/raid1/www/Hosts/bankrupt/TCR_Public/060302.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, March 2, 2006, Vol. 10, No. 52
Headlines
AM COMMUNICATIONS: Chap. 7 Trustee Taps RSI as Collections Agent
ARMOR HOLDINGS: Inks Pact to Buy Stewart & Stevenson for $755 Mil.
ARMOR HOLDINGS: Stewart Merger Cues S&P to Affirm BB Credit Rating
ASARCO LLC: Court Okays $308,983 Payment to Cummins Rocky
ASARCO LLC: Court Okays Assumption of Westland Resources Contract
BALL CORP: Fitch Says Acquisitions Won't Affect Double-B Ratings
BIJOU-MARKET: Case Summary & 20 Largest Unsecured Creditors
BON-TON STORES: Fitch Junks Rating on $525 Million Senior Notes
BROOKLYN HOSPITAL: Has Until July 28 to File Chapter 11 Plan
CABLEVISION SYSTEMS: Posts $54.1 Mil. Profit in 2005 4th Quarter
CARROLS CORP: Accounting Issues Cue Moody's to Review Ratings
CHEM-AWAY INC: Voluntary Chapter 11 Case Summary
CHIQUITA BRANDS: Earns $131.4 Million in Fiscal Year 2005
COMBUSTION ENG'G: District Court Confirms Modified Chapter 11 Plan
CONSECO INC: Fitch Upgrades Preferred Stocks' Ratings to BB-
CPOR INC: Case Summary & 20 Largest Unsecured Creditors
DANA CORP: Fitch Junks Issuer Default & Sr. Unsec. Debt Ratings
DANA CORP: In Talks with Lenders for New Financing Agreement
DELPHI CORP: Inks First Amendment to Restated DIP Credit Agreement
DELPHI CORP: Taps Jaeckle as IP Counsel for Automotive Systems
DELPHI CORP: Taps Rader as IP Counsel for Electronics Systems
DELTA AIR: Comair Walks to Walk Away from Flight Attendants CBA
DELTA AIR: Wants Court Nod on Renewal of AIG Insurance Policies
DELTA AIR: Court Lifts Stay for Resumption of Sept. 11 Lawsuits
DIAMOND ENT: Posts $1.2 Mil. Net Loss in Quarter Ended December 31
DYKESWILL LTD: Disclosure Statement Hearing Set for March 13
E.DIGITAL CORP: Gets $1.5 Million from Sale of Common Shares
E*TRADE FINANCIAL: S&P Affirms B+ Rating with Stable Outlook
ENTERPRISE PRODUCTS: Offers 15 Million Common LP Units for Sale
EPRESENCE INC: Distributes $2.5 Million to Shareholders
EXCELLIGENCE LEARNING: Earns $4.4 Million in 2005 Third Quarter
EXCELLIGENCE LEARNING: Appeals Nasdaq Delisting Determination
GLOBAL SIGNAL: Moody's Rates $122 Mil. Class F Certificates at Ba1
GOODMAN GLOBAL: Strong Earnings Prompt Moody's to Lift Ratings
HARRY ANDREWS: Case Summary & 12 Largest Unsecured Creditors
HEALTHCARE BUSINESS: Voluntary Chapter 11 Case Summary
HEALTHSOUTH CORP: Settles Investor Lawsuits for $445 Million
HEALTHSOUTH CORP: Plans $300 Million Convertible Stock Offering
HORIZON LINES: Good Performance Prompts S&P's Positive Outlook
HUGHES SUPPLY: Launches Tender Offers for Debt Securities
INEX PHARMACEUTICALS: To Appeal Court Ruling on Noteholders Voting
INTERSTATE BAKERIES: Wants to Preserve NOL Carryforwards as Assets
INTRAWEST CORP: Taps Goldman Sachs to Review Strategic Options
KGEN LLC: S&P Affirms Low-B Ratings on $475 Million Loans
LONGVIEW FIBRE: Moody's Rates Proposed Senior Unsec. Notes at B1
LONGVIEW FIBRE: S&P Rates Proposed $150 Million Notes at BB-
MCMILLIN COMPANIES: Moody's Rates $100 Million Senior Notes at B2
MCMORAN EXPLORATION: Converts $7.1MM of Sr. Notes to 500K Shares
MED GEN: Amends Quarter Ended June 30, 2005 Financials
MESABA AVIATION: Final DIP Hearing Scheduled for March 28
MESABA AVIATION: Panel Wants Exclusive Period Ended by August 10
MMRENTALSPRO LLC: Court Converts Ch. 11 Case to Ch. 7 Liquidation
MOVIE GALLERY: Weak Industry Fundamentals Cue S&P to Junk Ratings
MUSICLAND HOLDING: Delivers List of 19 Assumed & Assigned Leases
MUSICLAND HOLDING: Panel Balks at Investment & Deposit Guidelines
NEW WORLD: Posts $14 Million Net Loss in Fiscal Year Ended Jan. 3
NMHG HOLDING: Moody's Rates $225 Million Senior Secured Loan at B2
OCEAN WEST: Amends Sept. 30, 2005 Financials After Failed Spin-Off
ODYSSEY RE: Fitch Rates $100 Mil. Floating Rate Sr. Notes at BB+
OMEGA HEALTHCARE: Exchanging $50M of Notes for Registered Bonds
ON TOP COMMS: Taps Media Services to Market Three FM Stations
OWENS CORNING: Incurs $4.099 Billion Net Loss in 2005
OWENS CORNING: Century Wants Inapplicability of Stay Determined
OWENS CORNING: Hiring American Appraisal as Valuation Consultant
PARKWAY HOSPITAL: Wants Until April 30 to Remove Civil Actions
PEABODY ENERGY: Good Performance Prompts Moody's to Lift Ratings
PERFORMANCE TRANSPORTATION: Jack Stalker Resigns as CFO
PERFORMANCE TRANSPORTATION: Gets OK to Pay Critical Vendor Claims
PHOTOCIRCUITS CORP: Court Approves $11 Mil. DIP Financing Facility
PLY GEM: Closes $120 Million AWC Holding Acquisition
PXRE CAPITAL: Tax Asset Write-Down Cues Moody's to Lower Ratings
RUSSEL METALS: 10 Mil. Share Deal Cues Moody's to Review Ratings
SHAW GROUP: Increases Credit Facility to $750 Million
SINGING MACHINE: Receives $3 Mil. Equity Investment from Starlight
SMART-TEK: December 31 Balance Sheet Upside-Down by $422,796
SOLUTIA INC: Provides Details of $825M Addt'l Financing under DIP
STRATUS TECHS: S&P Junks Rating on Proposed $125 Million Term Loan
STRATUS TECHNOLOGIES: Receives Loan Commitments for $330 Million
SUPERB SOUND: Wants Plan-Filing Period Extended to May 15
SUPERIOR PLUS: S&P Affirms Corporate Credit Rating at BB+
SYNAGRO TECHNOLOGIES: Issues Shares in Private Placement to GTCR
TELOGY INC: Disclosure Statement Hearing Set for March 16
TELOGY INC: Wants Until June 27 to Decide on Two Unexpired Leases
THILMANY LLC: Packaging Dynamics Merger Cues S&P's Negative Watch
TITAN CRUISE: Gets Okay to Hire Carter Belcourt as Tax Accountants
TOMMY HILFIGER: European Commission Approves Sale to Apax Partners
TRIAD HOSPITALS: Earns $226 Million in Fiscal Year 2005
US AIRWAYS: Incurs $138 Million Net Loss in Fourth Quarter
US AIRWAYS: Issues New Replacement Warrants to AFS Cayman
WESTERN REFINING: Debt Repayment Cues Moody's to Withdraw Ratings
WICKES INC: Gets Court OK to Hire Novare as Claims Administrator
WINN-DIXIE: AHG Group Buys Oviedo Store for $5 Million at Auction
WODO LLC: Asks Court for Final Decree Closing Chapter 11 Case
* Alvarez & Marsal Names Pat McCormick as Head of Solutions Group
* American Capital Forms Technology Group Led By Andy Fillat
*********
AM COMMUNICATIONS: Chap. 7 Trustee Taps RSI as Collections Agent
----------------------------------------------------------------
Alfred T. Giuliano, the Chapter 7 Trustee for the estates of AM
Communications, Inc., and its debtor-affiliates, asks the U.S.
Bankruptcy Court for the District of Delaware for permission to
employ Recovery Services Inc. as his collection agent.
RSI will assist Mr. Giuliano in collecting unpaid judgments
arising from avoidance actions filed by the Trustee against the
Debtor's creditors.
The Trustee has commenced and prosecuted approximately 37 lawsuits
seeking recovery of more than $5 million. Several of the
Preference Complaints have proceeded to judgment, and the Trustee
anticipates that additional avoidance actions will also be reduced
to judgment.
The Trustee explains that RSI has the necessary experience,
methods and equipment to expeditiously handle the collection of
unpaid judgments.
RSI will charge a 30% contingency fee based on a percentage of the
collected funds, plus reimbursement of costs.
The Trustee assures the Bankruptcy Court that the employment of
RSI is in the best interest of the Debtors' estate.
AM Communications, Inc. -- http://www.amcomm.com/-- located in
Quakertown, Pennsylvania, is a leading supplier of software-driven
network reliability solutions for HFC broadband network
enterprises. The Company and its debtor-affiliates filed for
chapter 11 protection on Aug. 28, 2003. (Bankr. D. Del. Case No.:
03-12689). Anthony M. Saccullo, Esq., and Christopher A. Ward,
Esq., at The Bayard Firm, represents the Debtors. Dmitry Pilipis,
Esq., and Frederick B. Rosner, Esq., provides the Official
Committee of Unsecured Creditors with legal advice. On March 23,
2004, the Court entered an order converting the chapter 11 cases
to chapter 7 cases.
ARMOR HOLDINGS: Inks Pact to Buy Stewart & Stevenson for $755 Mil.
------------------------------------------------------------------
Armor Holdings, Inc. (NYSE: AH), signed a definitive agreement to
acquire Stewart & Stevenson Services, Inc.
Armor Holdings has agreed to acquire all of the outstanding stock
of SVC for $35 per share in a cash merger transaction. The
total value of the transaction is expected to be approximately
$755 million after deducting SVC's net cash balance of
$312 million as of January 31, 2006. The transaction is subject
to SVC shareholder approval, the expiration or termination of the
Hart-Scott-Rodino waiting period and other customary conditions.
The transaction is expected to close mid-year. Armor Holdings
will finance the transaction through available cash and with
proceeds from new senior credit facilities.
Robert R. Schiller, President of Armor Holdings, said, "This is
truly a transformational event for our company. Stewart &
Stevenson is one of the finest manufacturers of military vehicles
in the world. Our position as the leading supplier of vehicular
armor and safety systems for the up-armored HMMWV, numerous heavy
tactical vehicles, and work for Stewart & Stevenson on the FMTV,
has enabled us to grow our sales and earnings at excellent rates
for the past several years. We believe this opportunity to become
a prime contractor within the military's tactical wheeled vehicle
fleet is extremely compelling. We expect to benefit from Stewart
& Stevenson's world-class fabrication and assembly operations,
strong research and development effort, and highly capable
management team."
Max L. Lukens, President and Chief Executive Officer of Stewart &
Stevenson commented, "Our Board of Directors unanimously concluded
that this transaction with Armor Holdings provides significant
value for our shareholders and is in the best interests of our
customers and employees. Our Tactical Vehicle Systems business
led by Denny Dellinger and his team has developed a standard of
quality, reliability and vehicle readiness for the FMTV that we
believe is unmatched in the industry. Armor Holdings, through its
Aerospace & Defense Group, has a diversified portfolio of great
products that it offers to the U.S. Department of Defense and
other customers in various parts of the world. I believe the
successful track record and complementary strengths of these two
organizations offer a platform for future growth and expanded
opportunities for the combined businesses."
