to ASARCO. Baker Botts will seek compensation for services
provided to both ASARCO and the Subsidiary Debtors by filing a
single, combined fee application.
Baker Botts will be compensated on its standard hourly basis,
plus reimbursement of expenses charges incurred:
Professional Hourly Rate
------------ -----------
Partners $375-$700
Associates $195-$370
Paralegals $120-$185
Paralegal Clerks $50-$100
Jack L. Kinzie, Esq., at Baker Botts LLP, in Dallas, Texas,
assures the Court that the firm does not represent any interest
adverse to the Subsidiary Debtors, and is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code.
Mr. Kinzie discloses that, in matters relating to intercompany
claims, Baker Botts will not represent the Subsidiary Debtors in
the liquidation of any potential claim held by or against ASARCO,
or the determination of the priority status of any claim.
Instead, co-counsel with Baker Boots will handle any matters
related to any intercompany claim.
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. Lehman Brothers Inc. provides the
ASARCO with financial advisory services and investment banking
services. Paul M. Singer, Esq., James C. McCarroll, Esq., and
Derek J. Baker, Esq., at Reed Smith LLP give legal advice to
the Official Committee of Unsecured Creditors and David J.
Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. 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 proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 215/945-7000).
ASARCO LLC: Subsidiary Panel & FCR Want Legal Analysis as Advisor
-----------------------------------------------------------------
As part of ASARCO LLC and its debtor-affiliates' reorganization
efforts, they hired Hamilton, Rabinovitz & Alschuler, Inc., to
provide them consulting services in relation to asbestos and
silica personal injury claims.
The Official Committee of Unsecured Creditors for the Asbestos
Subsidiary Debtors and Robert C. Pate, the legal representative
for future asbestos personal injury claimants, see a need for a
similar consultant. Hence, the Subsidiary Committee and the
Futures Representative seek authority from the U.S. Bankruptcy
Court for the Southern District of Texas in Corpus Christi to
retain Legal Analysis Systems, Inc., as their asbestos claims
estimation consultant.
The Subsidiary Committee and FCR believe that Legal Analysis'
services are both necessary and appropriate and will assist the
Subsidiary Committee and FCR in the negotiation, formulation,
development, and implementation of a plan of reorganization.
Legal Analysis is a firm noted for its expertise and experience
in providing expert consultation and advice regarding estimation
liabilities, development of procedures and facilities, and
settlement of asbestos claims and other matters involving the
valuation and treatment of asbestos bodily injury claims, Debra
L. Innocenti, Esq., at Oppenheimer, Blend, Harrison & Tate, Inc.,
in San Antonio, Texas, tells the Court.
Legal Analysis will:
(a) provide estimation of the number and value of present and
future asbestos personal injury claims;
(b) develop claims procedures to be used in the development of
financial models of payments and assets of a claims
resolution trust;
(c) review and analyze the Debtors' claims database and review
and analyze the Debtors' resolution of asbestos claims;
(d) evaluate reports and opinions of experts and consultants
retained by other parties to the Debtors' bankruptcy
proceedings;
(e) evaluate and analyze proposed proofs of claim and bar
dates and analyze data from the proofs of claim;
(f) provide quantitative analyses of other matters related to
asbestos bodily injury claims as may be requested by the
Subsidiary Committee and FCR; and
(g) provide testimony on matters required by the Subsidiary
Committee and FCR.
Legal Analysis will be paid on an hourly basis in accordance with
its hourly rates:
Professional Hourly Rate
------------ -----------
Mark A. Peterson $700
Daniel Relles 425
Mark A. Peterson, president of Legal Analysis Systems, Inc.,
discloses that Legal Analysis has performed work in various other
bankruptcy matters, and many of the parties-in-interest in the
current bankruptcy case may have had some involvement in some or
all of those prior cases. Nonetheless, he assures the Court that
the firm is a "disinterested person" within the meaning of
Section 101(14) of the Bankruptcy Code; holds no interest adverse
to the Debtors and their estates; and has no connection to the
Debtors, their creditors or their related parties.
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. Lehman Brothers Inc. provides the
ASARCO with financial advisory services and investment banking
services. Paul M. Singer, Esq., James C. McCarroll, Esq., and
Derek J. Baker, Esq., at Reed Smith LLP give legal advice to
the Official Committee of Unsecured Creditors and David J.
Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. 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 proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 215/945-7000).
ATA AIRLINES: Court Approves Sabre Restructuring Agreement
----------------------------------------------------------
Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis,
Indiana, recounts that ATA Airlines, Inc., and Sabre Inc., are
parties to:
(1) a Distribution Agreement, which is a participating
carrier agreement dated April 30, 1992;
(2) a Hosting Agreement, which is an information technology
services agreement dated October 2, 2003; and
(3) a Software License, which is a master agreement for
software license and professional services dated June 15,
2000.
As part of its restructuring efforts, the Debtor developed a new
business plan that contemplates a scheduled service business
smaller than the scheduled service business existing when the
Agreements were originally executed.
After extensive negotiations, the Debtor and Sabre entered into a
restructuring agreement, which reflects the Debtor's current
needs.
The Restructuring Agreement:
(a) provides for several amendments to the Agreements that
will substantially reduce the Debtor's costs;
(b) establishes the cure that the Debtor will pay to Sabre in
conjunction with the Debtor's assumption of the Amended
Agreements as well as for the payment by the Debtor of the
cure to Sabre over a period of time; and
(c) reduces the Debtor's costs going forward by eliminating
its obligation to continue to use and pay for products and
services that are no longer necessary or useful to its
operations.
Sabre has agreed to reduce certain minimum monthly fees, resulting
in substantial savings to the Debtor, Mr. Nelson relates.
The payment of the cure amount will also fully satisfy all of
Sabre's filed or scheduled claims.
In exchange, the Debtor has agreed to extend the term of the
Hosting Agreement and to a higher charge for one aspect of the
Agreements.
Accordingly, Judge Basil H. Lorch of the U.S. Bankruptcy Court for
the Southern District of Indiana approves the Restructuring
Agreement, and authorizes the Debtor to assume the Amended
Agreements.
The Restructuring Agreement is filed under seal.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. Daniel H.
Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland,
Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the
Official Committee of Unsecured Creditors. When the Debtors filed
for protection from their creditors, they listed $745,159,000 in
total assets and $940,521,000 in total debts. (ATA Airlines
Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ATA AIRLINES: Court Okays to Use ATSB Lenders' Cash Collateral
--------------------------------------------------------------
As reported in the Troubled Company Reporter on Feb. 13, 2006, ATA
Airlines, Inc., its debtor-affiliates and the ATSB Lenders
stipulate that the carrier may use the ATSB Lenders' cash
collateral and other collateral until the occurrence of the Plan
Effective Date.
Currently, the Reorganizing Debtors are:
* seeking to negotiate definitive documentation for the Exit
Facility and other transactions contemplated in connection
with the Reorganizing Debtors' emergence from the Chapter 11
cases; and
* preparing to consummate the Amended Plan and cause the
occurrence of the Effective Date.
The Debtors covenant with the ATSB Lenders to maintain:
(i) at least $35,000,000 in Available Cash during the
Extension Period; and
(ii) no less than the greater of the Available Cash amount or
90% of the Available Cash amount forecasted at each week
end in the Debtors' cash forecast:
Week Ending Available Cash 90% of Available Cash
----------- -------------- ---------------------
02/03/06 $41,502,353 $37,352,117
02/10/06 $41,843,142 $37,658,828
02/17/06 $33,618,989 $35,000,000
02/24/06 $36,924,044 $35,000,000
03/3/06 Not Applicable $35,000,000
* * *
The U.S. Bankruptcy Court for the Southern District of Indiana put
its stamp of approval on the stipulation authorizing the
Reorganizing Debtors to use the ATSB Lenders' cash collateral and
other collateral until the occurrence of the Plan Effective Date.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. Daniel H.
Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland,
Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the
Official Committee of Unsecured Creditors. When the Debtors filed
for protection from their creditors, they listed $745,159,000 in
total assets and $940,521,000 in total debts. (ATA Airlines
Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
AXCESS INT'L: December 31 Balance Sheet Upside-Down by $4.59 Mil.
-----------------------------------------------------------------
AXCESS International Inc. reported it financial results for the
fourth quarter and fiscal year ended Dec. 31, 2005.
For the three months ended Dec. 31, 2005, AXCESS International's
Radio Frequency Identification (RFID) systems revenues increased
to $417,751 from RFID revenues of $151,080 for the same period in
2004. For the fiscal year ended Dec. 31, 2005, RFID revenues
increased to $986,377 from revenues of $772,475 in 2004. The
increase in revenues in the fourth quarter and on an annual basis
is due to the Company gaining traction in the active RFID market
and continued improvement in technology and customer system
implementation.
For the fiscal year ended Dec. 31, 2005, AXCESS' net loss
decreased to $3,256,054 from a net loss of $3,416,554 for the year
ended Dec. 31, 2004.
Financing Transactions
In December 2005, AXCESS closed on a $813,021 preferred stock
offering for 956,495 shares (that pay no dividends) and 956,495
five-year warrants to purchase the Company's common stock at $1.50
per share. A large portion of that funding came from its largest
shareholder group, including Amphion Innovations PLC (AMP.L), a
company that creates, operates, and finances technology companies
and continues to support AXCESS and its progress.
Going Concern Doubt
Hein & Associates LLP expressed substantial doubt about AXCESS
International's ability to continue as a going concern after
reviewing the Company's financial statements for the years ended
December 31, 2004 and 2003. "AXCESS' recurring losses from
operations and resulting continued dependence on external
financing raise substantial doubts about its ability to continue
as a going concern," the auditing firm said. "If the Company is
unable to generate profitable operations or raise additional
capital, it may be forced to seek protection under federal
bankruptcy laws," management's warned.
For the fiscal year ended Dec. 31, 2005, AXCESS International
reported total assets of $932,979 and total liabilities of
$5,520,301.
Headquartered in Dallas, Texas, AXCESS International Inc. --
http://www.axcessinc.com-- through its proprietary technology, is
a manufacturer of advanced physical security and enterprise asset
management systems that can automatically locate, identify, track,
monitor, count, and protect people, property and vehicles. The
purpose of the systems is: to reduce loss and liability; to
increase the efficiency of a client's employees; and to improve
the management of personal property, logistics, and facilities.
Axcess utilizes two patented and integrated technologies: battery-
powered wireless tagging called Active-Radio Frequency
Identification (RFID) and network based streaming digital video
(IPTV).
As of Dec. 31, 2005, AXCESS International's stockholders' deficit
widened to $4,587,322 from a deficit of $4,581,010 at Dec. 31,
2004.
BIOGEN IDEC: S&P Lifts Sr. Unsecured Debt Rating to BBB from BB+
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit and
senior unsecured debt ratings on biopharmaceutical company Biogen
Idec Inc. to 'BBB' from 'BB+'. The outlook is stable.
"The upgrade reflects the continued strong performance of a key
product in the face of newer competition, exceptional growth in a
co-promoted product, and the financial capacity of a now
essentially debt-free balance sheet," said Standard & Poor's
credit analyst David Lugg. "Also, concerns that the marketing
withdrawal of the company's promising multiple sclerosis (MS) drug
Tysabri would be disruptive to management and operations have not
been borne out."
The ratings on Biogen Idec reflect the biopharmaceutical company's
leading positions in the treatment of cancer and MS, as well as
its strong financial profile. These factors are partially offset
by the company's high revenue dependence on only two drugs and its
relatively thin near-term product pipeline.
Formed in late 2003 through the all-equity merger of Biogen Inc.
and Idec Pharmaceutical Corp., Cambridge, Massachusetts-based
Biogen Idec is the third-largest biopharmaceutical company in the
U.S. based on sales. It specializes in the development of
monoclonal antibody-based cancer treatments and autoimmune disease
treatments. The company currently has four marketed products:
* Avonex, for the treatment of MS;
* Rituxan and Zevalin, both for the treatment of B-cell
non-Hodgkin's lymphoma; and
* Amevive, for the treatment of psoriasis.
Of these, only Avonex and Rituxan have achieved significant market
success. Indeed, Biogen Idec is seeking to divest Amevive.
The company is expected to continue turning in solid operational
performance. EBITDA margins are roughly 40%, and free cash flow
is estimated to be in excess of $400 million for 2005. Return on
capital is depressed because of the all-equity merger.
Financially, with the company's repayment of the majority of its
LYONs issue, Biogen Idec is virtually unleveraged.
Management's growth strategy now places a greater emphasis on
externally generated growth, in particular the licensing or
acquisition of products or companies. In 2005, the company
licensed three drugs early in clinical development from Protein
Design Laboratories Inc. (unrated) for total consideration of $100
million. It is likely that this activity will accelerate and may
require debt financing. Standard & Poor's anticipates that any
borrowings utilized to achieve growth objectives will be moderate
and that credit measures will remain consistent with an
investment-grade rating.
BOYD GAMING: P. Chakmak Replacing CFO E. Landau Upon Retirement
---------------------------------------------------------------
Boyd Gaming Corporation's (NYSE: BYD) long-time Chief Financial
Officer Ellis Landau has informed the Company that he intends to
retire on May 31, 2006.
Mr. Landau, 62, has been the Company's CFO since he joined Boyd
Gaming in 1990, where he led or played a significant role in the
Company's financial, acquisition, and development strategies and
endeavors during that time.
The Company said that Paul Chakmak, currently Senior Vice
President for Finance and Treasurer, will be promoted to succeed
Landau as Chief Financial Officer and Treasurer on June 1, 2006.
Bill Boyd, Chairman and Chief Executive Officer of Boyd Gaming
said, "Ellis has played a tremendous role in the growth of our
Company over the past 16 years as we moved from a small private
company to one of the leading companies in our industry today. I
know how respected he is both inside Boyd Gaming and in the
financial community at large for both his financial and business
skills and for his integrity. I am really pleased that he has
been on our team for these many years, and speak for so many
others at Boyd Gaming in wishing him well as he enjoys his years
ahead."
Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) --
http://www.boydgaming.com/-- is a leading diversified owner and
operator of 19 gaming entertainment properties located in Nevada,
New Jersey, Mississippi, Illinois, Indiana and Louisiana. The
Company is also developing Echelon Place, a world class
destination on the Las Vegas Strip, expected to open in early
2010. Additionally, the Company was recently recognized by Forbes
Magazine as the best managed company in the category of Hotels,
Restaurant and Leisure.
* * *
As reported in the Troubled Company Reporter on Jan. 30, 2006,
Standard & Poor's Ratings Services assigned a 'B+' rating to Boyd
Gaming Corp.'s proposed $250 million senior subordinated notes due
2016. At the same time, Standard & Poor's affirmed its existing
ratings on the Las Vegas-based casino operator, including its 'BB'
issuer credit rating. S&P said the outlook is stable.
BUFFALO MOLDED: Wants McDonald Hopkins as Substitute Counsel
------------------------------------------------------------
Buffalo Molded Plastics, Inc., dba Andover Industries asks the
Honorable Thomas P. Agresti of the U.S. Bankruptcy Court for the
Western District of Pennsylvania in Erie for permission to employ
McDonald Hopkins, Co., L.P.A.
The Debtor wants to substitute McDonald Hopkins for Lindahl Gross
Lievois, P.C., its current bankruptcy counsel.
McDonald Hopkins purchased substantially all of the assets of
Lindahl Gross. Nicole C. Amey, Esq., at McDonald Hopkins in
Bingham, Michigan, relates that, effective Jan. 1, 2006, employees
previously employed by Lindahl Gross, including shareholders and
attorneys, are now employed by McDonald Hopkins.
Stephen M. Gross, Esq., at Lindahl Gross in Bingham, Michigan,
said that the substitution will not cause any delay in its
bankruptcy case because the particular attorneys responsible for
the Debtor's representation will continue to do so.
Papers filed with the Court did not indicate the hourly rate the
professionals will be paid.
Headquartered in Andover, Ohio, Buffalo Molded Plastics, Inc., dba
Andover Industries -- http://www.andoverplastics.com/--
manufactures rocker panels, grilles, pillars and body side molding
components for General Motors Corp. and DaimlerChrysler. The
Company filed for chapter 11 protection on Oct. 21, 2004 (Bankr.
W.D. Pa. Case No. 04-12782). David Bruce Salzman, Esq., at
Campbell & Levine, LLC, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its
creditors, it estimated assets and debts in the $10 million to $50
million range. David W. Lampl, Esq., at Leech Tishman Fuscaldo &
Lampl, LLC, represents the Official Committee of Unsecured
Creditors in the Debtor's chapter 11 case.
BROOKLYN HOSPITAL: Court Fixes April 21 as Claims Bar Date
----------------------------------------------------------
The United States Bankruptcy Court for the Eastern District of
New York, set Apr. 21, 2006, at 4:00 p.m., as the deadline for all
creditors owed money by The Brooklyn Hospital Center and its
debtor-affiliate Caledonian Health Center, Inc., on account of
claims arising prior to Sept. 30, 2005, to file their proofs of
claim.
Creditors must file written proofs of claim on or before the
April 21 Claims Bar Date and those forms must be delivered to:
Clerk of the U.S. Bankruptcy Court
Eastern District of New York
The Brooklyn Hospital Center Claims Processing
271 Cadman Plaza East, Suite 1595
Brooklyn, New York 11201
Headquartered in Brooklyn, New York, The Brooklyn Hospital Center
-- http://www.tbh.org-- provides a variety of inpatient and
outpatient services and education programs to improve the well
being of its community. The Debtor, together with Caledonian
Health Center, Inc., filed for chapter 11 protection on Sept. 30,
2005 (Bankr. E.D.N.Y. Case No. 05-26990). Lawrence M. Handelsman,
Esq., and Eric M. Kay, Esq., at Stroock & Stroock & Lavan LLP
represent the Debtors in their restructuring efforts. Glenn B.
Rice, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.,
represents the Official Committee of Unsecured Creditors.
Clifford A. Zucker, CPA, a member at J.H. Cohn LLP, provides the
Debtors with accounting and financial advisory services; the
Committee retained Alvarez & Marsal, LLC, as its financial
advisor. When the Debtors filed for protection from their
creditors, they listed $233,000,000 in assets and $337,000,000 in
debts.
CALPINE CORP: Construction Finance Wants Waiver from Noteholders
----------------------------------------------------------------
Calpine Construction Finance Company, L.P. and CCFC Finance Corp.
commenced a consent solicitation, for holders of record as of
Feb. 21, 2006, to seek a waiver under the indenture governing
their $415,000,000 principal amount of Second Priority Senior
Secured Floating Rate Notes due 2011 and that CCFC is requesting a
similar waiver from the lenders under the credit and guarantee
agreement governing its $385,000,000 First Priority Senior Secured
Institutional Term Loans due 2009.
The proposed waivers would waive certain existing defaults under
the Credit Agreement and Indenture that occurred following the
filing by Calpine Corporation (OTC Pink Sheets: CPNLQ), the
Company's ultimate parent, and certain of Calpine Corporation's
controlled subsidiaries, for bankruptcy on Dec. 20, 2005.
The defaults under the Credit Agreement and Indenture resulted
from the failure of one of Calpine Corporation's controlled
subsidiaries to make payments to CCFC under a gas sale and power
purchase agreement.
Obtaining both waivers would, among other things, have the effect
of permitting CCFC to make certain distributions to CCFC Preferred
Holdings, LLC, its indirect parent, to enable CCFCP to pay the
semi-annual dividend on its redeemable preferred shares.
With respect to the Indenture, a waiver agreement will be executed
following receipt by the Company of the consent of at least a
majority in aggregate principal amount of outstanding Notes. With
respect to the Credit Agreement, a similar waiver agreement will
be executed following receipt by CCFC of the consent of lenders
holding more than 50% of the aggregate outstanding Term Loans.
The effectiveness of each of the waivers is conditioned, among
other things, upon the effectiveness of the other. The waivers
will be effective immediately upon satisfaction of the conditions
precedent to their effectiveness, which may occur prior to the
expiration of the consent solicitation and request for waiver
under the Credit Agreement. Consents given in the consent
solicitation may be revoked at any time prior to the effectiveness
of the waiver under the Indenture, but not thereafter.
Upon their effectiveness, the respective waiver agreements will
implement the waivers for all holders of the Notes and lenders
under the Term Loans whether or not they provided their consent.
The consent solicitation under the Indenture and waiver request
under the Credit Agreement will expire at 5:00 p.m., New York City
time, on Mar. 3, 2006, unless extended.
The consent solicitation may be amended, extended or terminated,
at the option of the Company, as set forth in the solicitation
letter and consent form from the Company. For a complete
statement of the terms and conditions of the consent solicitation,
holders of the Notes should refer to the solicitation letter.
The Company has retained Merrill Lynch & Co. to serve as
Solicitation Agent for the consent solicitation. Global
Bondholder Services Corporation will act as Information Agent in
connection with the consent solicitation. Questions concerning
the terms of the consent solicitation, and requests for copies of
the solicitation letter, the consent form or other related
documents should be directed to the Information Agent by calling
866-736-2200. Wilmington Trust Company will act as Tabulation
Agent. Requests for assistance in delivering consents should be
directed to the Tabulation Agent at 302-636-6181.
Goldman Sachs Credit Partners L.P. is the administrative agent
under the Credit Agreement. The administrative agent will be
contacting lenders under the Credit Agreement in connection with
CCFC's request for the waiver.
About Calpine Construction Finance Company L.P.
CCFC is an indirect subsidiary of Calpine Corporation. It was
formed to develop, own and operate power generating facilities and
currently owns and operates six core natural gas-fired combined-
cycle facilities, which have a combined estimated peak capacity of
3,667 megawatts and a combined estimated nominal capacity of 3,347
megawatts. The facilities are the 594-megawatt Brazos Valley
project in Thompsons, Texas; the 642-megawatt Hermiston project
near Hermiston, Oregon; the 751-megawatt Magic Valley project near
Edinburg, Texas; the 609-megawatt Osprey project near Auburndale,
Florida; the 543-megawatt Sutter project near Yuba City,
California; and the 528-megawatt Westbrook project near Westbrook,
Maine. CCFC Finance Corp. is an indirect subsidiary of Calpine
Corporation that was formed solely to act as co-issuer of the
Notes. A major power company, Calpine Corporation supplies
customers and communities with electricity from clean, efficient,
natural gas-fired and geothermal power plants.
About Calpine Corporation
Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities with
electricity from clean, efficient, natural gas-fired and
geothermal power plants. Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces. Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services. The Company filed for chapter 11 protection on Dec. 20,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri,
Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert
G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in
their restructuring efforts. Michael S. Stamer, Esq., at Akin
Gump Strauss Hauer & Feld LLP, represents the Official Committee
of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed
$26,628,755,663 in total assets and $22,535,577,121 in total
liabilities.
CANWEST MEDIAWORKS: Moody's Confirms Sr. Subor. Bond Rating at B2
-----------------------------------------------------------------
Moody's Investors Service confirmed the Ba3 Corporate Family
Rating and B2 Senior Subordinate rating of CanWest MediaWorks
Inc., and changed the outlook to negative. Moody's also withdrew
CanWest's senior secured and senior unsecured ratings as
previously rated debt has been repaid and Moody's has not been
requested to rate CanWest's new bank facility.
In September 2005, Moody's placed the ratings of CanWest under
review for possible upgrade following the company's decision to
sell a minority interest in its Canadian newspaper and interactive
media assets. The confirmation of CanWest's Ba3 Corporate Family
Rating reflects a more modest debt reduction and weaker operating
results than Moody's expected; Canwest raised about $100 million
less in equity than expected and their recently announced Canadian
and Australian broadcast operations underperformed Moody's
expectations.
Moody's expects poor Canadian broadcast segment results for the
next two years, moderating results for Network Ten in Australia,
margin pressure in the newspaper segment, and increasing capital
expenditures to keep credit metrics weak for the rating category,
despite likely modest improvement through 2007. The Corporate
Family Rating is supported by CanWest's significant market
positions in Canadian newspaper publishing, Canadian TV
broadcasting and Australian TV broadcasting, the divisibility and
salability of Canwest's diverse and largely publicly-traded asset
mix, as well as management's continued commitment to further
reduce debt. The rating is constrained, however, by Moody's
expectation of weak credit metrics for the rating in 2007. The
negative outlook reflects those expected weak metrics.
As the company has become organizationally more complex, with all
assets except Canadian TV and the National Post newspaper now only
partially owned, the Retained Cash Flow and Free Cash Flow metrics
become relatively more important as they are the only ones to
reflect Canwest's minority interest distributions. By 2007,
Moody's expects Retained Cash Flow/Debt of 11% and Free Cash
Flow/Debt of just 4%, both after Moody's standard adjustments.
The ratings may be considered for a downgrade if CanWest is unable
to improve upon these expectations, towards mid-teens and mid-
single digits respectively. This would likely be caused by an
inability to restore the Canadian broadcasting business to levels
of profitability consistent with its peers and its track record,
or if it incurs debt for acquisitions. The ratings would be
considered for an upgrade if the company is able to achieve
sustainable free cash flow/debt towards the upper single digits
and retained cash flow/debt in the upper teens, most likely caused
by a strong improvement in the company's Canadian broadcasting
segment and the sale of other non-strategic assets to reduce debt.
Moody's is concerned that CanWest's current lack of competitive
Canadian television shows might take a number of years to fix, and
may involve increased programming costs which could further
pressure margins. At the same time, viewership continues to
migrate from conventional TV towards specialty channels, where
Canwest has only a minor market position. Moody's notes, however,
that Canwest has in the past demonstrated market leadership in
Canadian TV broadcasting, along with the disproportionate cash
flows associated with it, and it is possible that they may do so
again. It is also likely that Canwest will need to incur higher
capital expenditures for high definition broadcasting.
Moody's believes that the company's Canadian newspaper business
will continue to grow in the low single digit range, although
Canwest, along with its Canadian newspaper competitors, will face
a continuation of the margin pressure of the last few years,
caused by a continuing decline in circulation as readers migrate
to electronic media.
Moody's currently expects relatively modest consolidated free cash
flow generation to limit significant reduction in debt, absent
further asset disposals.
The senior subordinated rating is confirmed at two notches below
the Corporate Family Rating due to the subordinated nature of its
position against both operating company debt and the senior
secured debt at the company itself. Moody's estimates that
approximately 70% of CanWest's consolidated debt is structurally
or legally superior to the company's remaining senior subordinated
debt issue of CN$937 million.
Outlook Actions:
Issuer: CanWest MediaWorks Inc.
* Outlook, Changed To Negative From Rating Under Review
Confirmations:
Issuer: CanWest MediaWorks Inc.
* Corporate Family Rating, Confirmed at Ba3
* Senior Subordinated Regular Bond/Debenture, Confirmed at B2
Withdrawals:
Issuer: CanWest MediaWorks Inc.
* Senior Secured Bank Credit Facility, Withdrawn, previously
rated Ba2
CanWest MediaWorks Inc., is a communications holding company based
in Winnipeg, Manitoba Canada, with interests in TV, radio and
publishing operations in Canada, Australia, New Zealand, the
Republic of Ireland, Israel, Turkey and the UK.
CARRINGTON MORTGAGE: Moody's Rates Class M-10 Certificates at Ba1
-----------------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by Carrington Mortgage Loan Trust, Series
2006-NC1 and ratings ranging from Aa1 to Ba1 to the subordinate
certificates.
The securitization is backed by New Century originated adjustable-
rate and fixed-rate sub-prime mortgage loans. The ratings are
based primarily on the credit quality of the loans, and on the
protection from subordination, overcollateralization and excess
spread. Moody's expects collateral losses to range from 4.40% to
4.90%.
New Century Mortgage Corporation will service the loans. Moody's
has assigned New Century Mortgage Corporation its servicer quality
rating as a primary servicer of subprime loans.
Actions taken are:
Issuer: Carrington Mortgage Loan Trust, Series 2006-NC1
* Class A-1, Assigned Aaa
* Class A-2, Assigned Aaa
* Class A-3, Assigned Aaa
* Class A-4, Assigned Aaa
* Class M-1, Assigned Aa1
* Class M-2, Assigned Aa2
* Class M-3, Assigned Aa3
* Class M-4, Assigned A1
* Class M-5, Assigned A2
* Class M-6, Assigned A3
* Class M-7, Assigned Baa1
* Class M-8, Assigned Baa2
* Class M-9, Assigned Baa3
* Class M-10, Assigned Ba1
CASE NEW HOLLAND: Moody's Rates $350 Mil. Senior Notes at Ba3
-------------------------------------------------------------
Moody's Investors Service has assigned a Ba3 rating to the
$350 million of senior notes issued by Case New Holland Inc.,
a 100%-owned subsidiary of CNH Global N.V. The notes are
unconditionally guaranteed by CNH, certain direct and indirect
domestic subsidiaries of Case, and certain direct and indirect
non-domestic subsidiaries of CNH. Proceeds will be used to
refinance maturing debt. The rating outlook is negative.
The Ba3 rating and negative outlook reflect the ongoing
difficulties that CNH has faced in achieving a fully effective
integration of the Case and New Holland brands, and the likely
softening in agricultural equipment markets during 2006. Although
the company has had a degree of success in integrating the design
and manufacturing components of the two businesses, it continues
to face important challenges, particularly in the area of
strengthening its dual-brand marketing strategy and it global
dealer network.
The company must also continue to improve operating efficiencies
by reducing purchasing costs and further streamlining its global
manufacturing footprint. As a result of these ongoing challenges,
CNH's operating performance and return measures continue to under
perform relative to its peers, its market share has eroded, and
its debt protection measures remain weak for the Ba3 rating level.
In order to stabilize its position at the current rating, CNH will
need to capitalize on recent reorganization initiatives designed
to better position the Case and New Holland product offerings
relative to competitors and to stabilize its share position. In
addition, it will be important for the company to continue
strengthening its credit metrics from their currently weak levels.
The rating agency would view it positively if credit metrics
demonstrated improvement from year-end 2005 levels that
approximated the following: operating margin from 4.4% to 5.5%;
interest coverage from just over 1x to a level in excess of 2x;
and a reduction in debt/EBITDA from 8x to a level approximating
6x.
CNH Global N.V., headquartered in the Netherlands, is a leading
global producer of agricultural and construction equipment. Case
New Holland Inc., headquartered in Lake Forest, Illinois, is a
wholly owned subsidiary of CNH., and indirectly through its
subsidiaries, owns substantially all of the US assets of CNH.
CDC MORTGAGE: S&P Downgrades Rating on Class B Debt to B from BB
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings to 'B' from
'BB' on class B from CDC Mortgage Capital Trust 2001-HE1 and class
B-2 from CDC Mortgage Capital Trust 2002-HE2. Both ratings remain
on CreditWatch with negative implications.
The lowered ratings reflect actual and projected credit support
percentages that are insufficient to maintain the previous
ratings. Excess interest has been insufficient to cover realized
losses for both series. During the past 12 months, average
monthly realized losses for series 2001-HE1 were $121,708, which
is 44.85% more than the average monthly excess interest of $84,026
generated during the period.
Average monthly realized losses for series 2002-HE2 were $344,404
for the same period, which is 78.79% more than the average monthly
excess interest of $192,632. Overcollateralization levels for
both series are below their targets because overcollateralization
is being used to cover losses.
The ratings on the two downgraded classes remain on CreditWatch
negative because of the additional projected losses expected to
result from high delinquencies. As of the January 2006
distribution date, total delinquencies for series 2001-HE1 were
45.08%, with 25.79% categorized as seriously delinquent (90-plus
days, foreclosure, and REO); for series 2002-HE2, total
delinquencies were 38.31%, with 19.1% categorized as seriously
delinquent.
Standard & Poor's will continue to closely monitor the performance
of these transactions. If the delinquent loans translate into
realized losses that continue to outpace excess interest, the
ratings on these classes are likely to be cut to 'CCC' or lower,
depending on the size of the losses and the remaining credit
support. If losses are considerably lower than our projections,
the current 'B' ratings are likely to be affirmed.
The collateral for all of the transactions consists of pools of
fixed- and adjustable-rate mortgage loans secured by first liens
on one- to four-family residential properties.
Ratings lowered and remaining on creditwatch negative:
CDC Mortgage Capital Trust
Rating
Series Class To From
------ ----- -- ----
2001-HE1 B B/Watch Neg BB/Watch Neg
2002-HE2 B-2 B/Watch Neg BB/Watch Neg
CENTENNIAL COMMS: Updates Financial Outlook for FY Ending May 31
----------------------------------------------------------------
Centennial Communications Corp. (NASDAQ: CYCL) updated its
financial outlook for the 2006 fiscal year ending May 31, 2006.
For the 2006 fiscal year, the Company now expects consolidated
adjusted operating income (AOI) from continuing operations between
$350 million and $360 million, including an approximately
$9 million startup loss related to its recent launch of service in
Grand Rapids and Lansing, Michigan. Centennial also now
anticipates consolidated capital expenditures of approximately
$150 million for fiscal 2006.
The Company is adjusting its fiscal 2006 outlook to reflect
several operating trends, including weaker than expected
subscriber growth in its Caribbean wireless segment resulting in
lower revenues and AOI. Centennial expects postpaid average
revenue per user (ARPU) in Puerto Rico to decline below $70 for
the fiscal third quarter due to lower access and airtime revenue.
In addition, AOI continues to be pressured by higher customer
acquisition costs associated with stronger than expected customer
activations in U.S. wireless, as well as higher costs related to
increased minutes-of-use and increased equipment expense resulting
from GSM handset upgrades.
"We took many important steps during 2005 to improve an already
strong competitive position in each of our local markets, and are
beginning to see good progress as we measure the early impact of
these initiatives," said Michael J. Small, Centennial's chief
executive officer. "With our network replacement and upgrade
complete in Puerto Rico, the reach, reliability and capabilities
of our network are once again proving to be an important
competitive differentiator as we deliver next-generation services.
We also reorganized our customer-facing organizations in Puerto
Rico and launched new markets in our Midwest footprint to support
renewed U.S. subscriber growth. We are confident that our local
market strategy remains the right one."
In U.S. wireless, Centennial expects to grow postpaid subscribers
by approximately 20,000 for the fiscal third quarter ending
February 28, 2006, compared to a loss of 1,600 postpaid
subscribers during the year-ago quarter. In Caribbean wireless,
the Company does not expect to add postpaid subscribers during the
fiscal third quarter, versus approximately 13,200 net postpaid
subscriber additions during the year-ago quarter.
Fiscal 2006 Outlook
Updated Outlook Previous Outlook
--------------- ----------------
Consolidated Adjusted $350 million to $370 million to
Operating Income (AOI) $360 million $390 million
Consolidated Capital $150 million $160 million
Expenditures (Capex)
Consolidated AOI from continuing operations for fiscal year 2005
was $366.4 million, which included $9.1 million of non-recurring
items. The Company has not included a reconciliation of projected
AOI because projections for some components of this reconciliation
are not possible to forecast at this time.
Based in Wall, N.J., Centennial Communications Corp. (NASDAQ:CYCL)
-- http://www.centennialwireless.com/-- is a leading provider of
regional wireless and integrated communications services in the
United States and the Caribbean with approximately 1.3 million
wireless subscribers and 326,400 access lines and equivalents.
The U.S. business owns and operates wireless networks in the
Midwest and Southeast covering parts of six states. Centennial's
Caribbean business owns and operates wireless networks in Puerto
Rico, the Dominican Republic and the U.S. Virgin Islands and
provides facilities-based integrated voice, data and Internet
solutions. Welsh, Carson, Anderson & Stowe and an affiliate of
the Blackstone Group are controlling shareholders of Centennial.
At Nov. 30, 2005, Centennial Communications' balance sheet
showed a $490,868,000 stockholders' deficit, compared to a
$518,432,000 deficit at May 31, 2005.
CENTURYTEL: Moody's Affirms Preferred Shelf (P) Ba1 Rating
----------------------------------------------------------
Moody's Investors Services affirmed CenturyTel's Baa2 senior
unsecured long-term rating following the company's authorization
of a $1.0 billion share repurchase program on Feb. 22, 2006.
Moody's believes that given the strength of the company's cash
flows and strong balance sheet at 12/31/05, the execution of the
share repurchase program will not materially weaken the company's
credit metrics.
Moody's anticipates that CenturyTel will have sufficient liquidity
and financial flexibility to maintain its financial metrics close
to current levels at the end of 2007. Moody's also assumes that
should CenturyTel identify and pursue any significant acquisitions
over the next twelve to sixteen months, the company will curtail
its execution of this share repurchase program.
As part of this rating action, Moody's affirms these ratings:
* Senior Unsecured Rating -- Baa2
* Senior Unsecured Shelf -- (P) Baa2
* Preferred Shelf -- (P) Ba1
* Commercial Paper -- P-2
The rating outlook is stable.
CenturyTel, Inc., headquartered in Monroe, Louisiana is a regional
communications company engaged primarily in providing local
exchange telephone services in various regions of the United
States.