Mr. Schiller added, "We believe that the integration of Stewart &
Stevenson will further diversify our overall defense business,
create improved multi-year visibility for revenues, make
appropriate use of our strong financial position, and provide a
wide variety of incremental growth opportunities. We expect the
FMTV program to deliver strong growth going into the second-half
of this year and to continue in 2007 and beyond. Based on this
expectation and potential synergies from the combination, we
expect the acquisition to be accretive to earnings in 2007. We
are very excited to begin the process of integration and creation
of a company that is stronger than either of its predecessors was
individually."
Robert Mecredy, President of Armor Holdings Aerospace & Defense
Group, said, "We are very proud of the work we have done and the
close relationships we have built with the team at Stewart &
Stevenson over the past several years. We are extremely excited
about now working full time with this incredibly talented and
capable organization, specifically to identify the many benefits
that might arise from our combination. Stewart & Stevenson's
leadership as a premier vehicle manufacturer brings to Armor
Holdings a multi-year FMTV contract through 2008, and potentially
well into the future. We believe that it positions us extremely
well for a wide range of high-priority procurement contracts in
the coming years. In our opinion, recent Defense budget actions
to significantly increase funding for the FMTV program underscore
the significance of this critical equipment to U.S. military
operations abroad and for the mission of our Guard and Reserve
components. We are proud of what Armor Holdings has done for our
Service men and women and excited to increase our contribution
through the addition of Stewart & Stevenson to the Armor Holdings
Aerospace & Defense Group."
Armor Holdings was advised on the transaction by Pruzan & Co. LLC.
Wachovia Securities provided financing and a fairness opinion to
Armor Holdings' Board of Directors. The law firm of Kane Kessler,
P.C. acted as legal counsel for Armor Holdings.
Stewart & Stevenson's financial advisor was Merrill Lynch & Co.,
with Robinson Partners acting as a consultant to the Company. The
law firms of Fulbright & Jaworski LLP and Wachtell, Lipton, Rosen
& Katz acted as legal counsel for Stewart & Stevenson.
About Stewart & Stevenson
Stewart & Stevenson Services, Inc. (NYSE: SVC), a leading
manufacturer of military tactical wheeled vehicles including the
Family of Medium Tactical Vehicles (FMTV), the U.S. Army's primary
transport platform.
About Armor Holdings
Armor Holdings, Inc. (NYSE: AH) -- http://www.armorholdings.com/
-- is a diversified manufacturer of branded products for the
military, law enforcement and personnel safety markets.
* * *
Armor Holdings, Inc.'s 8.25% Senior Subordinated Notes due 2013
carry Moody's Investor Service's B1 rating and Standard & Poor's
B+ rating.
ARMOR HOLDINGS: Stewart Merger Cues S&P to Affirm BB Credit Rating
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings, including
the 'BB' corporate credit rating, on Armor Holdings Inc. The
outlook remains stable.
Armor currently has around $500 million in debt. The action
follows the announcement that Armor will be acquiring Stewart &
Stevenson Services Inc. (unrated) for $35 a share cash, which
totals more than $1 billion. The transaction is expected to close
by midyear.
"The affirmation reflects improved program diversity from the
acquisition and acknowledges Armor's previously above average for
the rating financial profile," said Standard & Poor's credit
analyst Christopher DeNicolo. "However, the transaction will use
up most of the company's excess liquidity and debt capacity, with
key credit ratios expected to be weaker, but still appropriate for
the rating in the intermediate term," the analyst continued.
The purchase will be funded with more than $300 million of cash at
Stewart & Stevenson, cash on hand at Armor ($500 million at Dec.
31, 2005), and a new credit facility. Total debt will likely
increase around $300 million. Pro forma debt to EBITDA, using the
last 12 months reported EBITDA for Stewart & Stevenson, will
increase to 2.5x-3x from just over 2x for Armor in 2005.
However, revenues and earnings at the acquired company are
expected to grow significantly in late 2006 and 2007 as additional
production capacity comes on line. Stewart & Stevenson produces
tactical wheeled vehicles (trucks) for the U.S. military, with its
largest program being the Family of Medium Tactical Vehicles. The
acquisition will decrease Armor's reliance on the up-armored HMMWV
program, which now comprises a substantial portion of sales
and profits. The combined companies will have $2 billion in
backlog.
The ratings on Jacksonville, Florida-based Armor Holdings reflect
an active acquisition program and limited program diversity.
These factors are offset somewhat by:
* leading positions in niche markets;
* moderate debt leverage; and
* good liquidity.
The company's aerospace and defense group (73% of 2005 revenues)
produces:
* armored military vehicles,
* military body armor, and
* crew seats for military helicopters and transports.
Armor is a leading provider of law enforcement equipment,
including:
* body armor,
* holsters,
* riot gear, and
* batons,
through its products division (19%).
The firm also provides commercial vehicle armoring through its
Armor Mobile Security unit (8%).
Strong demand for Armor's military products and contributions from
acquisitions should offset increased debt levels and integration
risks. In the near term, the outlook is unlikely to be revised to
positive as Armor has used up almost all of its financial
flexibility at the current rating. The outlook could be revised
to negative if further acquisitions results in significantly
higher debt leverage or if there are unforeseen operating problems
at the acquired operations.
ASARCO LLC: Court Okays $308,983 Payment to Cummins Rocky
---------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas in
Corpus Christi authorized ASARCO LLC to pay its prepetition
obligations to certain critical vendors, including Cummins Rocky
Mountain LLC.
Cummins, however, disputed the prepetition claim amount proposed
by ASARCO.
ASARCO and Cummins worked together to reconcile the amount that
needs to be paid to Cummins and to negotiate the terms of
Cummins' continued service.
Consequently, the parties agree that ASARCO will pay Cummins
$308,983.
Upon full payment of prepetition debt, the parties agree that
Cummins will extend credit to ASARCO on an open account of not
less than $200,000, with payment from ASARCO required net 30
days. Amounts advanced under the open account will be treated as
administrative expenses.
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: Court Okays Assumption of Westland Resources Contract
-----------------------------------------------------------------
ASARCO sought and obtained permission from the U.S. Bankruptcy
Court for the Southern District of Texas in Corpus Christi to
assume the engineering contract with Westland Resources, Inc.
Under the Contract dated March 9, 2005, Westland will provide
ASARCO with an environmental impact statement for a new tailings
dam at the Ray Mine Complex.
As reported in the Troubled Company Reporter on Feb. 17, 2006, C.
Luckey McDowell, Esq., at Baker Botts LLP, in Dallas, Texas,
told the Court that Westland began its work on the environmental
impact statement before the Petition Date. Thus, Westland is
already familiar with the issues involved in the tailings dam.
ASARCO owed Westland $25,890 as of its bankruptcy filing. Upon
assumption of the Contract, ASARCO will promptly cure its
defaults by paying Westland the $25,890 outstanding balance.
ASARCO estimated that it will pay $313,228 more to Westland as
additional work is completed.
Mr. McDowell told the Court that the assumption of the Contract
was more economical than replacing Westland with a new consultant.
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).
BALL CORP: Fitch Says Acquisitions Won't Affect Double-B Ratings
----------------------------------------------------------------
Fitch Ball Corporation's (NYSE: BLL) recently announced
acquisitions will not affect the company's credit ratings based
on the currently available information. Fitch currently rates
BLL as:
-- Issuer default rating (IDR) 'BB'
-- Senior secured credit facilities 'BB+'
-- Senior unsecured notes 'BB'
Fitch's most recent rating action on BLL was Feb. 10 of this year,
when the agency revised the company's Rating Outlook to Stable
from Positive. BLL announced on Feb. 27 that it would acquire
some of Alcan Inc.'s plastic bottle business in North America for
$180 million. BLL also announced on February 14th that it would
acquire U.S. Can Corporation's United States and Argentinean
operations for 1.1 million of its shares plus assumption of $550
million of debt. Both transactions are expected to close by March
31, 2006.
BLL will increase borrowings under its current credit facility and
issue new 10-year senior unsecured notes to finance both
acquisitions. Fitch expects BLL's debt/operating EBITDA on a pro
forma basis after the two acquisitions and incorporating its
seasonal working capital needs to exceed 3.0x, up from 2.3x at the
year-end. Assuming no other acquisitions, BLL expects that it can
reduce its debt/EBITDA ratio to below 3.0x by the end of 2006.
Fitch believes that BLL's overall credit profile remains solid for
the rating category. BLL continues to produce healthy free cash
flow and maintains a solid balance sheet, providing the company
with a good level of financial flexibility. Fitch believes that
BLL could modify some of its previous share repurchase plans in
order to reduce the debt incurred in the recent acquisitions.
However, if the company allocates sizable amounts of cash to
additional acquisitions or share repurchases, or if margin
deterioration reduces free cash flow available for debt reduction,
a review on the ratings and/or Rating Outlook may be considered.
Ball Corporation manufactures metal and plastic packaging,
primarily for beverages and foods, and is also a supplier of
aerospace and other technologies and services to commercial and
governmental customers. Major customers include:
* Miller Brewing Company;
* PepsiCo, Inc. and affiliates;
* Coca-Cola Company and affiliates;
* all bottlers of Pepsi-Cola and Coca-Cola branded beverages;
and
* various U.S. government agencies.
BIJOU-MARKET: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Bijou-Market, LLC
aka Market Street Cinema
aka Bijou Market
aka La Gals
1077 Market Street
San Francisco, California 94103
Bankruptcy Case No.: 06-30118
Type of Business: The Debtor operates or operated a porno
theater and strip club. With the warning that
the Web site contains nudity and sexually
explicit material, see http://www.msclive.com/
Chapter 11 Petition Date: February 28, 2006
Court: Northern District of California (San Francisco)
Judge: Thomas E. Carlson
Debtor's Counsel: Michael St. James, Esq.
St. James Law, P.C.
155 Montgomery Street #1004
San Francisco, California 94104
Tel: (415) 391-7566
Total Assets: $620,458
Total Debts: $66,308,352
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Roe 1, Roe 2, Roe 3 $66,157,389
360 Post Street, 8th Floor
San Francisco, CA 94108
Mazzy's Fire Business Debt $36,107
Protections Services
2551 West Winton Avenue
Suite 6-C
Hayward, CA 94545
N.A.E.F. Business Debt $26,607
P.O. Box 408
Durano, MI 48429
Jaidin Consulting Group, LLC Business Debt $25,049
George J. Britton Wages $9,000
Ernesto Salak Wages $6,300
SFBSC Management, LLC Business Debt $4,800
San Francisco Chronicle Business Debt $4,750
Habib Carouba Business Debt $4,616
Consolidated Bookkeeping Business Debt $3,600
Sherri Ziesche Wages $2,800
Sam Conti Business Debt $2,312
Reed & Stillskin Business Debt $2,000
Gerald J. Bunch Wages $1,400
Mark Garcia Wages $1,200
John Weathersby Wages $1,100
Central Parking Business Debt $960
Sequel Media.com Business Debt $884
Terrell Butler Wages $728
Kenneth Lorenzetti Wages $700
BON-TON STORES: Fitch Junks Rating on $525 Million Senior Notes
---------------------------------------------------------------
Fitch Ratings assigned ratings to The Bon-Ton Stores, Inc. (BONT)
as:
-- Issuer default rating (IDR) 'B-'
-- $1 billion senior secured credit facility 'B+/RR2'
-- $260 million mortgage loan facility 'B+/RR2'
-- $525 million of senior unsecured notes 'CCC/RR6'
Approximately $1.2 billion of debt is projected to be outstanding
upon completion of BONT's acquisition of Saks Incorporated's
Northern Department Store Group (NDSG), which is expected to close
in March 2006. The Rating Outlook is Stable.
The ratings reflect:
* BONT's high financial leverage following its acquisition of
NDSG;
* the challenge of integrating a substantially larger business;
and
* soft operating results at both BONT and NDSG.
These factors are balanced against the strengthened competitive
positioning and geographic diversity of the combined organization.
BONT is acquiring the NDSG for $1.1 billion in cash and the
assumption of $35 million of capital leases. BONT intends to
finance the acquisition entirely with debt, which will push
adjusted debt/EBITDAR from 4.7x currently to around 6x. Limited
levels of free cash flow (after interest expense and capital
expenditures) will limit BONT's ability to reduce debt levels and
constrain the company's financial flexibility, particularly in the
event of an economic downturn.
BONT is acquiring a larger company that operates in more
competitive markets. The acquisition doubles BONT's store base
from 137 stores to 279 stores, and substantially increases its
revenues from $1.3 billion to $3.5 billion. While BONT gained
some useful experience from its recent integration of another
department store chain, Elder Beerman, integrating NDSG will
present greater challenges given its size and geographic scope.
BONT has posted sub-par operating results over the past five
years, with flat to negative comparable store sales growth and
weak margins. The NDSG has also delivered soft results, though
slightly stronger than those of BONT. Fitch expects weak
operating results will persist over the medium term given the
competitive retail environment.
The acquisition is being financed with:
* $525 million of senior unsecured notes;
* a $260 million mortgage note facility; and
* drawings on a $1 billion senior secured credit facility.
The credit facility has superior recovery prospects in a
distressed scenario as it is secured by a first lien on
substantially all of the assets of the borrowing entities and
guarantors. Covenants require a minimum excess availability of
$75 million and place limits on debt, dividends, and capital
expenditures. The facility provides more than enough capacity to
handle seasonal inventory swings of around $250 million.
The mortgage loan facility also has superior recovery prospects
given that it is secured by mortgages on 23 stores and one
distribution center with an appraised value of $328 million.
These properties are owned by bankruptcy-remote special purpose
entities. The senior unsecured notes, on the other hand, are
considered to have poor recovery prospects in a distressed
scenario.
BROOKLYN HOSPITAL: Has Until July 28 to File Chapter 11 Plan
------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of New York
extended, until July 28, 2006, the period within which The
Brooklyn Hospital Center and its debtor-affiliate Caledonian
Health Center, Inc., have the exclusive right to file a chapter 11
plan. The Court also extended until Sept. 25, 2006, the period
within which the Debtors can solicit acceptances of that plan.
As reported in the Troubled Company Reporter on Feb. 20, 2006,
the Debtors asserted that the size and complexity of their chapter
11 cases warrant the extension.
According to Lawrence M. Handelsman, Esq., at Stroock & Stroock &
Lavan LLP, in New York, the Chapter 11 Cases are complicated by
the Debtors' status as not-for-profit entities. Mr. Handelsman
emphasized that the Debtors' fiduciary duties run not only to
their creditors, but also to the communities they serve. Mr.
Handelsman explained that every decision the Debtors make must not
only be vetted and negotiated with their traditional creditor
constituencies, but the impact on other parties-in-interest must
be evaluated based on the Debtors' duty of mission.
In addition, Mr. Handelsman stated that as health care providers,
the Debtors are regulated by various governmental agencies
including the United States Department of Health and Human
Services and the New York State Department of Health. Hence, when
making decisions, the Debtors are also required to factor in, and
ensure compliance with, the complex web of federal and state rules
and regulations, which further complicate their Chapter 11 Cases,
Mr. Handelsman said.
The Debtors believe that the additional time will enable them to
stabilize their operations, negotiate a reorganization plan with
their creditors, and ultimately achieve a result that maximizes
the value of the estate.
The Debtors assure the Court that the extension will not harm
their creditors or other parties-in-interest nor delay the
reorganization process.
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. When the
Debtors filed for protection from their creditors, they listed
$233,000,000 in assets and $337,000,000 in debts.
CABLEVISION SYSTEMS: Posts $54.1 Mil. Profit in 2005 4th Quarter
----------------------------------------------------------------
Cablevision Systems Corporation reported a profit of $54.1 million
in the fourth quarter of 2005 compared to a loss of $305.8 million
for the same quarter in 2004.
Cablevision Systems attributed 2005 profits to strong sales of its
services like digital video, high-speed Internet connections and
digital phone service. For the fiscal year ended 2005,
Cablevision's revenues increased to $5.18 billion from $4.75
billion in the fiscal year of 2004.
Most of Cablevision's profits came from its cable TV division,
which added 18,000 subscribers in the fourth quarter of 2005. The
Company's Internet phone service added 130,000 new subscribers in
the last quarter of 2005.
News of Cablevisions' profit gains caused its shares to rise
nearly $2 to $26.50 per share late within the past week.
Headquartered in New York City, New York, Cablevision Systems
Corporation -- http://www.cablevision.com-- is one of the
nation's leading telecommunications and entertainment companies.
Cablevision currently operates the nation's single biggest cable
cluster, serving 3 million households in the New York metropolitan
area. Its portfolio of operations ranges from high-speed internet
access, robust digital cable television as well as advanced
digital telephone services, professional sports teams, world-
renowned entertainment venues and national television program
networks.
* * *
As reported in the Troubled Company Reporter on March 1, 2006,
Standard & Poor's Ratings Services raised its selected ratings
on Bethpage, New York-based cable TV operator Cablevision Systems
Corp. and related entities, including:
-- the corporate credit rating, which was upgraded to 'BB'
from 'BB-'; and
-- the short term rating, which was raised to 'B-1' from 'B-2'.
All other ratings also were raised, except the senior secured bank
loan ('BB', and not on CreditWatch) and senior unsecured debt
rating ('B+') at intermediate holding company CSC Holdings Inc.
These ratings were affirmed.
All ratings were removed from CreditWatch with developing
implications: They originally were placed on CreditWatch with
negative implications on June 20, 2005, and a stable outlook was
assigned.
At Sept. 30, 2005, Cablevision Systems' balance sheet showed
liabilities exceeding assets by more than $2.4 billion.
CARROLS CORP: Accounting Issues Cue Moody's to Review Ratings
-------------------------------------------------------------
Moody's Investors Service placed the ratings of Carrols
Corporation on review for possible downgrade.
Ratings place on review for possible downgrade are:
* Corporate family rating of B1
* $220 million senior secured term loan B, due Dec. 31, 2010,
rated B1
* $50 million senior secured revolving credit facility due
Dec. 31, 2009, rated B1
* $180 million guaranteed senior subordinated notes due
Jan. 15, 2013, rated B3
The review is prompted by the potential impact that proposed
accounting changes may have on Carrols financial statements as
well as the uncertain timing surrounding the company's ability to
file public financial statements with the SEC. Due to various
accounting issues Carrols filed a notice of late filing for its
third quarter 2005 quarterly financial statements in late 2005.
Although the notice could have resulted in an event of default
under its bank agreement, the company received a waiver and
amendment in February 2006, which extends its filing obligation
until June 30, 2006. However, in the event Carrols is unable to
file financial statements by June 30, 2006, an event of default
under its debt agreements would again be triggered, which could
result in negative implications for the ratings.
Moody's review will focus on the company's success in addressing
the various accounting issues outstanding, the impact those final
changes will have on its public financial statements, and its
ability to meet its new filing deadline. The review will also
focus on the company's capacity to profitably grow its two Mexican
concepts, Taco Cabana and Pollo Tropical, and continue its
initiatives at Burger King, while strengthening credit metrics.
Carrols Corporation, with headquarters in Syracuse, New York,
operates 336 Burger King quick service hamburger restaurants.
Carrols also operates or franchises 95 Pollo Tropical restaurants
and 138 Taco Cabana restaurants.
CHEM-AWAY INC: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Chem-away, Inc.
1502 Westbrook Court
Modesto, California 95358-1086
Bankruptcy Case No.: 06-90075
Type of Business: The Debtor previously filed for chapter 11
protection on Mar. 1, 2005 (Bankr. E.D. Calif.
Case No. 05-90374).
Chapter 11 Petition Date: February 28, 2006
Court: Eastern District of California (Modesto)
Judge: Robert S. Bardwil
Debtor's Counsel: David C. Johnston, Esq.
1020 15th Street #10
Modesto, California 95354-1132
Tel: (209) 578-9009
Fax: (209) 578-5909
Estimated Assets: $50,000 to $100,000
Estimated Debts: $1 Million to $10 Million
The Debtor does not have any creditors who are not insiders.
CHIQUITA BRANDS: Earns $131.4 Million in Fiscal Year 2005
---------------------------------------------------------
Chiquita Brands International, Inc. (NYSE: CQB) delivered its
financial results for the fourth quarter and fiscal year ended
December 31, 2005, to the Securities and Exchange Commission on
Feb. 22, 2006.
For the fourth quarter 2005, the company reported $19 million net
loss compared to $25.1 million net loss for the same period of
2004. The quarterly result includes $23 million of costs from
previously announced flooding in Honduras caused by Tropical Storm
Gamma in November and the consolidation of fresh-cut fruit
facilities in the Midwestern United States.
Net income for the full-year 2005 was $131.4 million compared to a
$55.4 million of net income for the full-year 2004, which included
expenses of $19 million that primarily represented the premium to
refinance the company's 10.56% senior notes and $9 million
relating to restructuring at Atlanta AG and to severance.
"We had a terrific year in 2005," said Fernando Aguirre,
Chiquita's chairman and chief executive officer. "In fact, we
realized the best annual financial results in more than a decade
in spite of fourth quarter challenges of flooding in Honduras, the
impact of a lower year-over-year euro-dollar exchange rate and
continuing high costs for fuel and ship charters."
Mr. Aguirre continued, "The European Commission's decision to more
than double its tariff on Latin American banana imports on Jan. 1,
2006, will result in higher costs and market uncertainty.
However, we are committed to overcoming these challenges and
winning in the European market in the long-term with our clear
brand leadership and excellent customer relationships. During the
fourth quarter, we invested an additional $20 million in consumer
marketing and innovation spending in Europe to reinforce
Chiquita's brand premium in advance of the tariff change.
Consumers can continue to expect Chiquita to offer better bananas,
and our retail partners can continue to count on us to deliver
consistently high quality products, superior service and
innovation."
Fourth Quarter 2005 Financial Highlights
Net sales were $999 million, up 30 percent from $768 million in
the fourth quarter 2004. The increase resulted primarily from the
acquisition of Fresh Express and higher banana pricing in Europe
and North America, partly offset by lower banana volume.
The company incurred an operating loss of $1 million, compared to
income of $35 million in the year-ago period. Operating results
for 2005 included:
* $17 million impact from flooding in Honduras caused by
Tropical Storm Gamma in November, comprised of a $12 million
mostly noncash charge primarily for asset writedowns,
$3 million impact from lower volume in North America, and
$2 million of increased costs for replacement fruit and
transportation. These flood-related costs are within the
company's estimate of $13-18 million announced in late
November.
* $6 million mostly noncash charge resulting from the
previously announced consolidation of fresh-cut fruit
facilities in the Midwestern United States.
Operating cash flow was $11 million, compared to $2 million in the
year ago period. Interest expense was $23 million, compared to $9
million in the year ago period, as a result of financing for the
Fresh Express acquisition.
At Dec. 31, 2005, total debt was $997 million, a reduction of $84
million since Sept. 30, 2005, including $75 million of voluntary
prepayments, and cash was $89 million.
Chiquita Brands International, Inc. -- http://www.chiquita.com/--
is a leading international marketer and distributor of
high-quality fresh and value-added produce, which is sold under
the Chiquita(R) premium brand, Fresh Express(R) and other related
trademarks. The company is one of the largest banana producers in
the world and a major supplier of bananas in Europe and North
America. In June 2005, Chiquita acquired Fresh Express, the U.S.
market leader in value-added salads, a fast-growing food category
for grocery retailers, foodservice providers and quick-service
restaurants.