CHEMED CORP: Discloses Financial Results for Fourth Quarter
-----------------------------------------------------------
Chemed Corporation (NYSE:CHE), reported financial results for its
fourth quarter ended December 31, 2005, versus the comparable
prior-year period, as follows:
Consolidated Operating Results from Continuing Operations
-- Consolidated Revenue increased 16% to $248 million;
-- Diluted EPS from Continuing Operations of $.15;
-- Adjusted Pro Forma Diluted EPS from Continuing Operations of
$.61 after excluding settlement of the California wage and
hour class action, LTIP and certain other items.
VITAS generated record operating results
-- Quarterly Net Patient Revenue of $169 million, up 19%;
-- Average Daily Census (ADC) of 10,412, up 14%;
-- Adjusted EBITDA of $24.7 million, an increase of 21%.
Roto-Rooter segment reported record Revenue and Adjusted EBITDA
-- Revenue of $79 million, an increase of 10%;
-- Adjusted EBITDA of $14.5 million, an increase of 21%.
"VITAS continues to generate excellent census and admissions
growth, with fourth-quarter ADC totaling 10,412, up 14%, and
admissions in the quarter of 12,487, an increase of 8% over the
prior-year quarter. Net income for VITAS in the quarter was
$2.5 million. After excluding the aftertax cost of the class
action litigation in California, LTIP and OIG investigation,
VITAS' net income of $13.8 million increased 29% when compared to
the prior-year adjusted pro forma net income. VITAS had a fourth-
quarter adjusted EBITDA margin of 14.6%," stated Kevin McNamara,
Chemed president and chief executive officer.
"The litigation settlement involved a wage-hour class action case
pending against VITAS in California. This case was filed in April
2004, shortly after completion of the VITAS acquisition. We
accrued a pretax liability of $2.3 million and accounted for this
issue as an assumed liability on our opening balance sheet. Since
the establishment of this accrual, there has been a significant
increase in litigation, high settlements and unfavorable verdicts
against companies involving wage-hour claims in California.
Recognizing this legal climate, we have reached a tentative
agreement to resolve this matter. Generally Accepted Accounting
Principles (GAAP) do not allow for a period of more than 12-months
post acquisition to finalize the quantification of existing
contingencies on the opening balance sheet of an acquisition. As
a result, VITAS' fourth-quarter operating results include an
aftertax charge of $10.8 million representing the portion of this
preliminary settlement not accounted for on VITAS' opening balance
sheet.
"Roto-Rooter also reported solid financial operating results.
For the fourth quarter of 2005, Roto-Rooter had revenue of
$79 million, an increase of 10%. Adjusted EBITDA was
$14.5 million, an increase of 21% at a margin of 18.3%."
Guidance for 2006
"Going into 2006," Mr. Williams stated, "we anticipate VITAS to
generate a revenue increase of 15% to 18%, increased admissions of
7% to 9% and continued expansion of EBITDA margins through the
leveraging of central support costs. This should result in VITAS
increasing its adjusted EBITDA margin approximately 60 to 80 basis
points.
"Roto-Rooter is estimated to generate a 5% to 6% increase in
revenue in 2006, with adjusted EBITDA margins averaging between
16% and 17%.
"Based upon these factors and an average diluted share count of
27.0 million, our expectation is that full-year 2006 earnings per
diluted share from continuing operations, excluding any charges or
credits not indicative of ongoing operations as well as excluding
any expense for stock options required under SFAS 123R, will be in
the range of $2.20 to $2.35."
Chemed Corp. operates VITAS Healthcare Corporation (VITAS), the
nation's largest provider of end-of-life care, and Roto-Rooter,
the nation's largest commercial and residential plumbing and drain
cleaning services provider.
* * *
As reported in the Troubled Company Reporter on Jan. 26, 2005,
Moody's Investors Service assigned a Ba2 senior implied rating to
Chemed Corporation's proposed credit facilities, and a Ba3 rating
to the Company's existing senior notes. Moody's also assigned an
SGL-1 liquidity rating to the Company. Moody's said the ratings
outlook is stable. This is the first time Moody's has assigned
ratings to Chemed Corp.
The ratings assigned:
* $140 Million Senior Secured Revolver maturing 2010 -- Ba2
* $85 Million Senior Secured Bank Debt maturing 2010 -- Ba2
* $150 Million 8.75% Senior Notes due 2011 -- Ba3
* Senior Implied -- Ba2
* Senior Unsecured Issuer Rating -- Ba3
* SGL -- 1
* Outlook -- Stable
As reported in the Troubled Company Reporter on Jan. 26, 2005,
Standard & Poor's Ratings Services raised its ratings on
Cincinnati, Ohio-based hospice, plumbing, and drain cleaning
services provider Chemed Corporation. The corporate credit rating
was raised to 'BB-' from 'B+', the senior secured debt rating to
'BB' from 'B+', and the senior unsecured debt rating to 'B' from
'B-'. At the same time, Standard & Poor's assigned a 'BB' rating
and a recovery rating of '1' to Chemed's new senior secured credit
facilities. These consist of an $85 million senior secured term
loan and a $140 million revolving credit facility, both due in
2010.
Standard & Poor's also revised its outlook on Chemed to stable
from negative.
CHEMTURA CORP: Focusing on Performance Chemicals Business
---------------------------------------------------------
Chemtura Corporation (NYSE: CEM) disclosed its organizational
changes geared towards placing greater focus on specific
businesses and functional areas.
Performance Chemicals will report directly to Robert L. Wood,
chairman and chief executive officer who believes that "direct
interaction with those business leaders will improve customer
focus and create better communication, accountability and delivery
of results." Myles S. Odaniell, former executive vice president of
Performance Chemicals, is leaving the company to pursue other
interests.
Robert B. Weiner, former executive vice president of Supply Chain
Operations, also is leaving the company to pursue other interests.
A replacement will be named in the near future.
Chemtura's Global Research & Development group, headed by John A.
Lacadie, will report to Gregory E. McDaniel, who has been promoted
to executive vice president, Strategy, New Business Development
and Technology. Mr. McDaniel will also have responsibility for
Industrial Water Treatment on an interim basis.
Global Customer Care and Logistics will report to Marcus Meadows-
Smith, executive vice president, Crop Protection and Consumer
Products.
Gary Yeaw has been promoted to executive vice president, Human
Resources and Communications, adding Communications and
Environmental, Health & Safety to his previous Human Resources
responsibilities.
Karen Osar, executive vice president and chief financial officer,
will take direct responsibility for Investor Relations, which has
been split out of the Communications group.
"We've made a number of organization changes to enable me to focus
more directly on our Performance Chemicals businesses, to align
our technology organization with our strategy and new business
opportunities, and to bring more customer-focused leadership to
Global Customer Care and Logistics," said Mr. Wood. "We believe
these changes will enable us to improve our performance and make
greater strides in achieving our financial and process excellence
goals.
"I want to thank Myles Odaniell and Bob Weiner for their
significant contributions to the transformation of Chemtura and
wish them great success in their future endeavors," said Wood.
Chemtura Corporation -- http://www.chemtura.com/-- is a global
manufacturer and marketer of specialty chemicals, crop protection
and pool, spa and home care products. Headquartered in
Middlebury, Connecticut, the company has approximately 7,300
employees around the world.
* * *
As reported in the Troubled Company Reporter on Sept. 26, 2005,
Moody's Investors Service affirmed the ratings of Chemtura
Corporation (Chemtura -- Corporate Family Rating of Ba1) and
changed the outlook on the company's ratings to negative from
stable. Specifically, Moody's affirmed these ratings:
* Corporate Family Rating -- Ba1
* Senior Unsecured Notes due 2012, $375 million -- Ba1
* Senior Unsecured Floating Rate Notes due 2010, $225 million
-- Ba1
* Senior Unsecured Notes, $260 million due 2023 and 2026 -- Ba1
* Senior Unsecured Notes, $10 million due 2006 -- Ba1
* Senior Unsecured Notes, $400 million due 2009 -- Ba1
As reported in the Troubled Company Reporter on July 7, 2005,
Standard & Poor's Ratings Services raised its ratings, including
the corporate credit rating to 'BB+' from 'BB-', on Chemtura Corp.
(fka Crompton Corp.). S&P said the outlook is stable.
COMDISCO INC: Makes Distribution to Contingent Rights Holders
-------------------------------------------------------------
Comdisco Holding Company, Inc. (OTC:CDCO) will make a cash payment
of $.0247 per right on the contingent distribution rights
(OTC:CDCOR), payable on Mar. 16, 2006 to contingent distribution
rights holders of record on Mar. 6, 2006. This distribution
relates to sharing amounts due contingent distribution rights
holders in conjunction with recent settlements from the Disputed
Claims Reserve of the Bankrupt estate of Comdisco, Inc. Comdisco
Holding Company has approximately 152.3 million contingent
distribution rights outstanding.
Effect on Common Stock
The plan of reorganization of the company's predecessor, Comdisco,
Inc., entitles holders of Comdisco Holding Company's contingent
distribution rights to share at increasing percentages in proceeds
realized from Comdisco Holding Company's assets after the minimum
percentage recovery threshold was achieved in May, 2003. The
amount due contingent distribution rights holders is based on the
amount and timing of distributions made to former creditors of the
company's predecessor, Comdisco, Inc., and is impacted by both the
value received from the orderly sale or run-off of Comdisco
Holding Company's assets and on the resolution of disputed claims
still pending in the bankruptcy estate of Comdisco, Inc.
As the disputed claims are allowed or otherwise resolved, payments
are made from funds held in a disputed claims reserve established
in the bankruptcy estate for the benefit of former creditors of
Comdisco, Inc. Since the minimum percentage recovery threshold
has been exceeded, any further payments from the disputed claims
reserve to former creditors of Comdisco, Inc. entitle holders of
contingent distribution rights to receive payments from Comdisco
Holding Company, Inc. The amounts due to contingent distribution
rights holders will be greater to the extent that disputed claims
are disallowed. The disallowance of a disputed claim results in a
distribution from the disputed claims reserve to previously
allowed creditors that is entirely in excess of the minimum
percentage recovery threshold. In contrast, the allowance of a
disputed claim results in a distribution to a newly allowed
creditor that is only partially in excess of the minimum
percentage recovery threshold. Therefore, any disallowance of the
remaining disputed claims would require Comdisco Holding Company,
Inc. to pay larger cash amounts to the contingent distribution
rights holders that would otherwise be distributed to common
shareholders.
Comdisco filed for chapter 11 protection on July 16, 2001 (Bankr.
N.D. Ill. Case No. 01-24795), and emerged from chapter 11
bankruptcy proceedings on August 12, 2002. The purpose of
reorganized Comdisco is to sell, collect or otherwise reduce to
money in an orderly manner the remaining assets of the
corporation. Pursuant to Comdisco's plan of reorganization and
restrictions contained in its certificate of incorporation,
Comdisco is specifically prohibited from engaging in any business
activities inconsistent with its limited business purpose.
Accordingly, within the next few years, it is anticipated that
Comdisco will have reduced all of its assets to cash and made
distributions of all available cash to holders of its common stock
and contingent distribution rights in the manner and priorities
set forth in the Plan. At that point, the company will cease
operations and no further distributions will be made. The company
filed on August 12, 2004 a Certificate of Dissolution with the
Secretary of State of the State of Delaware to formally extinguish
Comdisco Holding Company, Inc.'s corporate existence with the
State of Delaware except for the purpose of completing the wind-
down contemplated by the Plan.
John Wm. "Jack" Butler, Jr., Esq., Charles W. Mulaney, Esq.,
George N. Panagakis, Esq., Gary P. Cullen, Esq., N. Lynn Heistand,
Esq., Seth E. Jacobson, Esq., Andre LeDuc, Esq., Christina M.
Tchen, Esq., L. Byron Vance, III, Esq., Marian P. Wexler, Esq.,
and Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher
& Flom, LLP, represented Comdisco before the Bankruptcy Court.
Evan D. Flaschen, Esq., and Anthony J. Smits, Esq., at Bingham
Dana LLP, served as Comdisco's International Counsel.
CONNECTICARE INC: S&P Affirms Financial Strength Rating at BB+
--------------------------------------------------------------
Standard & Poor's Ratings Service affirmed its 'BBB-' counterparty
credit and financial strength ratings on Health Insurance Plan of
Greater New York (HIP) and its 'BB+' counterparty credit and
financial strength ratings on HIP's strategically important
subsidiary, ConnectiCare Inc.
"The outlook on both companies remains negative but now reflects
new integration challenges related to HIP's planned merger with
Group Health Inc. (GHI; not rated)," noted Standard & Poor's
credit analyst Neal Freedman.
Integration is expected to commence in the third or fourth quarter
of 2006.
"Integration concerns regarding HIP's March 2005 acquisition of
ConnectiCare, which was the reason for the previous negative
outlook, have been diminished as the ConnectiCare integration is
running on target," Mr. Freedman added.
Consolidated 2006 pretax operating income, including the GHI
merger on a full-year, pro forma basis is expected to be $210
million-$220 million, slightly lower than estimated 2005 results.
Standard & Poor's expects HIP's year-end 2006 risk-adjusted level
of capitalization to decline to 145%-155%, reflecting the GHI
merger. Excluding GHI, HIP's consolidated membership level in
2006 is expected to be almost flat with 2005.
If the company's performance falls short in terms of expected
earnings or capitalization, if the market environment
deteriorates, or if the integration of the companies gets off
track, Standard & Poor's could lower the ratings one notch.
Conversely, should the company significantly exceed expected
earnings and capitalization, Standard & Poor's could affirm the
ratings and revise the outlook to stable.
CONTINENTAL AIRLINES: Moody's Affirms Corp. Family Rating at B3
---------------------------------------------------------------
Moody's Investor Services affirmed all debt ratings of Continental
Airlines, Inc. -- corporate family rating at B3 -- as well as all
tranches of the Enhanced Equipment Trust Certificates supported by
payments from Continental and the SGL-3 Speculative Grade
Liquidity rating. The outlook has been changed to stable from
negative.
The stable outlook reflects Moody's expectation of continued
improvements to Continental's key credit metrics, such as leverage
and interest coverage, in FY 2006, due primarily to operating
performance improvements. Operating cash flows grew in FY 2005,
and Moody's anticipates further growth in the company's cash flows
in FY 2006 which should be sufficient to meet all cash demands
without meaningfully increasing its debt. Continental benefited
in 2005 from a strong performance in its international markets,
and the company plans to continue to augment its international
ASMs in 2006.
In raising the outlook, Moody's also cited the progress
Continental has achieved in lowering its non-fuel operating
expenses, particularly concessions that the company has now
obtained from substantially all of its labor unions. Continental
has adequate liquidity -- the company made significant
enhancements to its cash on hand in 2005 by accessing the debt and
equity capital markets -- and its unrestricted balance sheet cash
and equivalents is expected to cushion any shortfall to internally
generated cash flows should the operating environment meaningfully
worsen in 2006.
Continental's ratings reflect its status as the sixth-largest
global airline, with a substantial international network reach
particularly in Latin America and Europe. Continental was one of
the few U.S. passenger airlines to achieve net income during
seasonally-stronger periods of 2005, although the company reported
a substantial net loss for the full year due to higher fuel costs.
The company's leverage is substantial although, due to the
improved operating environment, its ratio of debt-to-EBITDA using
Moody's standard adjustments declined to 8.5 times in 2005
compared to 10.4x in 2004. Interest coverage improved in 2005,
primarily due to operating margin gains.
The company's ratio of EBIT to interest expense increased to 1.0x.
Continental's rating could improve if continued growth in
operating cash flows is sufficient, over time, to reduce the
company's reliance on debt financing, and if improvements to its
key credit metrics were to occur -- for example, debt-to-EBITDA
approaching 7x to 8x and EBIT to interest expense approaching 1.5x
for a sustained period.
Continental plans to increase its international capacity by 12.5%
in 2006, focusing on existing markets such as its Mexico
destinations as well as adding new transatlantic markets. Overall
ASMs are expected to grow in 2006. The company's domestic unit
revenues and yields are expected to improve in 2006 -- despite
greater competition from low-cost carriers
-- primarily due to less industry capacity as some carriers in
reorganization removed ASM's during 2005. Additionally, some
industry fare increases have occurred in early 2006 as higher fuel
prices are passed through to passengers. Assuming no further
increase in fuel costs, Moody's expects the company's mainline
cost per available seat mile to remain relatively flat in 2006,
due primarily to Continental's efforts to reduce operating costs
through labor concessions and productivity improvements. In
January 2006 the Flight Attendants ratified an agreement with the
company for lower pay and benefits, which is expected to save the
company $72 million annually.
In affirming the SGL-3 Speculative Grade Liquidity rating, Moody's
noted that Continental reported approximately $1.96 billion in
unrestricted cash and short-term investments as of Dec. 31, 2005.
As long as internally generated cash flows continue to grow in
2006, liquidity should be adequate over the next twelve months.
The company increased its liquidity in 2005 through partial sales
of its interests in ExpressJet Holdings, Inc., and Copa Holdings,
S.A., as well as a common equity offering. Demands on the
company's cash in 2006 are similar to previous years. Capital
expenditures are expected to be approximately $250 million, debt
maturities should approximate $525 million, and pension
contributions are estimated to be in the range of $250 to $260
million in 2006 -- all of which are expected to be met through the
company's operating cash flows as well as its existing liquidity.
Assuming no substantial deterioration to the operating
environment, Moody's expects that the company will comply with all
of its debt covenants in the near term.
Continental Airlines, Inc. is headquartered in Houston, Texas.
COVAD COMMS: Completes Acquisition of NextWeb in Cash & Stock Deal
------------------------------------------------------------------
Covad Communications Group, Inc. (AMEX: DVW), has completed its
acquisition of NextWeb, Inc., a broadband wireless carrier
operating in California and Nevada.
Covad paid approximately $3.9 million in cash and issued
approximately 16 million Covad shares in the transaction. A
portion of Covad shares issued are restricted from sale in the
open market for a period of time.
"For the last five years, no one has delivered business-class
wireless broadband better than NextWeb," said Charles Hoffman,
Covad president and chief executive officer. "With this
acquisition, we complement our existing network footprint, can
provide higher bandwidth products to our customers, can provision
customers more quickly, and ultimately own the "last mile" and
further reduce our dependency on the ILECs."
NextWeb, based in Fremont, California, delivers business-class
broadband service to small and medium-sized businesses at speeds
up to 100 megabits per second (Mbps), complementing Covad's
existing portfolio of data solutions. NextWeb currently provides
service to more than 3,000 business customers in the greater San
Francisco Bay Area, the Los Angeles metropolitan area, parts of
central California, and Las Vegas, Nevada, with coverage available
to more than 200,000 business locations in these areas.
NextWeb finished 2005 with revenues of approximately $10 million
and has been EBITDA and cash-flow positive since December 2003.
Covad's focus for 2006 will be maximizing NextWeb's revenue and
profit contribution within its existing wireless markets and
footprint. This will contribute to Covad's plan to be EBITDA
positive by mid-year 2006.
Graham Barnes, NextWeb's CEO, will report to Hoffman in the
position of senior vice president and general manager. NextWeb
will continue to offer its full portfolio of business broadband
services, including scalable bandwidth up to 10 Mbps, redundant
access, converged solutions, and high-capacity licensed point-to-
point links at speeds up to 100 Mbps.
According to Mr. Barnes, "NextWeb proved that carriers could
efficiently and profitably deliver business-class broadband
services using pre-WiMAX technology. By becoming part of Covad,
we are now well-positioned to capitalize on the potential that
wireless broadband access technology has as a complement to
traditional wireline broadband services."
"The combination of wireline and wireless broadband services is a
competitive advantage as business customers continue to seek out
providers of converged voice and data solutions offered through a
variety of technologies," says Pyramid Research's senior analyst
Ozgur Aytar.
Covad Communications Group, Inc. -- http://www.covad.com/--
provides broadband voice and data communications. The company
offers DSL, Voice over IP, T1, Web hosting, managed security, IP
and dial-up, and bundled voice and data services directly through
Covad's network and through Internet Service Providers, value-
added resellers, telecommunications carriers and affinity groups
to small and medium-sized businesses and home users. Covad
broadband services are currently available across the nation in
44 states and 235 Metropolitan Statistical Areas and can be
purchased by more than 57 million homes and businesses, which
represent over 50 percent of all US homes and businesses.
At Dec. 31, 2005, Covad Communications Group, Inc.'s balance sheet
showed a stockholders' equity deficit of $20,169,000 compared to a
$8,635,000 shareholders' equity deficit at Dec. 31, 2004.
Covad emerged from a chapter 11 restructuring in Dec. 2001 under a
plan of reorganization that swapped $1.4 billion of bond debt with
a combination of cash (about 19 cents-on-the-dollar) and a 15%
equity stake in the company. Covad's prepetition shareholders
retained an approximate 80% equity interest in the company.
CSC HOLDINGS: Moody's Rates $2.4BB Proposed Sr. Facility at Ba3
---------------------------------------------------------------
Moody's Investors Service assigned Ba3 ratings to the proposed
$2.4 billion senior secured bank facility of CSC Holdings, Inc.,
a wholly owned subsidiary of Cablevision Systems Corporation.
Moody's also upgraded the speculative grade liquidity rating to
SGL-1 from SGL-4.
The ratings outlook is changed to stable from negative. The
proposed facility would refinance existing bank debt and
alleviates Moody's concerns over CSC's ability to repay the
approximately $1.4 billion of outstanding bank borrowings under
the existing revolver, which matures in June 2006. Furthermore,
Cablevision has resolved all covenant compliance issues and
expects no restatement of financial statements.
Cablevision's B1 corporate family rating continues to reflect high
financial risk and heightened competitive pressure from direct
broadcast satellite providers and Verizon, offset by strong cash
flow margins, the prospect of cash flow growth from increased
penetration of advanced services, and high loan to value coverage.
The B1 corporate family rating also incorporates the likelihood of
a large special dividend that would result in a substantial
increase in leverage, noting that the bank facility provides for
over $3 billion of incremental financing capacity.
Actions taken:
CSC Holdings, Inc.
* Ba3 assigned to Senior Secured Bank Credit Facility
* Outlook, Changed To Stable from Negative
Cablevision Systems Corporation
* Speculative Grade Liquidity Rating, Upgraded to SGL-1
from SGL-4
* Outlook, Changed To Stable from Negative
Ratings for Cablevision continue to reflect high financial
leverage, only modest coverage of interest after capital
expenditures, and heightened competitive pressure from Verizon and
DBS providers.
Moody's considers Cablevision well positioned to respond to these
competitive threats due to its demonstrated ability to offer a
bundle of video, data and voice services, but the related increase
in marketing and retention spending will likely erode margins,
particularly if there is an unexpected increase in basic
subscriber churn.
Cablevision's ratings benefit from the core cable operations'
continued strong cash flow margins; the prospect of cash flow
growth as penetration of Internet and voice products increases;
and strong asset value associated with Cablevision's
technologically upgraded network and well clustered subscriber
base, which provide good coverage of outstanding obligations.
Financial risk includes the expectation of future shareholder
rewards that would result in an increase in leverage from the
current 5.6 times debt-to-EBITDA, as well as modest coverage of
interest and fixed charges. Cablevision also faces considerable
competitive challenge. Its high speed data currently competes
with Verizon's offerings, and Moody's believes Verizon's eventual
video offering will create further competition.
The high density and affluent customer base of Cablevision's
footprint makes it a Verizon target, in Moody's view. Cablevision
currently benefits from these demographics, but the prospect of
intensified competition could limit its pricing power and reduce
growth opportunities, although Moody's considers Cablevision less
vulnerable than other incumbent cable operators due to its
demonstrated success with its triple play offering.
Continued strong cash flow margins, albeit somewhat weakened by
high corporate expenses, support the ratings. Cablevision's high
penetration of advanced services and attractive system economics
contribute to high revenue and EBITDA per homes passed; it leads
both investment grade and high yield peers in these metrics.
Moody's also anticipates continued cash flow growth as Cablevision
drives increased penetration of its voice, high speed data, and
advanced video services. Growth from the small and medium
business segment provides potential additional upside. Finally,
the high asset value associated with Cablevision's upgraded
network and well clustered subscriber base, as well as the Rainbow
National Services, LLC core programming channels, provide good
coverage of outstanding obligations.
Cablevision's stable outlook incorporates expected utilization of
its incremental facility to fund an approximately $3 billion
special dividend. Under this scenario, Moody's estimates total
cable operations debt-to-EBITDA would rise to the mid-to-high 6
times range based on estimated 2006 EBITDA or the high 7 times
range based on estimated full year 2005 EBITDA. The stable
outlook assumes some de-leveraging over time driven by cash flow
growth and improved coverage of interest expense and capital
expenditures, as well as sustained values for cable assets.
Moody's would consider a positive outlook given evidence that
shareholder rewards were unlikely, or, in the event of a dividend,
if leverage fell below 6 times. Distributions from the Restricted
Group to shareholders beyond the previously proposed $3 billion
dividend or to other Cablevision entities could pressure the
ratings down. From a business perspective, evidence of
penetration by a successful video product from Verizon could also
have negative ratings implications.
In analyzing Cablevision for these ratings, Moody's focuses on
debt of its Restricted Group, which consists of approximately $1.4
billion of bank debt, $4.2 billion of senior unsecured notes and
$250 million of senior subordinated notes, as well as the $1.5
billion of bonds at the CVC parent company.
Cash flow generated from the consumer and business cable assets,
less corporate expenses, services this debt. Based on estimated
results for the year end 2005, cable operations debt is
approximately 5.6 times EBITDA. Fixed charge coverage is
relatively thin in the low 1 times range.
These credit metrics are better than many of Cablevision's B1
rated cable peers, and the company outperforms both investment
grade and high yield peers on an operating level, but Moody's
considers an increase in debt to support shareholder rewards and a
resultant deterioration in credit metrics likely. The B1
corporate family rating also incorporates the company's high risk
tolerance.
Assuming Cablevision's board approved a $3 billion dividend,
Moody's estimates total cable operations debt-to-EBITDA would rise
to the mid-to-high 6 times range based on estimated 2006 EBITDA or
the high 7 times range based on estimated 2005 EBITDA.
The Ba3 ratings on the proposed secured credit facilities
incorporate the benefits of the credit agreement and security
package. Pro forma the transaction, this debt comprises only
about 20% of the total debt capital structure.
Assuming full utilization of the incremental facility, Moody's
estimates bank debt would comprise less than 50% of total debt and
would still warrant a notch up from the corporate family rating.
Moody's rates the CSC senior unsecured notes, currently the
majority of the debt capital structure, B2 to reflect their
structural subordination to the senior secured credit facilities.
These bondholders benefit, however, from the junior capital
provided by the contractually subordinated $250 million of B3
rated senior subordinated notes at CSC and the $1.5 billion notes
at the CVC holding company, also rated B3.
Cablevision Systems Corporation, through its wholly owned
subsidiary CSC Holdings, Inc., serves approximately 3 million
subscribers in and around the New York metropolitan area. The
company maintains its headquarters in Bethpage, New York.
CSC HOLDINGS: S&P Rates Proposed $2.4 Billion Facilities at BB
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' rating to
CSC Holdings Inc.'s proposed $2.4 billion in combined senior
secured bank loan facilities, with a recovery rating of '2',
indicating the expectation for substantial recovery of principal
in a default or bankruptcy. Under terms of the bank loan, the
company can incur up to $3.1 billion of additional secured debt.
Accordingly, the bank loan analysis is based on $5.5 billion of
total secured bank debt.
"This rating is based on preliminary information, subject to
receipt of final documentation," said Standard & Poor's credit
analyst Catherine Cosentino.
CSC Holdings is an intermediate holding company owned by
Bethpage, New York-based cable TV operator Cablevision Systems
Corp. Proceeds from these financings will be used to refinance a
June 2006 $1.4 billion upcoming bank maturity. Pro forma for the
new financings, total debt will be about $11 billion.
The bank loan rating is not on CreditWatch, although Standard &
Poor's long term-ratings, including the 'BB-' corporate credit
rating for Cablevision Systems Corp., remain on CreditWatch where
it was placed with developing implications on Dec. 20, 2005,
following a downgrade from 'BB' when the company indicated that it
had incurred certain technical covenant violations under CSC
Holdings' existing bank credit agreement. Since then, the company
has obtained waivers for these violations.
The CreditWatch with developing implications currently reflects
concerns about a $1.4 billion upcoming maturity. Given that both
these issues will have been addressed, upon completion of this
financing package, all ratings for Cablevision, except the
unsecured debt at CSC Holdings, will be raised one notch,
including Cablevision's corporate credit rating, which will be
upgraded to 'BB' from 'BB-'.
An upgrade would be supported by the fundamental strength of the
company's cable TV operations, which have performed very well and
continue to have favorable business prospects, largely because of
the attractive demographics of the company's overall markets.
Standard & Poor's expects to assign a stable outlook.
The 'B+' rating for CSC Holdings' existing unsecured debt will be
affirmed, providing a two notch differential from the 'BB'
corporate credit rating because of the increased amount of
priority obligations relative to these unsecured debt issues
expected to exist, principally additional secured debt to fund a
potential dividend being considered by the board of directors,
which could be in the area of the $3 billion level previously
proposed by senior management.
Standard & Poor's 'B-2' short-term rating for Cablevision, which
is on CreditWatch with developing implications, simultaneously
will be raised to 'B-1' because of the modest amortization under
the new bank loans and about $1 billion of initial availability
under the revolving credit portion of the facility, which provides
ample excess liquidity to support a 'B-1' rating.
The ratings reflect the solid investment-grade characteristics of
Cablevision's cable TV business, composed of three million basic
subscribers in the metropolitan New York/New Jersey area. These
favorable business characteristics are partially offset by the
company's aggressive financial policy. As a result, debt to
EBITDA, pro forma for the refinancing and special dividend
payment, is expected to be about 6.6x on an operating lease
adjusted basis for 2006, including contractual purchase
commitments, but excluding collateralized indebtedness for
monetization transactions.
DATATEC SYSTEMS: Wants Claim Objection Period Extended to Sept. 30
------------------------------------------------------------------
Stephen S. Gray at The Recovery Group, Inc., the Liquidating
Trustee of Datatec Systems, Inc., and Datatec Industries, Inc.,
asks the U.S. Bankruptcy Court for the District of Delaware to
extend until September 30, 2006, the period within which he can
object to claims filed against the Debtors' estates.
According to the Liquidating Trustee, the primary sources of funds
available to the Datatec Trust created under the Debtors' Second
Amended Joint Plan of Liquidation confirmed on October 21, 2005,
to pay unsecured creditors cases are:
(A) recoveries on account of avoidance actions that the
Datatec Trust may bring and
(B) proceeds under a settlement agreement with the Creditors'
Committee and its members, Eagle Acquisition Partners,
Inc., and Technology Infrastructure Solutions, Inc.
Mr. Gray tells the Court that he is currently analyzing the
potential causes of action that the Datatec Trust may have. Mr.
Gray expects to recover $500,000 under the settlement agreement.
Mr. Gray does not explain why these estimates are lower than the
estimates included in the Plan and Disclosure Statement reported
in the Troubled Company Reporter on Oct. 28, 2005.
The Liquidating Trustee believes that the extension will conserve
judicial resources and avoid litigation of disputed claims that
can be resolved through negotiation.
Unless the Datatec Trust receives the settlement payment, Mr. Gray
adds, pursuing claim objections is not an efficient use of the
Datatec Trust's resources.
The Honorable Peter J. Walsh will hold a hearing on March 13,
2006, at 3:30 p.m., to consider the request.
Headquartered in Alpharetta, Georgia, Datatec Systems, Inc. --
http://www.datatec.com/-- specializes in the rapid, large-scale
market absorption of networking technologies. The Company and its
debtor-affiliate filed for chapter 11 protection on Dec. 14, 2004
(Bankr. D. Del. Case No. 04-13536). John Henry Knight, Esq., at
Richards, Layton & Finger, P.A. and Bruce Buechler, Esq., at
Lowenstein Sandler PC represent the Debtors. When
the Company filed for protection from its creditors, it listed
total assets of $26,400,000 and total debts of $47,700,000.
DELTA AIRLINES: Court Okays Reinstatement of Severance Program
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave Delta Air Lines, Inc., authority to reinstate a modest
severance program for the company's officers and directors, the
only employees who have not had severance or furlough protection
since the September 2005 Chapter 11 filing. CEO Jerry Grinstein
and COO Jim Whitehurst, both among the lowest-compensated
executives in similar-sized U.S. companies, have elected not to
participate in the program.
The Honorable Adlai S. Hardin granted the requested approval over
the objection of the Air Line Pilots Association, the only party
that objected to the program. The request was supported by
Delta's Official Committee of Unsecured Creditors.
The program, which would cost the company approximately $3 million
if 20% of its current officers and directors were severed under
its terms, is "necessary, timely and reasonable," said Rob Kight,
Vice President of Compensation and Benefits for Delta Air Lines.
"Delta was not -- as is often done in Chapter 11 -- seeking a new
or enhanced program," said Mr. Kight when expressing appreciation
for the Creditors Committee's support and the court's approval.
"To combat a problem that can interfere with its successful
restructuring, Delta responsibly sought to reinstate coverage for
the sole remaining group of employees without it. This program is
far more conservative than those at other carriers and companies
both in and out of Chapter 11."
Delta's program does not have any bonus or retention payment
element and has much lower payment ranges than programs at most
other carriers. Moreover, executives cannot just resign and
receive severance; severance only gets paid if the participant's
employment terminates for a qualifying reason.
"Clearly, this program in no way provides any type of enrichment
opportunity for Delta's executives. In addition to the multiple
and substantial pay cuts and 'no-bonus, no-incentives' policy this
management team has adopted in light of the company's current
financial circumstances, the limited scope of this modest
severance proposal demonstrates our commitment to the principles
of shared sacrifice and to breaking with past practices to do
things differently," Mr. Kight said.
Delta has among the very lowest management salaries in the
industry and currently provides no bonuses or incentive
compensation to its executives. "Delta's top five executives
combined will likely make less than many individual executives at
many similar-size companies this year," Mr. Kight noted.
The level of severance proposed by Delta for officers and
directors is about one-half less than what United had for the same
management positions while in bankruptcy and, generally, one-third
to one-half less than the levels approved for US Airways and
Northwest. Mr. Kight said that even that comparison is misleading
because "managements' base salaries at those carriers is generally
higher than Delta's and they generally have bonus and incentive
plans in place as well. Severance at other companies is often
calculated as a multiple of base salary plus target bonus."
Delta said it needed the severance program now because it is in
the process of eliminating another $200 million annually in
overhead and administrative costs, which will include job loss for
some of its officers and directors. The management ranks at Delta
already have been reduced by 35% since January, 2003.
"Without this protection, Delta's officers and directors would be
the only group of full-time Delta employees with absolutely no
bridge to another job should they lose theirs suddenly," Mr. Kight
concluded.
On the first day of the bankruptcy case, Delta sought and received
authority from the court to honor severance and furlough
provisions for all of its full-time employees, including pilots,
except for officer- and director-level employees. Unlike other
carriers and Chapter 11 debtors, Delta waited to monitor business
conditions before deciding whether a modest severance program was
needed for its senior-most employees.
Headquartered in Atlanta, Georgia, Delta Air Lines --
http://www.delta.com/-- is the world's second-largest airline in
terms of passengers carried and the leading U.S. carrier across
the Atlantic, offering daily flights to 502 destinations in 88
countries on Delta, Song, Delta Shuttle, the Delta Connection
carriers and its worldwide partners. The Company and 18
affiliates filed for chapter 11 protection on Sept. 14, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner,
Esq., at Davis Polk & Wardwell, represents the Debtors in their
restructuring efforts. Timothy R. Coleman at The Blackstone Group
L.P. provides the Debtors with financial advice. Daniel H.
Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss
Hauer & Feld LLP, provide the Official Committee of Unsecured
Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey
Howard & Zukin Capital and James S. Feltman at Mesirow Financial
Consulting, LLC, serve as the Committee's financial advisors. As
of June 30, 2005, the Company's balance sheet showed $21.5 billion
in assets and $28.5 billion in liabilities.
DIGITAL LIGHTWAVE: Owes Optel Capital $53.4 Million as of Feb. 15
-----------------------------------------------------------------
Digital Lightwave, Inc., borrowed an additional $180,000 on
February 15, 2006, from Optel Capital, LLC, an entity controlled
by the Company's largest stockholder and current chairman of the
board of directors, Dr. Bryan J. Zwan. The Company will use it
for its working capital requirements.
The loan is evidenced by a separate secured promissory note. The
loan bears interest at 10.0% per annum, and is secured by a
security interest in substantially all of the Company's assets.
Principal and any accrued but unpaid interest under the secured
promissory note is due and payable upon demand by Optel at any
time after March 31, 2006.
The Company continues to have insufficient short-term resources
for the payment of its current liabilities. As of February 15,
2006, the Company has been unable to secure any financing
agreement or to restructure its financial obligations with Optel.
As of February 15, 2006, the Company owed Optel approximately
$48.5 million in principal plus approximately $6.6 million of
accrued interest, which debt is secured by a first priority
security interest in substantially all of the Company's assets and
such debt accrues interest at a rate of 10.0% per annum.
Approximately $53.4 million of principal and accrued interest is
currently due and payable on demand.
The company has warned many times that if it is not able to obtain
financing, it expects that it will not have sufficient cash to
fund its working capital and capital expenditure requirements for
the near term and will not have the resources required for the
payment of its current liabilities when they become due. The
Company's ability to meet cash requirements and maintain
sufficient liquidity over the next 12 months is dependent on the
Company's ability to obtain additional financing from funding
sources, which may include, but may not be limited to Optel.
Optel currently is, and continues to be, the principal source of
financing for the Company. The Company has not identified any
funding source other than Optel that would be prepared to provide
current or future financing to the Company.
The Company is continuing its discussions with Optel to
restructure its debt by extending the maturity date, and to
arrange for additional short-term working capital. If the Company
does not reach an agreement to restructure the debt, and obtain
additional financing from Optel, the Company will be unable to
meet its obligations to Optel and other creditors, and in an
attempt to collect payment, creditors including Optel, may seek
legal remedies.
The Company cannot assure that it will be able to obtain adequate
financing, that it will achieve profitability or, if it achieves
profitability that the profitability will be sustainable or that
it will continue as a going concern.
Based in Clearwater, Florida, Digital Lightwave, Inc., provides
the global communications networking industry with products,
technology and services that enable the efficient development,
deployment and management of high-performance networks. Digital
Lightwave's customers -- companies that deploy networks, develop
networking equipment, and manage networks -- rely on its offerings
to optimize network performance and ensure service reliability.
The Company designs, develops and markets a portfolio of portable
and network-based products for installing, maintaining and
monitoring fiber optic circuits and networks. Network operators
and telecommunications service providers use fiber optics to
provide increased network bandwidth to transmit voice and other
non-voice traffic such as internet, data and multimedia video
transmissions. The Company provides telecommunications service
providers and equipment manufacturers with product capabilities to
cost-effectively deploy and manage fiber optic networks. The
Company's product lines include: Network Information Computers,
Network Access Agents, Optical Test Systems, and Optical
Wavelength Managers. The Company's wholly owned subsidiaries are
Digital Lightwave (UK) Limited, Digital Lightwave Asia Pacific
Pty, Ltd., and Digital Lightwave Latino Americana Ltda.
At Sept. 30, 2005, Digital Lightwave's equity deficit widened
to $44,696,000 from a $29,146,000 deficit at Dec. 31, 2004.
DRESSER-RAND GROUP: Reduces Debt by $30 Million in Two Months
-------------------------------------------------------------
Dresser-Rand Group Inc. reported that during the first two months
of 2006, it reduced its term debt by $30 million. As a result,
the Company will incur an additional non-cash charge relating to
the writeoff of unamortized debt issuance costs of approximately
$600,000. Annual interest expense will be reduced by about
$1.8 million. The Company plans to further reduce debt this year.
Bookings for the fourth quarter were strong, totaling $410 million
which is 42% higher than third quarter 2005 and 36% higher than
the prior year's fourth quarter. Backlog grew to $872 million
compared to $638 million at the end of 2004, providing a very
solid order book for 2006. The Company plans to discuss fourth
quarter and full-year 2005 results at its conference call
following the filing of its Form 10-K for 2005 by March 31, 2006.
Excluding the curtailment gain, the Company expects operating
income and earnings per share for the full year 2006 to be
consistent with the current First Call consensus estimate. First
quarter operating income is expected to be between $17 million and
$19 million, which is in line with the Company's plan for 2006 and
consistent with the historical seasonal pattern of the first
quarter representing 7% to 10% of full year operating income.
Dresser-Rand is among the largest suppliers of rotating equipment
solutions to the worldwide oil, gas, petrochemical, and process
industries. The Company operates manufacturing facilities in the
United States, France, Germany, Norway, India, and Brazil, and
maintains a network of 24 service and support centers covering 105
countries.
* * *
As reported in the Troubled Company Reporter on Dec. 1, 2005,
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on compression equipment maker Dresser-Rand Group
Inc. and revised the outlook on the company to positive.
DRESSER-RAND GROUP: Restructures Steam Turbine Business
-------------------------------------------------------
Dresser-Rand Group Inc. (NYSE: DRC) finalized the plan for
integrating its steam turbine business with the steam turbine
assets of Tuthill Energy Systems, which it acquired in September
of 2005.
The plan is expected to result in annual operating synergies of
approximately $15 million. In 2006, the Company expects to
realize operating synergies of approximately $10.5 million, which
will be partially offset by approximately $4.5 million of
integration expenses. Additionally, Dresser-Rand will record a
net non-cash curtailment gain in the first quarter of 2006 of
about $12 million. This gain results from a reduction in the
estimated future cash costs of certain previously recorded retiree
healthcare benefits.
The key elements of the plan includes:
* Ceasing manufacturing operations at its Millbury,
Massachusetts facility and shifting production to its other
facilities around the world.
* Maintaining a commercial and technology center in Millbury.
* Implementing a new competitive labor agreement at its
Wellsville, New York facility.
* Rationalizing product offerings, distribution and sales
channels.
* Back-office rationalization.
* Providing aftermarket parts and services support for the
installed base of Tuthill equipment through Dresser-Rand's
worldwide service-center network.
"The decision regarding the cessation of manufacturing activities
in Millbury was very difficult to reach because of its impact on
the affected employees and the communities where they live and
work," said Dresser-Rand CEO, Vincent R. Volpe, Jr. "However,
these actions will result in improved products and services
offerings for customers while better positioning Dresser-Rand to
be cost competitive in the worldwide markets we serve. We have
made substantial progress to date and are moving quickly to
complete the integration while taking steps to ensure a smooth
transition with no disruption to promised deliveries or service to
our clients."
Dresser-Rand is among the largest suppliers of rotating equipment
solutions to the worldwide oil, gas, petrochemical, and process
industries. The Company operates manufacturing facilities in the
United States, France, Germany, Norway, India, and Brazil, and
maintains a network of 24 service and support centers covering 105
countries.
* * *
As reported in the Troubled Company Reporter on Dec. 1, 2005,
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on compression equipment maker Dresser-Rand Group
Inc. and revised the outlook on the company to positive.
DTE ENERGY: 2005 Earnings Increase 25% to $537 Million
------------------------------------------------------
DTE Energy (NYSE: DTE) reported 2005 earnings of $537 million
compared with 2004 reported earnings of $431 million. Earnings
improved 25% over 2004, driven by operational and regulatory
improvements at Detroit Edison and MichCon. Also boosting
earnings were higher profits in DTE Energy's Power and Industrial
segment.
Operating earnings for 2005 were $577 million, or $3.27 per
diluted share, compared with 2004 operating earnings of $445
million. Operating earnings exclude non-recurring items, certain
timing-related items and discontinued operations. Reconciliations
of operating to reported earnings are included at the end of this
news release.
"I am very pleased with the progress we made in 2005 and I expect
to continue the trend of strong long-term earnings growth in
2006," said Anthony F. Earley Jr., DTE Energy chairman and CEO.
"Detroit Edison and MichCon achieved important regulatory
milestones in 2005 and initiated a focused effort to achieve
significant cost reductions and increase customer satisfaction,
which will drive our utilities toward achieving their full
earnings power. In our three non-utility business segments, I
believe we will continue to capitalize on opportunities to invest
our strong cash flow. Our focus for 2006 is to continue our
growth momentum while executing our plans for performance
excellence."
For the fourth quarter of 2005, DTE Energy reported earnings of
$382 million up from 2004 reported earnings of $113 million.
Operating earnings for the fourth quarter 2005 were $378 million,
up from 2004 operating earnings of $151 million.
DTE Energy -- http://www.dteenergy.com/-- is a Detroit-based
diversified energy company involved in the development and
management of energy-related businesses and services nationwide.
Its operating units include Detroit Edison, an electric utility
serving 2.2 million customers in Southeastern Michigan, MichCon, a
natural gas utility serving 1.3 million customers in Michigan and
other non-utility, energy businesses focused on power and
industrial projects, fuel transportation and marketing, and
unconventional gas production.
* * *
The company's $100 million preferred securities carries Standard &
Poor's BB+ rating. S&P assigned those ratings on Dec. 1, 2004.
DYNTEK INC: Losses Continue in Quarter Ended December 31
--------------------------------------------------------
DynTek, Inc., (OTCBB:DYTK), delivered its financial results for
the quarter ended Dec. 31, 2005, to the Securities and Exchange
Commission on Feb. 21, 2006.
DynTek incurred a $4,256,000 net loss for the three months ended
Dec. 31, 2005, compared to a $7,004,000 net loss for the three
months ended Dec. 31, 2004.
Revenues for the three months ended Dec. 31, 2005 were
approximately $18,844,000, as compared to approximately
$20,002,000 for the three months ended Dec. 31, 2004. The
$1,158,000 decrease is principally attributable to a $1,232,000
decrease in revenues from the Company's Business Process
Outsourcing business, which is being de-emphasized.
"Over the past several quarters, we have been working on
initiatives to restructure our organization in order to create a
positive, profitable business and financial structure," said
Casper Zublin, Jr., DynTek's chief executive officer. "We
recently announced a recapitalization plan that is expected to
bring the company more favorable debt terms and up to $7 million
in net working capital. In addition, we have significantly
reduced our G&A expenses, and expect to further reduce this
expenditure over the next several quarters. Furthermore, we are
continuing to concentrate our business on the IT services sector
and shed business units outside this core focus. With a leaner
structure, solid balance sheet and clear business focus, we
believe our company is reaching the crest of our turn-around,
which should lead to measurable improvements to the bottom line."
The Company's balance sheet at Dec. 31, 2005, showed $42,367,000
in total assets and liabilities of $32,691,000. At December 31,
2005, the Company had a working capital deficiency of
approximately $9,160,000.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?5be
Bridge Notes
On Oct. 26, 2005, DynTek entered into a Note Purchase Agreement,
whereby it obtained an aggregate loan of $2,500,000 from two
shareholders of the Company pursuant to two Secured Promissory
Notes, each in the original principal amount of $1,250,000.
The Bridge Notes bear interest at 12% per annum until March 1,
2006, with the interest rate increasing 2% each month until
June 1, 2006, and then remaining constant at 20% until maturity
on Dec. 31, 2006.
Payment of principal and interest under the Bridge Notes is
secured by a lien to substantially all the assets of the Company,
which lien is subordinated to the perfected security interests
held be existing secured lenders.
Going Concern Doubt
Marcum & Kliegman LLP expressed substantial doubt about DynTek's
ability to continue as a going concern after it audited the
Company's financial statements for the fiscal years ended June 30,
2005, 2004 and 2003. The auditing firm pointed to the Company's
recurring losses and significant working capital deficiency at
June 30, 2005.
About DynTek
DynTek, Inc. -- http://www.dyntek.com/-- provides professional
information technology services and sales of related products to
mid-market commercial businesses, state and local government
agencies, and educational institutions. It operates its business
primarily through its subsidiary, DynTek Services, Inc. DynTek
provides a broad range of multi-disciplinary IT solutions that
address the critical business needs of its clients, including IT
security, converged networking including voice-over-internet-
protocol, application infrastructure, and access infrastructure.
Its primary operations are located in four of the top ten largest
IT spending states: California, New York, Florida, and Michigan.
EMMIS COMMUNICATIONS: Moody's Affirms Senior Debt Rating at B3
--------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Emmis
Communications Corporation and its wholly owned subsidiary, Emmis
Operating Company, but changed the outlook to stable from
positive. Additionally, Moody's raised the company's speculative
grade liquidity rating to SGL-2 from SGL-3.
The change in outlook to stable reflects Moody's concerns over
Emmis' ability to complete the divestiture of its remaining three
television stations at our original expectations given the
depressed operating environment in New Orleans and the uncertainty
surrounding the status of the CW affiliation for Emmis' station in
Florida. Further, Moody's expects that Emmis will not utilize all
of the proceeds from asset sales to retire debt, and instead may
favor discretionary investments. As such, Moody's believes that
the company may not reduce leverage as much as originally
anticipated. While leverage levels will benefit from the
anticipated divestiture of these remaining stations, it is our
expectation that total leverage will remain at or slightly above 5
times. The outlook may be revised back to positive if Emmis
favors debt repayment instead of discretionary expenditures or if
the proceeds from the remaining asset sales are greater than
Moody's expectations.
The ratings continue to reflect Emmis' renewed focus on its
attractive radio assets, balanced by the competition present in
these markets and Moody's longer-term concerns that the growth
prospects for radio, particularly in large markets, will be
challenging as advertising spending is spread across a growing
number of mediums.
Moody's affirmed these ratings:
Emmis Operating Company:
* Senior Secured Debt -- Ba2
* Senior Subordinated Notes -- B2
Emmis Communications Corporation:
* Senior Unsecured Debt -- B3
* Cumulative Preferred Stock -- Caa1
* Corporate Family Rating -- Ba3
The outlook is now stable.
Additionally, Moody's raised the company's speculative grade
liquidity rating to SGL-2 from SGL-3. The SGL-2 rating indicates
expectations of "good" liquidity as projected over the next twelve
months. The SGL-2 rating benefits from the company's meaningful
free cash flow generation, sizeable flexibility under financial
covenants, availability under its revolving credit facility, and
the absence of any material near-term debt amortizations. The
upgrade to the SGL rating incorporates Emmis' completion of
pending television asset divestitures and the application of the
proceeds to debt reduction. Thus, the SGL-2 rating reflects the
improved availability under the company's $350 million revolving
credit facility and improved cushion under its financial
covenants.
Emmis Communications Corporation, headquartered in Indianapolis,
Indiana, is a diversified media company comprised of radio and
television stations and magazine publishing assets.
EPOCH INVESTMENTS: Creditors Must File Proofs of Claim by March 10
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
set at 5:00 p.m. on March 10, 2006, as the deadline for all
creditors owed money by Epoch Investments, L.P., fka Empyrean
Investment, L.P., to file their proofs of claim on account of:
-- claims and interests arising prior to May 12, 2005; and
-- claims arising after May 12, 2005, and before June 13, 2005.
Creditors must file written proofs of claim on or before the March
10 Claims Bar Date and those forms must be delivered to:
United States Bankruptcy Court
Southern District of New York
Claims Processing Department
One Bowling Green, Room 534
New York, NY 10004-1408
Headquartered in New York, Epoch Investments, L.P., fka Empyrean
Investment, L.P.'s creditor, MarketXT Holdings, Inc., filed an
involuntary chapter 11 petition against the company on May 12,
2005 (Bankr. S.D.N.Y. Case No. 05-13470). Alan Nisselson, Esq.,
at Brauner Baron Rosenzweig & Klein, LLP, is the chapter 11
Trustee of MarketXT Holdings. Gabriel Del Virginia, Esq., of New
York, represents Epoch. Leslie S. Barr, Esq., at Brauner Baron
Rosenzweig & Klein, LLP, represents Mr. Nisselson. MarketXT
Holdings asserts a $2.5 million claim against Epoch. In its
Schedules of Assets and Liabilities, it listed $7,671,360 in
assets and $10,985,000 in debts.
FIREARMS TRAINING: Dec. 31 Balance Sheet Upside-Down by $27.7 Mil.
------------------------------------------------------------------
Firearms Training Systems, Inc. (OTC: FATS) reported earnings for
the third quarter of its fiscal year ending Mar. 31, 2006.
Revenue for the third quarter was $16.6 million versus $21.5
million for the same period of the previous year. Operating
income for the third quarter was $0.8 million versus $3.1 million
for the third quarter of its 2005 fiscal year. The decline in
revenue during the quarter is attributed to timing of new orders.
International sales declined $4.9 million primarily due to the
near completion of a large, long-term, percentage-of-completion
contract in fiscal 2005.
Year-to-date revenue was $55.9 million versus $60.4 million for
the same period of the previous year. Operating income for year-
to-date was $4.2 million versus $7.3 million for the same period
in fiscal 2005. This improvement reflects lower debt costs and
the elimination of mandatory preferred stock dividends associated
with our prior Series B Preferred Stock.
Ronavan R. Mohling, the Company's Chairman and Chief Executive
Officer stated, "Even though the quarter's revenue was less than
expected, we feel good about continued momentum in new orders. We
are very pleased that new bookings for the quarter were $29.0
million. Year-to-date new bookings are $63.4 million, an increase
of 19% versus the same period last year. As a result of higher
bookings, our backlog at the end of December was $66 million, an
increase of $13.8 million from last year. New bookings from our
long-time customers, including the UK Ministry of Defence, the New
Zealand Army and the Australian Defence Force, demonstrate the
continued strength of our strategic relationships. Our R&D
commitments, operational improvements and quality initiatives
remain on track."
Firearms Training Systems, Inc. -- http://www.fatsinc.com/-- and
its subsidiary, FATS, Inc., provides fully-integrated, simulated
training to professional military and law enforcement personnel.
Utilizing quality engineered simulated weapons, FATS' state-of-
the-art virtual training solutions offer judgmental, tactical and
combined arms experiences. The company serves U.S. and
international customers from headquarters in Suwanee, Georgia,
with branch offices in Australia, Canada, Netherlands and United
Kingdom. The ISO-certified company celebrated its 20th
anniversary in 2004.
At Dec. 31, 2005, Firearms Training Systems, Inc.'s balance sheet
showed a $27,748,000 stockholders' deficit compared to a
$28,504,000 deficit at mar. 31, 2005.
FORD CREDIT: S&P Puts BB Rating on $59.1 Million Class D Notes
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its ratings to Ford
Credit Auto Owner Trust 2006-A's $3.015 billion asset-backed
notes series 2006-A.
The ratings reflect:
a) credit support including subordination of:
* 7.0% for class A,
* 4.0% for class B, and
* 2.0% for class C (as a percentage of the adjusted
principal balance); and
b) a nonamortizing, fully funded reserve account equal to 0.50%
of the initial gross pool balance.
The payment structure also features a turbo mechanism through
which excess spread, after covering losses, will be used to pay
the securities until the requisite overcollateralization is
reached. Further, because interest rates have increased since
Ford Motor Credit Co.'s previous securitizations, the discount
rate applied to the subvened loans was increased to 9.75% from
8.75% to prevent a decline in excess spread, thus allowing hard
credit enhancement to remain unchanged.
Ratings assigned:
Ford Credit Auto Owner Trust 2006-A
Class Rating Amount (mil. $)
----- ------ ---------------
A-1* A-1+ 540.000
A-2a AAA 500.000
A-2b AAA 549.951
A-3 AAA 901.239
A-4 AAA 316.809
B A 88.674
C BBB 59.116
D* BB 59.116
* The class A-1 and D notes are not being
offered at this time.
FORD CREDIT: Fitch Puts BB+ Rating on $59.1 Million Class D Notes
-----------------------------------------------------------------
Fitch Ratings rated the Ford Credit Auto Owner Trust 2006-A asset-
backed notes as:
-- $540,000,000 class A-1 4.72480% 'F1+'
-- $500,000,000 class A-2A 5.04% 'AAA'
-- $549,951,000,000 class A-2B floating-rate 'AAA'
-- $901,239,000 class A-3 5.05% 'AAA'
-- $316,809,000 class A-4 5.07% 'AAA'
-- $88,674,000 class B 5.29%, 'A'
-- $59,116,000 class C 5.48% 'BBB+'
-- $59,116,000 class D 7.21% 'BB+'
The ratings on the notes are based upon:
* their respective levels of subordination;
* the specified credit enhancement amount (funds in the reserve
account and overcollateralization); and
* the yield supplement overcollateralization amount.
All ratings reflect the transaction's sound legal structure, the
high quality of the retail auto receivables originated by Ford
Motor Credit Company, and the strength of Ford Credit as servicer.
The classes A-1 and D notes will be initially retained by the
seller.
The weighted average APR in 2006-A is 6.65%. As with previous
deals, the 2006-A transaction incorporates a YSOC feature to
compensate for receivables with interest rates below 9.75%. The
YSOC is subtracted from the pool balance to calculate bond
balances and the first priority, second priority, and regular
principal distribution amounts, resulting in the creation of
'synthetic' excess spread. These amounts enhance the receivables'
yield and are available to cover losses and turbo the class of
securities then entitled to receive principal payments.
Initial enhancement for the class A notes as a percentage of the
adjusted collateral balance (collateral balance less YSOC) is 5.5%
(5.0% subordination, and the 0.5% initial reserve deposit).
Initial enhancement for the class B notes is 2.5% (2.0%
subordination and the 0.5% reserve). Initial enhancement for the
class C notes is 0.5% provided by the reserve account.
On the closing date, the aggregate principal balance of the notes
will be 102% of the initial pool balance less the YSOC. The class
D notes represent the undercollateralized 2%.
During amortization, both excess spread and principal collections
are available to reduce the bond balance. Hence, if excess spread
is positive, the bonds will amortize more quickly than the
collateral. It is this mechanism that ensures that the class D
notes are collateralized and the specified credit enhancement
level is achieved.
Furthermore, the 2006-A transaction provides significant
structural protection through a shifting payment priority
mechanism. In each distribution period, a test will be performed
to calculate the amount of desired collateralization for the notes
versus the actual collateralization. If the actual level of
collateralization is less than the desired, then payments of
interest to subordinate classes may be suspended and made
available as principal to higher rated classes.
Based on the loss statistics of Ford Credit's prior
securitizations, and Ford's U.S. retail portfolio performance,
Fitch expects consistent performance from the pool of receivables
in the 2006-A pool. For the nine months ending September 2005,
average net portfolio outstanding totaled approximately $66
billion, had total delinquencies of 1.99%, and net losses of 0.88%
of the average net portfolio outstanding.
GLOBE LIFT: Case Summary & Largest Unsecured Creditor
-----------------------------------------------------
Debtor: Globe Lift, LLC
100 7th Street
Oregon, Illinois 61061
Tel: (630) 844-4247
Bankruptcy Case No.: 06-70229
Type of Business: The Debtor manufactures automotive lifts and is
a subsidiary of SVI International, Inc.
Chapter 11 Petition Date: February 23, 2006
Court: Northern District of Illinois (Rockford)
Judge: Manuel Barbosa
Debtor's Counsel: John S. Biallas, Esq.
3N918 Sunrise Lane
St. Charles, Illinois 60174
Tel: (630) 513-7878
Fax: (630) 513-7880
Total Assets: $432,732
Total Debts: $1,126,048
Debtor's Largest Unsecured Creditor:
Entity Nature of Claim Claim Amount
------ --------------- ------------
SVI International, Inc. Unliquidated $1,126,048
101 West Illinois Avenue Business Debts
Aurora, IL 60506
GRANITE BROADCASTING: Marketing WB TV Stations to More Buyers
-------------------------------------------------------------
Granite Broadcasting Corporation (OTC Bulletin Board: GBTVK)
disclosed amendments to each of its agreements with wholly owned
subsidiaries of AM Media Holdings, LLC, relating to the sale of
Granite's WB-affiliated television stations, KBWB, Channel 20 in
San Francisco, California and WDWB, Channel 20 in Detroit,
Michigan.
The amendments eliminate the exclusivity, or "no-shop," clause in
each agreement, freeing the Company to engage in dialogue with
other parties interested in acquiring the stations while AM Media
continues to evaluate its interest in the transactions in light of
the recent announcement by the WB Network that it will cease
operations in September 2006. In addition, the amendments allow
either party to terminate the agreements at any time.
Commenting on the disclosure, W. Don Cornwell, Chief Executive
Officer of Granite Broadcasting Corporation, said, "The recent
announcement by the WB Network has led AM Media to decide not to
proceed forward with the transactions as originally contemplated.
As AM Media continues to evaluate its interest in these stations,
these amendments give us the ability to actively engage in
dialogue with other interested parties. While it is our intention
to sell the stations, we are prepared to operate them as
independents in September."
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.
* * *
Moody's Investors Service lowered Granite Broadcasting
Corporation's corporate family rating to Caa2 from Caa1 and
preferred stock rating to C from Ca following the company's
announcement that it intends to market its two WB affiliate
stations while AM Media Holdings LLC evaluates is interest in
purchasing these assets in light of the likely loss of the WB
affiliation when the network ceases operations in 2006.
Additionally, Moody's affirmed the B3 rating on the company's
senior secured notes. Moody's said the outlook remains negative.
GS MORTGAGE: Fitch Lifts Class G Certs.' Rating to BBB- from B+
---------------------------------------------------------------
Fitch Ratings upgrades GS Mortgage Securities Corp. II's
commercial mortgage pass-through certificates, series 1998-C1, as:
-- $102.4 million class C to 'AAA' from 'AA'
-- $107.0 million class D to 'AAA' from 'BBB'
-- $32.6 million class E to 'AA+' from 'BBB-'
-- $23.3 million class G to 'BBB-' from 'B+'
In addition, Fitch affirms these classes:
-- $409.1 million class A-2 at 'AAA'
-- $503.5 million class A-3 at 'AAA'
-- Interest-only class X at 'AAA'
-- $102.4 million class B at 'AAA'
The $55.8 million class H and the $7.1 million class J remains at
'CCC' and 'C', respectively.
Fitch does not rate classes F and K. Class A-1A has paid off in
full.
The upgrade reflects an increase in subordination levels due to:
* continued loan payoffs,
* amortization, and
* defeasance.
To date, 12 loans (12.9%) have defeased. As of the January 2006
distribution date, the collateral balance has been reduced 25.1%
to $1.4 billion from $1.86 billion at issuance. To date, the
transaction has realized losses in the amount of $53.4 million.
Currently, four assets (0.6%) are in special servicing. The
largest specially serviced loan (0.2%) is secured by a retail
center, located in Columbus, Ohio, and is 90+ days delinquent.
The loan was transferred to special servicing in July 2003 as the
result of the borrower requesting a loan modification following a
decline in occupancy at the property. The special servicer is
negotiating with the borrower on a discounted payoff. If the sale
falls through, the special servicer will take title to the
property.
The second largest specially serviced asset (0.2%) is a hotel in
Deland, FL and is real estate-owned. The special servicer is
marketing the asset for sale. Fitch projects a loss upon
liquidation of this asset.
Fitch reviewed the credit assessments of the Americold loan
(9.1%), as well as the Four Winds Portfolio (2%). The Americold
loan is secured by 27 cold-storage warehouses totaling 7 million
square feet; two of the original 29 properties have defeased to
date. Net cash flow decreased 6.3% from year-end 2004 to the
trailing 12 months ending June 30, 2005. The loan maintains an
investment-grade credit assessment.
The Four Winds Portfolio comprises two, cross-collateralized and
cross-defaulted loans on two psychiatric facilities in Katonah,
New York, and Saratoga Springs, New York, totaling 263 beds. The
TTM Sept. 2005 NCF increased slightly from the YE 2004 but remain
well below NCF at issuance. The loan maintains a below
investment-grade credit assessment.
GUITAR CENTER: Posts $76.7-Mil. of Net Income in Fiscal Year 2005
-----------------------------------------------------------------
Guitar Center, Inc. (Nasdaq:GTRC) delivered its financial results
for the fourth quarter and full year ended Dec. 31, 2005, to the
Securities and Exchange Commission on Feb. 15, 2006.
Consolidated net sales increased 20.0% to $562.8 million in the
fourth quarter from $468.9 million in the prior year period.
Consolidated net sales for the full year increased 17.8% to $1.782
billion from $1.513 billion in 2004.
Net income increased 23.6% in the fourth quarter to $33.5 million,
from $27.1 million in the prior year period. Fourth quarter 2005
net income includes an after-tax charge of $1.7 million, resulting
from the previously announced settlement of two class action
lawsuits as well as a one-time after-tax gain of $883,000 due to a
reversal of the stock-based compensation expense recorded in the
third quarter of 2005. Under the terms of the Company's long-term
incentive plan, a stock-based compensation expense is only
recorded if the Company expects to meet or exceed specified
earnings targets. The Company's fourth quarter 2004 net income
included a one-time after-tax charge of approximately $1.2 million
recorded in connection with the termination of an employment
agreement. Excluding the credit and charges in both years, fourth
quarter 2005 net income would have been $34.3 million, compared to
net income of $28.3 million, in the fourth quarter of 2004.
Net income for the full year increased 20.9% to $76.7 million,
from net income of $63.4 million, in 2004. In addition to the
charge described above which was recorded in the fourth quarter,
2005 net income includes an after-tax charge of $2.1 million
recorded principally in the second quarter in relation to the
acquisition of Music & Arts Center, Inc. Full year 2004 net
income included the fourth quarter charge due to the termination
of an employment agreement. Excluding the charges in both years,
net income in 2005 would have been $80.5 million compared to net
income of $64.6 million in the prior year.
Marty Albertson, Chairman and Chief Executive Officer stated, "On
a consolidated basis the company ended the year with sales in line
with expectations and earnings at the low end of our anticipated
range. The company generated solid sales growth across all our
divisions for the fourth quarter and the year. We were
particularly pleased with the operating margin performance in our
Guitar Center division for both the quarterly and annual periods.
Our Guitar Center stores have benefited from a more favorable
product mix and efficiencies in our stores and at the distribution
center. We successfully opened five new stores in the fourth
quarter, including our first tertiary market store in Pueblo,
Colorado, which brought our new store openings in 2005 to 25. At
Musician's Friend, fourth quarter and 2005 operating margin
reflects our increased spending on Internet advertising and
promotional expenses, due to an ongoing competitive environment.
Music & Arts' sales met our expectations for the year."
Guitar Center Stores
During the quarter, the Company opened three large format stores,
one small format store and the first tertiary market store. Net
sales from Guitar Center stores increased 13.0% to $409.9 million
from $362.8 million in the fourth quarter of 2004, with sales from
new stores contributing $30.6 million, or 65.0% of the increase.
Comparable store sales for the Guitar Center stores increased
4.6%. Gross margin, after buying and occupancy costs, grew to
29.6% from 28.6% in the fourth quarter last year. The increase is
primarily due to a higher selling margin. Selling, general and
administrative expenses for the Guitar Center stores, inclusive of
corporate general and administrative expenses and a credit from
the reversal of the third quarter stock-based compensation
expense, were 18.4% of net sales in the fourth quarter compared to
19.4% in the prior year period.
Musician's Friend
Direct response net sales for the quarter increased 21.6% to
$114.8 million from $94.4 million in last year's fourth quarter.
Gross margin for the quarter was 28.8% compared to 32.2% in the
prior year period, reflecting a lower selling margin due to
reduced shipping and handling revenue which is a result of the
competitive environment. Selling, general and administrative
expenses for the fourth quarter were 19.9% of net sales versus
19.1% in the comparable period last year. The increase primarily
reflects higher advertising costs primarily related to Internet
advertising and affiliate fees.
Music & Arts
The Company completed its acquisition of Music & Arts Center, Inc.
on April 15, 2005, and the acquired business and the Company's
former American Music business were combined into a new division
that operates under the Music & Arts name. Fourth quarter 2005
consolidated results reflect contributions from the combined
operations of Music & Arts and American Music. Fourth quarter
2004 results do not reflect the acquisition.
Net sales from the company's Music & Arts division were $38.1
million in the fourth quarter compared to $11.7 million in the
fourth quarter of 2004. Comparable sales for the Music & Arts
division increased 2.9% in the quarter. Fourth quarter gross
margin for Music & Arts increased to 41.1% versus 36.1% in the
same period last year. Selling, general and administrative
expenses for Music & Arts were 39.2% of net sales compared to
43.4% in the fourth quarter of 2004.
Business Outlook
In 2006, the Company plans to open 35 to 40 Guitar Center stores,
consisting of 8 to 10 large format, 27 to 30 small format and 2
tertiary market format stores. To date in the first quarter we
have opened large format Guitar Center stores in El Paso, Texas
and Allen Park, Michigan, a small format store in Madison,
Wisconsin and our second tertiary market store in Terre Haute,
Indiana.
Headquartered in Westlake Village, California, Guitar Center --
http://www.guitarcenter.com/-- is the nation's leading retailer
of guitars, amplifiers, percussion instruments, keyboards and pro-
audio and recording equipment. We presently operate 165 Guitar
Center stores, with 127 stores in 50 major markets and 36 stores
in secondary markets and 2 stores in tertiary markets across the
U.S. In addition, the Music & Arts division operates 81 stores
specializing in band instruments for sale and rental, serving
thousands of teachers, band directors, college professors and
students. Guitar Center is also the largest direct response
retailer of musical instruments in the U.S. through our wholly
owned subsidiary, Musician's Friend, Inc.
As reported in the Troubled Company Reporter on March 29, 2005,
Standard & Poor's Ratings Services raised its ratings on specialty
music retailer Guitar Center Inc. The corporate credit rating was
raised to 'BB' from 'BB-'.
HARD ROCK: S&P Places B+ Corporate Credit Rating on CreditWatch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on casino
owner and operator Hard Rock Hotel Inc., including its 'B+'
corporate credit rating, on CreditWatch with developing
implications. The CreditWatch listing follows the company's
announcement that it will explore the potential sale of its Hard
Rock Hotel & Casino in Las Vegas after receiving a number of
proposals to purchase the asset. Hard Rock had about $200 million
in debt outstanding as of Sept. 30, 2005.
Developing implications suggest that ratings could be affected
either positively or negatively, depending on whether a
transaction ultimately occurs. An example of a transaction that
might have a positive effect would be an acquisition by a higher-
rated entity. An example of a transaction that could have a
negative effect would include the sale of the asset to a more
highly leveraged entity.
In resolving its CreditWatch listing, Standard & Poor's will
continue to monitor transaction developments. As the company may
not provide ongoing guidance relative to its progress, Standard &
Poor's may decide to resolve the CreditWatch listing at a later
date if it appears a transaction is not likely to occur.
HOVNANIAN ENTERPRISES: Moody's Affirms Low-B Ratings on Securities
------------------------------------------------------------------
Moody's Investors Service assigned a Ba1 to the new issue of $250
million of senior notes of K. Hovnanian Enterprises, Inc. At the
same time, Moody's affirmed all of the company's existing ratings,
including the corporate family rating and the ratings on the
company's existing senior notes at Ba1, senior subordinated notes
at Ba2, and Ba3 on its preferred stock. The ratings outlook is
stable.
The stable ratings outlook reflects Moody's expectation that the
company will continue to operate at or close to a 50% net
homebuilding debt/capitalization ratio even as it continues to
pursue an acquisition-based growth strategy.
The ratings acknowledge Hovnanian's increased size, scale and
market penetration, strong interest coverage, margin and return
performance, continuing success in diversifying its operating
profits, and significant management ownership. At the same time,
however, the ratings consider Hovnanian's higher-than-average
business risk profile given its appetite for acquisitions, greater
willingness than its peers to leverage its balance sheet,
significant capacity under its credit agreement that could lead to
substantial additional debt incurrence, integration risks
associated with its acquisitions, larger-than-average amount of
spec building, and the cyclical nature of the homebuilding
industry.
The ratings affirmed are:
* Ba1 corporate family rating
* Ba1 on $150 million of 10.5% senior notes due 10/01/2007
* Ba1 on $100 million of 8% senior notes due 04/01/2012
* Ba1 on $215 million of 6.5% senior notes due Jan. 15, 2014
* Ba1 on $150 million of 6.375% senior notes due Dec. 15, 2014
* Ba1 on $200 million of 6.25% senior notes due Jan. 15, 2015
* Ba1 on $300 million of 6.25% senior notes due Jan. 15, 2016
* Ba2 on $150 million of 8.875% senior subordinated notes due
04/01/2012
* Ba2 on $150 million of 7.75% senior subordinated notes due
5/15/2013
* Ba2 on $100 million of 6% senior subordinated notes due
Jan. 15, 2010
* Ba3 on $140 million Series A Preferred Stock
(P)Ba1/(P)Ba2/(P)Ba2/(P)Ba3 prospective ratings on $162 million of
various securities that could be offered under a multiple
seniority shelf registration.
All of K. Hovnanian Enterprises' debt is guaranteed by the parent
company, Hovnanian Enterprises, Inc., and by its restricted
operating subsidiaries.
Proceeds from the $250 million senior note offering will be used
to pay down the company's revolver.
As illustrated in the Homebuilding Rating Methodology dated
December 2004, Hovnanian outperformed its Ba rating category in
product and price point diversity, gross margins, return on
assets, and interest coverage. Its 26.4% gross margin for fiscal
2005 was particularly impressive, considering that Hovnanian
forgoes a substantial amount of the profit potential inherent in
building a home by owning substantially less land than its peer
group. Debt leverage, as measured by the ratio of homebuilding
debt to capitalization, was a solid 46.5% at fiscal year-end
October 31, 2005. Hovnanian's "true" debt leverage, however, is
probably higher, considering that the company owns less land and
options more land than its peer group. Moody's expects the
company to maintain an average 50% net homebuilding debt-to-
capitalization ratio or better in line with management's long-
term target.