* * *
Chiquita Brands' $250 million 7-1/2 notes due Nov. 1, 2014, carry
Moody's Investors Service's and Standard & Poor's single-B
ratings.
COMBUSTION ENG'G: District Court Confirms Modified Chapter 11 Plan
------------------------------------------------------------------
The Hon. Joseph E. Irenas of the U.S. District Court for the
District of New Jersey, Camden Division confirmed the Modified
Plan of Reorganization filed by Combustion Engineering, Inc.
Judge Irenas confirmed the Plan on Feb. 28, 2006.
The Hon. Judith K. Fitzgerald of the U.S. Bankruptcy Court for the
District of Delaware confirmed the Debtor's Plan on Dec. 19, 2005,
and Judge Fitzgerald recommended its confirmation to the District
Court. It has been a protocol for both a district court judge and
a bankruptcy judge to review asbestos-related bankruptcies.
Judge Irenas rules that her order for Combustion's Plan
confirmation becomes final if there are no appeals filed within 30
days of the entry of the order.
As reported in the Troubled Company Reporter on Dec. 21, 2005,
priority claims, secured claims, workers' compensation claims,
general unsecured claims will be unimpaired.
The Plan separates the asbestos tort claimants into two classes:
a) Non-participants to the CE Settlement Trust will be subject
to a channeling injunction. The injunction will require
the tort claimants to assert their claims against the
Asbestos PI Trust. The Trust will be funded with
substantial assets including ABB's $232 million
contribution.
b) Participants in the CE Settlement Trust will also be
subject to a channeling injunction. The participants will
receive a release of any preference claims and fraudulent
transfer claims from the Debtors. They will also be
permitted to keep any distributions that have been or will
be made from the CE Settlement Trust.
The Asbestos PI Trust will act as a Qualified Settlement Fund as
defined in the Treasury Regulations under Section 468B of the
Internal Revenue Code.
Valuation & Plan Funding
Under the Plan, CE's US$812,000,000 value is delivered to the
Sec. 524(g) Trust for the benefit of present and future claimants.
In addition:
(1) ABB contributes:
(a) 30,298,913 shares of its stock, initially valued
at $50,000,000, but with a current market value
exceeding $81,000,000;
(b) a financial commitment to pay $250,000,000 to the
Trust in pre-agreed installments from 2004 to 2009
(guaranteed by certain ABB affiliates);
(c) up to $100,000,000 more from 2006 through 2011 if
certain performance benchmarks are achieved; and
(2) Asea Brown Boveri contributes:
(a) an indemnification of all of CE's environmental
liabilities, which has a value of around
$100,000,000;
(b) a release of its indemnification rights against CE
for asbestos claims asserted against Asea Brown
Boveri after June 30, 1999;
(c) a note evidencing Asea Brown Boveri's agreement to
contribute almost $38,000,000 on account of the
asbestos claims attributable to:
-- Basic, Incorporated (CE acquired this
acoustical plaster manufacturer in 1979) and
-- ABB Lummus Global, Inc. (CE acquired
this manufacturer of feed water heaters that
used asbestos-containing gaskets in
transactions stretching from 1930 to 1970);
(3) Lummus and Basic release and assign all of their
interests in insurance covering asbestos personal
injury claims, including certain CE-shared policies.
A full-text copy of the Debtor's Modified Disclosure Statement
explaining the Modified Plan is available for a fee at:
http://ResearchArchives.com/t/s?5f9
About ABB
ABB -- http://www.abb.com-- is a leader in power and automation
technologies that enable utility and industry customers to
improve performance while lowering environmental impact. The
ABB Group of companies operates in more than 100 countries and
employs about 146,000 people. As of Dec. 31, 2004, ABB listed
$24,677,000,000 in total assets and $5,534,000,000 in total debts.
Headquartered in Norwalk, Connecticut, Combustion Engineering,
Inc., is the U.S. subsidiary of the ABB Group. ABB is a leader in
power and automation technologies that enable utility and industry
customers to improve performance while lowering environmental
impact. The ABB Group of companies operates in more than 100
countries and employs about 103,000 people. Combustion
Engineering filed for chapter 11 protection on Feb. 17, 2003
(Bankr. D. Del. Case No. 03-10495). Curtis A. Hehn, Esq., at
Pachulski Stang Ziehl Young & Jones and Jennifer Mo, Esq., at
Kirkpatrick & Lockhart Nicholson Graham represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it estimated more than $100 million in assets
and debts.
CONSECO INC: Fitch Upgrades Preferred Stocks' Ratings to BB-
------------------------------------------------------------
Fitch Ratings upgraded Conseco Inc.'s senior secured debt
facility, senior unsecured debt facility, and preferred stock
securities. At the same time, Fitch is upgrading the insurer
financial strength rating of most of CNO's primary insurance
operating subsidiaries and affirming the rating of others. The
Rating Outlook is Stable.
Fitch's upgrades reflect:
* Conseco's improved capital base;
* financial flexibility;
* good market position in the Medicare supplement business; and
* high quality investment portfolio.
During 2005 Conseco's consolidated statutory risk based
capitalization improved from 318% to an estimated 358% at
Dec. 31, 2005. At the same time equity adjusted financial
leverage improved from 20% to a moderate 15.9%. The ratings are
further supported by the company's strong Bankers Life operations
and the improved clarity and favorable outcome of issues involving
its Net Operating Loss tax position. Conseco also exceeded its
expense savings goals for 2005.
The upgraded rating of Conseco Life Insurance Company of New York
reflects its transition to a position as a direct subsidiary of
Conseco Life Insurance Company of Texas. The unchanged rating of
its former parent, Conseco Senior Health Insurance Company,
continues to reflect the performance of the Florida long-term care
market and its own low capital levels.
Overall ratings concerns for Conseco include the impact of changes
in the Medicare Supplement environment and spread compression
resulting from low interest rate conditions. Fitch also remains
watchful of CNO's performance against debt covenants.
Fitch expects that the company will:
* continue to achieve its expense savings goals;
* maintain a high quality investment portfolio; and
* maintain fixed charge coverage of greater than 8.0x in the
near term, and total equity adjusted leverage of under 25%.
Conseco, Inc. is the holding company for a group of insurance
companies selling supplemental health, life, and annuity insurance
products, focused on the senior and middle income markets. As of
Dec. 31, 2005, it had an estimated $4.5 billion in shareholders
equity and $31.6 billion in assets.
Conseco, Inc.:
-- Senior secured debt Upgrade 'BBB-'Stable Outlook
-- Senior unsecured debt Upgrade 'BB' Stable Outlook
-- Preferred stock Upgrade 'BB-'Stable Outlook
-- Issuer default rating Assign 'BB+' Stable Outlook
Bankers Life and Casualty Insurance Company:
-- Insurer financial strength rating Upgrade 'BBB+'/Stable
Outlook
Conseco Life Insurance Company:
Conseco Life Insurance Company of New York:
Conseco Insurance Company:
Conseco Health Insurance Company:
Colonial Penn Life Insurance Company:
Washington National Insurance Company:
-- Insurer financial strength rating Upgrade 'BBB'/Stable
Outlook
Conseco Senior Health Insurance Company:
-- Insurer financial strength rating Affirm 'B-'/Stable Outlook
CPOR INC: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------
Debtor: CPOR, Inc.
fka Concept Packaging of Richmond, Inc.
2229 Tomlynn Street
Richmond, Virginia 23230
Bankruptcy Case No.: 06-30415
Type of Business: The Debtor designs, manufactures, and
distributes packaging products.
See http://www.cporinc.com/
Chapter 11 Petition Date: February 28, 2006
Court: Eastern District of Virginia (Richmond)
Debtor's Counsel: Troy Savenko, Esq.
LeClair Ryan, P.C.
Riverfront Plaza, East Tower
951 East Byrd Street
P.O. Box 2499
Richmond, Virginia 23218
Tel: (804) 783-2003
Fax: (804) 783-2294
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Odom's Tennessee Pride Purchase contracts $964,780
1655 Old Columbia Road
Dickson, TN 37055
HB Fuller Glue $313,509
P.O. Box 905326
Charlotte, NC 28290
The Christie Cookie Company Purchase contract $293,400
1205 3rd Avenue North
Dickson, TN 37055
Bizerba USA Inc. Scales, labelers $191,711
SpanTech LLC Conveyors $183,975
Electrical Equipment Company Electric supplies $106,407
American Express Credit card purchases $103,294
AEP Industries Bags/Poly $81,920
OK International Case erector & closer $73,430
Cherry's Industrial Spacers $52,350
Equipment
Information Integration, Office rent $50,624
Inc.
Badger Plug Company Endboards $48,092
Austell Boxboard Chipboard $47,260
Paragon Films Inc. Stretch film $40,983
Travis Electric Company Electricians $40,954
Design Electric Electrician & install $40,681
team
A to Z Logistics Freight $40,055
Hesco Glue $38,247
Laminations Cornerboards $34,328
Pinnacle Film $32,028
DANA CORP: Fitch Junks Issuer Default & Sr. Unsec. Debt Ratings
---------------------------------------------------------------
Fitch Ratings downgraded the ratings of Dana Corporation as:
-- Issuer default rating (IDR) to 'CCC' from 'B'
-- Senior secured bank facility to 'B' from 'BB'
-- Senior unsecured debt to 'CCC' from 'B'
The recovery rating on the senior unsecured debt is 'RR4', and the
senior secured bank facility has a recovery rating of 'RR1'.
Fitch is maintaining the Rating Watch Negative.
Fitch's concerns include Dana's ability to obtain sufficient
secured bank financing may be constrained by:
* unsecured bond indentures' limitations on liens covenant;
* a higher risk that liquidity needs could increase if
suppliers were to begin to insist on cash terms;
* the potential for more aggressive restructuring actions,
which could increase demands on cash;
* Dana's reliance on the declining sport utility vehicle (SUV)
market; and
* the company's financial condition heading into a potential
commercial vehicle downturn in 2007.
While the Rating Watch Negative includes a going concern issue, as
reflected by the 'CCC' IDR, it also includes Fitch's concerns
regarding the outcome of an ongoing SEC accounting investigation
and uncertainty with respect to the final amount of a secured bank
line, which could impair the position of unsecured bondholders.
Fitch estimates that as of Sept. 30, 2005, Dana's limitations on
liens, according to an unsecured bond indenture, were very close
to the $400 million level of its current total bank facility.
Dana granted security on this facility as announced in the
company's press release dated Nov. 21, 2005.
Fitch also calculates that as of the end of the third quarter,
Dana had negative free cash flow for the previous 12 months of
$712 million versus full year 2004 negative free cash flow of $329
million. At Sept. 30, 2005, Dana had $145 million available under
its bank facility, $55 million available under a $275 million
accounts receivable securitization program and $730 million in
cash and cash equivalents. Given the rate of increase in negative
free cash flow and the amounts drawn at the end of the third
quarter, there is a high probability that Dana's current bank
lines could now be fully drawn.
DANA CORP: In Talks with Lenders for New Financing Agreement
------------------------------------------------------------
Dana Corporation disclosed that it may reach a financing agreement
with its lenders within the next two weeks in the hopes of
avoiding a chapter 11 bankruptcy filing, according a report by
Jeffrey McCracken at The Wall Street Journal.
Dana Corp. won't divulge any specific details about the possible
financing agreement, saying it doesn't want to adversely impact
ongoing negotiations with the banks and financial institutions
involved in the transaction. Dana's financing negotiations with
its lenders is the latest action by the Company to restructure
its debts. At Sept. 30, 2005, Dana's balance sheet showed
$6.7 billion in total liabilities. While auto parts maker is
solvent, liquidity is strained. In its latest quarterly financial
report, Dana reported $3.5 billion in current assets available to
satisfy $4.7 billion in liabilities coming due by Sept. 30, 2006.
Market analysts surveyed by Reuters, the Associated Press and
other newswires, are predicting that without a restructuring of
its debt, the Company will not have enough liquidity to enact the
restructuring plan that it hopes to implementing.
In October 2005, Dana unveiled a restructuring plan that called
for large job cuts, plant closings, consolidating manufacturing in
certain units and other cost-cutting efforts, in order to generate
at least $1 billion of revenues.
Dana recently hired restructuring consultants Miller Buckfire &
Co., to advise it in its restructuring plans. AlixPartners is on
the scene too, providing its turnaround and crisis management
expertise.
The news of Dana hiring Miller Buckfire and speculation that new
financing really means debtor-in-possession financing drove the
Company's shares to an all-time low below $2 per share in heavy
trading on the New York Stock Exchange. Approximately 150 million
shares in Dana Corp. are issued and outstanding; on Fri., Feb. 24
and Mon., Feb. 27, more than 123 million shares traded hands.
November Bank Loan Amendments
As reported in the Troubled Company Reporter on Nov. 23, 2005,
Dana obtained waivers from the lenders under its five-year bank
facility and its accounts receivable securitization facility. In
November, Dana disclosed that it pledged "certain current assets
and machinery and equipment" to the lenders to secure repayment of
amounts borrowed. The November Waivers, subject to some
unspecified early termination provision, expire on May 31, 2006.
Dana has not made a copy of the November Agreement public to date.
Financial Difficulties
Similar to the situation of other auto parts makers like Delphi
Corp. and Tower Automotive, Dana Corp.'s financial troubles have
been caused by high raw material and labor costs and legacy costs.
Dana's major customers like General Motors Corp. and Ford Motor
Co., have also been pressuring the Company to cut prices on its
automotive parts as those companies deal with their own financial
problems.
As reported in the Troubled Company Reporter on Jan. 25, 2006,
Dana Corp. recorded a net loss of $1.272 billion for the third
quarter of 2005, compared to net income of $42 million in the
third quarter of 2004. For the first nine months of 2005, the
Company reported a net loss of $1.226 billion compared to net
income of $200 million for the same period in 2004.
Headquartered in Toledo, Ohio, Dana Corporation --
http://www.dana.com/-- designs and manufactures products for
every major vehicle producer in the world. Dana is focused on
being an essential partner to automotive, commercial, and
off-highway vehicle customers, which collectively produce more
than 60 million vehicles annually. A leading supplier of axle,
driveshaft, engine, frame, chassis, and transmission technologies,
Dana Corp. employs 46,000 people in 28 countries
* * *
As reported in the Troubled Company Reporter on Feb 28, 2006,
Moody's Investors Service lowered the ratings of Dana Corporation
-- Corporate Family to B3 from B1; senior unsecured to Caa1 from
B1; and Dana Credit Corporation -- senior unsecured to Caa1 from
B1.
The downgrade of the Corporate Family Rating to B3 reflects the
prospects for continued weakness in the company's operating
performance and credit metrics resulting from the ongoing erosion
in the automotive supply sector. Moody's believes that this
weakness is highlighted by the recent decision by the company's
board of directors to postpone a decision on the payment of a cash
dividend.
As reported in today's Troubled Company Reporter, Fitch Ratings
downgraded the ratings of Dana Corporation as:
-- Issuer default rating (IDR) to 'CCC' from 'B'
-- Senior secured bank facility to 'B' from 'BB'
-- Senior unsecured debt to 'CCC' from 'B'
The recovery rating on the senior unsecured debt is 'RR4', and the
senior secured bank facility has a recovery rating of 'RR1'.
Fitch is maintaining the Rating Watch Negative.
DELPHI CORP: Inks First Amendment to Restated DIP Credit Agreement
------------------------------------------------------------------
As reported in the Troubled Company Reporter on Oct. 28, 2005, the
U.S. Bankruptcy Court for the Southern District of New York
approved, on a final basis, Delphi Corp.'s $2 billion debtor-in-
possession financing.
On November 21, 2005, Delphi Corporation entered into an Amended
and Restated Revolving Credit, Term Loan and Guaranty Agreement to
borrow up to $2,000,000,000 from a syndicate of lenders arranged
by J.P. Morgan Securities Inc.; Citigroup Global Markets, Inc.;
and Deutsche Bank Securities Inc.
JPMorgan Chase Bank, N.A. is the administrative agent for the
Amended DIP Credit Facility, while Citicorp USA, Inc., is the
syndication agent. Ableco Finance LLC, Deutsche Bank Trust
Company Americas, and General Electric Capital Corporation are
co-documentation agents.
The Amended DIP Credit Facility consists of a $1,750,000,000
revolving facility and a $250,000,000 term loan facility. Delphi
had previously entered into a debtor-in-possession credit
facility on October 14, 2005, with the Agents and a first
amendment to that facility on October 27, 2005.
On February 3, 2006, Delphi Corporation entered into a First
Amendment to the Amended and Restated Credit Agreement and
Amended and Restated Security and Pledge Agreement, dated
November 21, 2005.
Delphi had entered into the DIP Credit Agreement to borrow up to
$2,000,000,000 from a syndicate of lenders arranged by J.P.
Morgan Securities Inc., Citigroup Global Markets, Inc., and
Deutsche Bank Securities Inc.
Among other things, the First Amendment:
-- amends the definition of "Global EBITDAR" to clarify the
measurement of Restructuring Costs on a monthly basis to be
consistent with the monthly Global EBITDAR covenant testing
requirements under the Amended DIP Credit Facility; and
-- permits Delphi to deliver its 2005 audited financial
statements within 110 days after the year-end, as is
currently provided, but without regard to any shorter time
period specified by the U.S. Securities and Exchange
Commission.
A full-text copy of the First Amendment is available for free
at http://ResearchArchives.com/t/s?5f7
Headquartered in Troy, Michigan, Delphi Corporation --
http://www.delphi.com/-- is the single largest global supplier of
vehicle electronics, transportation components, integrated systems
and modules, and other electronic technology. The Company's
technology and products are present in more than 75 million
vehicles on the road worldwide. The Company filed for chapter 11
protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and
Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
represent the Debtors in their restructuring efforts. Robert J.
Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude,
Esq., at Latham & Watkins LLP, represents the Official Committee
of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance
sheet showed $17,098,734,530 in total assets and $22,166,280,476
in total debts. (Delphi Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
DELPHI CORP: Taps Jaeckle as IP Counsel for Automotive Systems
--------------------------------------------------------------
Delphi Corporation and its debtor-affiliates seek the U.S.
Bankruptcy Court for the Southern District of New York's
permission to employ Jaeckle Fleischmann & Mugel, LLP, as their
intellectual property counsel with respect to these areas of
technical expertise:
-- automotive engines,
-- automotive engine components,
-- valve trains,
-- direct injection gasoline systems, and
-- general fuel handling systems
The Debtors relate that several members of Jaeckle have extensive
experience in intellectual property law and its interplay with
the Debtors' technology. Thus, the Debtors believe that the firm
is well qualified to serve as intellectual property counsel in an
efficient and effective manner.
David M. Sherbin, vice president, general counsel and chief
compliance officer of Delphi Corporation, assures Judge Drain
that Jaeckle will work with other professionals to avoid any
duplication of services. The Debtors believe Jaeckle's
employment will enhance and not duplicate the employment of other
professionals.
As intellectual property counsel, Jaeckle will:
(a) prepare and file patent applications;
(b) prepare and file responses to actions received from the
U.S. and foreign patent offices related to its areas of
technical expertise;
(c) prepare and file appeals with the United States Patent
Office related to its areas of technical expertise;
(d) conduct searches related to its areas of technical
expertise;
(e) provide patent opinions related to its areas of technical
expertise; and
(f) provide miscellaneous intellectual property advice and
counsel related to copyrights, trademarks and know-how and
contractual matters involving intellectual property.
Ronald J. Kisicki, a member of the firm, discloses that Jaeckle
does not hold or represent any interest adverse to the Debtors,
their creditors, and any other party-in-interest.
Jaeckle's professionals expected to render services in connection
with the Debtors' intellectual property and their hourly rates
are:
Professional Position Hourly Rate
------------ -------- -----------
Ronald J. Kisicki, Esq. Partner $250
Susan J. Timian, Esq. Partner $250
Dennis B. Danella, Esq. Attorney $185
Robert D. Lott, Esq. Attorney $200
Mauri A. Sankus, Esq. Attorney $185
Katherine H. McGuire, Esq. Attorney $200
Lee J. Fleckenstein Patent Agent $175
Robert C. Brown Patent Agent $175
Elizabeth A. Kinsely IP Paralegal $100
Margaret I. Hults Legal Assistant $80
Messrs. Kisicki and Danella, and Ms. McGuire will have the
primary responsibility with respect to the intellectual property-
related services to be provided to the Debtors.
Jaeckle has continued to assist the Debtors' in connection with
their intellectual property issues since October 8, 2005. Hence
the Debtors ask the Court that Jaeckle's retention be effective
October 8.
Headquartered in Troy, Michigan, Delphi Corporation --
http://www.delphi.com/-- is the single largest global supplier of
vehicle electronics, transportation components, integrated systems
and modules, and other electronic technology. The Company's
technology and products are present in more than 75 million
vehicles on the road worldwide. The Company filed for chapter 11
protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and
Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
represent the Debtors in their restructuring efforts. Robert J.
Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude,
Esq., at Latham & Watkins LLP, represents the Official Committee
of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance
sheet showed $17,098,734,530 in total assets and $22,166,280,476
in total debts. (Delphi Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
DELPHI CORP: Taps Rader as IP Counsel for Electronics Systems
-------------------------------------------------------------
Delphi Corporation and its debtor-affiliates require the services
of Rader Fishman & Grauer PLLC as their intellectual property
counsel with respect to sophisticated automotive electronics
systems.
Rader Fishman has performed similar work for the Debtors in the
past and is therefore familiar with their businesses and
operations.
As intellectual property counsel, Rader Fishman will:
(a) review invention disclosures, prepare patentability
opinions, and prepare and file patent applications with
U.S. Patent and Trademark Office;
(b) review correspondence from U.S. Patent and Trademark
Office and prepare amendments to patent applications to
secure patents focusing on, among others, patents relating
to sophisticated automotive electronics systems;
(c) review correspondence from foreign patent offices and
consult with the Debtors concerning appropriate responses
and interface with foreign law firms concerning the filing
of responses in foreign jurisdictions focusing on, among
others, sophisticated automotive electronics systems;
(d) represent the Debtors in litigation in United States
District Courts and U.S. Courts of Appeal and oversee
litigation and administrative proceedings in foreign
countries involving patents and trademarks with a focus on
local litigation issues;
(e) review potential products and inventions, conduct searches
for relevant patents and publications, review and analyze
uncovered patents and publications, and prepare opinions
focusing on, among others, sophisticated automotive
electronics systems; and
(f) provide miscellaneous intellectual property advice and
counsel related to copyrights, trademarks and know-how and
contractual matters involving intellectual property.
Accordingly, the Debtors seek the U.S. Bankruptcy Court for the
Southern District of New York's authority to employ Rader Fishman,
nunc pro tunc to October 8, 2005.
The Debtors will pay Rader Fishman's professionals at these
rates:
Attorney Hourly Rate
-------- -----------
R. Terrance Rader, Esq. $475
Michael D. Fishman, Esq. $325
Michael B. Stewart, Esq. $345
Glenn E. Forbis, Esq. $325
Kristin L. Murphy, Esq. $265
Glenn E. Forbis, Esq., a member of the firm, assures the Court
that Rader Fishman does not represent or hold adverse interest to
the Debtors' estates or to other parties-in-interest in the
Debtors' Chapter 11 cases.