Going forward, an upgrade will depend largely on the company's
clearly adopting, and maintaining, a gross homebuilding
debt/capitalization target at 45% or lower, growing its equity
base, and successfully integrating its recent and any further
acquisitions while continuing to generate above-average returns.
Factors that could stress the outlook and ratings will include
material problems in integrating its acquired companies or a
releveraging of the balance sheet for acquisitions, share
repurchases, or because of major impairment charges to above 55%.
Established in 1959 and headquartered in Red Bank, New Jersey,
Hovnanian Enterprises, Inc., designs, constructs and markets
single-family detached homes and attached condominium apartments
and townhouses. Revenues and net income for the fiscal year that
ended Oct. 31, 2005 were $5.3 billion and $472 million,
respectively.
HOVNANIAN ENTERPRISES: Fitch Rates $250 Million Sr. Notes at BB+
----------------------------------------------------------------
Fitch Ratings assigned a 'BB+' rating to Hovnanian Enterprises,
Inc.'s (NYSE: HOV) $250 million senior unsecured notes due 2016.
The rating outlook is stable.
The $250 million issue will be ranked on a pari passu basis with
all other senior unsecured debt, including HOV's revolving and
letter of credit facility. Proceeds from the new debt issues will
be used for general corporate purposes and repayment of existing
debt.
Ratings for HOV are based on:
* the company's successful execution of its business model;
* conservative land policies and geographic;
* price point; and
* product line diversity.
HOV has been an active consolidator in the homebuilding industry
which has contributed to above average growth during the past
seven years, but has kept debt levels somewhat higher than its
peers. Management has also exhibited an ability to quickly and
successfully integrate its acquisitions. In any case, now that
HOV has reached current scale there may be somewhat less use of
acquisitions going forward and acquisitions may be smaller
relative to the company's current size. Significant insider
ownership aligns management's interests with HOV's long term
financial health.
Risk factors include the inherent (although somewhat tempered)
cyclicality of the homebuilding industry. The ratings also
manifest HOV's aggressive, yet controlled growth strategy,
concentration in California (20% of consolidated deliveries in the
fourth quarter of fiscal 2005) and the company's capitalization
and size.
HOV's EBITDA, EBIT and FFO to interest ratios tend to be close to
the average public homebuilder, while inventory turnover tends to
be modestly stronger. HOV's leverage is somewhat higher and debt
to EBITDA ratio is slightly below the averages of its peers.
Although HOV has certainly benefited from the generally strong
housing market of recent years, a degree of profit enhancement is
also attributed to purchasing design and engineering, access to
capital and other scale economies that have been captured by the
large national and regional public homebuilders in relation to
non-public builders. These economies, HOV's presale operating
strategy and a return on equity and assets orientation provide the
framework to soften the margin impact of declining market
conditions in comparison to previous cycles. HOV's ratio of sales
value of consolidated backlog to debt since 2001 has ranged
between 1.6x to 2.5x and is currently 2.5x - a comfortable
cushion.
HOV employs conservative land and construction strategies. The
company typically purchases land only after necessary entitlements
have been obtained so that development or construction may begin
as market conditions dictate. HOV extensively uses lot options.
The use of land option contracts without specific performance
clauses gives the company the ability to renegotiate price/terms
or void the option which limits down side risk in market downturns
and provides the opportunity to hold land with minimal investment.
At present 74% of its lots are controlled through options - a
higher percentage than most public builders. Total lots,
including those owned, were 116,126 at Oct. 31, 2005. This
represents a 6.5 year supply based on latest twelve months home
deliveries. However, the company has one of the lowest owned lot
positions in the industry, typically owning only a one to two year
supply. An estimated 85%-90% of its homes are pre-sold. The
balance is homes under construction or homes completed in advance
of a customer's order. HOV's unconsolidated joint venture
activity is growing, but is still moderate in size and
conservatively levered.
Fitch estimates that in recent years at least half of HOV's growth
has resulted from a series of acquisitions - seventeen during the
past eight years. (However, in each of the last five years more
than 90% of HOV's growth in earnings has come from operations
owned more than one year.) The acquisitions have enabled HOV to
grow its position and increase market share, often broadening
product and customer bases in existing markets. They have also
enabled HOV to enter new markets. The combinations typically were
funded by debt and to a lesser degree by stock and retained
earnings. At times there were earn-outs which reduced risk and
served to retain key management.
HOV's current acquisition strategy focuses on purchasing smaller
builders and land portfolios in current markets and on making
selected acquisitions in new markets if there is a good strategic
fit and appropriate returns can be achieved. The key analysis
will be return on capital as to whether an acquisition will be
executed. Fitch believes that management would balance debt and
stock as acquisition currency to maintain current credit ratios.
HOV is publicly committed to maintaining an average net
debt/equity ratio of 1.0:1.0.
HOV maintains a $1.2 billion revolving and letter of credit
facility. The facility contains an accordion feature under which
the aggregate commitment can be increased to $1.3 billion subject
to the availability of additional commitments.
As of Oct. 31, 2005, the outstanding balance under the agreement
was zero. Also, as of the end of the fourth quarter HOV had
issued $330.8 million of letters of credit which reduces cash
available under the agreement. The revolving credit agreement
matures in July 2009. The company has irregularly purchased
moderate amounts of its stock in the past. HOV repurchased
600,000 shares of common stock in fiscal 2005 at a cost of $34
million. About 1.5 million shares remain in the current class A
common stock repurchase authorization as of Oct. 31, 2005.
IASIS HEALTHCARE: Moody's Affirms $475MM Sr. Notes Rating at B3
---------------------------------------------------------------
Moody's Investors Service changed the ratings outlook of IASIS
Healthcare LLC to negative from stable and affirmed the company's
existing ratings.
These ratings have been affirmed:
* $250 million senior secured revolving credit facility due
2010, rated B1
* $425 million senior secured term loan due 2011, rated B1
* $475 million senior subordinated notes due 2014, rated B3
* Corporate family rating, B1
The change in outlook reflects Moody's view that the company faces
challenges over the next twelve to eighteen months. Moody's
expects free cash flow to remain constrained, and likely negative,
in the near term as IASIS continues implementing its capital
investment plan. Moody's expects the company to spend the
majority of its cash flow on capital projects, including the
construction of Mountain Vista Medical Center, a new hospital in
the Phoenix, Arizona market.
Moody's is also concerned about quarterly trends in adjusted
admissions growth that have lagged those of industry peers due in
part to soft volume in Arizona and Florida, which represent seven
of the company's 15 facilities. As a result, IASIS reported same-
facility adjusted admissions growth of -1.9% for the fiscal year
ended Sept. 30, 2005. In the first quarter of 2006, the company
also experienced adjusted admissions growth of 0.9%, which
excludes Hurricane Rita's negative effect on volume at the
company's new facility in Port Arthur, Texas. Including the
effect of the hurricane, adjusted admissions growth was -1.6%.
Moody's notes that results for fiscal 2005 indicate that sluggish
revenue growth in the inpatient business was offset by growth in
Health Choice, the company's Medicaid managed health plan. Growth
in Health Choice operations as a percentage of consolidated
revenue increases concentration risk because Health Choice relies
heavily on a single contract with the Arizona Health Care Cost
Containment System. Moody's notes that the health plan does not
contribute much to the company's operating margins and does not
represent a significant concentration of consolidated EBITDA.
The company also faces, along with its peers, rising exposure to
uninsured patients, and the resulting bad debt expense. For the
first quarter of 2006, IASIS experienced a large increase in
uninsured volume through its emergency rooms, in part due to the
effect of Hurricane Rita. Bad debt expense as a percentage of net
revenue at the company was in the 13% range in the first quarter
of fiscal 2006, which is slightly higher than that of its peers.
Further increases could intensify pressure on the company's
operating margins. The industry also faces potential cuts to
Medicare reimbursement due to the federal government's proposed
budget for 2007.
The affirmation of the ratings recognizes the improvements in
margin performance and cash flow coverage metrics since the
company's acquisition by Texas Pacific Group in June 2004. Moody's
believes that the company's performance in areas considered in
Moody's Global For-Profit Hospital Industry Rating Methodology
continue to support the B1 corporate family rating, although some
metrics are weak for the category. More specifically, the company
has been able to offset declines in factors such as growth in
same-facility adjusted admissions with growth in same-facility
revenue per adjusted admission and improvements in cash flow
coverage of debt.
IASIS has been free cash flow positive on a last twelve-month
basis since June 2005. For the twelve months ended Dec. 31, 2005,
Moody's calculates that the company's adjusted operating cash flow
to adjusted debt and adjusted free cash flow to adjusted debt
ratios were approximately 14% and 2%, respectively. These ratios
improved from approximately 10% and -3%, respectively, for fiscal
2004. However, Moody's expects the ratio of adjusted free cash
flow to adjusted debt to be negative for fiscal 2006.
Other factors constraining the rating include a concentration of
revenue and cash flow in five states and fourteen facilities. In
addition, the company continues to look at acquisitions to
supplement organic growth initiatives.
The combination of the previously discussed issues facing IASIS
and metrics that are considered weak for the current rating
category will likely continue to constrain the ratings. Therefore,
Moody's does not foresee an upgrade of the ratings in the near
term. However, Moody's could return the outlook to stable if the
company returns to positive free cash flow through return on its
capital investments or improvements in volume and pricing.
Additionally, Moody's would like to see a larger portion of the
company's revenue growth coming from the higher margin acute care
segment of the business.
Moody's could downgrade the ratings if IASIS is not expected to
return to positive free cash flow coverage of debt or if the
company experiences a deterioration of operating cash flow
coverage of debt to below 10%. Moody's notes that pressure on the
ratings could also result from declining trends in volume and
pricing. Additionally, given the significant capital spending
initiatives of the company, downward pressure on the ratings could
result from a further deterioration of the return on assets.
Moody's estimates that the return on assets has decreased from
approximately 3.9% for fiscal 2004 to 2.1% for fiscal 2005.
Further, Moody's could consider downgrading the ratings if the
company were to change its strategy and attempt to drive growth
through a large debt-financed acquisition.
Moody's expects IASIS to continue to have adequate liquidity,
including access to an undrawn $250 million revolving credit
facility. While IASIS is not expected to borrow under the
revolver to fund operations, the company could draw on the
facility for project-based investments over the next twelve
months. Moody's expects the company's free cash flow to continue
to be constrained by ongoing capital investments. Moody's expects
the company will remain in compliance with the financial covenants
set forth in the credit agreement. Such covenants should not
limit the company's access to the unused portion of the revolving
facility.
IASIS Healthcare, located in Franklin, Tennessee, is an owner
operator of medium sized acute care hospitals in high growth urban
and suburban markets. IASIS operates 14 acute care hospitals and
one behavioral health hospital with a total of 2,228 beds in
service. IASIS also operates a Medicaid managed health plan in
Phoenix that serves over 113,000 members. The company had net
revenue of approximately $1.5 billion for the twelve months ended
Dec. 31, 2005.
INDIGITA CORP: Case Summary & 9 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Indigita Corporation
126 East Dyer Road, Suite A
Santa Ana, California 92707
Tel: (714) 513-1800
Fax: (714) 513-1801
Bankruptcy Case No.: 06-10187
Type of Business: The Debtor produces semiconductors and other
electronic peripherals. See www.indigita.com
Chapter 11 Petition Date: February 23, 2006
Court: Central District Of California (Santa Ana)
Judge: John E. Ryan
Debtor's Counsel: Marc J. Winthrop, Esq.
Winthrop Couchot Professional Corporation
660 Newport Center Drive, 4th Floor
Newport Beach, California 92660
Tel: (949) 720-4100
Estimated Assets: $1 Million to $ 10 Million
Estimated Debts: $1 Million to $ 10 Million
Debtor's 9 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Emulex Corporate Services Corp. $795,000
3333 Susan Street
Costa Mesa, CA 92626
DemiCom $17,826
31328 cia Colina #102
Westlake Village, CA 91362
Jim Radford $7,290
Maxtor Corporation $6,150
Min Aik Industrial Co., Ltd. $2,926
Vinatronic, Inc. $2,841
Jurong High-Tech $0
Fish & Richardson $0
Latham & Watkins Unknown
INTEGRATED ELECTRICAL: Can Obtain DIP Financing on Interim Basis
----------------------------------------------------------------
Without immediate access to fresh financing, Integrated Electrical
Services, Inc., and its debtor-affiliates won't be able to conduct
their business in a normal fashion. The Debtors won't be able to
pay postpetition operating expenses, including costs relating to,
inter alia, the purchase of inventory and the payment of
subcontractors, rent, taxes, utilities, salaries and wages, and
employee benefits.
The Debtors also need money to pay Court-approved prepetition
operating expenses including, inter alia:
(a) payments to trade vendors for goods ordered, but not yet
received, which are necessary to ensure an uninterrupted
supply of inventory,
(b) payment of prepetition wages, salaries, commissions,
incentive payments, and employee benefits, including
prepetition workers' compensation claims and other
benefits, which are necessary to assure the continued
services of the employees during the pendency of their
cases, and
(c) payments to all other undisputed trade vendors and
subcontractors.
If the Debtors fail to pay their trade vendors, employees, and
customers, their efforts to confirm the Plan in a timely fashion
will be undermined.
The Debtors do not have sufficient unencumbered cash on hand to
meet their immediate operating needs.
DIP Financing Facility
Thus, the Debtors seek the U.S. Bankruptcy Court for the Northern
District of Texas's authority to enter into a postpetition credit
agreement with their prepetition senior secured lender, Bank of
America, N.A.
Sanford R. Edlein, Integrated Electrical Services, Inc.'s chief
restructuring officer, relates the Debtors are unable to obtain
credit that is not secured by a senior lien on property of the
estate that is not otherwise subject to a lien. In their
attempts to obtain postpetition financing, the Debtors had
discussions with 15 potential lenders, all of which required, as
did Bank of America, a lien on property of the Debtors. Given
the Debtors' current financial status and based on its
discussions with other potential lenders, the Debtors believe
that alternative financing is not available to them.
Under the terms of the DIP Facility, the Debtors will enter into
a debtor-in-possession credit agreement and related documentation
and will grant the DIP Lender a security interest in certain of
their assets and properties. Due to the unfunded nature of the
outstanding indebtedness under the Pre-Petition Credit Agreement,
all reimbursement obligations with respect to unfunded letters of
credit will be deemed to be obligations under the DIP Facility.
The DIP Credit Facility will consist of a revolving credit
facility of up to $80,000,000, including a $72,000,000 sub-limit
for letters of credit.
The Debtors will use the DIP Facility to issue standby or
commercial letters of credit, and to finance their ongoing
working capital needs. However, no more than $22,000,000 in new
or replacement letters of credit outstanding at one time will be
provided to the Debtors.
The Debtors are required to maintain at least $20,000,000 in its
Cash Collateral Account at all times for the first three months
of their Chapter 11 cases.
IES' obligations to the DIP Lender will be:
(a) entitled to superpriority administrative expense claim
status pursuant to Section 364(c)(1) of the Bankruptcy
Code;
(b) secured, pursuant to Section 364(d) of the Bankruptcy
Code, by a first priority security interest in and lien on
all of the estates' assets;
(c) secured, pursuant to Section 364(c)(2) of the Bankruptcy
Code, by a perfected first priority lien on all
unencumbered property of the Debtors; and
(d) further secured, pursuant to Section 364(c)(3) of the
Bankruptcy Code, by a perfected second priority lien on
all property of the Debtors that is subject to Permitted
Liens.
The DIP Facility will mature at the earliest to occur of:
(i) the expiration of a period of 12 months from the closing
date of the DIP Agreement,
(ii) 45 days after the Petition Date if no Final Order
approving the DIP Facility is entered,
(iii) the effective date of an approved Plan of Reorganization,
or
(iv) termination of the DIP Agreement.
IES promises that it will maintain Adjusted Net Earnings from
Operations (defined as Net Earnings plus interest expenses,
Federal, state, local and foreign income taxes, depreciation,
amortization and other identified non-cash items not otherwise
included which are acceptable to Agent, and restructuring
expenses) not less than:
Time Period Minimum EBITDAR
----------- ---------------
6 Calendar Month Period ending Mar. 31, 2006 $9,700,000
7 Calendar Month Period ending Apr. 30, 2006 $10,400,000
8 Calendar Month Period ending May 31, 2006 $11,200,000
9 Calendar Month Period ending June 30, 2006 $12,200,000
10 Calendar Month Period ending July 31, 2006 $13,400,000
11 Calendar Month Period ending Aug. 31, 2006 $14,400,000
12 Calendar Month Period ending Sept. 30, 2006 $15,600,000
13 Calendar Month Period ending Oct. 31, 2006 $18,200,000
14 Calendar Month Period ending Nov. 30, 2006 $20,700,000
16 Calendar Month Period ending Dec. 31, 2006 $23,200,000
The DIP Facility will bear interest at a rate equal to LIBOR plus
350 basis points or BofA's Base Rate plus 150 basis points.
IES is required to pay a number of fees including a 0.375% Unused
Line Fee per annum on every dollar not borrowed from BofA,
customary letter of credit fees, and a $1,000,000 closing fee.
IES will also pay (a) all out-of-pocket costs and expenses of
each DIP Lender associated with the DIP Facility, plus (b) $850
per day per field examiner charges, in addition to all out-of-
pocket expenses for field examinations.
* * *
On an interim basis, the Hon. Barbara J. Houser of the Bankruptcy
Court for the Northern District of Texas authorizes the Debtors
to, among others, execute and deliver the DIP Loan Agreement, and
pay and perform all obligations, covenants and agreements in
accordance with the terms of the DIP Loan Agreement.
The fees and costs of the DIP Lenders' case professionals will be
subject to review by the Court.
After the occurrence of an Event of Default, the Debtors may use
proceeds of Collateral and DIP Loans to pay:
(a) up to $1,600,000 of:
-- unpaid Professional Fees and disbursements incurred
from the Petition Date through the occurrence of the
Event of Default, and
-- Professional Fees incurred after the occurrence of an
Event of Default; and
(b) U.S. Trustee Fees.
A full-text copy of the Interim DIP Financing Order is available
for free at http://bankrupt.com/misc/ies_interimDIPorder.pdf
The Final DIP Financing Hearing is scheduled for March 10, 2006,
at 9:00 a.m., in Dallas, Texas.
Objections must be filed and served no later than March 8, 2006,
on:
(i) Counsel for the Debtors:
Vinson & Elkins L.L.P.,
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attn: Daniel C. Stewart, Esq.
(ii) Counsel for the Agent for the DIP Lenders:
Patton Boggs LLP
2001 Ross Avenue, Suite 3000
Dallas, Texas 75181
Attn: Robert W. Jones, Esq.
(iii) the United States Trustee
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. As of Dec. 31, 2005, Integrated Electrical reported
assets totaling $400,827,000 and debts totaling $385,540,000.
(Integrated Electrical Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc. 215/945-7000)
INTEGRATED ELECTRICAL: Can Use Cash Collateral on Interim Basis
---------------------------------------------------------------
Prior to the Petition Date, Integrated Electrical Services,
Inc.'s primary sources of working capital were cash flow from
operations and advances under a Loan and Security Agreement dated
as of August 1, 2005, with Bank of America, N.A.
The Pre-Petition Credit Agreement consists of an $80,000,000
revolving credit facility with a letter of credit sub-facility.
As of January 31, 2006, Integrated Electrical Services, Inc., and
its debtor-affiliates' obligations under the Pre-Petition Credit
Agreement were comprised entirely of reimbursement obligations
with respect to outstanding letters of credit. No amounts were
drawn on the revolving facility.
The Debtors' obligations under the Pre-Petition Credit Agreement
are secured by a lien on substantially all of their assets,
excluding assets pledged to secure surety bond obligations.
The Debtors need to use cash and the proceeds of existing
accounts receivable and other collateral to maintain the
operation of their businesses and preserve their value as going
concerns. These essential items, however, constitute part of the
collateral package securing the Debtors' obligations under the
Pre-Petition Credit Agreement and surety bonds issued by Federal
Insurance Company.
Because the Debtors filed for bankruptcy, absent court authority
pursuant to 11 U.S.C. Sec. 363(c), the Debtors can't touch the
Cash Collateral. Without authorization to use the Cash
Collateral, the Debtors would be left without no working capital
and would suffer immediate and irreparable harm.
By this motion, the Debtors ask the U.S. Bankruptcy Court for the
Northern District of Texas to:
(i) authorize them to use Cash Collateral to pay overhead,
operating expenses and ordinary course obligations
necessary to maintain and preserve the going-concern value
of their assets and business, and to administer their
estates, including, but not limited to, using Cash
Collateral to pay:
(a) any prepetition operating and other expenses
approved by the Court,
(b) the postpetition operations of Debtors' businesses,
and
(c) all costs and expenses arising in connection with
the administration of their estates; and
(ii) grant adequate protection to Bank of America and Federal
in the form of replacement liens with the same priority
and in the same categories and types of collateral that
secure their prepetition facilities.
The Debtors will limit their use of Cash Collateral to amounts
specified in a 13-Week Budget. A full-text copy of the Debtors'
Consolidated Forecast of Cash Flows commencing as of the week
ending February 18, 2006, through and including the week ending
May 13, 2006, is available for free at:
http://bankrupt.com/misc/ies_13weekbudget.pdf
Interim Approval
The Court authorizes the Debtors to use Cash Collateral solely in
accordance with the Budget. The Hon. Barbara J. Houser of the
Bankruptcy Court for the Northern District of Texas directs that
the Debtors' actual cash receipts will be:
-- for the first calendar week, at least 75% of those
projected for the corresponding week in the Budget,
-- in the aggregate for the first two calendar weeks, at least
80% of the aggregate amount projected for the first two
calendar weeks in the Budget,
-- in the aggregate for the first three calendar weeks, at
least 85% of the aggregate amount projected for the first
three calendar weeks in the Budget, and
-- in the aggregate for the first four calendar weeks, and for
each thereafter occurring trailing four calendar week
period, on an aggregate basis at least 90% of those
projected for the corresponding period in the Budget.
Likewise, Judge Houser rules, the Debtors' actual cash
disbursements may not exceed projected cash disbursements by:
(i) more than 25% per line item for the first calendar week of
the Budget, and more than 20% in the aggregate for all
cash disbursements during the first calendar week,
(ii) more than 20% per line item in the aggregate for the first
two calendar weeks of the Budget, and more than 15% in the
aggregate for all cash disbursements during the first two
calendar weeks,
(iii) more than 15% per line item in the aggregate for the first
three calendar weeks of the Budget, and more than 10% in
the aggregate for all cash disbursements during the first
three calendar weeks, and
(iv) more than 10% per line item in the aggregate for the first
four calendar week period and for each thereafter
occurring trailing four calendar week period with the
relevant per line items in the Budget, and more than 5% in
the aggregate for all cash disbursements during the first
four calendar week period and for each thereafter
occurring trailing four calendar week period.
The Court will convene the Final Cash Collateral Hearing on
March 10, 2006, at 9:00 a.m., in Dallas, Texas.
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. As of Dec. 31, 2005, Integrated Electrical reported
assets totaling $400,827,000 and debts totaling $385,540,000.
(Integrated Electrical Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc. 215/945-7000)
INTEGRATED ELECTRICAL: Disclosure Statement Hearing Set on Mar. 10
------------------------------------------------------------------
The Hon. Barbara J. Houser of the U.S. Bankruptcy Court for the
Northern District of Texas scheduled a hearing for March 10,
2006, at 9:00 a.m. (CST) to consider the adequacy of the
information contained in Integrated Electrical Services, Inc., and
its debtor-affiliates' Disclosure Statement.
Disclosure Statement Objections, if any, must:
(i) be in writing,
(ii) comply with the Bankruptcy Rules and the Local Rules of
the Court,
(iii) set forth the name of the objector, and the nature and
amount of any claim or interest asserted against the
estates or property of the Debtors,
(iv) state with particularity the legal and factual basis for
that objection, and
(v) be filed with the Clerk of the United States Bankruptcy
Court for the Northern District of Texas, Dallas Division,
so as to be actually received no later than 12:00 (noon)
on March 8, 2006, by the Court and by:
(a) Counsel to the Debtors:
Paul E. Heath, Esq.
Courtney S. Lauer, Esq.
Vinson & Elkins L.L.P.
Trammell Crow Center
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Fax: (214) 999-7960
(b) Proposed Counsel to the Official Committee
of Unsecured Creditors:
Marcia Goldstein, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Fax: (212) 735-4919
- and -
Alfredo R. Perez, Esq.
Weil, Gotshal & Manges LLP
100 Louisiana, Suite 1600
Houston, Texas 77002
Fax: (713) 224-9510
(c) United States Trustee:
Office of the United States Trustee
1100 Commerce Street, Room 9C60
Dallas, Texas 75242
Fax: (214) 767-6530
(d) all other parties requesting notice
The principal economic terms of the Plan of Reorganization filed
by Integrated Electrical Services, Inc., and its debtor-
affiliates, provide for the Company's balance sheet to be
restructured on the effective date of the Plan in this manner:
(a) the allowed Class 5 claims (Senior Convertible Note
Claims) will be refinanced from the proceeds of the term
exit facility;
(b) the allowed Class 6 claims (Senior Subordinated Note
Claims) will be converted into 82% of the new IES common
stock to be issued pursuant to the Plan, before giving
effect to new options to be issued pursuant to a long term
incentive plan;
(c) all outstanding shares of prepetition IES common stock
will be cancelled and the holders of allowed interests in
Class 8 (IES Common Stock Interests) will receive a pro
rata share of 15% of the new IES common stock to be issued
pursuant to the Plan, before giving effect to new options
to be issued pursuant to a long term incentive plan;
(d) all prepetition, outstanding stock options, warrants,
stock rights, and other rights to purchase or acquire
prepetition IES common stock in Class 9 will be cancelled;
and
(e) all undisputed claims, including Class 1 (Priority
Claims), Class 2 (Credit Agreement Claims), Class 3
(Secured Claims), Class 4 (Unsecured Claims), Class 7
(Subordinated Claims), and Class 10 (IES Subsidiary Debtor
Interests) will either be reinstated or paid in full on
the effective date of the Plan, to the extent that the
Bankruptcy Court does not permit the Debtors to pay them
in the ordinary course of business during the pendency of
the Chapter 11 Cases.
Under the Plan, there are four classes of impaired claims or
equity interests, three of which are entitled to vote:
(i) Class 5 (Senior Convertible Note Claims);
(ii) Class 6 (Senior Subordinated Note Claims); and
(iii) Class 8 (IES Common Stock Interests).
Holders of equity interests in Class 9 (IES Other Equity
Interests) are not entitled to receive a distribution on account
of their interests and are therefore deemed to have rejected the
Plan.
The Plan is supported by holders who hold approximately 61% of
the Senior Subordinated Notes, and it is expected that the
Debtors will easily obtain sufficient votes from Class 6
claimants to confirm the Plan pursuant to Section 1129(b) of the
Bankruptcy Code. Furthermore, the Debtors have commitment letters
from Bank of America to provide both debtor-in-possession
financing and exit financing on a senior secured basis.
A full-text copy of the Disclosure Statement is available for
free at http://researcharchives.com/t/s?5c8
A full-text copy of the Plan of Reorganization is available for
free at http://researcharchives.com/t/s?5c9
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. As of Dec. 31, 2005, Integrated Electrical reported
assets totaling $400,827,000 and debts totaling $385,540,000.
(Integrated Electrical Bankruptcy News, Issue No. 1; Bankruptcy
Creditors' Service, Inc. 215/945-7000)
INTEGRATED HEALTH: Balks at Abe Briarwood's Move to Release $1.5MM
------------------------------------------------------------------
As reported in the Troubled Company Reporter on Feb. 6, 2006, Abe
Briarwood Corp. wants the U.S. Bankruptcy Court for the District
of Delaware to order the release of a $1,554,815 Medicare
receivable, currently held in escrow.
Integrated Health Services, Inc., and Briarwood entered into a
Stock Purchase Agreement under which Briarwood was to effectively
acquire all of Briarwood's assets.
Laurie S. Polleck, Esq., at Jaspan Schlesinger Hoffman LLP, in
New York, relates that one of the major assets acquired by
Briarwood under the SPA and the IHS Debtors' Plan of
Reorganization were IHS' account receivables.
According to Ms. Polleck, IHS' account receivables include
receivables owed from the United States Centers for Medicare and
Medicaid Services -- a portion of which had been subjected to an
administrative freeze pending resolution of certain CMS claims
subject to an appeals process.
The appeals process resulted in a deduction of the CMS claim from
the amount administratively frozen with the excess amount
allocated to IHS for $1,554,815.
IHS Liquidating Objects
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in
Wilmington, Delaware, points out that Abe Briarwood Corp.'s
request to permit the release of the $1,554,815 medicare
receivable is procedurally defective.
Mr. Brady argues that under Rule 7001 of the Federal Rules of
Bankruptcy Procedure, Briarwood cannot seek declaratory relief by
way of a "motion". The Bankruptcy Rules require that the relief
be sought through commencement of an adversary proceeding.
Mr. Brady tells Judge Walrath that Briarwood's Request must be
adjourned without date, and rescheduled only after:
-- the Court has rendered its decision on Briarwood's prior
request to compel IHS Liquidating LLC to comply with the
terms of their Stock Purchase Agreement; and
-- the parties have had an opportunity to confer on the
implications of the Court's Decision with respect to the
request for release of funds.
If the Court is not inclined to deny Briarwood's Request or
adjourn it indefinitely, Mr. Brady asserts that the Court should
defer, at a minimum, any substantive hearing on the merits of the
Request until after the conclusion of a reasonable period of
discovery, after which the parties should submit appropriate
briefs and fully present the matter at a trial before the Court.
Briarwood Responds
Laurie S. Polleck, Esq., at Jaspan Schlesinger Hoffman LLP, in
New York, contends the IHS Liquidating LLC's arguments are merely
delay tactics.
According to Ms. Polleck, IHS Liquidating failed to dispute that
the $1,554,815 medicare receivable is an account receivable
purchased by Abe Briarwood Corp. under the terms of the Stock
Purchase Agreement, and that the SPA was approved, consummated and
confirmed pursuant to various Court Orders and the IHS Debtors'
Plan of Reorganization.
IHS Liquidating ignored the fact that "an adversary proceeding is
not necessary where the relief sought is the enforcement of an
order previously obtained," Ms. Polleck maintains.
In addition, Ms. Polleck says, IHS Liquidating failed to:
* allege any basis for either preliminary or pre-judgment
relief, which would restrain the release of the Funds to
Briarwood; and
* set forth any substantive defense to the release of the
Funds.
For these reasons, Ms. Polleck says, Briarwood's Request must be
approved.
Integrated Health Services, Inc. -- http://www.ihs-inc.com/--
operated local and regional networks that provide post-acute care
from 1,500 locations in 47 states. The Company and its
437 debtor-affiliates filed for chapter 11 protection on
February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical
Corporation and its direct and indirect debtor-subsidiaries broke
away from IHS and emerged under their own plan of reorganization
on March 26, 2002. Abe Briarwood Corp. bought substantially all
of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan
on May 12, 2003, and that plan took effect September 9, 2003.
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP,
represent the IHS Debtors. On September 30, 1999, the Debtors
listed $3,595,614,000 in consolidated assets and $4,123,876,000 in
consolidated debts. (Integrated Health Bankruptcy News, Issue
No. 101; Bankruptcy Creditors' Service, Inc., 215/945-7000)
INTEGRATED HEALTH: Court Delays Entry of Final Decree to Oct. 30
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware postpones
the entry of a final decree closing the Chapter 11 case of
Integrated Health Services, Inc., Case No. 00-389 (MWF), until
October 30, 2006.
Judge Mary F. Walrath also extends the deadline for IHS
Liquidating LLC to file a final report and accounting for all the
IHS Debtors' cases until June 29, 2006.
As reported in the Troubled Company Reporter on Feb. 2, 2006, the
IHS Liquidating LLC has made substantial progress in its efforts
with regard Integrated Health Services, Inc., and its debtor-
affiliates' claims reconciliation process.
Due to the pending and active litigation before the Court, IHS
Liquidating asserts that case closure at this time is not
possible. Filing a final report and accounting would also be
inaccurate since the claims administration process has not come to
a conclusion.
"Delaying entry of a final decree for the IHS case will help
ensure that distributions are made under the Plan only to those
actual creditors, and in such amounts, as are appropriate," Robert
S. Brady, Esq., at Young Conaway Stargatt & Taylor, in Wilmington,
Delaware said.
Integrated Health Services, Inc. -- http://www.ihs-inc.com/--
operated local and regional networks that provide post-acute care
from 1,500 locations in 47 states. The Company and its
437 debtor-affiliates filed for chapter 11 protection on
February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical
Corporation and its direct and indirect debtor-subsidiaries broke
away from IHS and emerged under their own plan of reorganization
on March 26, 2002. Abe Briarwood Corp. bought substantially all
of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan
on May 12, 2003, and that plan took effect September 9, 2003.
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP,
represent the IHS Debtors. On September 30, 1999, the Debtors
listed $3,595,614,000 in consolidated assets and $4,123,876,000 in
consolidated debts. (Integrated Health Bankruptcy News, Issue
No. 101; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ISLE OF CAPRI: Earns $4.1 Mil. Net Income in Quarter Ended Jan. 22
------------------------------------------------------------------
Isle of Capri Casinos, Inc. (Nasdaq: ISLE) reported financial
results for its third quarter of fiscal 2006 ended Jan. 22, 2006.
For the third quarter, the Company earned $4.1 million of net
income, compared to $3.5 million of net income for the same
quarter last year. Included in net income for the quarter ended
Jan. 22, 2006, are $3.8 million in net hurricane related pre-tax
charges, related to Isle-Biloxi, Isle-Lake Charles, and Pompano
Park, and a $2.1 million pre-tax loss on early extinguishment of
debt related to Isle-Black Hawk.
The Company generated $269.8 million of revenue for the quarter
ended Jan. 22, 2006, compared to $265.4 million for the same
quarter in fiscal 2005.
The Company's balance sheet as of Jan. 22, 2006, showed
stockholders' equity of $259,920,000.
"I am pleased with the third quarter results particularly because
during this quarter most of the short term challenges facing the
Company's southern markets have been resolved. I believe the
Company is positioned well going forward, as our expansion work
continues with projects in Iowa and Missouri, our rebuilding in
Mississippi and new development opportunities in Florida and
Pennsylvania," according to chairman and chief executive officer,
Bernard Goldstein.
Third Quarter Highlights and Updates
-- Subsequent to the end of the quarter, the Company entered
into an agreement to sell its properties in Bossier City,
Louisiana and Vicksburg, Mississippi for $240 million cash.
Net proceeds from the sale will be used to fund existing
development projects and pay down debt. The Company
expects to record a gain on this transaction. The closing
of the transaction is expected to occur during the summer
of 2006.
-- Isle-Biloxi reopened on December 26, 2005, following
Hurricane Katrina, with 730 slot machines, a live poker
room with nine poker tables, 27 table games, three
restaurants and 525 hotel rooms. The casino was the first
land-based casino to open since the change in Mississippi
gaming legislation. Subsequent to the end of the quarter,
Isle-Biloxi added an additional 220 slot machines and a
European spa.
-- the Company signed a joint development agreement with
Lemieux Group LP that includes a provision for Isle to fund
a $290 million new multi-purpose arena and pursue a gaming
license for 3,000 slot machines in Pittsburgh,
Pennsylvania. The new multi-purpose arena and gaming
facility are part of a larger billion-dollar effort known
as Pittsburgh First to redevelop the Lower Hill and Uptown
Districts in conjunction with the Pittsburgh Penguins and a
development partner. This proposal is one of three
applications under consideration by the Pennsylvania Gaming
Control Board for a single license with a decision expected
by the end of calendar 2006 or early 2007.
-- Pompano Park Harness Track reopened for live racing on
Dec. 2, 2005 following Hurricane Wilma. In early December,
the Florida legislature passed legislation to allow 1,500
slot machines at pari-mutuel facilities in Broward County
including the Company's Pompano Park Harness Track. The
Company has proceeded with the design for the development
of an approximately $125 million racino at Pompano Park and
further development is awaiting operating rules and
regulations from the state and the satisfaction of other
contingencies.
-- the Company announced plans for an $85 million expansion
project at its Kansas City, Missouri property. The
expansion project will improve guest traffic patterns and
renovate existing gaming space. The Kansas City expansion
project is subject to negotiation of an amended lease and
development agreement and receipt of necessary permits and
approvals.
-- the new 162-room Colorado Central Station Hotel in Black
Hawk, Colorado opened on Dec. 24, 2005 ahead of schedule.
-- the Inn at Isle-Lake Charles reopened in late November and
brought the number of rooms at the property back to 493.
-- the Company announced that it will relocate its corporate
headquarters to the St. Louis County municipality of Creve
Coeur while maintaining a regional presence in Biloxi,
Mississippi. The Company plans to relocate approximately
150 corporate positions. The relocation process will begin
in early summer 2006.
"Our new casino in Biloxi is an example of the direction our
product is taking. I am proud of our team members in the southern
markets for overcoming significant challenges both personally and
professionally in order to get our properties open and operating,
"according to Timothy Hinkley, president and chief operating
officer.
About Isle of Capri
Isle of Capri Casinos, Inc. -- http://www.islecorp.com/-- a
leading developer and owner of gaming and entertainment
facilities, operates 16 casinos in 14 locations. The company owns
and operates riverboat and dockside casinos in Biloxi, Vicksburg,
Lula and Natchez, Mississippi; Bossier City and Lake Charles (two
riverboats), Louisiana; Bettendorf, Davenport and Marquette,
Iowa; and Kansas City and Boonville, Missouri. The company also
owns a 57 percent interest in and operates land-based casinos in
Black Hawk (two casinos) and Cripple Creek, Colorado. Isle of
Capri's international gaming interests include a casino that it
operates in Freeport, Grand Bahama, and a two-thirds ownership
interest in casinos in Dudley, Walsal and Wolverhampton,
England. The company also owns and operates Pompano Park Harness
Racing Track in Pompano Beach, Florida.
* * *
As reported in the Troubled Company Reporter on Feb. 16, 2006,
Moody's Investors Service confirmed Isle of Capri's restricted
group ratings and assigned a negative ratings outlook. The
confirmation was based primarily on improvements in the Company's
operating results as well the agreement to sell its Bossier City,
LA and Vicksburg, MS casinos to privately owned Legends Gaming,
LLC for $240 million in cash. The affected restricted group
ratings are:
* Corporate family rating -- Ba3;
* $400 million senior secured revolver due 2010 -- Ba2;
* $300 million senior secured term loan due 2011 -- Ba2;
* $500 million 7% senior subordinated debt due 2014 -- B2; and
* $200 million 9% senior subordinated debt due 2012 -- B2.
As reported in the Troubled Company Reporter on Dec. 26, 2005,
Standard & Poor's Ratings Services affirmed its ratings on Isle of
Capri, including its 'BB-' corporate credit rating. At the same
time, all ratings were removed from CreditWatch with negative
implications where they were placed on Sept. 1, 2005. About $1.2
billion in debt was outstanding as of Oct. 23, 2005.
J.P. MORGAN: Moody's Affirms Low-B Ratings on Eight Cert. Classes
-----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of five classes and
affirmed the ratings of thirteen classes of J.P. Morgan Chase
Commercial Mortgage Securities Corp., Commercial Mortgage Pass
-Through Certificates, Series 2002-CIBC5:
* Class A-1, $265,902,773 Fixed, affirmed at Aaa
* Class A-2, $487,155,000, Fixed, affirmed at Aaa
* Class X-1, Notional, affirmed at Aaa
* Class X-2, Notional, affirmed at Aaa
* Class B, $36,405,000, Fixed, upgraded to Aaa from Aa2
* Class C, $13,809,000, Fixed, upgraded to Aaa from Aa3
* Class D, $27,618,000, Fixed, upgraded to Aa3 from A2
* Class E, $13,809,000, Fixed, upgraded to A1 from A3
* Class F, $28,873,000, WAC, upgraded to Baa1 from Baa2
* Class G, $16,320,000, WAC, affirmed at Baa3
* Class H, $18,831,000, Fixed, affirmed at Ba1
* Class J, $12,553,000, Fixed, affirmed at Ba2
* Class K, $5,022,000, Fixed, affirmed at Ba3
* Class L, $5,021,000, Fixed, affirmed at B1
* Class M, $8,788,000, Fixed, affirmed at B2
* Class S-1, $5,670,418, WAC, affirmed at Ba1
* Class S-2, $6,343,179, WAC, affirmed at Ba2
* Class S-3, $5,093.765, WAC, affirmed at Ba3
As of the Feb. 13, 2006 distribution date, the transaction's
aggregate principal balance has decreased by 4.5% to
$977.0 million from $1.0 billion at securitization. The
Certificates are collateralized by 117 loans, ranging in size from
less than 1.0% to 10.5% of the pool, with the top ten loans
representing 36.2% of the pool. The pool's largest loan is shadow
rated investment grade. Eleven loans, representing 11.1% of the
pool, have defeased and are collateralized by U.S. Government
securities. The largest defeased loan is The Avion Portfolio
Loan, which is the pool's third largest loan.
One loan has been liquidated from the pool resulting in a realized
loss of approximately $274,000. Two loans, representing 1.5% of
the pool, are in special servicing. Moody's has estimated
aggregate losses of approximately $7.5 million for the specially
serviced loans. Twenty-two loans, representing 15.3% of the pool,
are on the master servicer's watchlist.
Moody's was provided with year-end 2004 operating results for
90.9% of the performing loans, excluding the defeased loans, and
partial year 2005 operating results for 70.9% of the performing
loans. Moody's weighted average loan to value ratio for the
conduit component is 87.4%, compared to 84.8% at securitization.
The upgrade of Classes B, C, D, E and F is due to a relatively
high percentage of defeased loans and increased credit support.
The shadow rated loan is the Simon Mall Portfolio Loan, which is
the pooled component of a $119.9 loan secured by a portfolio of
four regional malls totaling 2.5 million square feet. The non-
pooled $17.1 million loan is held within the trust and secures
Classes S-1, S-2 and S-3. Richmond Town Square comprises 1.0
million square feet and is located in the suburban Cleveland
community of Richmond Heights, Ohio. Inline occupancy is 80.0%,
compared to 97.0% at securitization. Midland Park Mall comprises
619,000 square feet and is located in Midland, Texas. Inline
occupancy is 95.0%, compared to 78.0% at securitization. Markland
Mall comprises 395,000 square feet and is located approximately 60
miles north of Indianapolis in Kokomo, Indiana. Inline occupancy
is 90.5%, compared to 97.1% at securitization. Forest Mall
comprises 501,000 square feet and is located approximately 70
miles northeast of Milwaukee in Fond Du Lac, Wisconsin. Inline
occupancy is 80.0%, compared to 93.0% at securitization. All of
the malls are middle tier malls that cater to a middle market
price point. Each of the malls is enclosed and anchored by three
or more anchors. Although the portfolio's overall inline
occupancy has declined to 85.3% from 91.6% at securitization,
financial performance has been stable. The loan sponsor is Simon
Property Group, Inc. Moody's shadow ratings of the pooled and
non-pooled loans are Baa3 and Ba3, respectively, the same as at
securitization.
The top three non-defeased conduit exposures represent 10.9% of
the pool. The largest conduit exposure is the Long Island
Industrial Portfolio Loan, which is secured by a portfolio of
seven cross collateralized multi-tenant industrial properties
located in Long Island, New York. The portfolio totals 980,000
square feet with individual properties ranging in size from 70,000
to 237,000 square feet. The properties have a well diversified
tenant base consisting of approximately 50 tenants with the five
largest tenants occupying approximately 40.0% of the portfolio.
The portfolio is 90.3% occupied, compared to 94.4% at
securitization. Financial performance has been impacted by a
decline in occupancy and increased operating expenses. Moody's LTV
is 98.0%, compared to 90.6% at securitization.
The second largest conduit exposure is the Daimler Chrysler Loan,
which is secured by two cross-collateralized distribution
facilities located in Orlando, Florida and Portage, Indiana, which
is approximately 45 miles east of Chicago. The two properties
contain a total of 609,000 square feet and were constructed in
2001 by DaimlerChrysler AG. The properties are leased by
DaimlerChrysler on triple net leases that expire in 2016. The
loan fully amortizes over an 18-year term. Moody's LTV is 73.5%,
compared to 78.3% at securitization.
The third largest conduit exposure is the Boulevard Square Loan,
which is secured by a 221,000 square foot power center located
approximately 12 miles southwest of Fort Lauderdale in Pembroke
Pines, Florida. The center is 100.0% occupied, the same as at
securitization. Major tenants include Sports Authority, Ross
Dress for Less and TJ Maxx. Moody's LTV is 81.6%, compared to
83.7% at securitization.
The pool's collateral is a mix of retail, office, industrial and
self-storage, multifamily, U.S. Government securities, healthcare
and lodging. The collateral properties are located in 32 states
and Washington, D.C. The highest state concentrations are
Florida, New York, Texas, Ohio and New Jersey. All of the loans
are fixed rate.
KERZNER INTERNATIONAL: Earns $7.1 Million in Fourth Quarter
-----------------------------------------------------------
Kerzner International Limited (NYSE: KZL) reported results for the
fourth quarter of 2005. The Company reported net income in the
quarter of $7.1 million, compared to net income of $8.4 million in
the same period last year. Adjusted net income for the quarter
was $13.2 million compared to $9.7 million in the same period last
year.
Butch Kerzner, Chief Executive Officer of the Company, commented,
"In 2005, we achieved financial performance records for adjusted
net income, revenue and EBITDA, which were driven by the strong
performance of our Paradise Island operations. These record
results, combined with the continued strong levels of demand for
Atlantis and our solid balance sheet, serve as a powerful
foundation for our next wave of growth on Paradise Island, the
Phase III expansion. Phase III is expected to be completed in
stages, with the 600-room, all-suite hotel and the expanded water
attractions open by April 2007. In addition, construction of our
second Atlantis-branded destination resort, Atlantis, The Palm,
has commenced in Dubai, United Arab Emirates and is expected to be
completed by the end of 2008."
Liquidity
At Dec. 31, 2005, the Company held $198.1 million in cash and cash
equivalents, short-term investments and restricted cash. This
amount consisted of $115.9 million in cash and cash equivalents,
$20.0 million in short-term investments and $62.3 million in
restricted cash. Restricted cash included $57.2 million of
escrowed funds for the Company's equity investment in the joint
venture developing Atlantis, The Palm.
Total interest-bearing debt at the end of the quarter was $797.2
million, comprised primarily of:
* the Company's recently-issued $400 million of 6-3/4% Notes
due 2015,
* $230 million of 2.375% Convertible Senior Subordinated Notes
due 2024,
* $110 million of financing related to the One&Only Palmilla ,
and
* approximately $55.2 million of non-affiliated debt
associated with Reethi Rah.
The non-affiliated debt associated with One&Only Palmilla and
Reethi Rah is consolidated under FIN 46R.
In the quarter, the Company amended its Revolving Credit Facility,
increasing the availability under the facility from $500 million
to $650 million and amending certain pricing and financial
covenants. At the end of the quarter, the Company's Revolving
Credit Facility was undrawn. In determining the credit statistics
used to measure compliance with the Company's financial covenants
under this facility, the incremental debt and interest expense
associated with the consolidation of Reethi Rah and the 50%-owned
One&Only Palmilla and The Residences at Atlantis are excluded.
In the quarter, the Company incurred $78.0 million in capital
expenditures, related primarily to Paradise Island, including
capitalized interest of $2.7 million. In the first quarter of
2006, the Company expects to spend between $90 million and $100
million on Paradise Island capital expenditures.
In the quarter, the Company invested $10.6 million in Atlantis,
The Palm. The Company expects to invest approximately $15 million
in the project in the first quarter of 2006. This investment will
be sourced from the remaining escrowed funds, which are currently
classified as restricted cash on the Company's consolidated
balance sheet.
In the quarter, the Company closed on the acquisition of an
additional seven and a half acres of beachfront property located
at the eastern edge of Cabbage Beach adjoining Ocean Club Estates.
The Company contributed this land into the Ocean Club Residences &
Marina joint venture and will develop the site through the joint
venture. The Company's share of the acquisition costs was $7.9
million.
As of Dece. 31, 2005, shareholders' equity was $1,159.4 million
and the Company had approximately 36.5 million Ordinary Shares
outstanding. During the quarter, the Company did not repurchase
any Ordinary Shares under its share repurchase program, which was
authorized in the third quarter of 2005. The Company currently
has approximately 1.4 million shares remaining under this program.
Kerzner International Limited -- http://www.kerzner.com/--
through its subsidiaries, is a leading international developer and
operator of destination resorts, casinos and luxury hotels. The
Company is also a 37.5% owner of BLB Investors, L.L.C., which owns
Lincoln Park in Rhode Island and pari-mutuel racing facilities in
Colorado. In the U.K., the Company is currently developing a
casino in Northampton and received a Certificate of Consent from
the U.K. Gaming Board in 2004. In its luxury resort hotel
business, the Company manages ten resort hotels primarily under
the One&Only brand. The resorts, featuring some of the top-rated
properties in the world, are located in The Bahamas, Mexico,
Mauritius, the Maldives and Dubai. An additional One&Only
property is currently in the planning stages in South Africa.
* * *
The company's $400 million 8.875% Senior Notes due 2011 carry
Standard & Poor's B rating. S&P assigned those ratings on Jun 24,
2004
KNOLL INC: Buying Back Common Shares Through Banc of America
------------------------------------------------------------
Knoll, Inc., reinstituted its stock repurchase program, under
which the Company purchases shares of its common stock in the open
market using the cash proceeds it received from the exercise of
options to purchase shares of its common stock.
The Stock Repurchase Program was first instituted on
August 19, 2005.
In connection with the repurchase program, the Company entered
into a Stock Repurchase Instruction and Agreement, dated
February 21, 2006, with Banc of America Securities LLC,
authorizing Banc of America to purchase shares on behalf of the
Company starting February 21, 2006.
As reported in the Troubled Company Reporter on Feb. 17, 2006,
certain of the Company's shareholders are selling 11,600,000
shares of common stock at $18.40 per share. The shares of common
stock are being sold by Warburg, Pincus Ventures, L.P. and Burton
B. Staniar. The selling stockholders have also granted the
underwriters of the offering an option to purchase up to an
additional 1,740,000 shares of common stock. The offering was
increased from the previously announced amount of 10,300,000
shares and an option of 1,545,000 shares.
Goldman, Sachs & Co. and Banc of America Securities LLC are
serving as joint book-running lead managers of the offering.
Merrill Lynch & Co. and UBS Investment Bank are serving as
co-managers of the offering.
There is no available information on whether the Company plans to
buy back the shares at that price.
Headquartered in East Greenville, Pennsylvania, Knoll Inc.,
designs and manufactures branded office furniture products and
textiles, serves clients worldwide.
* * *
As reported in the Troubled Company Reporter on Sept. 12, 2005,
Standard & Poor's Ratings Services assigned its 'BB-' rating and
its '3' recovery rating to Knoll Inc.'s proposed $450 million
senior secured credit facilities, indicating that lenders can
expect meaningful recovery of principal in the event of payment
default. These ratings are based on preliminary offering
statements and are subject to review upon final documentation.
In addition, Moody's Investors Service assigned a Ba3 rating to
the Company's $450 million senior secured credit facility, which
is comprised of a revolver and a term loan. At the same time,
Moody's affirmed Knoll's corporate family rating at Ba3. Moody's
said the ratings outlook is stable. Moody's will withdraw its
ratings on Knoll's $425 million senior secured term loan and
$75 million revolver upon the closing of the new secured credit
facility.
KNOLL INC: Declares $0.10 Quarterly Cash Dividend on Common Shares
------------------------------------------------------------------
Knoll, Inc.'s board of directors had declared a quarterly cash
dividend of $0.10 per share payable on March 31, 2006, to
stockholders of record on March 15, 2006.
The Company's net income for third quarter 2005 was $8.2 million.
Cash flow from operations for the third quarter totaled
$18.7 million, an increase of $7.1 million or 61.2% from the same
period last year. The Company repaid $22.1 million of debt in the
quarter, $11.4 million from operations and $10.7 million from the
proceeds received from the exercise of stock options in the
quarter.
Fourth Quarter Outlook
As a result of completing the Company's amended credit facility,
which was announced on October 3, 2005, the Company expects to
incur approximately $1 million of costs related to putting the new
facility in place and to write-off approximately $3.7 million of
deferred financing fees related to the old facility. In addition,
as discussed above, an additional $600,000 of estimated
restructuring charges are expected to be incurred related to the
consolidation of one our Canadian leased facilities. The Company
will also incur approximately $1 million of stock based
compensation costs related to restricted stock grants.
The Company stated that it expects fourth quarter 2005 revenue to
be in the $206 to $211 million range, an increase of 7% - 9% from
the fourth quarter of 2004.
The Company has yet to file its fourth quarter financials.
Headquartered in East Greenville, Pennsylvania, Knoll Inc.,
designs and manufactures branded office furniture products and
textiles, serves clients worldwide.
* * *
As reported in the Troubled Company Reporter on Sept. 12, 2005,
Standard & Poor's Ratings Services assigned its 'BB-' rating and
its '3' recovery rating to Knoll Inc.'s proposed $450 million
senior secured credit facilities, indicating that lenders can
expect meaningful recovery of principal in the event of payment
default. These ratings are based on preliminary offering
statements and are subject to review upon final documentation.
In addition, Moody's Investors Service assigned a Ba3 rating to
the Company's $450 million senior secured credit facility, which
is comprised of a revolver and a term loan. At the same time,
Moody's affirmed Knoll's corporate family rating at Ba3. Moody's
said the ratings outlook is stable. Moody's will withdraw its
ratings on Knoll's $425 million senior secured term loan and
$75 million revolver upon the closing of the new secured credit
facility.
LASERSIGHT: CFO & Secretary Resigns & Z. Tang Named as Successor
----------------------------------------------------------------
LaserSight Inc.'s (OTC Pink Sheets: LRST) Chief Financial Officer
and Secretary, Dorothy Cipolla, resigned from her positions. Ms.
Cipolla's resignation from her positions with the company is
effective February 27, 2006. The board of directors has named
Zhaokai "Art" Tang, the Company's Vice President of Finance and
Treasurer, as the interim CFO and Secretary.
"Dorothy has helped in the execution of our strategy to become a
current filer with the Securities and Exchange Commission," said
David Liu, Ph.D., LaserSight President and Chief Executive
Officer, "and has been presented with an opportunity at another
company. We wish Dorothy success in her new endeavor and
appreciate her contributions to LaserSight over the last two
years."
Mr. Tang has served as Vice President of Finance and Treasurer of
LaserSight since March 2005. Prior to joining LaserSight, he
served in various financial management positions. From 1994 to
2000, he was General Manager of the Management Department at China
New Industries Investment Co., Ltd., a holding company in China.
From 2001 to 2004, he was Chief Financial Officer and Vice
President with Shenzhen New Industries Medical Development Co.,
Ltd. in China. From 2003 to 2004, Mr. Tang was Vice President
with New Industries Investment Consultants (H K) Ltd., a
consulting company in Hong Kong. He received a Master of Business
Administration from the University of Hull in England.
Going Concern Doubt
Moore Stephens Lovelace, PA, expressed substantial doubt about
LaserSight's ability to continue as a going concern after it
audited the Company's financial statements for the years ended
Dec. 31, 2004 and 2003. The auditing firm points to the Company's
substantial losses since its inception, negative cash flow from
operations and working capital deficit at Dec. 31, 2004.
About LaserSight
Headquartered in Winter Park, Florida, LaserSight Inc. --
http://www.lase.com/-- is principally engaged in the manufacture
and supply of narrow beam scanning excimer laser systems,
topography-based diagnostic workstations, and other related
products used to perform procedures that correct common refractive
vision disorders such as nearsightedness, farsightedness and
astigmatism. Since 1994, it has marketed it laser systems
commercially in over 30 countries worldwide. It is currently
focused on selling in selected international markets; primarily
China. On Sept. 5, 2003, LaserSight filed for bankruptcy
protection under chapter 11 of the Bankruptcy Code and operated in
this manner from Sept. 5, 2003 through June 10, 2004, when the
reorganization was approved by the U.S. Bankruptcy Court for the
Middle District of Florida.
LB COMMERCIAL: Fitch Junks $17.3 Million Class L Certs.' Ratings
----------------------------------------------------------------
Fitch Ratings took action on LB Commercial Mortgage Trust's
commercial mortgage pass-through certificates, series 1998-C1, as:
-- $17.3 million class L downgraded to 'C' from 'CC'
Additionally, Fitch upgrades these classes:
-- $90.7 million class D to 'AAA' from 'AA+'
-- $34.6 million class E to 'AAA' from 'A+'
-- $51.8 million class F to 'AA' from 'BBB'
-- $34.6 million class G to 'BBB+' from 'BB+'
-- $17.3 million class H to 'BBB' from 'BB'
-- $43.2 million class J to 'BB-' from 'B'
These classes are affirmed by Fitch:
-- $582.1 million class A-3 at 'AAA'
-- Interest only class IO at 'AAA'
-- $86.4 million class B at 'AAA'
-- $86.4 million class C at 'AAA'
-- $17.3 million class K at 'B-'
Fitch does not rate the $7.1 million class M certificates.
The upgrades reflect the defeasance of an additional 2.3% of the
pool as well as 3.3% paydown since Fitch's previous rating action.
Since issuance, 14.5% of the pool has defeased. As of the January
2006 distribution date, the collateral balance has been reduced by
38.2%, to $1.07 billion from $1.73 billion at issuance. The deal
benefits from being diverse, both geographically and by loan size,
with the five largest loans comprising only 11% of the pool.
There are six assets, representing 4.4% of the pool, in special
servicing, including two 90-days delinquent (1.3%) and two real
estate owned (REO) (1.8%). Losses are expected on most of the
specially serviced loans. The largest of them (1.4%) is a retail
center in Kansas City, Missouri, and is currently approximately
60% occupied. The asset is REO and the special servicer is
soliciting proposals from brokers.
The next specially serviced loan (1.0%) is secured by a
multifamily property in Durham, North Carolina. The loan is
currently 90-days delinquent and the servicer is evaluating
workout options. The third specially serviced asset (0.38%) is an
office property in Nashville, Tennessee. The asset is REO and
will be marketed upon stabilization.
LIBERTY MEDIA: Completes Acquisition of Provide Commerce, Inc.
--------------------------------------------------------------
Stockholders of Provide Commerce, Inc., approved the Agreement and
Plan of Merger between Provide and Liberty Media Corporation
(NYSE:L; LMC.B) on Feb. 9, 2006.
Following the stockholder approval, the merger of a wholly owned
subsidiary of Liberty with Provide was completed. Under the terms
of the agreement Liberty will pay $477 million in cash, or $33.75
per Provide share. Provide is now a wholly owned subsidiary of
Liberty.
Provide, which was formerly listed on the Nasdaq National Market
under the symbol "PRVD", has voluntarily delisted its securities
from trading on Nasdaq.
"We are very happy to complete this transaction and to become part
of the Liberty Media family," said Provide Commerce CEO Bill
Strauss. "We would like to take this opportunity to thank our
shareholders and our employees for a terrific tenure as a public
company during the past two years. We have the opportunities we
do because of our outstanding employees and their continued focus
on executing our direct business model that delivers a superior
value proposition for our customers."
About Provide Commerce
Provide Commerce -- http://www.prvd.com/-- operates an e-commerce
marketplace of websites for perishable goods that delivers fresh,
high-quality products direct from the supplier to the customer at
competitive prices. The Company's platform combines an online
storefront, proprietary supply chain management technology and
established supplier relationships to create a market platform
that bypasses traditional supply chains of wholesalers,
distributors and retailers. Provide Commerce also offers fresh
fruit and premium meat direct from the supplier through its
Gourmet Food business unit.
About Liberty Media
Based in Englewood, Colorado, Liberty Media --
http://www.libertymedia.com/-- owns a broad range of electronic
retailing, media, communications and entertainment businesses and
investments. Its businesses include some of the world's most
recognized and respected brands and companies, including QVC,
Encore, Starz, IAC/InterActiveCorp, Expedia and News Corporation.
The company was a subsidiary of AT&T, which had acquired former
parent Tele-Communications, Inc., in 1999. In 2001 AT&T spun off
Liberty Media as part of the phone giant's plan to split its
empire into several companies. Liberty Media completed a spin off
of its own in 2004 by separating its international assets into a
new company. The firm is chaired by former TCI head John Malone.
* * *
As reported in the Troubled Company Reporter on Dec. 9, 2005,
Standard & Poor's Ratings Services said that Liberty Media's 'BB+'
corporate credit rating remains on CreditWatch, where it was
placed with negative implications on Nov. 10, 2005. The
CreditWatch update followed Liberty's announcement that it has
signed a definitive agreement to acquire Provide Commerce Inc.
MERIDIAN AUTOMOTIVE: Foley Okayed Despite U.S. Trustee's Protest
----------------------------------------------------------------
As reported in the Troubled Company Reporter on Jan. 26, 2006,
Meridian Automotive Systems, Inc., and its debtor-affiliates asked
the U.S. Bankruptcy Court for the District of Delaware for
permission to employ Foley & Lardner LLP as their special counsel,
nunc pro tunc to Dec. 13, 2005.
Foley will advise the Debtors with respect to employee benefits,
labor and employment, and commercial contract matters.
The firm's current customary rates, subject to change from time
to time, are $215 to $760 per hour.
The names and the hourly rates for the attorneys that will
primarily handle the Debtors' labor and employment matters
are:
Professional Hourly Rate
------------ -----------
John Birmingham $400
Jeff Kopp $340
Ebony Wilkerson $215
The names and hourly rates for the attorneys that will
primarily handle general commercial contract matters are:
Professional Hourly Rate
------------ -----------
Tom Spillane $450
Tom Chinonis $325
Erin Toomey $245
In addition, Foley will be reimbursed for its costs and expenses
incurred in connection with these cases at Foley's normal and
customary rates and charges.
U.S. Trustee Objects
Kelly Beaudin Stapleton, United States Trustee for Region 3,
tells the Court that Thomas B. Spillane, Jr., a member of Foley &
Lardner LLP, disclosed in an affidavit that the firm represented
Azdel Inc., in June 2005. The representation was in connection
with general bankruptcy advice on a cash-in-advance payment issue
involving the Debtors.
The Debtors indicated that Foley's "representation of Azdel on
the Meridian matter was terminated on or about July 1, 2005" and
that "the matter was closed for purposes of Foley's internal
records on or about October 24, 2005."
Ms. Beaudin argues that while the term "represent" appears in the
present tense in Section 327(a) of the Bankruptcy Code, the
Debtors' argument is premised on the fallacy that an
administrative closing of the matter, which formed the basis for
the attorney-client relationship, means that the attorney
represented the client, but does not "represent" the client for
purposes of Section 327(a).
Both common sense and the case law, however, lead to the contrary
conclusion that a terminated representation can form the basis
for disqualification under Section 327(a), Ms. Beaudin avers.
Ms. Beaudin also tells the Court that subsequent to the filing of
the application, the Debtors advised her that they will not be
proceeding with their request to excuse Foley from the Court's
prior order governing compensation of estate professionals.
A professional employed under Section 327(a) must apply to the
Court on notice to other parties-in-interest prior to being
compensated by the Debtors. There is no basis for excusing Foley
from this requirement, the U.S. Trustee contends.
For these reasons, the U.S. Trustee asks the Court to deny the
Debtors' application.
Debtors Respond
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware, insists that whether analyzed under a
strict reading of Section 327(a) or the more liberal framework of
Section 327(e), the Debtors' proposed employment of Foley is
authorized and appropriate.
The Debtors sought to employ Foley for the limited purpose of
addressing day-to-day labor and employment and commercial
contract issues previously handled by an in-house counsel
currently on leave of absence, Mr. Brady recounts.
Mr. Brady contends that Foley's past representation is not
adverse to the Debtors with respect to limited matters on which
Foley is to be employed. Foley's brief representation of Azdel
is over, having concluded more than six months prior to the
filing of Foley's affidavit in support of ordinary course
retention.
Therefore, Mr. Brady asserts, Foley does not hold or represent an
interest adverse to the Debtors' estates and is eligible for
retention under Section 327(a).
Mr. Brady further asserts that Foley's prior representation of
Azdel does not rise to the level of a conflict of interest. The
cash-in-advance payment advice provided by Foley is not the same
transaction or legal dispute for which Foley is presently being
retained, Mr. Brady explains.
According to Mr. Brady, there is no risk that confidential
factual information obtained by Foley from Azdel will materially
advance the Debtors' position because any of that information is
irrelevant to the matters on which Foley is to be retained. The
degree to which Foley represented Azdel also serves to
substantially limit the scope of the matters that could implicate
an actual or potential conflict of interest, Mr. Brady asserts.
Application Approved
Judge Walrath agreed with the Debtors, disagreed with the U.S.
Trustee, and entered an order approving the Debtors' application.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 22; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
MERISTAR HOSPITALITY: Moody's Junks Subordinate Debt Ratings
------------------------------------------------------------
Moody's Investors Service has placed the B2 senior unsecured debt
and Caa1 convertible debt ratings of MeriStar under review for
possible downgrade. This rating action follows the announcement
on Feb. 21, 2006 that MeriStar is being acquired by an affiliate
of The Blackstone Group in a transaction valued at $2.6 billion.
The affiliate of The Blackstone Group has obtained a committment
from its parent for $800 million in equity financing, while about
$1.9 billion in secured debt committments has been provided by
three bank lenders. The acquisition is expected to close in the
second quarter of 2006.
According to Moody's, this rating review reflects the rating
agency's concern that MeriStar's capital structure would be more
highly levered and contain significant amount of secured debt
following the acquisition of the REIT by an affiliate of The
Blackstone Group. Moody's review will focus on utilization of
debt -- especially secured debt -- to fund this transaction, and
the ultimate capitalization of MeriStar. The ratings downgrade is
likely to be limited to one notch. However, should both the
senior unsecured debt be retired and convertible debt be converted
to equity in their entirety at or before the closing of the
acquisition, Moody's could affirm the current ratings and
simultaneously withdraw the ratings.
These ratings were placed under review for possible downgrade:
Issuer: MeriStar Hospitality Operating Partnership, L.P.
* Senior unsecured debt at B2; senior unsecured shelf at
(P)B2;
* subordinate debt shelf at (P)Caa1.
Issuer: MeriStar Hospitality Corporation
* Senior unsecured shelf at (P)B3;
* senior subordinate debt at Caa1;
* subordinate debt shelf at (P)Caa1.
Issuer: MeriStar Hospitality Finance Corporation III
* Senior unsecured debt shelf at (P)B3;
* subordinated debt shelf at (P)Caa1.
In its last rating action, Moody's affirmed MeriStar's B2 senior
unsecured debt rating on Nov. 5, 2004.
MeriStar Hospitality Corporation, based in Washington DC, is a
lodging REIT that owns 57 principally upscale, full-service hotels
in major markets and resort locations with 16,507 rooms in 19
states and the District of Columbia. The REIT's hotels are
flagged under brands that include Hilton, Sheraton, Marriott,
Westin, Radisson and Doubletree. Almost all of the REIT's
properties are managed by a separate management company,
Interstate Hotels & Resorts, under long-term management contracts.
MORGAN STANLEY: S&P Puts Three Debt Classes' Low Ratings on Watch
-----------------------------------------------------------------
Standard & Poor's Rating Services placed its ratings on classes B-
4 and B-5 from Morgan Stanley Mortgage Loan Trust's series 2004-1
and class B-5 from Morgan Stanley Mortgage Loan Trust's series
2004-9 on CreditWatch with negative implications.
At the same time, ratings are affirmed on 302 classes of mortgage-
backed securities from 16 Morgan Stanley Mortgage Loan Trust
transactions, including series 2004-1 and 2005-1.
The CreditWatch placements reflect foreclosure and REO levels that
could potentially significantly reduce the credit support for
these classes. Standard & Poor's will continue to closely monitor
the performance of these transactions. If the level of REOs and
foreclosures in these pools decline without compromising the
credit support percentages, these ratings will be affirmed and
removed from CreditWatch. Conversely, if losses begin to
materialize and reduce the credit support for these classes,
downgrades can be expected.
The affirmations are based on credit support amounts that are
sufficient to support the current ratings. Credit support is at
least 1.05x the amount associated with the current rating levels.
Delinquencies in these transactions range from 0.00% to 4.86% of
the current balances. Cumulative losses range from 0.00% to 0.02%
of the original pool balances.
Credit support for these transactions is provided by
subordination. Series 2004-6AR has additional credit support
provided by excess interest and overcollateralization.
Additionally, class 2-A-4 from series 2004-3 benefits from a bond
insurance policy issued by MBIA Insurance Corp. ('AAA' financial
strength rating).
The underlying collateral for these transactions is mostly
adjustable- and fixed-rate, fully amortizing, first lien
residential mortgage loans with original terms to maturity of no
more than 30 years.
Ratings placed on creditwatch negative:
Morgan Stanley Mortgage Loan Trust
Rating
Series Class To From
------ ----- -- ----
2004-1 B-4 BB/Watch Neg BB
2004-1 B-5 B/Watch Neg B
2004-9 B-5 B/Watch Neg B
Ratings affirmed:
Morgan Stanley Mortgage Loan Trust
Series Class Rating
------ ----- ------
2004-1 1-A-1, 1-A-2, 1-A-3 AAA
2004-1 1-A-4, 1-A-5, 1-A-6 AAA
2004-1 1-A-7, 1-A-8, 1-A-9 AAA
2004-1 1-A-10, 1-A-11, 1-A-X AAA
2004-1 1-A-P, 2-A-1, 2-A-2 AAA
2004-1 2-A-3, 2-A-4*, 2-A-5 AAA
2004-1 2-A-X, 2-A-P, A-R AAA
2004-1 B-1 AA
2004-1 B-2 A
2004-1 B-3 BBB
2004-2AR 1-A, 2-A, 3-A, 4-A, A-R AAA
2004-2AR B-1 AA
2004-2AR B-2 A
2004-2AR B-3 BBB
2004-2AR B-4 BB
2004-2AR B-5 B
2004-3 1-A, 1-A-X, 1-A-P AAA
2004-3 2-A-1, 2-A-2, 2-A-3 AAA
2004-3 2-A-4*, 2-A-5, 2-A-6 AAA
2004-3 2-A-7, 3-A, 4-A, C-A-X AAA
2004-3 C-A-P, A-R AAA
2004-3 B-1 AA
2004-3 B-2 A
2004-3 B-3 BBB
2004-3 B-4 BB
2004-3 B-5 B
2004-4 1-A-1, 1-A-2, 1-A-3 AAA
2004-4 1-A-4, 1-A-5, 1-A-8 AAA
2004-4 1-A-9, 1-A-10, 1-A-11 AAA
2004-4 1-A-12, 1-A-13, 1-A-14 AAA
2004-4 1-A-15, 1-A-X, 1-A-P AAA
2004-4 2-A, 3-A, 3-A-X AAA
2004-4 3-A-P, A-R AAA
2004-4 B-1 AA
2004-4 B-2 A
2004-4 B-3 BBB
2004-4 B-4 BB
2004-4 B-5 B
2004-5AR 1-A-1, 1-A-2, 1-A-3 AAA
2004-5AR 2-A, 3-A-1, 3-A-2 AAA
2004-5AR 3-A-3, 3-A-4, 3-A-5 AAA
2004-5AR 4-A, A-R AAA
2004-5AR B-1 AA
2004-5AR B-2 A
2004-5AR B-3 BBB
2004-5AR B-4 BB
2004-5AR B-5 B
2004-6AR 2-A-1, 2-A-2, 2-A-3 AAA
2004-6AR 3-A, 4-A, 5-A, 6-A AAA
2004-6AR 1-A, A-R AAA
2004-6AR C-B-1, 1-M-1 AA
2004-6AR C-B-2, 1-M-2 A
2004-6AR 1-M-3 A-
2004-6AR 1-B-1 BBB+
2004-6AR C-B-3, 1-B-2 BBB
2004-6AR C-B-4 BB
2004-6AR C-B-5 B
2004-7AR 1-A, 2-A-1, 2-A-2 AAA
2004-7AR 2-A-3, 2-A-4, 2-A-5 AAA
2004-7AR 2-A-6, 2-A-7, 3-A AAA
2004-7AR 4-A, A-R AAA
2004-7AR B-1 AA
2004-7AR B-2 A
2004-7AR B-3 BBB
2004-7AR B-4 BB
2004-7AR B-5 B
2004-8AR 1-A, 1-X, A-R, 2-A, 2-X AAA
2004-8AR 3-A, 4-A-1, 4-A-2 AAA
2004-8AR 4-A-3, 4-A-4, 4-A-5 AAA
2004-8AR S-B-1, B-1 AA
2004-8AR S-B-2, B-2 A
2004-8AR S-B-3, B-3 BBB
2004-8AR S-B-4, B-4 BB
2004-8AR S-B-5, B-5 B
2004-9 1-A, 2-A, 3-A-1, 3-A-2 AAA
2004-9 3-A-3, 3-A-4, 3-A-5 AAA
2004-9 3-A-6, 3-A-X, 3-A-P AAA
2004-9 4-A, 5-A, 5-A-X AAA
2004-9 5-A-P, A-R AAA
2004-9 B-1 AA
2004-9 B-2 A
2004-9 B-3 BBB
2004-9 B-4 BB
2004-10AR 1-A, 2-A-1, 2-A-2 AAA
2004-10AR 2-A-3, 3-A, 3-X, 4-A AAA
2004-10AR A-R AAA
2004-10AR B-1 AA
2004-10AR B-2 A
2004-10AR B-3 BBB
2004-10AR B-4 BB
2004-10AR B-5 B
2004-11AR 1-A, 1-A-2A, 1-A-2B AAA
2004-11AR 1-X-1, 1-X-2, 1-X-B AAA
2004-11AR 2-A, 3-A, 4-A, 5-A, A-R AAA
2004-11AR 1-B-1, B-1 AA
2004-11AR 1-B-2, B-2 A
2004-11AR 1-B-3, B-3 BBB
2004-11AR 1-B-4, B-4 BB
2004-11AR 1-B-5, B-5 B
2005-1 1-A-1, 1-A-2, 1-A-3 AAA
2005-1 1-A-4, 1-A-5, 1-A-6 AAA
2005-1 2-A-1, 2-A-2, 3-A-1 AAA
2005-1 3-A-2, 3-A-3, 3-A-4 AAA
2005-1 3-A-5, 3-A-6, 3-A-7 AAA
2005-1 4-A-1, 4-A-2, 4-A-X AAA
2005-1 A-P, A-R AAA
2005-1 B-1 AA
2005-1 B-2 A
2005-1 B-3 BBB
2005-1 B-4 BB
2005-1 B-5 B
2005-2AR A, X, A-R AAA
2005-2AR B-1 AA
2005-2AR B-2 A
2005-2AR B-3 BBB
2005-2AR B-4 BB
2005-2AR B-5 B
2005-3AR 1-A, 2-A-1, 2-A-2 AAA
2005-3AR 2-A-3, 3-A, 4-A AAA
2005-3AR 5-A, A-R AAA
2005-3AR B-1 AA
2005-3AR B-2 A
2005-3AR B-3 BBB
2005-3AR B-4 BB
2005-3AR B-5 B
2005-4 1-A, 1-A-X, 1-A-P AAA
2005-4 2-A-1, 2-A-2, 3-A-1 AAA
2005-4 3-A-2, 4-A, 5-A-1 AAA
2005-4 5-A-2, 5-A-3, 5-A-4 AAA
2005-4 5-A-5, 5-A-6, 5-A-P AAA
2005-4 6-A-1, 6-A-2, A-R AAA
2005-4 B-1 AA
2005-4 B-2 A
2005-4 B-3 BBB
2005-4 B-4 BB
2005-4 B-5 B
2005-5AR 1-A-1, 1-A-2, 1-A-3 AAA
2005-5AR 1-A-4, 2-A-1, 2-A-2 AAA
2005-5AR 3-A-1, 3-A-2, 3-A-3 AAA
2005-5AR 4-A-1, 4-A-2, A-R AAA
2005-5AR 1-M-1 AA+
2005-5AR 1-M-2, B-1 AA
2005-5AR 1-M-3 AA-
2005-5AR 1-M-4 A+
2005-5AR 1-M-5, B-2 A
2005-5AR 1-M-6 A-
2005-5AR 1-B-1 BBB+
2005-5AR 1-B-2, B-3 BBB
2005-5AR 1-B-3 BBB-
2005-5AR B-4 BB
2005-5AR B-5 B
* Bond insured.