The Debtors believe that Rader Fishman's employment will enhance
and will not duplicate the employment of other employed
professionals.
Headquartered in Troy, Michigan, Delphi Corporation --
http://www.delphi.com/-- is the single largest global supplier of
vehicle electronics, transportation components, integrated systems
and modules, and other electronic technology. The Company's
technology and products are present in more than 75 million
vehicles on the road worldwide. The Company filed for chapter 11
protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and
Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
represent the Debtors in their restructuring efforts. Robert J.
Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude,
Esq., at Latham & Watkins LLP, represents the Official Committee
of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance
sheet showed $17,098,734,530 in total assets and $22,166,280,476
in total debts. (Delphi Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
DELTA AIR: Comair Walks to Walk Away from Flight Attendants CBA
---------------------------------------------------------------
Comair, Inc., a debtor-affiliate of Delta Air Lines, asks the U.S.
Bankruptcy Court for the Southern District of New York for
authority to its collective bargaining agreement with 970 flight
attendants, represented by the International Brotherhood of
Teamsters.
Dan Dixon, corporate controller of Comair, recounts that, prior
to 2001, Comair was one of the most successful of the regional
airlines, and its employees were among the most highly
compensated in the regional industry.
Unfortunately, financial conditions for Delta Air Lines, Inc.,
Comair, and the entire airline industry worsened materially after
September 11, 2001. Comair initially expected that conditions
would improve by the end of 2002, but that improvement did not
occur.
As a result, since late 2003, Comair has implemented a number of
cost-cutting initiatives. Among others, Comair, which has 6,400
employees, sought to modify the existing collective bargaining
agreements with its unionized employees.
IBT, however, has refused to agree to any meaningful concessions
with respect to the Flight Attendant Agreement, which became
effective July 19, 2002. Accordingly, Comair filed the request,
under Section 1113(c) of the Bankruptcy Code, to reject the CBA.
Section 1113(c) provides that the Court must approve the Flight
Attendant Agreement's rejection if it determines that:
(1) Comair has submitted to IBT proposals necessary to permit
the Debtor's reorganization and that treat all affected
parties fairly;
(2) IBT has rejected Comair's proposals without good cause;
and
(3) the balance of the equities clearly favors rejection.
Section 1113(c) Proposal
Comair seeks to reduce its labor costs with respect to the Flight
Attendants, with the bulk of the savings to be achieved through
the reduction of their pay scale. The reduced pay rates will
provide approximately $6,800,000 in annual savings, or 77% of the
$8,900,000 "ask" of the flight attendants.
As additional measures for Comair to reach the necessary cost
reductions, it proposes to:
(a) eliminate its future funding of the Retirement Plan --
yielding approximately $790,000 of savings per year;
(b) reduce per diem rates to $1.46 per hour -- yielding
approximately $570,000 of savings per year;
(c) implement a part-time flight attendant program -- yielding
approximately $364,000 of savings per year; and
(d) implement work rule changes yielding approximately
$380,000 of savings per year, including:
(1) increasing staffing flexibility by modifying the
"line value window" from a range of 78-85 hours to a
range of 78-88; valued at approximately $89,000;
(2) increasing flexibility in work rules by modifying
reserve assignment procedures; valued at $175,000;
and
(3) lengthening the report time for line holders to
60 minutes prior to departure at base, which may be
reduced to 45 minutes; valued at approximately
$118,000.
$120 Million in Losses for 2005
Comair is one of the six carriers that provide regional carrier
passenger service to Delta. Unlike Comair, the five other Delta
Connection carriers -- Atlantic Southeast Airlines; SkyWest
Airlines; Chautauqua Airlines; Shuttle America; and Freedom
Airlines -- are not are not owned in whole or in part by Delta.
Shawn Anderson, president of Delta Connection, a unit of Delta,
relates that, under the Delta Connection Agreement, Delta
purchases Comair flying on a "capacity purchase" basis.
Currently, 100% of Comair's "revenue" is provided by Delta
pursuant to the Connection Agreement and 100% of the revenue from
the tickets sold to passengers who fly on Comair is kept by
Delta. The amount of Comair's revenue is based on the number of
block hours of flying that Delta allocates to Comair.
Despite Comair's extensive financial presentations to demonstrate
its need to reduce costs, the IBT and its economists, Norman
Weintraub, maintain that Comair is profitable, primarily based on
DOT Form 41 data. Comair, however, maintains that Form 41 does
not show an accurate picture of its financial position.
Mr. Dixon explains that, based upon the compensation formula in
the Agreement, Comair's operating revenues, expenses, and markup,
by themselves, will appear to show a "profit." However, this
apparent "profit" is illusory, as it does not allocate the
revenue actually received for Comair's flying, nor does it fully
allocate Delta's costs of its arrangement with Comair.
Mr. Dixon says that, using a "pro rate" accounting of the actual
ticket revenue attributable to Comair flying, and allocating all
of Delta's expenses attributable to Comair's operations, Comair's
operations resulted in a pre-tax loss of more than $120,000,000,
excluding reorganization and special items, in 2005.
If Comair can restructure itself so that its controllable costs,
which includes crew costs, overhead, dispatch, and insurance, are
competitive, Delta should be able to increase, rather than
decrease, the flying it contracts to Comair, Mr. Dixon avers.
Flight Attendants' High Pay Rates
Joel Kuplack, Comair's vice president of Human Resources and
Inflight Services, relates that, under the Flight Attendant
Agreement, Comair's flight attendant pay generally ranges from
$21.70 per hour for flight attendants in the first year to $42.26
for flight attendants with 18 years or more of seniority.
In 2005, the annual compensation of a Comair flight attendant
with average seniority was approximately $28,600. In addition,
the per diem rate paid for every hour that a flight attendant is
away from base on assigned trips is $1.75 per hour.
Comair's rates are 13.98% to 24.04% higher than SkyWest, 17.79%
to 27.88% higher than ASA, 21.66% to 29.63% higher than
Chautauqua, and 24.88% to 31.35% higher than Freedom. The per
diem rate of Comair's flight attendants is also substantially
higher than what is paid at other regional airlines.
In addition, due to flight attendant pay cuts at Delta, the
Comair flight attendant pay rates currently are generally higher
than the pay rates at its parent and mainline partner, which is
highly unusual.
Comair believes that the only way it will continue to receive
flying opportunities from Delta is if Comair can offer its
services at a cost comparable to the other Delta Connection
carriers.
Comair's Cost-Cutting Initiatives
In late 2003, Comair identified and implemented non-labor cost
reductions, which generated more than $53,100,000 in cumulative
savings between January 1, 2003, and December 31, 2005.
Comair also sought savings from its employees. Since 2002, all
of Comair's non-union employees -- including hourly, salaried and
management employees -- have experienced either reductions in
pay, pay freezes, or both.
Comair's postpetition Restructuring Plan established a cost
reduction target of $42,300,000 per year in operating costs,
excluding reduced aircraft financing costs. Included among the
cost reductions were annual labor cost reductions of $17,300,000
from pilots, $8,900,000 from flight attendants, and $1,000,000
from mechanics.
In connection with the Restructuring Plan, in early November
2005, Comair presented formal proposals to each union to modify
its existing CBA.
The Air Line Pilots Association, International, which represents
Comair's pilots, and the International Association of Machinists,
which represents Comair's maintenance employees, have accepted
and ratified the proposed cost reductions. However, ALPA and IAM
have conditioned the implementation of these cost reductions on
comparable cost reductions for flight attendants.
IBT's Counterproposal
Bargaining with the IBT has not been as productive or successful
as the negotiations with ALPA and the IAM. The IBT has been
reluctant to discuss any significant labor cost reductions in its
CBA, Mr. Dixon relates.
On February 3, 2006, IBT submitted a counter proposal to Comair,
a copy of which is available at:
http://bankrupt.com/misc/comair_IBT_feb3_proposal.pdf
Jon A. Geier, Esq., at Paul, Hastings, Janofsky & Walker LLP, in
Washington, DC, relates that the IBT proposal reflected some
modest progress in negotiations, as the IBT showed willingness to
accept Comair's proposed work rules.
However, the IBT's proposal on pay rates would still result to
the Comair flight attendant's pay rates being higher than the
rates at any other regional airline, including the other Delta
Connection carriers.
Moreover, the IBT's proposal reflected an inflated dollar value
for the work rule changes, because the IBT's pay rates were used
in valuing the changes. As the pay rates decrease, so too will
the amount saved by work rules alone.
The IBT's economist, Norman Weintraub, stated that he believed
the IBT's proposal was worth $13,000,000 to $14,000,000 in
savings to Comair, but he did not provide any costing analysis.
Comair, however, believes the valuation is unrealistic. Comair's
costing of the proposal shows it would not save even 25% of the
needed $8,900,000.
Comair has informed the IBT that it is prepared to continue to
meet at any time to negotiate with respect to the Section 1113
Proposal and has indicated its willingness to consider
alternative changes to the CBA so long as the level of cost
saving achieved is the same as those achieved through the
Proposal.
Section 1113 Rejection
The proposed modifications to the Flight Attendant Agreement
assure that all employees, creditors, the Debtors, and all of the
affected parties are treated fairly and equitably, Mr. Kuplack
maintains.
He notes that other unionized employees, the pilots and
maintenance workers, have accepted the concessions proposed by
Comair. In addition non-union employees, including management
and executives also have take their fair share of the Debtor's
necessary labor reductions.
Employees at Comair's parent company, Delta, were also required
to participate equitably in significant pay and benefit
reductions under the terms of Delta's Business Plan, Edward
Bastian, executive vice president and chief financial officer of
Delta, notes.
The IBT's refusal to agree to Comair's proposals was without good
cause, Mr. Geier argues. He notes that, IBT thus far has
expressed no unwillingness to agree to the necessary level of
savings. IBT's proposal would achieve only a small fraction of
what Comair has proposed, and a far lower share than Comair's
pilots and maintenance workers have agreed to. It does not
satisfy the conditions placed by IAM and ALPA on implementation
of their own agreements.
Mr. Geier further asserts that the balance of equities clearly
favors rejection of the Flight Attendant Agreement. Absent
rejection of the CBA, all Comair employees, including the flight
attendants, could lose their jobs, and other stakeholders also
would receive less than if Comair emerged as a going concern. On
the other hand, if the CBA is rejected and Comair implements its
Section 1113 Proposal, its flight attendants still will have pay
and benefits comparable to those of flight attendants at other
regional airlines.
Consistent with its proposals to the other unions, Comair has
proposed a profit sharing plan that will permit flight attendants
to share in any upside that the Company achieves if its financial
forecasts prove too conservative.
* * *
IBT asks the Court to extend the deadline for it to file an
objection to Comair's request until March 8, 2006, and a
continuance of the hearing in this matter to no earlier than
March 15, 2006, or at a later date the Court deems appropriate.
A hearing on Comair's request is currently set for March 6, 2006.
Objections are due February 27, 2006.
Barry I. Levy, Esq., at Shapiro, Beilly, Rosenberg, Aronowitz,
Levy & Fox, LLP, in New York, explains that an extension is
necessary to permit the Union to evaluate the lengthy brief and
large number of exhibits submitted by Comair. The flight
attendants deserve sufficient time for their defense.
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. (Delta Air Lines
Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
DELTA AIR: Wants Court Nod on Renewal of AIG Insurance Policies
---------------------------------------------------------------
Delta Air Lines Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York for
authority to prepetition insurance policies they entered into with
entities affiliated with American International Group, Inc., in
connection with the workers' compensation program of Comair
Holdings, LLC.
Pursuant to the AIG Policies, the Debtors agree to pay and
reimburse AIG for premiums, premium taxes, surcharges and
assessments, obligations within their insurance deductible,
related claim service fees, and paid losses and expenses,
pursuant to periodic retrospective loss adjustments.