MUSCLETECH RESEARCH: Court Sets Feb. 28 to Hear Monitor's Request
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
will convene a hearing on Feb. 28, 2006, to consider RSM Richter
Inc.'s motion to recognize MuscleTech Research and Development,
Inc. and its debtor-affiliates pending case under Canada's
Companies Creditors Arrangement Act as a foreign main proceeding
as that term is used in Chapter 15 of the U.S. Bankruptcy Code.
Appointed by the Ontario Superior Court of Justice, RSM Richter is
the monitor and foreign representative of MuscleTech Research and
its debtor-affiliates. Kenneth P. Coleman, Esq., Daniel Guyder,
Esq., and Kelle Gagne, Esq., at Allen & Overy LLP, represent RSM
Richter.
Headquartered in Mississauga, Ontario, MuscleTech Research and
Development Inc. -- http://www.muscletech.com/-- develops health
supplement, weight-loss and nutrition products. RSM Richter filed
chapter 15 petitions on behalf of MuscleTech Research and its
debtor-affiliates on Jan. 18, 2006 (Bankr. S.D.N.Y. Lead Case No.
06-10092). As of Dec. 26, 2005, the Debtors reported total assets
of $7,108,204 and total debts of $29,000,000.
NCI BUILDING: S&P Says BB Credit Rating Unaffected by Merger Plan
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that, based on preliminary
information, its corporate credit rating and outlook on Houston,
Texas-based NCI Building Systems Inc. (BB/Stable/--) would not be
affected by the company's recently announced plans to acquire
unrated Robertson-Ceco Corp., an engineered-building-systems
manufacturer with 2005 annual revenues of about $430 million. At
the same time, Standard & Poor's had put NCI's senior secured bank
loan and recovery ratings on CreditWatch with developing
implications pending further details on the term loan amendment.
NCI plans to finance the $370 million acquisition with $170
million from its prior convertible senior note offering and by
increasing its existing term loan by $200 million.
"Our initial assessment is that the transaction should somewhat
strengthen NCI's business position by improving manufacturing
efficiency and expanding the dealer network and geographic sales
area within the United States and Canada," said Standard & Poor's
credit analyst Lisa Wright. "In addition, there is room at the
current ratings for a moderate increase in debt leverage to fund
the acquisition."
Pro forma for the acquisition, Standard & Poor's expects NCI's
total debt to EBITDA ratio to increase to the low to mid-3x range.
As of Oct. 29, 2005, NCI had total debt, including $180 million of
convertible notes and $16 million of capitalized operating leases,
of $389 million, with total debt to EBITDA of 3x.
"We will be meeting with management shortly to obtain more
information about privately held Robertson-Ceco and NCI's
strategies for the combined entity and will review the bank loan
and recovery ratings," Ms. Wright said.
NES RENTAL: S&P Places B+ Corporate Credit Rating on CreditWatch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on equipment
rental company NES Rental Holdings Inc., including its 'B+'
corporate credit rating, on CreditWatch with developing
implications.
The listing stems from the company's decision to hire a financial
adviser to review strategic alternatives, which could include:
* the sale of the company,
* a merger, or
* another transaction.
"Although the ultimate outcome is uncertain, the ratings could be
raised in the near term if the company is sold to a buyer with a
higher credit profile," said Standard & Poor's credit analyst John
R. Sico. "Conversely, if the company were sold to an entity with
a weaker credit profile or to a financial sponsor in a leveraged
transaction, the ratings could be lowered."
Chicago, Illinois-based NES is a closely held regional equipment
company with operations in 34 states. Its trailing-12-month sales
as of September 2005 were approximately $600 million and its total
debt outstanding was about $440 million.
NETWORK PLUS: Hires Recovery Services as Collection Agent
---------------------------------------------------------
The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the
District of Delaware authorized Michael B. Joseph, Esq., the
Chapter 7 Trustee overseeing the liquidation of Network Plus Corp.
and Network Plus, Inc., to:
-- employ Recovery Services, Inc., nunc pro tunc to Oct. 10,
2005, as his collections agent; and
-- pay a 30% contingency fee to Recovery Services from the
gross proceeds of any amounts collected on account of
default judgments.
As reported in the Troubled Company Reporter on Jan. 11, 2006, the
Chapter 7 Trustee filed numerous avoidance actions that resulted
in nine default judgments totaling $574,303.
Network Plus Corp., a network-based integrated communications
provider, which offers broadband data and telecommunications
services, filed for chapter 11 protection on Feb. 4, 2002
(Bankr. Del. Case No. 02-10341). On June 11, 2003, Judge Walsh
converted the Debtors' cases into chapter 7 liquidation
proceedings. Michael B. Joseph, Esq., was appointed chapter 7
trustee. Raymond H. Lemisch, Esq., Gary M. Schildhorn, Esq., and
Anne R. Myers, Esq., at Adelman Lavine Gold and Levin, PC, and
Jonathan M. Stemerman, Esq., of Wilmington, Del., represent the
Chapter 7 Trustee. Edward J. Kosmowski, Esq., Joel A. White,
Esq., and Maureen D. Like, Esq., at Young Conaway Stargatt &
Taylor represent the Debtors. As of Sept. 30, 2001, the Debtors
posted $433,239,000 in total assets and $371,300,000 in total
debts.
NOBLE DREW: Court Okays N. Cheng's Retention as Accountants
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York,
approved the application of Noble Drew Ali Plaza Housing Corp., to
employ N. Cheng & Co., P.C. as its accountants.
As reported in the Troubled Company Reporter on Sept. 1, 2005,
N. Cheng will:
(1) prepare the Debtor's financial statements for the periods
ended Sept. 30, 2002, Sept. 30, 2003, and Sept. 30, 2004;
and
(2) prepare the Debtor's tax returns.
German Rodriguez, an accountant at N. Cheng, disclosed that the
Firm's professionals bill:
Designation Hourly Rate
----------- -----------
Partner $250
Manager $175
Staff and Senior Accountant $105 - $135
Mr. Rodriguez assured the court that the Firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Brooklyn, New York, Noble Drew Ali Plaza Housing
Corp. is a not-for-profit corporation organized and existing under
the Not-For-Profit Corporation Law of the State of New York.
Noble was formed to develop a housing project for low and moderate
income households including project-based facilities and services
for the benefit of the project residents as well as the
Brownsville community of Brooklyn, New York. The Debtor filed for
chapter 11 protection on March 25, 2005 (Bankr. S.D.N.Y. Case No.
05-11915). Gerard R. Luckman, Esq., at Silverman Perlstein &
Acampora, LLP, represents the Debtor. Official Committee of
Unsecured Creditors is represented by Martin G. Bunin, Esq., at
Thelen Reid & Priest LLP. When the Debtor filed for protection
from its creditors, it listed total assets of $43,500,000 and
total debts of $18,639,981.
NVIDIA CORP: Earns $98.1 Million of Net Income in Fourth Quarter
----------------------------------------------------------------
NVIDIA Corporation (Nasdaq: NVDA) reported financial results for
the fourth quarter of fiscal 2006 and the fiscal year ended
Jan. 29, 2006.
For the fourth quarter of fiscal 2006, revenue was $633.6 million,
compared to $566.5 million for the fourth quarter of fiscal 2005,
an increase of 12%. Operating income for the fourth quarter of
fiscal 2006 experienced 97% growth to $112.3 million, compared to
operating income of $57.2 million for the fourth quarter of fiscal
2005. Net income for the fourth quarter of fiscal 2006 was $98.1
million compared to net income of $48.0 million for the fourth
quarter of fiscal 2005, a net income increase of 104%.
Revenue for the fiscal year ended Jan. 29, 2006 was a record $2.38
billion, compared to revenue of $2.01 billion for the fiscal year
ended January 30, 2005. Net income for the fiscal year ended
January 29, 2006 was $302.6 million compared to net income of
$100.4 million for the fiscal year ended Jan. 30, 2005, a net
income increase of 202%.
"Fiscal 2006 was a milestone year for NVIDIA," stated Jen-Hsun
Huang, president and CEO at NVIDIA. "We led the GPU and core
logic industry on every front -- technology leadership, product
innovation, and operational excellence. As a result, we delivered
record annual results for revenue, operating income, operating
margin, and operating cash flow."
"Looking ahead into fiscal 2007, multiple important trends will
create substantial growth opportunities in our target markets --
HD DVD and Blu-ray high definition video, Microsoft Windows Vista,
the 3G ramp and increasing multimedia content for mobile devices,
and next generation game consoles. We have aligned ourselves with
these exciting new growth drivers and are well positioned to have
another strong year."
NVIDIA Corporation -- http://www.nvidia.com/-- is the worldwide
leader in programmable graphics processor technologies. The
Company creates innovative, industry-changing products for
computing, consumer electronics, and mobile devices. NVIDIA is
headquartered in Santa Clara, California, and has offices
throughout Asia, Europe, and the Americas.
The company's credit rating carries Standard & Poor's B+ rating.
That rating was assigned on Oct. 5, 2000.
ONE PRICE: Chapter 7 Trustee Wants Weiser as Expert Witness
-----------------------------------------------------------
Kenneth P. Silverman, Esq., the Chapter 7 Trustee of One Price
Clothing Stores, Inc., and its debtor-affiliates asks the
Honorable Stuart M. Bernstein of the U.S. Bankruptcy Court for the
Southern District of New York in Manhattan for permission to
employ Weiser LLP, nunc pro tunc to Jan. 19, 2006.
The Chapter 7 Trustee wants Weiser as his expert witness in
various adversary proceedings.
Weiser will:
-- review all reports prepared by or on behalf of various
defendants in several adversary proceedings,
-- possibly provide a rebuttal report as quickly as possible in
order to comply with the Federal Rules of Bankruptcy
Procedure, and
-- provide expert testimony in rebuttal at trial.
Papers filed with the Court did not identify the adversary
proceedings.
Judge Francis G. Conrad, a partner at Weiser LLP, discloses that
the Firm's professionals bill:
Designation Hourly Rate
----------- -----------
Partner $350 to $500
Manager & Director $250 to $350
Associates & Senior Associates $150 to $300
Administrators & Paraprofessionals $85 to $145
Judge Conrad assures the Court that Weiser represents no interest
adverse to the Trustee, the Debtors or their estates and is
disinterested as that term is defined in Section 101(14) of the
U.S. Bankruptcy Code.
Headquartered in Duncan, South Carolina, One Price Clothing
Stores, Inc. -- http://www.oneprice.com/-- operates a chain of
off price specialty retail stores. These stores offered a wide
variety of contemporary, in-season apparel and accessories for the
entire family. The Company, together with its two affiliates,
filed for chapter 11 protection on February 9, 2004 (Bankr.
S.D.N.Y. Case No. 04-40329). Neil E. Herman, Esq., at Morgan,
Lewis & Bockius, LLP, represents the Debtors. When the Company
filed for chapter 11 protection, it listed $110,103,157 in total
assets and $112,774,600 in total debts. The Court converted the
Debtors' chapter 11 case to a chapter 7 liquidation proceeding on
March 23, 2005. Kenneth P. Silverman is the chapter 7 Trustee for
the Debtors' estates. Ronald J. Friedman, Esq., at Silverman
Perlstein & Acampora LLP represents the chapter 11 Trustee.
OREGON ARENA: Liquidating Trustee Prepares to Sue Paul Allen
------------------------------------------------------------
Susan Freeman, Esq., the Liquidating Trustee appointed in Oregon
Arena Corporation's chapter 11 case, disclosed in a status report
submitted to the U.S. Bankruptcy Court for the Oregon that she may
file a lawsuit against Paul Allen, Helen Jung of The Oregonian
reports.
The Court had designated Ms. Freeman to investigate several
claims, including transfers to Paul Allen, the Debtor's former
owner, amounting to more than $9 million.
Ms. Jung reports that Ms. Freeman had already circulated a draft
of the complaint to target defendants.
Ms. Freeman is also reviewing other possible claims arising under
the cost-sharing and other agreements between Oregon Arena and the
Portland Trail Blazers NBA team, Cutting Edge Concepts, and other
Allen-owned entities, Ms. Jung relates.
Ms. Jung reports that Ms. Freeman has until August 2006 to
actually file her lawsuits. Ms. Freeman says that she hopes to
reach a settlement with the target defendants before the deadline
expires, Ms. Jung relates.
Headquartered in Portland, Oregon, Oregon Arena Corporation, owned
Portland's Rose Garden, one of the city's entertainment arenas and
home of the NBA's Portland Trail Blazers. The company filed for
chapter 11 protection on February 27, 2004 (Bankr. D. Oreg. Case
No. 04-31605). Alex I. Poust, Esq., at Schwabe, Williamson &
Wyatt, P.C., represents the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors, it
listed an estimated assets of more than $10 million and estimated
debts of more than $100 million.
The Court confirmed the Debtor's Fourth Amended Plan of
Reorganization on Nov. 8, 2004.
The Rose Garden is presently owned by Portland Arena Management, a
group composed of the Debtor's lenders.
PANTRY INC: Names President & CEO Peter J. Sodini Board Chairman
----------------------------------------------------------------
The Pantry, Inc.'s (NASDAQ: PTRY) President and CEO Peter J.
Sodini has been elected Chairman of the Board. In addition,
Thomas M. Murnane has been elected Lead Independent Director.
Mr. Sodini has been the Company's President and Chief Executive
Officer since 1996, and a director since 1995. He has chaired
meetings of the Company's Board of Directors since 1996.
Previously, he was Chief Executive Officer and a director of
Purity Supreme, Inc., for more than four years, and held executive
positions at several other supermarket chains earlier in his
career.
Speaking on behalf of the Board, Mr. Murnane said, "We would like
to thank Pete Sodini for his dedication to The Pantry over the
last decade, and congratulate him and his executive team on the
results they have produced for our shareholders. Electing Pete to
the additional position of Chairman of the Board of Directors is a
well-deserved acknowledgement of his longstanding leadership roles
in the Company's management and in Board deliberations, and is a
natural part of the Board's transition following Freeman Spogli &
Co.'s sale of its interests in the Company last year."
Mr. Murnane has served as a director of The Pantry since October
2002 and chairs its Corporate Governance and Nominating Committee.
He retired as a partner of PricewaterhouseCoopers, LLP in 2002 and
currently works as an outside consultant. During his 22-year
career with PricewaterhouseCoopers and its predecessors, he served
in a variety of client service and leadership roles, focused
primarily on the retail sector. He is currently a partner in ARC
Business Advisors, providing strategic consultation to retailers,
as well as branding and private equity firms. Mr. Murnane is also
a director of Finlay Enterprises, Inc., Pacific Sunwear of
California, Inc. and Captaris, Inc.
All of The Pantry's current directors except Mr. Sodini are
independent of the Company and its management. As Lead
Independent Director, Mr. Murnane will act as principal liaison
between the independent directors and Chairman on board and
Corporate Governance matters.
Mr. Sodini commented, "Tom Murnane has contributed valuable input
to the Board on numerous occasions over the last three and a half
years. With his broad experience as a business consultant, Tom is
in an excellent position to ensure that the Board maintains the
discipline and independent perspective required to safeguard our
shareholders' interests."
Headquartered in Sanford, North Carolina, The Pantry, Inc. is the
leading independently operated convenience store chain in the
southeastern United States and one of the largest independently
operated convenience store chains in the country, with net sales
for fiscal 2005 of approximately $4.4 billion. As of September
29, 2005, the Company operated 1,400 stores in eleven states under
a number of banners including Kangaroo Express(SM), Golden
Gallon(R), and Cowboys(SM). The Pantry's stores offer a broad
selection of merchandise, as well as gasoline and other ancillary
services designed to appeal to the convenience needs of its
customers.
* * *
As reported in the Troubled Company Reporter on Nov. 17, 2005,
Moody's Investors Service rated the proposed secured bank loan and
senior subordinated convertible notes of The Pantry, Inc., at Ba3
and B3 and affirmed the existing senior subordinated notes at B3
and the corporate family rating at B1. Proceeds from the new debt
principally will be used to repay the existing term loan. Moody's
said the rating outlook remains stable.
As reported in the Troubled Company Reporter on Nov. 16, 2005
Standard & Poor's Ratings Services affirmed leading convenience
store operator The Pantry Inc.'s 'B+' corporate credit rating and
changed the outlook to positive from stable. At the same time,
Standard & Poor's assigned its 'BB-' bank loan rating to The
Pantry's proposed $205 million senior secured term loan due 2012
and $125 million revolving credit facility due 2012. The recovery
rating on the loan is '1', indicating the expectation for full
recovery of principal in the event of payment default.
At the same time, Standard & Poor's assigned its 'B-' rating to
the company's $130 million convertible senior subordinated
debentures due 2012 to be issued under Rule 144A. Ratings on the
company's existing senior subordinated notes were affirmed at
'B-'.
PAPERSWEEP INC: Creditors Must File Claims by April 4
-----------------------------------------------------
On Dec. 15, 2005, the remaining director of Papersweep, Inc., and
majority of its stockholders agreed to wind-up the company's
affairs and voluntarily dissolve.
All entities having a claim against the company must file a
written claim indicating their identity and the amount of their
claim. The claim must include supporting documents.
All claims must be received by Apr. 4, 2006, by:
Stephen T. O'Neill, Esq.
Murray & Murray, P.C.
19400 Stevens Creek Boulevard, Suite 200
Cupertino, CA 95014-2548
PARKWAY HOSPITAL: Taps Loeb & Troper for Auditing Services
----------------------------------------------------------
The Parkway Hospital, Inc., asks the U.S. Bankruptcy Court
for the Southern District of New York for permission to employ
Loeb & Troper as its auditors, nunc pro tunc to August 26, 2005.
Loeb & Troper will:
a) review of the Debtor's consolidated balance sheet and
related statements of operation and cash flow;
b) test of documentary evidence supporting the transactions
recorded in the accounts;
c) confirm the existence of certain assets and liabilities;
d) audit of Debtor's financial statements;
e) audit of Debtor's financial and statistical data for the
Institutional Cost Report to be submitted to federal and
state agencies; and
f) audit of Debtor's compliance with the New York State Bad
Debt and Charity Care Reporting requirements.
Bernard Grotell, a Loeb & Troper partner, discloses that his
Firm's professionals and support staff will bill the Debtor
$79 to $340 per hour for their work.
Mr. Grotell assures the Court that Loeb & Troper is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code, as modified by Section 1107(b).
The Parkway Hospital, Inc., operates a 251-bed proprietary, acute
care community hospital located in Forest Hills, New York. The
Company filed for chapter 11 protection on July 1, 2005 (Bankr.
S.D.N.Y. Case No. 05-14876). Timothy W. Walsh, Esq., at DLA Piper
Rudnick Gray Cary US LLP, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $28,859,000 in total assets and
$47,566,000 in total debts.
PERFORMANCE TRANSPORTATION: Hires Sitrick as PR Consultant
----------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of New York
authorized Performance Transportation Services, Inc., and its
debtor-affiliates to employ Sitrick and Company Inc. as their
corporate communications consultants, effective as of the Petition
Date.
During the period leading up to the Petition Date, the Debtors
engaged Sitrick to assist them in developing a comprehensive
communications strategy designed to facilitate the smooth
transition of their operations into Chapter 11.
Specializing in corporate communications consulting, Sitrick is a
strategic communications firm that has served as lead corporate
communications consultant in numerous bankruptcy cases.
Sitrick will:
a. develop and implement communications programs and related
strategies and initiatives for communications with the
Debtors' key constituencies regarding their operations and
financial performance and their progress through the
Chapter 11 process;
b. develop public relations initiatives for the Debtors to
maintain public confidence and internal morale during
their Chapter 11 Cases;
c. prepare press releases and other public statements for the
Debtors, including statements relating to major Chapter 11
events;
d. prepare other forms of communication to the Debtors' key
constituencies and the media, potentially including
materials to be posted on the Debtors' Web sites; and
e. perform other communications consulting services as the
Debtors may request.
Before the Petition Date, Sitrick received from the Debtors a
$75,000 advance payment, representing a $60,000 retainer for the
firm's services, and a $15,000 refundable expense advance for all
out-of-pocket expenses it will incur under the engagement.
Sitrick will be paid on an hourly basis and will be reimbursed
for all reasonable out-of-pocket expenses. The Debtors did not
disclose the firm's current hourly rates.
The Debtors agree to indemnify Sitrick and its shareholders,
officers, directors, employees and agents.
Steven D. Goldberg, a member of Sitrick, asserts that neither he
nor the firm and its personnel have any connection with the
Debtors, their creditors, the United States Trustee or any other
party with an actual or potential interest in the Debtors'
Chapter 11 cases. The firm's personnel may have business
associations with certain of the Debtors' creditors but unrelated
to the Chapter 11 cases, he adds.
Sitrick has in the past provided services to Xcel Energy, Reliant
Energy, Centerpoint Energy and PG&E, all of which are unsecured
creditors of the Debtors, in relation to matters unrelated to the
Debtors' Chapter 11 Cases.
Headquartered in Wayne, Michigan, Performance Transportation
Services, Inc. -- http://www.pts-inc.biz/-- is the second largest
transporter of new automobiles, sport-utility vehicles and light
trucks in North America. The Company provides transit stability,
cargo damage elimination and proactive customer relations that are
second to none in the finished vehicle market segment. The
company's chapter 11 case is administered jointly under Leaseway
Motorcar Transport Company.
Headquartered in Niagara Falls, New York, Leaseway Motorcar
Transport Company Debtor and 13 affiliates filed for chapter 11
protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107).
Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they estimated assets between $10
million and $50 million and more than $100 million in debts.
(Performance Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PHOTOCIRCUITS CORP: Court Approves $1MM Sale of All Estate Assets
-----------------------------------------------------------------
In an order dated Feb. 17, 2006, the U.S. Bankruptcy Court for the
Eastern District of New York, allowed Photocircuits Corporation to
sell substantially all of the estate's assets.
The Sale Order includes the Debtor's sale of its assets to:
a) Asset Sales, Inc.;
b) American Pacific Financial Corporation; and
c) Kunshan Yuanmao Electronics Technology Co., Ltd/GBM Group.
The Debtor sold printed circuits board manufacturing equipment and
related assets located in Peachtree City, Georgia for $506,000 to
Assets Sales, Inc.
The Debtor assumed and assigned its unexpired non-residential real
property leases and executory contracts to American Pacific
Financial Corporation. The Assignment is free and clear of all
liens, claims and encumbrances.
The Debtor sold its PAL V copper plating line to Kunshan Yuanmao
for $500,000.
The company defaulted on various financial covenants under its
secured credit agreements with Bank Group, its senior lenders.
The Bank Group encouraged an orderly liquidation of all the
company's assets. As a result, the company appointed a committee
to lead the company's operational and financial restructuring, as
well as selling non-essential assets, including the Philippines
Facility and all equipment located, in order to satisfy the term
loan that is part of the security agreements.
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. Ted A. Berkowitz, Esq., and Louis A.
Scarcella, Esq., at Farrell Fritz, P.C., represent the Official
Committee of Unsecured Creditors. When the Debtor filed for
protection from its creditors, it estimated more than $100 million
in assets and debts.
PLUM POINT: S&P Puts Preliminary B Rating on $760 Million Debts
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'B'
rating and '3' recovery rating to Plum Point Energy Associates
LLC's:
-- $590 million first-lien term loan;
-- $105 million synthetic LOC facility; and
-- $65 million revolving credit facility.
The '3' rating indicates meaningful recovery (50% to 80%) of
principal in a default scenario. The outlook is stable. The
preliminary ratings are subject to final structure and document
review.
The proceeds from the loans will be used for the construction of
the Plum Point Energy Station, a 665 MW coal-fired base load
electrical generating facility with advanced emission controls
that will be in Osceola, Arkansas, about 30 miles north of
Memphis, Tennessee, on the Mississippi River. The facility will
dispatch into the Entergy Corp. subregion of the Southeast
Electric Reliability Council region.
Standard & Poor's expects ratings stability in the near term, as
construction progresses. The 'B' rating reflects PPEA's high
leverage and exposure to merchant markets in the Entergy region.
These risks are offset by PPEA's demonstrated ability to sell
capacity and enter into long-term power-purchased agreements and
the plant's likely efficiency.
"The rating could fall if there are substantial construction
issues or market dynamics in Entergy deteriorate," said Standard &
Poor's credit analyst Scott Taylor. "If PPEA can execute its
strategy of entering into further long-term PPAs, and this leads
to a greater percentage of capacity under contract, the rating
could improve," he continued.
PRICE OIL: Creditors Committee Hires Pachulski Stang as Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Alabama gave
the Official Committee of Unsecured Creditors appointed in Price
Oil, Inc., and its debtor-affiliates' cases permission to retain
Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. as its
general bankruptcy counsel.
ExxonMobil and BP Products North America, Inc., chair the six-
member Committee on which:
* Citgo Petroleum Corp.,
* Marathon Petroleum Company, LLC,
* Coca-Cola Enterprises, Inc., and
* Petry.
also serve.
Pachulski Stang will:
-- advise and assist the Committee in its consultation and
communications with the Debtors as to the administration of
the Debtors' cases, proposed transactions, the resolution of
the Debtors' cases, and any other related matters;
-- represent the Committee at Court hearings and communicate
with the Committee regarding the issues raised and the Court
decisions;
-- assist and advise the Committee in its examination and
analysis of the conduct of the Debtors' affairs and their
cases;
-- review and analyze all applications, motions, orders,
statements of operations and schedules filed with Court by
the Debtors or third parties, advise the Committee as to
their propriety, and, after consultation with the Committee,
take appropriate action;
-- assist the Committee in preparing applications, motions and
order in support of positions taken by the Committee, as
well as prepare witnesses and review documents in this
regard;
-- confer with any other professionals retained by the
Committee, so as to advise the Committee and the Court more
fully of the Debtors' operations;
-- assist the Committee in its negotiations with the Debtors
and other parties-in-interest concerning applicable matters;
-- assist the Committee in its consideration of any plan of
organization proposed by the Debtors or other parties-in-
interest as to whether it is in the best interest of
creditors and is feasible;
-- assist the Committee with other services as may contribute
to plan confirmation;
-- advise and assist the Committee in evaluating and
prosecuting any claims that the Debtors may have against
third parties;
-- assist the Committee determining whether to, and is so, how
to, sell the Debtors' assets for the highest and best price;
and
-- assist the Committee in performing other services as may be
in the creditors' interest, including, but not limited to,
the filing and participating in appropriate litigation.
The principal professionals presently designated to represent the
Committee and the current hourly rates to be charged for services
are:
Name Position Rate
---- -------- ----
Marc A. Beilinson, Esq. Shareholder $500
Jonathan J. Kim, Esq. Of Counsel $350
Jorge E. Rojas Paralegal $120
Mr. Beilinson assured the Court that the Firm is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Niceville, Florida, Price Oil, Inc., supplies
gasoline fuel to convenience store owners and operators throughout
Alabama and Florida panhandle. The Debtor also owns, operates and
lease multiple convenience stores. The Debtor and five of its
affiliates filed for chapter 11 protection on Dec. 22, 2005
(Bankr. M.D. Ala. Case No. 05-34286). M. Leesa Booth, Esq., at
Bradley, Arant, Rose & White represents the Debtors in their
restructuring efforts. The Debtors tapped Cahaba Capital
Advisors, L.L.C. and AEA Group, L.L.C., for financial and
restructuring advice. When the Debtor filed for protection from
its creditors, it listed $10 million to $50 million in assets and
debts.
PRICELINE.COM INC: Earns $3.8 Million in Fourth Quarter
-------------------------------------------------------
Priceline.com Incorporated (Nasdaq: PCLN) reported financial
results for the 4th quarter and full-year 2005. For the 4th
quarter, gross travel bookings, which refers to the total dollar
value, inclusive of all taxes and fees, of all travel services
purchased by consumers, rose 29% year-over-year to $536.8 million.
Revenues in the 4th quarter were $203.9 million, a 4.6% increase
over a year ago. 2005 results include the operating results of
Active Hotels Ltd., which was acquired in September 2004, and
Bookings B.V., which was acquired in July 2005.
Priceline.com's GAAP gross profit for the 4th quarter 2005 was
$64.9 million, up 30.1% from the prior year, and GAAP net income
for the 4th quarter was $3.8 million. Pro forma gross profit for
the 4th quarter 2005 was $65.3 million, up 26.9% over the same
period a year ago. Pro forma net income for the 4th quarter 2005
was $11.4 million.
For full-year 2005, priceline.com reported gross travel bookings
of $2.2 billion, a 32% increase over full-year 2004. Full-year
2005 revenues were $962.7 million versus $914.4 million a year
ago. Priceline.com's GAAP gross profit for 2005 was $267.9
million, a 35.2% increase over the prior year. Full-year 2005
GAAP net income was $190.9 million, including a $170.5 million
non-cash tax benefit recorded in the 3rd quarter from reversing a
portion of priceline.com's deferred tax asset valuation allowance.
Pro forma gross profit for full-year 2005 was $269.9 million, a
34.2% increase over 2004. Pro forma net income for 2005 was $56.0
million, representing a 42% increase over the prior year.
"With gross travel bookings up 29% year-over-year and pro forma
net income at the high end of our guidance range, the 4th quarter
2005 was a solid quarter for priceline.com," said priceline.com
President and Chief Executive Officer Jeffery H. Boyd. "We were
particularly pleased with results from Priceline Europe, where 4th
quarter gross travel bookings of $158 million represented an
organic growth rate of 88% compared to the same quarter in the
prior year (which assumes ownership of Bookings B.V. during the
entire period), which we believe is roughly twice that of our
major European competitors." With the combination of Active
Hotels Ltd. and Bookings B.V., Priceline Europe's online hotel
reservation services now cover 40 countries with approximately
20,000 participating hotels.
Mr. Boyd continued, "Domestically, priceline.com continues to
focus on the integration of opaque and published-price travel
offerings. We believe that adding published-price services gives
priceline.com the ability to satisfy a much broader spectrum of
customers."
Earlier this year, priceline.com launched an enhanced U.S. website
that gives customers More Ways To Save(SM) than any other major
online travel service. Presently, priceline.com customers are
greeted with an easy-to-compare, searchable grid of
priceline.com's best published-prices, services and itineraries,
along with the option to Name-Your-Own-Price(R) for a travel
service, or save money by purchasing a package. In addition,
priceline.com recommends money-saving travel alternatives, such as
traveling on different dates or using a different airport.
Priceline's new website is being supported by a major advertising
campaign and a new Name-Your-Own-Price(R) best-price and quality
guarantee. "Since opening our doors in 1998, priceline.com has
saved customers more than $5 billion on their travel purchases,"
said Mr. Boyd. "Our goal in 2006 is to build on those savings by
offering leisure travelers the number one destination for travel
value."
Mr. Boyd added, "In Europe, we believe priceline took meaningful
market share from our major competitors in the 4th quarter.
Further, we believe that priceline can increase our full-year 2006
financial performance by driving this trend with marketing
investments and further product enhancements in the 1st quarter.
We intend to continue to build out Priceline Europe, which we
believe is one of the largest and fastest growing online hotel
reservation services in Europe. We also intend to explore ways to
make priceline.com's global collection of travel services
available to customers on both sides of the Atlantic. We expect
that the first quarter of 2006 will include an increase of over
$10 million compared to the first quarter 2005 in global online
marketing expense in support of our retail hotel business.
Relative to our historical trends, we expect that a much higher
percentage of the revenue generated from our online marketing
expenditures will be recognized in future quarters at the time of
the hotel stay. Given the rapid growth in the retail hotel
business, we anticipate a shift in our earnings seasonality, with
higher seasonal earnings in the second and third quarters of 2006.
With the investments we are making in this business, a supplier-
and consumer-friendly service lineup and the efforts of our teams
in the United States and Europe, we believe priceline.com is
building a leadership position in worldwide online hotel sales."
Priceline.com is the leading travel service for value-conscious
leisure travelers. No other travel service gives customers more
ways to save on their airline tickets, hotel rooms, rental cars,
vacation packages and cruises. In addition to getting all the
best published prices, leisure travelers can narrow their searches
using priceline.com's TripFilter(TM) advanced search technology,
create packages to save even more money, and take advantage of
priceline.com's famous Name-Your-Own-Price(R) service, which
delivers the lowest prices available.
Priceline.com operates one of Europe's fastest growing hotel
reservation services through four websites at
http://Activehotels.com/and http://Activereservations.com/and
http://Bookings.net/and http://priceline.co.uk/
The company also operates travel websites at http://Travelweb.com/
and http://Lowestfare.com/and http://RentalCars.com/and
http://BreezeNet.com/
Priceline.com also has a personal finance service that offers home
mortgages, refinancing and home equity loans through an
independent licensee. Priceline.com licenses its business model
to independent licensees, including priceline mortgage and certain
international licensees
The company's $100 million 2.25% Senior Notes due 2025 carry
Standard & Poor's single-B rating. That rating was assigned on
Sept. 23 2004.
QUESTRON TECH: Plan Trustee Has Until April 24 to Object to Claims
------------------------------------------------------------------
The Honorable Peter Walsh of the U.S. Bankruptcy Court for the
District of Delaware gave Diane Walker, the Plan Trustee appointed
under Questron Technology, Inc., and its debtor-affiliates'
confirmed Amended Plan of Liquidation, until April 24, 2006, to
object to proofs of claim.
The Plan Trustee oversees the liquidation and the distribution of
assets of the Plan Trust. The Plan Trust has held the Debtors'
assets since the Liquidating Plan took effect. The Plan Trustee
also has the authority to investigate, prosecute, settle, collect
on and otherwise dispose of claims.
The Plan Trustee tells Judge Walsh she still has 1,580 proofs of
claim to sift through. The Plan Trustee has objected to several
claims and has prosecuted some of those objections. More
objections, Ms. Walker hints, will be filed and prosecuted.
Questron Technology, Inc., was a leading provider of supply chain
management solutions and professional inventory logistics
management programs for small parts commonly referred to as "C"
inventory items (fasteners and related products). The Company and
its debtor-affiliates filed for Chapter 11 protection on
February 3, 2002. Evelyn Rodriguez, Esq., at Kasowitz Benson
Torres & Friedman LLP and Amanda Kernish, Esq., at Richards
Layton & Finger PA, represented the Debtors. Christopher Page
Simon, Esq., at Cross & Simon, LLC, and Christopher A. Ward, Esq.,
at The Bayard Firm, represent the Official Committee of Unsecured
Creditors. When the Company filed for protection from its
creditors, it listed $178,415,000 in assets and $131,039,000 in
debts.
Judge Walsh confirmed an Amended Plan of Liquidation for the
Debtors and that plan took effect on October 24, 2005. The
Liquidating Plan created a Plan Trust and appointed Diane Walker
as the Plan Trustee to liquidate and distribute the Debtors'
assets to creditors. Edwin J. Harron, Esq., Sharon M. Zieg, Esq.,
and Erin Edwards, Esq., at Young Conaway Stargatt & Taylor LLP,
represent Ms. Walker.
RADNET MANAGEMENT: S&P Junks $60 Mil. 2nd-Lien Term Loan's Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its ratings to RadNet
Management, Inc.'s $160 million secured bank financing. The $100
million first-lien loan (consisting of a $15 million revolver and
an $85 million term loan) was rated 'B+' (one notch higher than
the 'B' corporate credit rating on RadNet) with a recovery rating
of '1', indicating a high expectation for full recovery of
principal in the event of a payment default.
The $60 million second-lien term loan was rated 'CCC+' (two
notches lower than the corporate credit rating) with a recovery
rating of '4', indicating the expectation for marginal (25%-50%)
recovery of principal in the event of a payment default.
The 'B' corporate credit rating on RadNet was affirmed. The
outlook is stable.
Parent company Primedex Health Systems Inc. and an unaffiliated
entity (but related as a result of a common controlling
shareholder), Beverly Radiology Medical Group (BRMG), are co-
guarantors of the debt. BRMG supplies most of RadNet's medical
professionals through a contractual arrangement that
extends through 2014. Because of the interdependence and common
ownership among Primedex, RadNet, and BRMG, Standard & Poor's
views them as a consolidated entity for rating purposes.
"The speculative-grade ratings on RadNet, a diagnostic imaging
company, reflect the company's relatively small presence in the
competitive medical imaging field, geographic concentration,
reimbursement risk, the limitations of capitated managed care
contracts, and high debt leverage (adjusted for operating
leases)," said Standard & Poor's credit analyst Cheryl Richer.
"The company had previously overstretched its resources and had to
restructure its debt in July 2004. These factors overshadow
favorable demand prospects related to the aging population and the
benefits of imaging itself (which can preclude more expensive
medical procedures), the company's regional hub-and-spoke model,
and its efficient technology systems."
Los Angeles, California-based RadNet provides diagnostic imaging
services in California, largely concentrated in the southern part
of the state, through its network of 57 centers. This network is
organized into 11 hub-and-spoke regional networks, whereby 34
multi-modality centers are supported by 23 single-modality
centers. The tight, geographic concentration provides flexibility
for:
-- patient access,
-- asset redeployment,
-- radiologist allocation, and
-- payor relationships.
The common IT platform and state-of-the-art Patient Archival
Communications System provides operational efficiencies and cost
savings. Technology risk is somewhat manageable, with upgrades
often accomplished by software.
SALOMON BROTHERS: Fitch Junks $8.8 Million Class M Certs.' Ratings
------------------------------------------------------------------
Fitch Ratings downgrades these certificates from Salomon Brothers
Mortgage Securities VII, Inc., series 2000-C2:
-- $8.8 million class M certificates to 'C' from 'CC'
In addition, Fitch upgrades these classes:
-- $33.2 million class C certificates to 'AAA' from 'A'
-- $7.8 million class D certificates to 'AAA' from 'A-'
-- $11.7 million class E certificates to 'AA+' from 'BBB+'
-- $13.7 million class F certificates to 'A' from 'BBB'
-- $9.8 million class G certificates to 'BBB+' from 'BBB-'
-- $21.5 million class H certificates to 'BBB-' from 'BB+'
Also, Fitch affirms these classes:
-- $469.2 million class A-2 at 'AAA'
-- Interest-only class X at 'AAA'
-- $33.2 million class B at 'AAA'
-- $13.7 million class J at 'BB'
-- $5.9 million class K at 'BB-'
-- $5.9 million class L at 'B-'
Class N remains at 'C'. Class A-1 has been paid off in full. The
non-rated class P has been depleted as a result of the losses
taken in the disposition of the Metatec loan.
The downgrade of class M reflects an increase in expected losses
of several specially serviced loans which Fitch expects will
deplete class N and significantly impact class M. Interest
shortfalls are currently affecting classes:
* J,
* K,
* L,
* M,
* N, and
* P.
The upgrades reflect the improved credit enhancement levels from
loan payoffs, amortization and the defeasance of an additional 13
loans (6.6%) since Fitch's last rating action. As of the February
2006 distribution date, the pool's aggregate certificate balance
has been reduced 18.2% since issuance, to $639.0 million from
$781.5 million.
Eight loans (7.4%) are currently in special servicing. The
largest specially serviced loan (2.3%) is secured by a 251,365
square foot retail center located in Baltimore, Maryland.
Foreclosure sale occurred in November of 2005 and the property
is currently real estate owned (REO). The special servicer is
marketing the property for sale. Based on recent appraisal
valuations, significant losses are expected upon the liquidation
of this asset.
The second largest specially serviced loan (1.3%) is secured by
136,796 sf office property located in Houston, Texas. This loan
has been REO since November of 2003 and the special servicer has
been marketing the property for sale. Several interested parties
have been identified, and are currently being qualified. Based on
recent appraisal valuations, losses are expected upon the sale of
this asset.
SATCON TECHNOLOGY: Posts $1.3 Mil. Loss in Quarter Ended Dec. 31
----------------------------------------------------------------
SatCon Technology Corporation(C) (Nasdaq NM: SATC) reported
operating results for the quarter ended Dec. 31, 2005. Net loss
for the quarter was $1.3 million compared with a net loss of
$1.4 million for the same period in fiscal 2005.
"This quarter should be viewed as a transition quarter," commented
David Eisenhaure, Chairman and CEO. "We closed the books on the
December quarter with 14 megawatts of solar inverters already
shipped and on the strength of the product launch of our 500kW
solar inverter we are emerging as the leading provider of
commercial grade inverters. Our market traction in the burgeoning
photovoltaic market combined with our leading position in
providing inverters for the stationary fuel cell market give us
confidence that our revenue growth in the alternative energy
sector is sustainable. This is an important inflection point for
our company as we invest in the service infrastructure to support
the anticipated growth. The sale of the non-strategic shaker and
amplifier product line was a key step in this transition."
Revenue for quarter ended Dec. 31, 2005 was $7.1 million, compared
with $9.2 million for the quarter ended Jan. 1, 2005. This
quarter's revenue was impacted by revenue deferrals in the current
quarter totaling approximately $400,000 and still excludes the
recognition of the Rotary Uninterruptible Power Supply for the
National Institute for Standards and Technology, which was a
system we shipped in third quarter of fiscal 2005. Upon
successful product commissioning, this previously deferred revenue
is expected to be recognized in 2006.
Operating loss for the quarter ended December 31, 2005 was
approximately $1.2 million, essentially unchanged from the $1.2
million operating loss recorded in the quarter ended Jan. 1, 2005.
In spite of the revenue shortfall, costs were contained and
channeled towards the businesses poised for growth. The sale of
the non-strategic shaker and amplifier product line contributed a
gain of approximately $1.4 million, which offset the operating
loss in the quarter ended December 31, 2005.
"We are keen to pursue the expanding revenue opportunities in the
alternative energy sector and we recognize the importance of
having a strong balance sheet to support this growth," said
Millard Firebaugh, President and Chief Operating Officer. We are
aggressively managing all aspects of the Balance Sheet with
division management focused on cash usage, receivables days
outstanding, and inventory turns. Our cash position at December
31, 2005 is approximately $9.3 million. Our cash usage for the
past couple of quarters is in the $1.5 million range per quarter.
Given our expectations for revenue growth with sustainable margins
in the alternative energy markets, our plans for 2006 are to
diminish our cash usage from the 2005 rates. What is important to
note here is that we believe that our current cash and
availability will sustain our operations through our fiscal 2007
and possibly beyond to a cash positive operation."
Commenting on the outlook for SatCon for the coming year, Mr.
Eisenhaure said, "Our prospects for sustainable revenue growth are
sound. Our years of experience in high voltage and high
reliability power electronics has put us in a great position to
not only participate in the market growth for alternative energy
products, but to be recognized as a strategic supplier to the
solar, wind and fuel cell industries. Our current orders on hand
combined with outstanding requests for quotations give us
confidence that we are poised to create sustainable value for our
shareholders."
Going Concern Doubt
As reported in the Troubled Company Reporter on Jan. 9, 2006,
Grant Thornton LLP expressed substantial doubt about SatCon
Technology Corporation'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.
Grant Thornton pointed to the Company's recurring losses from
operations. In addition, the auditing firm noted the Company's
need to comply with certain restrictive covenants related to a
line of credit agreement.
During the fiscal year ended Sept. 30, 2005, SatCon Technology
incurred a $10.2 million net loss compared to an $11 million net
loss in the prior fiscal year. For each of the past ten fiscal
years, the Company has experienced losses from operating its
businesses. As of Sept. 30, 2005, the Company had an accumulated
deficit of approximately $137.9 million.
About SatCon
SatCon Technology Corporation -- http://www.satcon.com/-- is a
developer and manufacturer of electronics and motors for the
Alternative Energy, Hybrid-Electric Vehicle, Grid Support, High
Reliability Electronics and Advanced Power Technology markets.
SHULLSBURG CREAMERY: Pursues Going-Concern Sale of Assets
---------------------------------------------------------
Shullsburg Creamery, Inc., is soliciting expressions of interest
from qualified buyers to purchase the Company's assets as a
going concern, free and clear of all liens, claims and
encumbrances.
Michael Polsky, the Company's Receiver, has retained (with
Wisconsin state court approval) Wadsworth Whitestar Consultants as
his exclusive financial advisor to pursue the Sale and oversee the
Company's operations.
Headquartered in Shullsburg, Wisconsin, Shullsburg Creamery, Inc.
-- http://www.shullsburgcreamery.com/-- is a $30 million
manufacturer, marketer and distributor of quality branded
Wisconsin cheeses, deli meats and related food products selling to
retail and wholesale customers throughout the Midwest. The
Company and its related entities operate a 50,000 sq. ft.
distribution center, a cut and wrap operation and a new state-of-
the-art 22,000 sq. ft. cheese factory. The Company filed a
voluntary assignment for the benefit of its creditors on Dec. 28,
2005, under Chapter 128 of the Wisconsin Statutes in Lafayette
County, Wisconsin Circuit Court.
SUPRESTA: Poor Credit Metrics Prompt Moody's B1 Debt Ratings
------------------------------------------------------------
Moody's Investors Service changed the outlook on Supresta's
ratings to negative from stable and affirmed the company's B1
rating corporate family rating and the B1 rating on the its $25
million senior secured revolver and $140 million secured term
loan.
The change in the outlook to negative is due to lower than
anticipated free cash flow and lack of meaningful repayment of
debt in 2005, and Moody's expectation that free cash flow may
remain relatively week in 2006.
In July of 2004, Ripplewood acquired this business from Akzo Nobel
N.V. for $276 million utilizing proceeds from the term loan, $60
million of subordinated mezzanine notes and roughly $88 million of
equity capital from an affiliate of Ripplewood Holdings LLC.
Ratings Affected:
Issuer: Supresta LLC f.k.a Ripplewood Phosphorus LLC
* Corporate family rating -- B1
* Guaranteed senior secured revolver, $25 million due 2009
-- B1
* Guaranteed senior secured term loan $140 million due 2011
-- B1
The negative outlook takes into account Supresta's lower than
anticipated free cash flow in 2005, the lack of meaningful
repayment of debt in 2005, credit metrics that need to improve in
order to support the B1 rating and Supresta's need to amend its
credit facility covenants as a result of not passing its interest
coverage covenant as originally set for the fourth quarter of
2005. The affirmation of the ratings anticipates that Supresta
will gain approval of an amendment to its financial covenants
under its $165 million credit agreement for 2006 and 2007 from its
lenders.
Supresta's volumes declined in 2005 as the company lost market
share on higher pricing. Although volumes began to improve at the
end of the year, Moody's believes that the company will need to
maintain both higher volumes and prices to generate any meaningful
free cash flow in 2006. The B1 ratings incorporate Moody's
expectation that Supresta will be able to maintain higher volumes,
higher prices and solid operating margins and generate free cash
flow in excess of $8 million in 2006, which will be applied
towards debt reduction. If the company failed to generate 2006
free cash flow of $8 million, the B1 rating would likely be
lowered. Conversely, if the company generates free cash flow
above $15 million, then the outlook would likely be restored to
stable.
Supresta is a global producer of phosphorus-based flame retardants
used in foams, plastics and industrial/hydraulic fluids. The
company major end-markets include polyurethane foams, engineering
plastics, PVC, and industrial/hydraulic fluids.
Industrial/hydraulic fluids include a variety of industrial
applications that require flame retardancy, such as: transformer
fluids, airplane hydraulic fluids, etc. The company also sells
phosphorus-based organic and inorganic chemicals used in fine
chemicals and paint additives. Supresta should benefit from the
continuing rebound in demand growth in its major end markets,
specifically polyurethane foams, which has been growing at over
1.5 times GDP.
Supresta LLC, is headquartered in Ardsley, New York. Revenues
were approximately $260 million for LTM ended Dec. 31, 2005.
STONE ENERGY: Unable to Tap Bank Line Until Default Is Cured
------------------------------------------------------------
Stone Energy Corporation (NYSE: SGY) provided notice to Bank of
America, N.A., as administrative agent for the banks that are
party to its Credit Agreement, of its receipt of notices of non-
compliance from holders of its 6.75% Senior Subordinated Notes Due
2014 for failure to file its SEC reports and financial statements.
The Credit Agreement requires, as a condition to additional
borrowing, that there be no default or event of default under
other debt instruments. Accordingly, Stone will be unable to
borrow additional funds under the Credit Agreement until it cures
any default or event of default by filing its delinquent SEC
reports and financial statements. As of Feb. 22, 2006, Stone had
borrowings and letters of credit of $186 million under its Credit
Agreement. Stone does not expect liquidity problems provided it
files its SEC reports and financial statements in mid-March, as
currently planned.
Notice of Non-Compliance
The company reported that as of Feb. 15, 2006, Stone has received
notice of non-compliance from holders of over 25% of the
outstanding principal amount of its 6.75% Senior Subordinated
Notes Due 2014. The notice is for failure to file its SEC reports
and financial statements; however, under the indenture, the delay
in filing the reports does not automatically result in an event of
default.
Stone previously informed the trustee of the delay in filing its
2005 third quarter 10-Q and was not given notice by the trustee.
Stone believes that it will be in a position to file its
financials in mid-March 2006, which would resolve this issue,
although no assurance can be given as to the actual filing date.
Stone has 60 days from the receipt of this notice to cure a
default, if a default has occurred.
There is an aggregate principal amount of $200 million of 6.75%
Senior Subordinated Notes Due 2014 outstanding. As previously
stated, if there has been a default under these Notes, Stone has
60 days from the receipt of notice of such default to cure the
default. If there is a default and the default is not cured
during the 60 day cure period, the trustee, or the holders of at
least 25% in aggregate principal amount of these Notes by notice
to the trustee and the Company, may declare the principal amount
of these Notes to be due and payable, and such principal would be
due and payable immediately. If an acceleration of these Notes
were to occur, Stone may be unable to meet its payment obligations
with respect to these Notes. In addition, the acceleration of
these Notes would result in a cross-default under Stone's
indenture for its 8.25% Senior Subordinated Notes Due 2011 and its
bank credit agreement.
As of Feb. 17, 2006, Stone had an aggregate principal amount of
$200 million of 8.25% Senior Subordinated Notes Due 2011
outstanding, and borrowings and letters of credit of $186 million
outstanding under its bank credit agreement.
Stone Energy is an independent oil and gas company headquartered
in Lafayette, Louisiana, and is engaged in the acquisition and
subsequent exploration, development, operation and production of
oil and gas properties located in the conventional shelf of the
Gulf of Mexico, deep shelf of the GOM, deep water of the GOM,
Rocky Mountain Basins and the Wiliston Basin.
* * *
As reported in the Troubled Company Reporter on Feb. 23, 2006,
Moody's Investors Service lowered the Corporate Family Rating for
Stone Energy Corp., to B2 from B1 and the ratings on the senior
subordinated notes to Caa1 from B3. The ratings are under review
for further possible downgrade. Moody's also affirmed Stone's
SGL-3 rating.
The ratings downgrade reflects:
-- the company's announcement of a second significant negative
reserve revision for fiscal 2005 which combined with the
first announcement, results in total reserve reduction of
nearly 30% from FYE 2004 levels despite the company's
indication that it replaced 106% of 2005 production;
-- Moody's estimation that leverage on the Proven Developed
reserve base is at historically high levels;
-- Moody's estimation of very high and unsustainable leveraged
full cycle costs that are incompatible even at the current
ratings;
-- still significantly lower production due to shut-in
production related to hurricanes Rita and Katrina;
-- the company's estimate that overall daily production will
remain essentially flat in 2006 compared to 2005 despite
spending about $500 million in 2005 and projected spending
of $360 million in 2006;
-- several years of weak capital productivity with Moody's
expectation that 2005 will show considerably higher
expected finding and development figures from previous
levels which were already unsustainable long-term.
TECHALT INC: Closes Agreement to Acquire Cypher Wireless
--------------------------------------------------------
TechAlt, Inc. (OTCBB:TCLT) and Cypher Wireless, Inc., a Washington
corporation, closed an acquisition agreement whereby TechAlt will
issue 35% of its common stock in exchange for all the issued and
outstanding shares of Cypher. In accordance with the acquisition,
Cypher intends to change its name to "TechAlt Security
Technologies, Inc." and will conduct its business as an operating
subsidiary of TechAlt.
David Otto, President of TechAlt, Inc. explained, "The acquisition
of Cypher marks an important step in TechAlt's plans to diversify
its opportunities in the Homeland Security sector through the
acquisition of proprietary, sustainable security technologies."
In announcing the acquisition, Federico Pacquing, President of
Cypher, stated that, "Cypher is excited about the opportunities
TechAlt will provide in terms of further access to the Homeland
Security market. Our customers and partners will benefit from the
added knowledge and expertise TechAlt brings in homeland security
and in providing operational product support and related
technologies. I believe that the proposed combination creates
synergies beneficial to the shareholders of both companies and the
unified vision of both companies' management."
The new TechAlt Security Technologies plans to continue to create
partnerships and build customer relationships in the Homeland
Security market. The initial focus will be on further developing
partnerships that both create new sales channels as well as
augment the products that TechAlt offers. The company hopes to
gain significant traction with key customers such as government
public safety customers, private security organizations, sports
venues and the military.
About Cypher Wireless Inc.
Cypher Wireless, Inc., was recently formed to acquire the assets
of Ascentry Technologies, Inc., a five year-old technology
communications company focusing on the Homeland Security market.
Cypher is an innovator in communication software and security
solutions, primarily focusing within the communications platform
to serve first responder teams in public safety, physical security
organizations across a variety of industries, and federal, state
and local governments. Cypher's software and technology solutions
create environments where both equipment and individuals can
communicate, regardless of platform. The company's solutions
create additional value by linking together existing equipment and
new technologies without having to replace entire systems to gain
the benefits of digital control, collaboration, and creation.
About TechAlt Inc.
TechAlt, Inc. -- http://www.techaltinc.com/-- seeks to become the
market leader in bringing safety and security solutions to the
Homeland Security market through innovative alternative
technology. TechAlt Security Technologies seeks to deploy mission
critical technology that provides video, voice and data in various
homeland security-related markets. TechAlt Security Technologies
is targeting a secure wireless communications toolset to be used
by emergency first responders for interagency interoperability,
communication and collaboration. The company's mission is to
deliver a complete technology solution for a wide range of
security solutions by developing, implementing and acquiring
various technologies.
At Sept. 30, 2005, TechAlt, Inc.'s balance sheet showed a
stockholders' deficit of $10,936,698.
* * *
As reported in the Troubled Company Reporter on Jan. 24, 2006,
TechAlt, Inc., amended its annual report for the year ended
Dec. 31, 2004 to reflect:
a) the possibility that holders of the Company's Series A
Preferred Stock may be entitled to certain rescission
rights. The Company's balance sheet at Dec. 31, 2004, was
restated to reclassify the gross proceeds received from
the sale of the securities. The consolidated statement
of stockholders' equity for the year ended Dec. 31, 2004
was similarly restated based on the reclassification.
b) the revaluation of warrants issued, which had been
initially recorded using values determined utilizing the
Black-Scholes valuation model with a volatility factor of
0%, and have been revised utilizing a volatility factor of
71%. The net effect of the change in volatility factor on
the Company's Dec. 31, 2004 financial statements increased
net loss by $203,100. There was no effect on total
stockholders' deficit or cash flows.
Going Concern Doubt
Salberg & Company, PA, expressed substantial doubt about TechAlt's
ability to continue as a going concern after it audited the
Company's financial statements for the years ended Dec. 31, 2004
and 2003. The auditing firm pointed to the Company's recurring
net losses and working capital deficit.
TRIMAS CORP: Weak Balance Sheet Cues Moody's Rating Downgrades
--------------------------------------------------------------
Moody's Investors Service downgraded all ratings of TriMas
Corporation.
Ratings downgraded are:
* Corporate family rating lowered to B2 from B1
* $150 million senior secured revolving credit facility, due
Nov. 15, 2007, lowered to B2 from B1
* $350 million term loan B, due Nov. 15, 2009, lowered to
B2 from B1
* $438 million 9.875% senior subordinated notes, due 2012,
lowered to Caa1 from B3
* Speculative Grade Liquidity rating lowered to SGL-4 from
SGL-3
The outlook is stable
The downgrade in Trimas ratings reflects operating performance
that continues short of Moody's previous expectations,
persistently high leverage, weak balance sheet, minimal coverage
of interest, moderate free cash flow generation, an acquisitive
growth strategy, and substantial challenges in managing a large
and disparate portfolio of businesses and products.
For the twelve month period ending Sept. 30, 2005, credit metrics
have remained weak with leverage on an adjusted basis, after
incorporating A/R securitization debt and rent expense, of over
6.5x, while coverage on an EBITDA to interest basis was about
1.55x and EBIT coverage of interest at just under 1.0x. In
addition, the company's balance sheet remains weak. After
incorporating intangible assets in excess of $900 million,
tangible book equity is significantly negative.
The lowering of the speculative grade liquidity rating to SGL-4
reflects Moody's view that the cushion under the company's bank
covenants is marginal and may require some modification to
covenants to maintain orderly access to its revolving credit
facility. Despite TriMas' past success in getting covenants
modified, Moody's SGL ratings do not assume the company will
receive amendments but rather that the bank facility will become
due and payable if covenants are breached.
As of Sept. 30, 2005, as calculated under the company's bank
credit agreement, leverage was approximately 5.18x and interest
coverage was 2.04x, while respective covenants were 5.65 and
1.80x. However, covenants step down considerably over the next
twelve months with leverage decreasing to 3.75x and coverage
rising to 2.75x in the first quarter of 2007.
Despite the potential issues with covenant compliance, Moody's
believes that TriMas will generate breakeven free cash flow.
Moody's also believes that the company's third party liquidity
facilities, $150 million revolver and a $125 million A/R
securitization facility, are adequate in size but access will be
restricted. The A/R securitization facility expires in December
2007. In the event TriMas is able to improve the cushion under
its financial covenants the SGL rating would likely improve.
The stable outlook reflects Moody's view that TriMas will continue
to focus on cost reduction initiatives and debt reduction as well
as improve its liquidity position over the near term. Moody's
expects leverage to moderate to around 6.0x on a adjusted debt to
EBITDAR basis and coverage to exceed 1.5x over the near term.
The outlook also reflects Moody's expectation that TriMas will
successfully negotiate bank covenants and improve liquidity, while
its asbestos liability remains manageable. Several factors that
could contribute to a negative outlook or ratings downgrade would
be an inability to improve its current liquidity position or
reduce leverage to more moderate levels over the next 12 to 18
months as well as any sizeable acquisitions that could potentially
detract from achieving current initiatives or a significant change
in asbestos liability claims or distributions.
Alternatively, a sustained improvement in TriMas' operating
performance resulting in leverage declining to below 5.0x,
coverage increasing to over 2.5x, and stronger liquidity would
likely improve the ratings or outlook.
TriMas has a diverse range of businesses that are organized into
four operating groups:
-- Cequent Transportation Accessories Group;
-- Rieke Packaging Systems Group;
-- Fastening Systems Group; and
-- Industrial Specialties Group.
TriMas Corporation, based in Bloomfield Hills, Michigan, is a
multi-industry US manufacturer.
UAL CORP: Provides Status Report on Plan Consummation
-----------------------------------------------------
United Airlines, Inc., on February 1, 2006, closed on a six-year
$3,000,000,000 exit facility underwritten by JP Morgan Chase Bank
NA, Citicorp USA, Inc., and General Electric Capital Corporation.
The facility was oversubscribed and is fully syndicated. On the
same day, United drew down funds under the exit facility to repay
$1,200,000,000 in outstanding debtor-in-possession loans and to
pay Chapter 11 expenses, provide working capital, and support
other general corporate purposes.
Erik W. Chalut, Esq., at Kirkland & Ellis LLP, in Chicago,
Illinois, relates that the Debtors have worked diligently to
implement their confirmed Plan of Reorganization and the various
settlements incorporated in the Plan, including the PDG
Settlement Agreement, the PBGC Settlement Agreement, and the
Chicago Municipal Bond Settlement Agreement. The Old UAL
Preferred Stock, Old UAL Common Stock, the Chicago Municipal
Bonds, the Unsecured Debentures and most other instruments or
documents creating an indebtedness or obligation of or ownership
interest in United were cancelled. In their place, the Plan
provides for the issuance of a variety of new securities.
The new UAL Junior Preferred Stock and the New UAL Convertible
Preferred Stock already have been issued. Mr. Chalut notes that
United has made great progress in distributing New UAL Common
Stock to creditors, which has traded on NASDAQ since February 2,
2006. As of February 16, 2006, United has authorized the
issuance of 92,600,000 shares, 88,700,000 of which have been
issued to unsecured creditors. Through the close of business on
February 14, 2006, over 40,000,000 shares have been traded on
NASDAQ.
United is in the middle of a programmatic monetization process
for 3,600,000 shares of New UAL Common Stock reserved for
$813,000,000 of allowed convenience class claims. Similar
programs are under way to monetize up to 11,600,000 shares of New
UAL Common Stock as provided under the PBGC Settlement Agreement,
the PDG Settlement Agreement, and through settlements with the
Official Committee of Unsecured Creditors, the Internal Revenue
Service, and certain indenture trustees. Monetization is
anticipated to conclude in early March 2006, at which time any
excess shares will be distributed to unsecured creditors, subject
to disputed claims reserves.
United also has distributed 20,300,000 shares of New UAL Common
Stock to its employees' 401(k) plans. In addition, after
monetizing 1,200,000 shares to satisfy tax withholding
obligations, employees and retirees will receive 2,100,000 shares
net shares directly.
United's new bylaws and articles of incorporation became
effective on February 1, and UAL's new Board of Directors has
convened. The Creditors Committee has been discharged, but a new
three-member Plan Oversight Committee has been created.
Matters Outside Bankruptcy Court
The U.S. Court of Appeals for the Seventh Circuit has set oral
argument on February 24, 2006, regarding the appeal of the United
Retired Pilots Benefit Protection Association concerning a
January 2005 Air Line Pilots Association restructuring agreement.
In the U.S. District Court for the Northern District of Illinois,
United, ALPA and URPBPA have fully briefed United's appeal of the
Bankruptcy Court's order compelling United to pay non-qualified
benefits for the month of October 2005. The District Court has
scheduled a status hearing on the appeal for February 23, 2006.
Furthermore, United, the Creditors Committee, and Atlantic Coast
Airlines have appealed the Bankruptcy Court's order allowing the
Atlantic Coast Airlines claim at $500,000,000. An initial status
hearing is scheduled for March 1, 2006, before Judge Darrah.
The District Court recently dismissed two appeals. On
January 18, the District Court dismissed Independent Fiduciary's
appeal of the Bankruptcy Court's ruling on the priority of
minimum funding contribution claims. On February 2, the District
Court held that the Pension Benefit Guaranty Corporation's action
to terminate the pilot plan was non-core, and that the Bankruptcy
Court should have made proposed findings of fact and conclusions
of law rather than entering a final order authorizing termination
of the plan. The District Court remanded the proceeding to the
Bankruptcy Court.
Mr. Chalut discloses that three appeals have not yet been
docketed in the District Court. The URPBPA and the Public Debt
Group filed notices of appeal of the Confirmation Order, and the
City of Los Angeles filed a notice of appeal of the Bankruptcy
Court's order denying intervention in Adversary Proceeding No.
05-1884.
In litigation pending outside the Seventh Circuit, the Aircraft
Mechanics Fraternal Association appealed to the Fourth Circuit
Court of Appeals the ruling of the U.S. District Court for the
Eastern District of Virginia that the effective termination date
of the Ground Plan would be March 11, 2005. The Fourth Circuit
docketed the appeal on December 12, 2005. AMFA's brief in
support of its appeal was filed around January 24, 2006.
On November 30, 2005, the Supreme Court docketed petitions for
writ of certiorari by HSBC Bank and the California Statewide
Communities Development Authority regarding litigation on the
recharacterization of complex transactions to obtain money to
build or improve premises at the San Francisco airport.
The Supreme Court has not yet decided whether to grant certiorari
with respect to the matter.
Mr. Chalut says that the Reorganized Debtors expect to continue
to distribute as much stock as they can to their unsecured
creditors and to take all other actions that are necessary to
effectuate the terms of their confirmed Plan.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. Judge Wedoff confirmed
the Debtors' Second Amended Plan on Jan. 20, 2006. The Company
emerged from bankruptcy protection on February 1, 2006. (United
Airlines Bankruptcy News, Issue No. 115; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
US AIRWAYS: Incurs $261 Million Net Loss in Fourth Quarter
----------------------------------------------------------
The new US Airways Group, Inc. (NYSE: LCC) reported a fourth
quarter 2005 net loss of $261 million.
This compares to a net loss of $69 million for the same period
last year. The Company's fourth quarter 2005 results include a
$69 million unrealized loss related to the airline's fuel hedges;
$36 million of special charges, which primarily includes merger
related transition expenses; and $18 million in charges partially
related to the remarketing and warrant repurchase associated with
America West's prior Airline Transportation Stabilization Board
(ATSB) loan.
Excluding these items, the Company reported a fourth quarter 2005
net loss of $138 million versus a net loss excluding special items
of $58 million in the fourth quarter of 2004. The increase in the
year-over-year net loss excluding special items is due to the fact
that the 2004 results include only America West's data.
Standalone fourth quarter net losses excluding special items at
both America West and US Airways improved versus the fourth
quarter 2004.
US Airways Group Chairman, CEO and President Doug Parker stated,
"We are making tremendous progress with our integration in all
areas. Our 35,000 employees are doing a great job as evidenced by
US Airways achieving the number one ranking among major airlines
in on-time performance for the fourth quarter 2005. Our revenue
and cost synergies are tracking ahead of our pre-merger model
projections and our customers are experiencing the benefit of our
broader network and reasonable fares.
"Our quarterly financial results reflect the continued difficult
industry environment but also show some encouraging trends. Both
US Airways' and America West's standalone results, excluding
special charges, are much improved versus last year despite a
nearly $200 million increase in expenses due to higher fuel
prices. We are particularly pleased with the strong double-digit
improvement in unit revenues experienced at both airlines.
"Looking forward, we continue to believe that excluding one-time
merger-related transition costs, the new US Airways will be
profitable in 2006 - even at today's projected fuel prices."
Revenue and Cost Comparisons
The revenue environment during the fourth quarter 2005 improved
significantly over the same period in 2004. On a standalone
basis, total revenue per available seat mile (RASM) for America
West increased 17.5 percent during the fourth quarter 2005
compared to the same period last year, and increased 15.7 percent
for US Airways compared to the same period last year. Mainline
yields during the fourth quarter 2005 for America West increased
15.7 percent as compared to the same period last year, while US
Airways saw a 14.1 percent increase in mainline yields when
compared to the same period last year.
Continued high fuel prices led to material cost increases for the
new US Airways Group. Had fuel prices remained constant versus
the fourth quarter 2004, US Airways Group's fourth quarter 2005
fuel expenses would have been $197 million lower. On a standalone
basis, America West's mainline operating costs per available seat
mile (CASM) increased 25.2 percent to 10.48 cents for the fourth
quarter 2005, driven by a 32.5 percent increase in the net price
of fuel from $1.41 to $1.87. Excluding fuel and special items,
America West's CASM was 6.44 cents, an increase of 5.1 percent
over the same period last year. US Airways standalone mainline
CASM during the fourth quarter 2005 increased 11.4 percent to
11.83 cents, primarily driven by a 60.3 percent increase in fuel
price from $1.31 to $2.10. Excluding fuel and special items, US
Airways standalone mainline CASM decreased 0.8 percent to 8.38
cents from the same period last year despite a 13.2 percent
decline in mainline available seat miles.
America West Airlines' and US Airways' Standalone Results
On a standalone basis, America West Airlines' net loss for its
fourth quarter 2005 was $139 million. Excluding special items,
America West's fourth quarter 2005 net loss was $31 million, an
improvement from the fourth quarter 2004 when the airline
recognized a $57 million loss, excluding special items.
On a standalone basis for US Airways, the airline's net loss for
its fourth quarter 2005 was $120 million. Excluding special
items, which were primarily merger-related transition costs, US
Airways fourth quarter 2005 net loss was $105 million. This
compares to a net loss of $218 million for the same period in the
prior year.
Liquidity
As of Dec. 31, 2005, the Company had $2.4 billion in total cash
and investments, of which $1.6 billion was unrestricted.
Integration Update
Since the two airlines merged at the end of September 2005,
operational accomplishments include:
-- achieved the top ranking in on-time performance among all
major airlines as reported by the Department of
Transportation (DOT) for the fourth quarter 2005;
-- consolidated operations at 30 overlap airports (seven
airports remain to be integrated);
-- signed an amended agreement with Embraer for 25 firm and 32
additional firm (with up to 50 options) for Embraer 170/190
family aircraft;
-- achieved ETOPS certification for Boeing 757 aircraft
operated by America West, which allowed the airline to begin
new service to Hawaii;
-- added 52 new pieces of ground equipment and additional
personnel at our Philadelphia hub, which helped the airline
run an enormously improved 2005 holiday operation as
compared to 2004.
In the area of finance, the combined airline has:
-- repurchased warrants associated with America West Holdings'
ATSB loan from the US government for $116 million; the US
Airways and America West loans were sold by the lender by
order of the ATSB to 13 fixed income investors, which
repaid in full the original consolidated loan amount of
$1.4 billion;
-- Combined all insurance programs for the new airline, which
will save an additional $41 million annually.
In the marketing area, the combined airline has:
-- established Dividend Miles as the new Company's frequent
flyer program, and created mechanisms for reciprocal
benefits, accrual and redemption;
-- completed all Star Alliance joining requirements;
-- introduced a new affinity card with Barclays bank;
-- announced three new European destinations, Lisbon, Milan and
Stockholm, which will begin service this summer;
-- reduced numerous fares in several east coast markets,
including Philadelphia, Charlotte, Pittsburgh and New
York/LaGuardia.
US Airways Group's labor integration team has achieved the
following since the merger closed:
-- recalled 55 furloughed US Airways pilots and announced
several new hire flight attendant classes, which will
include recalling furloughed US Airways flight attendants;
-- began the process to bring some of the currently outsourced
reservations work back in house by increasing hiring in
Winston-Salem, North Carolina and Reno, Nevada;
-- reached a Transition Agreement with the airline's pilots and
flight attendants;
-- reached a Transition Agreement with a new labor alliance
between the Communication Workers Association and the
International Brotherhood of Teamsters, which represents the
airline's customer service employees;
-- received single carrier certification by the National
Mediation Board (NMB), which will further the process of
getting to single representation for the combined airline's
mechanics and fleet service workers.