As security for the payment and performance of their obligations,
the Debtors are required to provide AIG a duly perfected, valid
superpriority security interest in and lien on a letter of credit
issued by a bank or other financial institution for the benefit
of the insurer.
On September 16, 2005, the Debtors obtained the Court's approval
to perform all of their prepetition obligations under various
insurance policies, including the AIG Policies.
Comair maintains required workers' compensation insurance for
certain U.S.-based employees through the AIG Policies, which
expired on December 31, 2005. Comair entered into a one-year
renewal of the Policies in the ordinary course of its business.
In connection with the renewal, Comair agreed to increase the
amount of the L/C held by AIG from $2,200,000 to $3,300,000.
The Debtors seek the Court's approval to renew the AIG Policies.
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in New York,
tells the Court that the Debtors are required by the laws of
various states in which they operate to provide their employees
with workers' compensation insurance coverage for claims arising
from or related to their employment with the Debtors.
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. (Delta Air Lines
Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
DELTA AIR: Court Lifts Stay for Resumption of Sept. 11 Lawsuits
---------------------------------------------------------------
Delta Air Lines, Inc., is among the defendants to personal injury
and wrongful death lawsuits filed by various parties in connection
with the events in September 11, 2001, when:
(1) United Airlines Flight 175 crashed at the south tower of
the World Trade Center, killing all 65 people aboard.
(2) American Airlines flight 77 crashed at the Pentagon,
killing all 64 people aboard; and
(3) American Airlines Flight 11, crashed at the north tower of
the World Trade Center, killing all 93 people aboard.
A list of September 11 Lawsuits is available for free at:
http://ResearchArchives.com/t/s?5f8
The September 11 Plaintiffs have not filed proofs of claim in the
Debtors' Chapter 11 cases.
Pursuant to a stipulation, the September 11 Plaintiffs agree to
waive claims against Delta and agree to seek recovery solely from
the insurance coverage, if any, available under one or more
insurance policies issued to the Debtors to satisfy the Claims.
At the parties' behest, the U.S. Bankruptcy Court for the Souther
District of New York lifts the stay solely to the limited extent
necessary to enable:
(a) the Lawsuits to proceed to final judgment or settlement;
(b) recover any liquidated final judgment or settlement on the
Lawsuits solely from available insurance coverage.
Any final judgment or settlement will be reduced by:
(i) the amount of any applicable deductible or self-insured
retention under the applicable insurance policy; and
(ii) any share of liability under the applicable insurance
policy of any insolvent or non-performing insurer or co-
insurer.
The automatic stay will not be modified for purposes of
permitting the Plaintiffs from attempting to recover any
intentional conduct or punitive damages from any party.
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. (Delta Air Lines
Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
DIAMOND ENT: Posts $1.2 Mil. Net Loss in Quarter Ended December 31
------------------------------------------------------------------
Diamond Entertainment Corporation, dba e-DMEC, delivered its
financial results for the quarter ended Dec. 31, 2005, to the
Securities and Exchange Commission on Feb. 17, 2006.
Diamond incurred a $1,201,591 net loss for the three months ended
Dec. 31, 2005, compared to a $1,021,748 net loss for the three
months ended Dec. 31, 2004.
Revenues increased 10.9% to $1,233,858 for the quarter ended Dec.
31, 2005, from $1,112,846 for the same period in 2004. Management
attributes the increase in revenues primarily to an increase in
permanent placements.
Diamond's balance sheet at Dec. 31, 2005, showed $5,573,209 in
total assets and $13,562,698 in liabilities, resulting in a
stockholders' deficit of $7,989,489.
At Dec. 31, 2005, the Company had limited liquid resources.
Current liabilities were $12,168,008 and current assets were
$5,312,281, resulting in a $6,855,727 working capital deficit.
In addition, the Company reports that as of February 2006, it has
arrears totaling $110,000 on its Series F Preferred Stock.
Dividends on the Company's Series F Preferred Stock accrue at a
rate of 7% per annum, payable monthly.
A full text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?5ae
Discontinued Operations
As reported in the Troubled Company Reporter on Aug. 26, 2005,
Diamond advised in its quarterly report for the period ended June
30, 2005, that it may have to sell its business or assets because
of inadequate cash flow and the lack of other available sources of
capital to fund its operations.
In December 2005, the Company completed a series of transactions
pursuant to which it sold substantially all of the assets used to
conduct its staffing services business, other then the IT staffing
solutions business that is conducted through the Company's 50%
owned joint venture, STS.
The assets sold at the end of 2005 are:
-- the Company's offices, and related assets, located in the
western half of the United States. ALS, LLC, a related
party, purchased the assets for:
* $250,000 payable over the 60 days following
December 2, 2005, at a rate no faster than $125,000
per 30 days;
* assumption of $798,626 of the Company's debts;
* $1,000,000 payable to be paid directly to certain
taxing authorities to reduce the Company's tax
obligations; and
* $3,537,000 which was paid by means of the
cancellation of all net indebtedness owed by the
Company to ALS outstanding as of the close of
business on December 2, 2005.
-- three of the Company's California offices to
Accountabilities, Inc. Pursuant to the terms of an Asset
Purchase Agreement between the Company and AI dated
December 5, 2005, AI has agreed to pay to the Company an
earnout amount equal to 2% of the sales of the Other
California Offices for the first twelve month period
after the AI Effective Date; one percent of the sales of
the Other California Offices for the second twelve month
period after the AI Effective Date; and one percent of
the sales of the Other California Offices for the third
twelve month period from the AI Effective Date.
-- the Company's northeastern offices, and related assets,
to Source One Personnel, Inc.
-- two of the Company's California branch offices to Tri-
State Employment Service, Inc.
Going Concern Doubt
Pohl, McNabola, Berg and Company, LLP, expressed substantial doubt
about Diamond Entertainment's ability to continue as a going
concern after it audited the company's financial statements for
the fiscal year ended March 31, 2005. The auditors point to the
company's significant working capital deficiency, substantial
recurring losses and negative cash flows from operations.
About Diamond
Diamond Entertainment Corporation d/b/a e-DMEC was formed under
the laws of the State of New Jersey on April 3, 1986. In May
1999, the Company registered in the state of California to do
business under the name "e-DMEC". DMEC markets and sells a
variety of videocassette and DVD (Digital Video Disc) titles to
the budget home video and DVD market. The Company also purchases
and distributes general merchandise including children's toy
products, general merchandise and sundry items.
DYKESWILL LTD: Disclosure Statement Hearing Set for March 13
------------------------------------------------------------
The Hon. Richard S. Schmidt of the U.S. Bankruptcy Court for the
Southern District of Texas will convene a hearing at 2:00 p.m. on
March 13, 2006, to consider approval of the Disclosure Statement
explaining Dykeswill, Ltd.'s Plan of Reorganization.
Judge Schmidt will determine if the Disclosure Statement contains
adequate information -- the right amount of the right kind -- for
creditors to make informed decisions when the Debtor asks them to
vote to accept the Plan.
The Plan calls for the distribution to creditors of funds
resulting from the sale of certain of Dykeswill's assets,
principally from the sale of its property in Hawaii.
As reported in the Troubled Company Reporter on Sept. 1, 2005, Ben
B. Floyd, the Chapter 11 Trustee for Dykeswill, Ltd., asked the
Bankruptcy Court to approve the sale of Tract 1 of the Debtor's
400-acre Wiaono Meadows Ranch in Holualoa, Hawaii, free and clear
of all liens, to Golden Bay Corporation for $1.2 million.
Treatment of Claims
Holders of allowed secured claims will be paid in full from the
proceeds of the sale of the collateral securing their claim.
Waiono Meadows Ranch, Ltd., as the principal holder of a secured
claim against the Debtor, has been paid in full following the sale
of its collateral.
Remaining claimants under this class are:
-- Waiono Plantation, Inc., and J. Mitchell Clark;
-- Jack Painter, who holds a $284,064 claim; and
-- Rene Halbardier, who holds a $46,004 claim.
Holders of general unsecured claims will receive a pro-rata
distribution of their allowed claims on the effective date of the
Plan. The Debtor estimates $2.1 million in potential liabilities
from unsecured claimants.
Subordinated claimants will receive a pro-rata payment of their
allowed claims after all other classes, except equity holders, are
paid in full.
Everett C. Williams and Claudia Dykes Williams, the Debtor's
principals, will retain their equity interest. However, they
cannot receive any distribution form the estate unless all other
classes are paid in full.
A copy of Dykeswill's reorganization Plan is available for a fee
at http://www.researcharchives.com/bin/download?id=060301021312
Headquartered in Corpus Christi, Texas, Dykeswill, Ltd., filed for
Chapter 11 protection on July 26, 2004 (Bankr. S.D. Tex. Case No.
04-20974). Harlin C. Womble, Jr., Esq., at Jordan, Hyden Womble
and Culbreth, P.C., represents the Debtor in its restructuring
efforts. When the company filed for protection from its
creditors, it listed over $10 million in assets and debts of more
than $1 million.
E.DIGITAL CORP: Gets $1.5 Million from Sale of Common Shares
------------------------------------------------------------
e.Digital Corporation (OTC: EDIG) received $1.5 million through
the sale of restricted common shares and warrants to 27 accredited
investors; two of the accredited investors are officers of the
company.
The company expects to use the proceeds from this financing to
speed the roll-out of its new, proprietary eVU(TM) mobile
entertainment product and turnkey entertainment services business
to U.S. and international companies in the healthcare and travel
and leisure industries, and to military organizations, as well as
fund its efforts to partner with an intellectual property
management company to jointly pursue monetizing the company's
flash memory management-based patent portfolio, and for general
working capital.
Under the terms of a Restricted Common Stock Purchase Agreement,
the company issued and sold 18,750,000 shares of restricted common
stock at a cash purchase price of $0.08 per share. The company
also issued "A" Warrants to purchase 4,687,500 shares of common
stock with an exercise price of $0.10 per share, exercisable until
February 28, 2009, and "B" Warrants to purchase 4,687,500 shares
of common stock with an exercise price of $0.09 per share,
exercisable until six months after the effective date of a "best
efforts" registration statement. Pricing of the financing was set
at 85% of the average closing common stock bid price for the ten
days prior to the commitment and pricing date of February 22,
2006, with the "A" Warrant set at 120% of such price and the "B"
Warrant set at 110% of such price, all prices rounded to the
nearest whole cent. No broker fees or warrants were paid in
connection with the financing.
The common stock and warrants to purchase common stock have not
been registered under the Securities Act of 1933, as amended, and
may not be offered or sold in the United States without a
registration statement or exemption from registration. The
company has agreed to file a registration statement on the
securities.
e.Digital Corporation -- http://www.edigital.com/-- provides
engineering services, product reference designs and technology
platforms to customers focusing on the digital video/audio and
player/recorder markets.
* * *
At Dec. 31, 2005, the Company's balance sheet showed $658,863 in
total assets and liabilities of $4,575,205, resulting in a
$3,916,342 stockholders' deficit. The Company had a $3,995,013
working capital deficiency at Dec. 31, 2005, too.
Going Concern Doubt
Singer Lewak Greenbaum & Goldstein LLP expressed substantial doubt
about the e.Digital's ability to continue as a going concern after
it audited the company's financial statement for the fiscal year
ended Mar. 31, 2005. The auditing firm pointed to the company's
recurring losses and stockholders' deficit.
E*TRADE FINANCIAL: S&P Affirms B+ Rating with Stable Outlook
------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on
E*TRADE Financial Corp. to positive from stable and raised its
counterparty credit ratings on E*TRADE Bank to 'BB+/B' from
'BB/B'. The rating on E*TRADE was affirmed at 'B+' and the
outlook on E*TRADE Bank remains stable.
"The outlook change on E*TRADE reflects its improvements in
franchise strength and fundamental performance driven by organic
growth and acquisitions," said Standard & Poor's credit analyst
Helene De Luca.