In the area of cultural integration, the combined airline
continues to make progress and has achieved the following
milestones:
-- paid out three consecutive monthly bonuses to employees for
achieving on-time performance goals in October, November and
December (totaling $5 million);
-- implemented new internal communication programs designed to
ensure senior management visibility among all areas of the
combined airline's operation;
-- unveiled one of four heritage planes that will feature
throwback liveries of the four major airlines that comprise
the new US Airways (Allegheny, America West, Piedmont and
PSA);
-- began an aggressive leadership development training program
that will ultimately touch all leaders at US Airways Group.
Change in Accounting Principle for Maintenance Costs
The Company has implemented a change in accounting principle
related to the way it accounts for its maintenance work on major
airframe, engine and certain component overhauls. While US
Airways historically charged maintenance and repair costs to
operating expenses as they were incurred, America West has
historically used the deferral method to account for its
maintenance work. Under the deferral method, certain maintenance
costs were recorded as capitalized assets and subsequently
amortized over the periods benefited. Effective Oct. 1, 2005,
America West retroactively changed its accounting policy from the
deferral method to the expense as incurred method as if that
change occurred on Jan. 1, 2005. This resulted in a one-time
charge of $202 million, as well as a $46 million increase in
maintenance expense, for the full year 2005 for the new US
Airways. In addition, as a result of having made this change in
the fourth quarter, the sum of the Company's 2005 reported
quarters will not equal annual results. The Company will recast
the quarterly data for the first three quarters in its 2005 Annual
Report.
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. The Debtors merged with America
West in September 2005, at about the same time Judge Mitchell
confirmed the Debtors' plan. In the Company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts.
USN CORP: Equity Deficit Tops $9 Million at December 31
-------------------------------------------------------
USN Corporation, fka Premier Concepts Inc., delivered its
financial results for the quarter ended Dec. 31, 2005, to the
Securities and Exchange Commission on Feb. 21, 2006.
USN incurred a $3,881,405 net loss on $8,910,321 of sales for the
three months ended Dec. 31, 2005, in contrast to a $1,924,046 net
loss on $4,036,790 of sales for the comparable period in 2004.
The 121% increase in sales is primarily attributable to the
additional programming hours and an increased assortment of
product merchandise. Prior to May 2004, USN's sales came from 12
hours of weekly programming. In September 2005, the Company
increased its programming to 24 hours per day.
USN's balance sheet at Dec. 31, 2005, showed $5,208,466 in total
assets and $14,346,649 in total liabilities, resulting in a
stockholders' deficit of $9,138,183. At Dec. 31, 2005, the
Company had a working capital deficit of $8,940,716.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?5c0
Going Concern Doubt
Creason & Associates, PLLC, expressed substantial doubt about USN
Corporation's ability to continue as a going concern after if
audited the Company's financial statements for the fiscal year
ended March 31, 2005. The auditing firm pointed to the Company's
losses from operations, failure to generate sufficient cash flows
to meets its obligations and stockholders' deficit.
About USN
Headquartered in Los Angeles, California, USN Corporation, fka
Premier Concepts Inc., through its wholly owned subsidiary, USN
Television Group, Inc. -- http://www.usntvg.com/-- is a retailer
of consumer products, such as jewelry, watches, coins and other
collectibles, through interactive electronic media using
broadcast, cable and satellite television and the Internet. USN
TV's programming is transmitted by satellite to cable television
systems, direct broadcast satellite systems, including DirecTV,
and television broadcasting stations across the United States.
USN TV also markets its products through the Internet. Revenues
are primarily generated from sales of merchandise offered through
USN TV's television home shopping programming.
USN filed a voluntary chapter 11 petition on Oct. 10, 200 (Bankr.
C.D. Calif. Case No. 03-36445). The Bankruptcy Court confirmed
the Company's First Amended Chapter 11 Reorganization Plan on Nov.
30, 2004. Lawrence A. Diamant, Esq., at Robinson, Diamant, &
Wolkowitz, represented the Debtor in its chapter 11 restructuring.
USN will remain subject to the jurisdiction of the Bankruptcy
Court until it makes its final payment to unsecured creditors in
the fourth quarter of fiscal year 2006.
USN CORP: Wants to Make Changes to Confirmed Plan
-------------------------------------------------
USN Corporation, fka Premier Concepts Inc., asks the U.S.
Bankruptcy Court for the Central District of California in Los
Angeles for permission to modify certain provisions contained in
its confirmed plan of reorganization.
USN wants to modify the confirmed plan to clarify a potential
ambiguity concerning authorized stock in the reorganized
companies.
Pursuant to the plan confirmed on Nov. 30, 2005, all equity
interest in the Debtor were cancelled on the effective date and
the Reorganized Debtor was authorized to issue 7,500,000 shares of
new common stock.
USN understood the confirmed plan to mean that 7,500,000 shares of
common stock were to be issued and that it was authorized to
reserve for issuance additional shares as it might deem
appropriate. In addition, USN intended that the proposed
additional shares would be available to convert pre-confirmation
debt, of up to an additional $2,000,000, to equity.
Based on the authorization granted through its confirmed plan, USN
amended its articles of incorporation with the Secretary of State
of Colorado. Pursuant to the amended articles of incorporation, a
reduced number of 195,000,000 shares of common stock and 5,050,000
shares of preferred stock were authorized.
Lawrence A. Diamant, Esq., at Robinson, Diamant & Wolkowitz
informs the Bankruptcy Court that USN has issued approximately
13,789,000 shares of common stock which were used for, among other
things:
-- the acquisition of Altron Limited;
-- the sale of certain assets to and the assumption of
certain liabilities by LGS Holdings, Inc.;
-- the conversion of debt to equity as provided in the plan;
and
-- for a management severance package.
USN has submitted an amended plan to clarify the provisions
concerning equity in the Reorganized Debtor.
The sole modification in the amend plan provides that, retroactive
to the date of entry of the order confirming USN's original plan,
the Board of Directors of the Reorganized Debtor is authorized to
amend the Reorganized Debtor's articles of incorporation to allow
the issuance of up to 195,000,000 shares of common stock and
5,050,000 shares of preferred stock.
The Debtor says that the provisions for treatment of claims and
interests under the amended plan are unchanged from the provisions
of the confirmed plan.
USN is not soliciting votes on the amended plan but creditors and
interest holders who voted on the confirmed plan have the
opportunity to change their votes. Any holder of a claim or
interest previously voting to accept or reject the Plan must act
to change his or her vote, at least 14 days before the hearing on
the motion.
Going Concern Doubt
Creason & Associates, PLLC, expressed substantial doubt about USN
Corporation's ability to continue as a going concern after if
audited the Company's financial statements for the fiscal year
ended March 31, 2005. The auditing firm pointed to the Company's
losses from operations, failure to generate sufficient cash flows
to meets its obligations and stockholders' deficit.
About USN
Headquartered in Los Angeles, California, USN Corporation, fka
Premier Concepts Inc., through its wholly owned subsidiary, USN
Television Group, Inc. -- http://www.usntvg.com/-- is a retailer
of consumer products, such as jewelry, watches, coins and other
collectibles, through interactive electronic media using
broadcast, cable and satellite television and the Internet. USN
TV's programming is transmitted by satellite to cable television
systems, direct broadcast satellite systems, including DirecTV,
and television broadcasting stations across the United States.
USN TV also markets its products through the Internet. Revenues
are primarily generated from sales of merchandise offered through
USN TV's television home shopping programming.
USN filed a voluntary chapter 11 petition on Oct. 10, 200 (Bankr.
C.D. Calif. Case No. 03-36445). The Bankruptcy Court confirmed
the Company's First Amended Chapter 11 Reorganization Plan on Nov.
30, 2004. Lawrence A. Diamant, Esq., at Robinson, Diamant, &
Wolkowitz, represented the Debtor in its chapter 11 restructuring.
USN will remain subject to the jurisdiction of the Bankruptcy
Court until it makes its final payment to unsecured creditors in
the fourth quarter of fiscal year 2006.
VENDTEK SYSTEMS: October 31 Balance Sheet Upside-Down by $712,000
-----------------------------------------------------------------
VendTek Systems Inc. reported its financial results for the year
ended Oct. 31, 2005.
For the year ended Oct. 31, 2005, VendTek's revenues increased to
$38,354,035 from revenues of $21,741,821 for the year ended
Oct. 31, 2004. For the year ended Oct. 31, 2005, net loss
decreased to $1,308,700 from a net loss of $365,501 for the year
ended Oct. 31, 2004.
Key highlights of VendTek's fiscal 2005 year-end results include:
-- Revenue growth of 77% during 2005 compared to 2004's revenue
growth of 88%.
-- The consolidated gross profit for 2005 increased
approximately 100% to $1,547,445 compared to $771,840 in
2004.
-- G&A expenses were $1,504,720 or 4% of revenues during 2005
compared to approximately 7% of revenues in 2004.
-- Net loss decreased by 72% for the year ended 2005 and net
loss per share for fiscal 2005 decreased by 75% to ($0.01)
compared to ($0.04) for fiscal 2004.
For the fiscal year ended Oct. 31, 2005, VendTek Systems' reported
total assets of $2,456,791 and total liabilities of $3,168,454.
Headquartered in Vancouver, Canada, VendTek Systems Inc. --
http://www.vendteksys.com-- develops and licenses automated
transaction system software and supporting technologies that
improve the efficiency of product delivery, reduce costs to
clients and offer superior safety measures. VendTek's customers
and its subsidiaries, Now Prepay Corp. (in Canada) and VendTek
Systems Technologies (in China), are using e-Fresh(TM) software to
build electronic, prepaid services networks, which enable
consumers to purchase prepaid services via POS and self-serve
terminals connected to a central e-Fresh(TM) server.
At Oct. 31, 2005, VendTek Systems' shareholders' deficit decreased
to $711,663 from a deficit of $825,296 at Oct. 31, 2004.
VIRGINIA DEVLIN: Case Summary & 6 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Virginia Scott Devlin
Ryton Farm, 172 Wood Creek Road
Bethlehem, Connecticut 06751
Tel: (203) 266-5656
Bankruptcy Case No.: 06-30195
Chapter 11 Petition Date: February 23, 2006
Court: District of Connecticut (New Haven)
Judge: Albert S. Dabrowski
Debtor's Counsel: Byron Paul Yost, Esq.
Yost & Associates, P.C.
50 Washington Street, 7th Floor
Norwalk, Connecticut 06854
Tel: (203) 226-1680
Fax: (203) 853-9429
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $100,000 to $500,000
Debtor's 6 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Ohio Savings Bank $307,500
160 Farmington Avenue
Farmington, CT 06032
John Febbrolello, Esq. $7,500
355 Prospect Avenue
Torrington, CT 06790
Newton Savings Bank $4,500
Main Street
Woodbury, CT 06780
New Milford Hospital $1,500
21 Elm Street
New Milford, CT 06776
The Hartford Insurance $1,100
P.O. Box 2903
Hartford, CT 06101-9935
Town of Bethlehem $0
Main Street
Bethlehem, CT 06751
WELLCARE HEALTH: S&P Revises Outlook to Positive from Stable
------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
WellCare Health Plans Inc. (NYSE:WCG) to positive from stable.
"WellCare met or exceeded our expectations for 2005 by achieving
very good operating performance and double-digit organic
enrollment growth," said Standard & Poor's credit analyst Joseph
Marinucci.
The company's pretax ROR (including start-up costs for new
markets) was 4.5% in 2005. In addition, WellCare strengthened its
balance sheet in 2005 through the retention of earnings. Based on
Standard & Poor's preliminary calculation, the rating agency
believes that WellCare materially grew statutory capitalization
and increased the capital adequacy and liquidity of its regulated
health plan subsidiaries in 2005.
"We will meet with WellCare sometime in the second quarter of 2006
to conduct a more in-depth review of its financial profile and
growth strategy to determine the sustainability of its improved
financial condition," Mr. Marinucci added. "Following the review,
the rating could be raised to 'BB-' from 'B+'."
WESTON NURSERIES: Has Until March 1 to Decide on Unexpired Leases
-----------------------------------------------------------------
Weston Nurseries, Inc., together with the Official Committee of
Unsecured Creditors, and Mezitt Agricultural Corporation agreed to
extend the Debtor's time to decide on leases until March 1, 2006.
The Honorable Joel B. Rosenthal of the U.S. Bankruptcy Court for
the District of Massachusetts in Worcester approved that agreement
at a telephonic hearing on Feb. 7, 2006. Judge Rosenthal will
convene another hearing to consider any request for an extension
beyond March 1.
As reported in the Troubled Company Reporter on Jan. 19, 2006, the
Debtor says that it is currently working on the terms of a
settlement with the lessors, Mezitt Agricultural Corp., Roger N.
Mezitt and Merylyn J. Mezitt, and is rapidly proceeding towards a
sale of the estate assets and a Chapter 11 plan.
The Debtor told the Court that the extension would allow it to
have a careful review on the validity and necessity of the lease
agreement and executory contracts.
The Debtor assured the Court that it is current in all its
postpetition obligations pursuant to Section 365(d)(3) of the
Bankruptcy Code.
Headquartered in Hopkinton, Massachusetts, Weston Nurseries, Inc.,
-- http://www.westonnurseries.com/-- is central New England's
premier resource in designing, creating, and enjoying outdoor
living areas. Weston Nurseries grows and sells quality plants,
trees, shrubs, and perennials. The Company filed for chapter 11
protection on Oct. 14, 2005 (Bankr. D. Mass. Case No. 05-49884).
Alan L. Braunstein, Esq., at Riemer & Braunstein, LLP represents
the Debtor in its restructuring efforts. When the Debtor filed
for protection from its creditors, it estimated assets and debts
of $10 million to $50 million.
WESTON NURSERIES: Has Until March 13 to File Chapter 11 Plan
------------------------------------------------------------
The Honorable Joel B. Rosenthal of the U.S. Bankruptcy Court for
the District of Massachusetts in Worcester extended Weston
Nurseries, Inc.'s time to file its chapter 11 plan of
reorganization. The Debtor has until March 13, 2006, to file its
plan. Judge Rosenthal says that if the Debtor asks for a further
extension of its plan-filing period, the company's exclusive
period under 11 U.S.C. Sec. 1121 is automatically extended through
the conclusion of a hearing to consider that request.
As reported in the Troubled Company Reporter on Feb. 8, 2006,
the Debtor is awaiting the Bankruptcy Court's decision on the
long-standing dispute between its two shareholders, brothers
Roger N. Mezitt and R. Wayne Mezitt, concerning the disposition
of the leased portion of the land on which the Debtor operates
and the abutting acreage. The proposed Shareholders' Settlement,
if executed and approved, will allow the Debtor to move forward
with the planned sale process that should permit, after payment
of secured and priority claims, full payment on all allowed
general unsecured claims.
The Debtor anticipated filing a plan and disclosure statement
concurrent with or upon completion of the sale process to
distribute the proceeds of the intended sale and proposed
settlement.
Headquartered in Hopkinton, Massachusetts, Weston Nurseries, Inc.,
-- http://www.westonnurseries.com/-- is central New England's
premier resource in designing, creating, and enjoying outdoor
living areas. Weston Nurseries grows and sells quality plants,
trees, shrubs, and perennials. The Company filed for chapter 11
protection on Oct. 14, 2005 (Bankr. D. Mass. Case No. 05-49884).
Alan L. Braunstein, Esq., at Riemer & Braunstein, LLP represents
the Debtor in its restructuring efforts. When the Debtor filed
for protection from its creditors, it estimated assets and debts
of $10 million to $50 million.
WILD OATS: Earns $3.6 Million in Quarter Ended Dec. 31
------------------------------------------------------
Wild Oats Markets, Inc., (Nasdaq: OATS), announced financial
results for the fourth quarter and year ended Dec. 31, 2005.
Net sales in the fourth quarter of 2005 were $282.7 million, up
slightly compared with $281.9 million in the fourth quarter of
2004. This increase in sales was achieved even with the
comparison to an additional sales week in the fourth quarter of
2004. Net sales in 2005 were $1.1 billion, a 7.2% increase
compared to $1 billion in 2004.
Higher sales were driven by sustained strong store sales and total
square footage growth of 5.5%, as the Company ended the quarter
with 2.58 million square feet. The addition of eight new stores -
- two of which were relocated stores -- and four major remodels in
2005, coupled with continued strong comparable store sales growth
helped to drive the overall increase in net sales.
Wild Oats was able to leverage its continued sales growth into
significant gains in profitability, which exceeded earnings
guidance provided at the end of the third quarter.
Net income for the fourth quarter of 2005 was $3.3 million
compared with a net loss of $34.7 million in the same period last
year. The improvement relative to the prior year fourth quarter
was due to stronger sales and a 230-basis-point gain in gross
margin. Net income for the full year 2005 was $3.2 million
compared with a net loss of $40.0 million.
Higher sales, improved gross margins and better direct store
expense leverage in the fourth quarter of 2005 resulted in a
substantially higher store contribution of $24.4 million, an 87.7%
increase, compared with $13 million in the prior year fourth
quarter. Store contribution in the full year 2005 was $84.7
million, a 37.9% increase, compared with $61.4 million, or 5.9
percent of sales, in 2004.
Wild Oats' balance sheet at Dec. 31, 2005, showed $418,870,000 in
total assets and $309,328 of liabilities.
"We are very pleased with our results for 2005 and believe it was
a year of solid progress for Wild Oats Markets," said Perry D.
Odak, President and Chief Executive Officer of Wild Oats Markets,
Inc. "We achieved -- and exceeded -- our sales and profitability
targets, and we are realizing the benefits of the investments we
have made to turn this business around."
Wild Oats opened one new Henry's store in Rancho Cucamonga, Calif.
in the fourth quarter. This brings the total number of new stores
opened in 2005 to eight. Currently Wild Oats has 16 leases or
letters of intent signed for new stores opening in 2006 and 2007,
and plans to open 10 new stores in 2006.
The Company also completed the major remodeling of four older
stores in 2005, including two San Diego Henry's stores and Wild
Oats stores in Evanston, Ill. and West Hartford, Conn. The
Company expects to complete the major remodeling of up to six
older stores in 2006. As part of its ongoing efforts to improve
its overall store base, thus far in the first quarter of 2006, the
Company announced the closure of two smaller, older stores in
Portland, Ore. and Ft. Lauderdale, Fla.
The Company has also identified an additional store for closure in
the second quarter of 2006. Restructuring charges related to
these closures have already been incorporated into the Company's
EPS guidance for the year.
"We are optimistic about our prospects for success in 2006," said
Mr. Odak. "We have a solid management team in place, our real
estate pipeline is full and we have many new stores in
development. In addition to being the high growth segment of the
food industry, we have built an infrastructure for growth and our
investments in distribution and in upgrading our store base are
paying off."
About Wild Oats
Wild Oats Markets, Inc. -- http://www.wildoats.com/-- is a
nationwide chain of natural and organic foods markets in the U.S.
and Canada. With more than $1 billion in annual sales, the
Company currently operates 111 natural foods stores in 24 states
and British Columbia, Canada. The Company's markets include: Wild
Oats Natural Marketplace, Henry's Farmers Markets, Sun Harvest and
Capers Community Markets.
* * *
As reported in the Troubled Company Reporter on June 7, 2005,
Standard & Poor's Ratings Services assigned a 'CCC+' corporate
credit rating to Wild Oats Markets Inc. and a 'CCC+' rating to the
company's $115 million 3.25% convertible bonds due 2034. These
notes were issued pursuant to rule 144A under the Securities Act.
Proceeds from the note issuance were used to repurchase shares,
pay down debt, and other corporate expenses. S&P said Wild Oats
had a negative outlook at that time.
WINN-DIXIE: DIP Credit Agreement Amended on January 31
------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission, Peter L. Lynch, president and chief executive officer
of Winn-Dixie Stores, Inc., reports that the Company entered into
an amendment of the DIP Credit Agreement on Jan. 31, 2006.
The Amendment modifies the financial covenants related to EBITDA
in two ways:
(1) The first modification will test EBITDA less Capital
Expenditures as compared with the bank plan rather than
testing them separately.
(2) The second modification changes the testing from a rolling
six-month period test to a year-to-date test for periods 8
through 13 of fiscal 2006, and thereafter to a trailing
13-period test.
Specifically, the Amendment provides that:
"(b) After the receipt by the Agent of the Initial Monthly
Projections:
(i) the Borrowers and the Guarantors will not permit
the consolidated EBITDA of Winn-Dixie and its
Subsidiaries for the most recently ended trailing
six (6) Fiscal Month period with respect to each
Fiscal Month through and including the Fiscal
Month ended January 11, 2006, in each case tested
on the last day of each Fiscal Month, to be less
than eighty percent (80%) of the EBITDA projected
in such Monthly Projections for such period; and
(ii) the Borrowers and the Guarantors will not permit
the consolidated EBITDA less Capital Expenditures
of Winn-Dixie and its Subsidiaries for the most
recently ended trailing eight (8) Fiscal Month
period with respect to the Fiscal Month ended
February 8, 2006, the most recently ended trailing
nine (9) Fiscal Month period with respect to the
Fiscal Month ended March 8, 2006, the most
recently ended trailing ten (10) Fiscal Month
period with respect to the Fiscal Month ended
April 5, 2006, the most recently ended trailing
eleven (11) Fiscal Month period with respect to
the Fiscal Month ended May 3, 2006, the most
recently ended trailing twelve (12) Fiscal Month
period with respect to the Fiscal Month ended
May 31, 2006, the most recently ended trailing
thirteen (13) Fiscal Month period with respect to
the Fiscal Month ended June 28, 2006, and the most
recently ended trailing thirteen (13) Fiscal Month
period with respect to each Fiscal Month
thereafter, in each case tested on the last day of
each Fiscal Month, to be less than eighty percent
(80%) of the EBITDA less Capital Expenditures
projected in such Monthly Projections for such
period."
Wachovia Bank, NA, serves as the administrative agent and
collateral monitoring agent for the Lenders.
General Electric Capital Corporation and The CIT Group/Business
Credit, Inc., act as syndication agents for the Lenders.
Bank of America, NA, Merrill Lynch Capital, a division of Merrill
Lynch Business Financial Services, Inc., GMAC Commercial Finance
LLC and Wells Fargo Foothill, LLC, are the documentation agents
for the Lenders.
A full-text copy of the Jan. 31, 2006, Amendment to the Credit
Agreement is available for free at
http://ResearchArchives.com/t/s?5c5
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King &
Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed $2,235,557,000 in total assets and
$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000).
WINN-DIXIE: Court Okays Rejection of Nine Equipment Contracts
-------------------------------------------------------------
As reported in the Troubled Company Reporter on Feb. 9, 2006,
Winn-Dixie Stores, Inc., and its debtor-affiliates seek authority
from the U.S. Bankruptcy Court for the Middle District of Florida
to reject nine executory contracts effective Feb. 9, 2006.
The contracts are:
(1) five copier/fax machine lease agreements with General
Electric Capital Corporation and Berney Office Solutions
and two digital copier lease agreements with Lanier
Worldwide, Inc.;
(2) an electric service agreement with the Public Works
Commission of the City of Fayetteville, North Carolina;
and
(3) a real property lease termination agreement with
Woolbright/SSR Marketplace LLC with respect to
Store No. 2386.
The Equipment Leases are no longer being used or are located in a
facility that has been targeted for closing. Due to the age of
the equipment, the Equipment Leases are not a source of potential
value to the Debtors' estates.
The PWC Agreement, which governed the use of electric service with
the City of Fayetteville, is no longer needed because the Debtors
have sold
or closed all of their stores in North Carolina. Electric utility
services for those stores have been terminated.
In addition, rejecting the Lease Termination Agreement with
Woolbright will save their estates $55,000 per month.
Woolbright contends that the Lease Termination Agreement is not
an executory contract because the only remaining material
unperformed obligation under it was the Debtors' obligation to
pay remaining monthly installments totaling $351,353.
Court Order
Judge Funk authorizes the Debtors to reject the Contracts,
including the Woolbright Lease Buyout Agreement. Any claims for
rejection damages resulting from the rejection of the Contracts,
to the extent executory, must be filed before March 11, 2006.
The Court deems the Woolbright/SSR Marketplace LLC Objection
resolved by the terms of the Court order.
Woolbright need not file an additional proof of claim if its
damages are already included in a previously filed proof of
claim.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King &
Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed $2,235,557,000 in total assets and
$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000).
WINN-DIXIE: Wants to Reject 13 Contracts & Leases by March 9
------------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates seek authority
from the U.S. Bankruptcy Court for the Southern District of
Florida to reject 13 executory contracts and unexpired leases as
of March 9, 2006:
CounterParty Contract
------------ --------
Barbco, Inc. Co-Pack/Product Supply
Agreement dated as of
October 28, 2004
Bayforce Staffing Solutions Master Information Technology
Services Agreement dated as of
January 8, 2004
CIT Technologies Corp., Computer Equipment Schedule
assignee of GATX Technology No. 1 to Master Lease Agreement,
Services dated as of July 15, 2003, for
lease of NCR Worldmark 5300,
Serial No. 33177335
Futuristic Foods, Inc. Entree and Side Dish Supply
Agreement dated as of July 20,
2003
Infosys Technologies Limited Services Agreement dated as of
March 31, 2004
MeadWestvaco Packaging Equipment Lease dated as of
Systems, LLC February 20, 2003 for
Specification Model: 18000,
Serial Number: 56, Types of
Packages: YOGOPAK *2x3
Modis Consulting Master Information Technology
Services Agreement, dated as of
January 7, 2004
National Welders Supply Cylinder Lease Agreement dated
Company, Inc. as of January 25, 2004
Scanna EnergyMarketing, Inc. Natural Gas Sales Agreement
Contract No. NCS01838, dated
November 1, 2002, for Taylors,
South Carolina facility
Natural Gas Sales Agreement
Contract No. GS001027, dated
October 1, 2000, for Atlanta,
Georgia facility
Natural Gas Sales Agreement
Contract No. NCS01845, dated
November 1, 2002, for High
Point, North Carolina facility
SAM Group, Inc. Statement of Work #5 dated
February 1, 2005
Wipro Limited Master Business Agreement
dated as of July 1, 2004
The Debtors have determined that they either no longer need these
agreements or that they are able to obtain similar services from
alternative sources at a lower cost.
By rejecting the Contracts, the Debtors will avoid unnecessary
expense and burdensome obligations that provide no tangible
benefit to their estates or creditors, D.J. Baker, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, in New York, said.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King &
Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed $2,235,557,000 in total assets and
$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WORLDCOM INC: Settles Dispute Over APCC's $44.9MM Unsecured Claim
-----------------------------------------------------------------
Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, in New
York City, tells the U.S. Bankruptcy Court for the Southern
District of New York that WorldCom, Inc., and its debtor-
affiliates purchased telecommunication services from certain
payphone providers who contend that MCI, Inc., formerly known as
WorldCom, Inc., or its predecessors-in-interest have previously
owed them for "dial- around compensation," pursuant to Section 276
of the Telecommunications Act of 1996 and the regulations
promulgated under the Federal Communications Commission.
Those PSPs own, install, operate, manage or maintain payphone
services and facilities throughout the U.S.
According to Mr. Perez, some PSPs filed proofs of claim, seeking
amounts allegedly due from the Debtors over various periods of
time. In addition, certain PSPs asserted claims for PSP Payphone
Compensation.
APCC Services, Inc., is the duly authorized billing and collection
agent, and attorney-in-fact for certain payphone providers for
various purposes.
Based on APCC's representation, the Debtors and APCC entered into
a stipulation, which provides that APCC may file a Proof of Claim
asserting the claims of its payphone providers customers. That
Stipulation was approved on January 21, 2003.
APCC then filed Proof of Claim No. 17851 for $157,288,788 against
the Debtors on January 21, 2003. The APCC Claim is based on:
a. unpaid dial-around compensation for completed calls made
during the second quarter of 2002;
b. unpaid dial-around compensation for completed calls made
during the third quarter of 2002, but prior to the
Petition Date;
c. true-up payments required by FCC; and
d. prepetition amounts owed on account of claims asserted in
the APCC Litigation.
Mr. Perez relates that the Reorganized Debtors denied that they or
their predecessor became indebted to APCC or the payphone
providers. The Debtors asserted that a lesser amount was owed to
APCC. Subsequently, the Debtors asked the Court to disallow the
PSP Claim in its entirety.
The Settlement Agreement
To resolve the disputes related to the Claim, MCI and APCC
executed a settlement agreement in October 2004. Among the
salient terms of the Agreement are:
a. The APCC Claim is allowed as a Class 6 WorldCom General
Unsecured Claim for $44,941,637, in full and final
satisfaction of the APCC Claim and the payphone providers
Claims;
b. PhoneTel Technologies Inc., a PSP, is deemed to have a
Class 6 WorldCom General Unsecured Claim for $300,000;
c. The Debtors have disbursed or will disburse payment
directly to the payphone providers for the Payphone
Services Providers Compensation due for the second quarter
of 2004, and therefore, those amounts are not included in
the Allowed APCC Claim; and
d. Certain claims held by the payphone providers will not be
affected by the Settlement Agreement.
Accordingly, the Reorganized Debtors seek the Court's authority to
implement the Settlement Agreement.
* * *
Judge Gonzalez authorizes the Debtors to execute, deliver,
implement and fully perform all obligations reflected in the
Settlement Agreement.
In addition, the Settlement Agreement between MCI and APCC will
finally and fully resolve the APCC Claim and any related claims
held by PSPs.
Except as otherwise provided in the Settlement Agreement, and with
the exception of the Exempt Claims, all claims for PSP
Payphone Compensation filed by APCC, and which claims are
duplicative of the APCC Claims, will be expunged from the claims
register.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on October
31, 2003, and on April 20, 2004, the company formally emerged from
U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News,
Issue No. 113; Bankruptcy Creditors' Service, Inc., 215/945-7000)
* Robert Manzo Joins Capstone Advisory Group
--------------------------------------------
The members of Capstone Advisory Group, LLC reported that Robert
Manzo, Esq., has joined the firm.
Mr. Manzo was a co-founder of Policano & Manzo, and was
subsequently co-head of the largest restructuring practice in
North America, FTI Consulting. Mr. Manzo has had more than 20
years of experience in the restructuring and transaction arena and
has lead some of the country's largest and most complex
restructurings.
Commenting on this addition, Ed Ordway, who along with Chris
Kearns and Peter Nurge, manage the day-to-day operations of
Capstone, said "We are very fortunate to add Bob Manzo's talent to
our firm. He is one of the most recognized names in the
restructuring world, and will provide leadership and creativity to
our major assignments. Bob's depth and breadth of experience,
which includes restructuring of Adelphia Communications, Federal
Mogul, Owens Corning and Safety-Kleen, will enable Capstone to
take on even the largest, most complicated matters."
About Capstone Advisory Group, LLC
Capstone Advisory Group, LLC -- http://www.capstoneAG.com/--
provides restructuring services, litigation and forensic support,
transaction due diligence and valuations to middle market and
large companies and their creditors, rendered by teams of highly-
experienced advisors. Capstone has expertise in a wide variety of
industries including automotive, merchant energy, retail, airline,
telecom, real estate, chemicals, shipping, hospitality, heavy
manufacturing and service companies.
Capstone has offices in New York, New Jersey, Los Angeles,
Washington, D.C. and Atlanta, and will be opening an office in
Chicago shortly.
* SEC Proposes Deregistration Process for Foreign Private Issuers
-----------------------------------------------------------------
The Securities and Exchange Commission proposes to amend the rules
allowing a foreign private issuer to terminate the registration of
a class of equity securities under Section 12(g) of the Securities
Exchange Act of 1934 and to cease its reporting obligations
regarding a class of equity or debt securities under section 15(d)
of the Exchange Act.
Current Deregistration Rules
Under the current rules, a foreign private issuer may find it
difficult to terminate its Exchange Act registration and reporting
obligations despite the fact that there is relatively little
interest in the issuer's securities among United States investors.
Currently a foreign private issuer can only suspend, and cannot
permanently terminate, a duty to report arising under Section
15(d). The proposed rules would permit the termination of
Exchange Act reporting regarding a class of equity securities
under either Section 12(g) or Section 15(d) by a foreign private
issuer that meets specified criteria designed to measure U.S.
market interest for that class of securities.
Proposed Deregistration Rules
The proposed rules would permit a foreign private issuer to
terminate, and not merely suspend, its Section 15(d) reporting
obligations regarding a class of debt securities as long as it
meets conditions similar to the current requirements for
suspending its reporting obligations relating to that class of
debt securities.
At the same time, the proposed rules would seek to provide U.S.
investors with ready access through the Internet to material
information about a foreign private issuer that is required by its
home country on an ongoing basis after it has exited the Exchange
Act reporting system.
A full-text copy of SEC Release No. 34-53020 describing the
proposed changes and requesting comment is available at no
additional charge at http://ResearchArchives.com/t/s?5c4
* BOOK REVIEW: Falling Through the Safety Net: Insurance Status
and Access to Health Care
---------------------------------------------------------------
Author: Joel S. Weissman & Arnold M. Epstein
Publisher: Beard Books
Paperback: 212 Pages
List Price: $34.95
Order your personal copy at
http://www.amazon.com/exec/obidos/1587982447/internetbankrupt
Falling Through the Safety Net examines the statement, "What
services patients get and how well they do depend in part on how
they pay for their care." The predicate for this book, which was
first published in 1994, is that the source of payment for
healthcare -- whether out of one's own pocket or through an
insurance plan -- substantially determines the quality of
healthcare received. The inquiry also takes into consideration
the type of insurance coverage and the selection of carrier.
When individuals are not covered by insurance, healthcare must be
paid for by government programs. So the question of who pays for
healthcare is not simply a question of how much individuals pay
for it, but rather, of how much businesses or institutions pay for
it.
As Falling Through the Safety Net brings to light, the source of
payment for healthcare is a major, and often the crucial, question
in determining access to healthcare, quality of care, and the
effect of this care on particular medical problems and longevity.
As Weissman and Epstein's work evidences by abundant statistics
and other documentation, the adage "you get what you pay for" is
the rule in healthcare. It is not just merely the case that
individuals with no health insurance or inferior or patchy
insurance have to wait a little longer for healthcare or that they
may run into inconveniences such as having to wait in line at
clinics or emergency rooms, or being directed to particular
healthcare facilities, or being able to see only those doctors who
are willing to see them. The consequences are far more serious.
According to the authors, "[u]ninsured hospital patients have
higher mortality, pregnant uninsured women have worse birth
outcomes, and uninsured women with breast cancer have shorter life
expectancies."
Weissmann and Epstein take a two-fold approach to presenting and
exploring their thesis. First, they offer statistics, references,
analyses, and commentary. The statistics are based on work the
two authors did for the U.S. Office of Technology Assessment (OTA)
in 1992. Their work entailed an extensive, unprecedented review
and summarization of academic and government literature on the
relationship between healthcare accessibility and insurance
coverage. The authors did this work for the OTA as part of a more
wide-ranging effort to gather and assess relevant materials for
the debate begun by the Clinton Administration over how to improve
the nation's healthcare system.
Second, the authors analyze, in essay fashion, sociological,
political, and moral issues in healthcare. Their analysis stems
from a series of lectures given at Harvard Medical School and the
Harvard School of Public Health. These lectures, given over a
period of several years, brought central issues of national health
policy to the attention of the university's medical students and
post-doctoral fellows.
The statistical analyses and essays complement each other and
provide a thorough treatment of the subject matter. Nonetheless,
the authors advise that readers wishing to "become knowledgeable
about health insurance and health system reform without getting
steeped in theoretical models and research" can do so by reading
chapters two and eight.
An inescapable conclusion of Falling Through the Safety Net is
that some of the biggest, seemingly most intractable, problems
with healthcare are caused by how healthcare is paid for. Among
the remedies posited in the book is a reduction in the number of
healthcare payers, who present consumers, doctors, and healthcare
organizations with a bewildering, changing, and competing array of
policies. The authors realize, however, that both insurance
companies and government bureaucracies have a vested interest in
keeping their positions as the primary payers for healthcare.
Consequently, the authors' recommendations concentrate mainly on
bringing better organization and clarification to the present
system of payers, which is not only worsening the quality of U.S.
healthcare, but also making it considerably more costly than it
need be. Among Weissman and Epstein's recommendations in the
current circumstances are risk pools for individuals, subsidized
insurance for unemployed people, and laws requiring coverage of
certain healthcare such as prenatal care.
Bringing together unique, extensive research with firsthand
familiarity of the healthcare system and its problems, Falling
Through the Safety Net gets to the root cause of many of the
system's chronic, widely-recognized problems -- namely, the
limitless differences in insurance status of individuals seeking
healthcare -- and puts forward practicable solutions for dealing
with these problems.
An associate professor in the Department of Medicine at the
Institute for Health Policy at Massachusetts General Hospital,
Joel S. Weissman is also a lecturer at Harvard Medical School's
Department of Health Care Policy.
Arnold M. Epstein is chairman of the Department of Health Policy
and Management at Harvard University's School of Public Health,
and holds several other prominent positions in the academic and
public healthcare fields.
*********
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
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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
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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. Marie Therese V. Profetana, Shimero Jainga, Emi Rose S.R.
Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, 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
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