The rating on E*TRADE is supported by:
* strong operating performance;
* a diversified business model; and
* adequate liquidity.
E*TRADE completed 2005 with strong pretax margins while closing on
a number of acquisitions:
-- three acquisitions, BrownCo, Harrisdirect, and Kobren
Insight management, closed in the fourth quarter; and
-- other smaller acquisitions earlier in the year.
The acquisitions are expected to provide strategic benefits at a
critical time when the industry is rapidly consolidating and
companies vie for acquisition targets in an attempt to gain scale
and market power. Another positive rating factor is
diversification through the bank and brokerage businesses, which
sets it apart from many of its competitors.
Offsets to these strengths are E*TRADE's financial leverage (due
to a high level of intangible assets) and double leverage.
Additionally, E*TRADE and its retail brokerage peers are operating
in a fiercely competitive industry, where-recognizing the slowdown
in trading price cuts-added competitive dynamics may result in
earnings pressures.
"The ratings upgrade on E*TRADE Bank is due to its strong core
earnings, improved asset and liability management, strong credit
quality, and growing net interest margin (NIM)," said Ms. De Luca.
E*TRADE Bank maintains a high-quality asset mix and has healthy
deposit growth. In 2005, total deposits increased 30% over those
of the prior year. The NIM is also healthy and has improved
primarily due to lower cost of funds as brokerage customer cash is
swept into the bank. E*TRADE expects to continue increasing bank
deposits from brokerage customers' cash balances.
Given the possibility of E*TRADE making further acquisitions in
2006, the positive outlook is based on the expectation that
E*TRADE will fund any future acquisitions without materially
reducing its capital adequacy. Standard & Poor's considers
capital to be tangible equity and equity equivalents, subject to
limitations, in its review of capital adequacy for securities
brokers. Material declines in capital adequacy or liquidity
measures could put pressure on E*TRADE's ratings. Conversely,
improvement of these measures, healthy integration of
acquisitions, and continuing strength of the franchise would be
viewed positively.
ENTERPRISE PRODUCTS: Offers 15 Million Common LP Units for Sale
---------------------------------------------------------------
Enterprise Products Partners L.P. (NYSE:EPD) filed a preliminary
prospectus supplement for an offering of 15,000,000 common units
representing limited partner interests. The prospectus supplement
also includes a 30-day option granted to the underwriters to
purchase an additional 2,250,000 common units.
Enterprise plans to use the net proceeds from this offering to
reduce borrowings currently outstanding under its multi-year
revolving credit facility and for general partnership purposes.
Lehman Brothers Inc. and Morgan Stanley & Co. Incorporated are
acting as joint book-running managers for the offering.
The co-managers for the offering are:
* Citigroup Global Markets Inc.,
* UBS Securities LLC, Merrill Lynch,
* Pierce, Fenner & Smith Incorporated,
* Wachovia Capital Markets, LLC,
* A.G. Edwards & Sons, Inc.,
* Raymond James & Associates, Inc.,
* RBC Capital Markets Corporation,
* Sanders Morris Harris Inc.,
* Banc of America Securities LLC,
* Credit Suisse Securities (USA) LLC,
* Deutsche Bank Securities Inc.,
* Natexis Bleichroeder Inc. and
* Oppenheimer & Co. Inc.
A copy of the preliminary prospectus supplement can be obtained
from Lehman Brothers Inc. or Morgan Stanley & Co. Incorporated.
Direct any requests to:
Lehman Brothers
c/o ADP Financial Services
Prospectus Fulfillment
1155 Long Island Avenue,
Edgewood, New York 11717
Fax: (631) 254-7268
-- and -
Morgan Stanley
Prospectus Department
180 Varick Street, 2nd Floor
New York, New York 10014
Tel: (917) 606-8474.
Enterprise Products Partners L.P. -- http://www.epplp.com/-- is
one of the largest publicly traded energy partnerships with an
enterprise value of approximately $15 billion, and is a leading
North American provider of midstream energy services to producers
and consumers of natural gas, NGLs and crude oil. Enterprise
transports natural gas, NGLs and crude oil through 32,776 miles of
onshore and offshore pipelines and is an industry leader in the
development of midstream infrastructure in the Deepwater Trend of
the Gulf of Mexico. Services include natural gas transportation,
gathering, processing and storage; NGL fractionation (or
separation), transportation, storage, and import and export
terminaling; crude oil transportation and offshore production
platform services. Enterprise Products Partners L.P. is managed
by its general partner, Enterprise Products GP LLC, which is
wholly owned by Enterprise GP Holdings L.P. (NYSE:EPE).
The company's $250 million 5% senior unsecured notes due 2015
carries Standard & Poor's BB+ rating. That rating was assigned on
Feb. 15, 2005.
EPRESENCE INC: Distributes $2.5 Million to Shareholders
-------------------------------------------------------
ePresence, Inc. (formerly NASDAQ: EPRE) reported an interim
distribution of liquidation proceeds to its shareholders of record
at the close of business on June 23, 2004. The distribution will
total approximately $2.5 million, or $0.10 per common share, and
will be paid on March 10, 2006.
The Company is pleased to note that this distribution, combined
with the initial distribution of $4.05 per share paid in June,
2004, will return to shareholders a cumulative $4.15 per share.
Remaining funds, if any, will be distributed to shareholders at
the conclusion of the Company's liquidation process.
The Company ceased active business operations in June, 2004 upon
the consummation of the sale of its consulting services business.
Since that time, the Company has been engaged in an orderly wind-
down of its affairs, including the liquidation of fixed assets and
the extinguishment of liabilities. The Company has filed its
Certificate of Dissolution with the Secretary of State of
Massachusetts.
EXCELLIGENCE LEARNING: Earns $4.4 Million in 2005 Third Quarter
---------------------------------------------------------------
Excelligence Learning Corporation (Pink Sheets:LRNS) delivered its
financial and operating results for the three and nine months
ended September 30, 2005, and reported its appeal of the decision
to delist its securities from The Nasdaq Capital Market.
Consolidated revenues for the nine months ended September 30, 2005
grew by $9.7 million, or 9.7%, to $109.5 million, driven by a
year-over-year increase of $10.3 million, or 14.4%, in revenues in
the Company's Early Childhood division. Net income for the nine
months ended September 30, 2005 climbed to $4.7 million compared
to $3.2 million for the same period in 2004. The Company incurred
significant non-recurring, pre-tax expenses during the nine-month
period in 2005, including $240,000 in connection with a legal
settlement in the second quarter of 2005 and $1.3 million in
legal, audit and consultancy expenses in the third quarter,
related to an internal investigation and the subsequent
restatement of the Company's previously issued financial
statements for the year ended December 31, 2004 and first quarter
ended March 31, 2005.
For the nine-month period, the Early Childhood division realized
an increase in gross profit of 15.1%, or $3.8 million. While the
Elementary School division's gross profit declined by 4.0%, or
$360,000, as a whole, the company's gross profit for the nine-
month period increased by 10.2% to $37.8 million, compared to
$34.3 million in the same period a year ago.
Commenting on the first nine months of 2005, Ron Elliott, CEO of
Excelligence, said, "I am thankful to our shareholders for their
patience during our restatement. Our results for the first nine
months of 2005 demonstrate that our strategies are working, so as
we move into 2006 we will continue along the same path. We will
continue to optimize our sales and marketing efforts by increasing
our catalog distribution, focusing on our best customers and
introducing specialized catalogs that speak to specific customer
categories. We plan to improve our margins by sourcing more of
our products from China and introducing more proprietary products.
We are also focused on achieving productivity gains in all of our
operations, including the Elementary School division. We look
forward to continued growth and profitability in the future."
Financial Results for Third Quarter 2005
Total revenues for the third quarter of 2005 increased 6.9%, to a
record $57.1 million, from $53.4 million for the same period last
year. Revenues in the Early Childhood division increased 13.4%,
to $36.5 million, from $32.2 million for the same period last
year. The Elementary School division reported revenues of $20.6
million, down 2.9% from $21.2 million in the third quarter of
2004.
Net income for the quarter increased 9.5% to $4.4 million versus
$4.1 million in the same period last year. In the third quarter
of 2005, the Company incurred $1.3 million in non-recurring, pre-
tax expenses related to an internal investigation and the
subsequent restatement of its previously issued financial results.
The 13.4% increase in revenues in the Early Childhood division was
primarily due to increases in the number and frequency of catalog
shipments. Average sales price per unit for the Early Childhood
division increased 7.7% from the third quarter of 2004, with total
units sold in the division up 4.9% from the third quarter of 2004.
The average sales price per unit for the Elementary School
division declined slightly by 1.1% from the same period in 2004,
with total units sold in the division down 2.1% from the same
period in 2004.
The Early Childhood division realized an increase in gross profit
of 15.9% to $13.1 million, compared to $11.3 million in the year
ago period. The Elementary School division's gross profit
declined by 2.7% to $6.7 million. As a whole, the Company's gross
profit for the quarter increased by 8.8% to $19.8 million, or
34.6% of revenues, compared to $18.1 million, or 34.0% of
revenues, in the same period a year ago.
Mr. Elliott continued, "I am very pleased with our achievements
this quarter, our seasonally strongest of the year. We achieved
growth in our top line by increasing the total number as well as
the frequency of catalog shipments and by incorporating smarter
selling strategies that target our best customers. At the same
time, we improved margins by adding more proprietary products,
sourcing more of our products from China, and optimizing our
pricing strategies. We believe that our margins will continue to
benefit from these strategies as our business grows in scale."
Operating profit in the Early Childhood division increased 6.1% to
$3.2 million in the third quarter of 2005, while the Elementary
School division had operating income of $4.6 million. Overall,
operating profit in the third quarter increased 7.6% to $7.8
million, versus $7.3 million in the year ago period.
Mr. Elliott concluded, "During the third quarter of 2005, we
achieved record revenues and growth in net income despite the
significant expenses related to the restatement of our financial
results. We are pleased to have the restatement behind us. Any
errors in our financial reporting are unacceptable to us, and our
Audit Committee and Board promptly addressed the issues that were
uncovered in the course of the investigation. We have taken steps
to improve our internal controls and procedures and believe that
we are on the right path for continued growth in 2006."
Restatement of Financial Statements
Certain numbers in the attached financial statements reflect the
previously announced restatement of the Company's previously
issued financial statements for the fiscal year ended December 31,
2004 and the fiscal quarter ended March 31, 2005, as reflected in
the Company's Form 10-K/A for such year and Form 10-Q/A for such
quarter filed with the Securities and Exchange Commission on
February 1, 2006.
Headquartered in Monterey, California, Excelligence Learning
Corporation -- http://www.excelligencelearning.com/-- is a
developer, manufacturer and retailer of educational products which
are sold to child care programs, preschools, elementary schools
and consumers. The company serves early childhood professionals,
educators, and parents by providing quality educational products
and programs for children from infancy to 12 years of age. With
its proprietary product offerings, a multi-channel distribution
strategy and extensive management expertise, the company aims to
foster children's early childhood and elementary education.
The company is composed of two business segments, Early Childhood
and Elementary School. Through its Early Childhood segment, the
company develops, markets and sells educational products through
multiple distribution channels primarily to early childhood
professionals and, to a lesser extent, consumers. Through its
Elementary School segment, the Company sells school supplies and
other products specifically targeted for use by children in
kindergarten through sixth grade to elementary schools, teachers
and other education organizations. Those parties then resell the
products either as a fundraising device for the benefit of a
particular school, student program or other community
organization, or as a service project to the school.
* * *
Financial Restatements
As reported in the Troubled Company Reporter on Sept. 15, 2005,
Excelligence Learning Corporation (Nasdaq:LRNSE) reported that, on
Sept. 7, 2005, and upon the recommendation of management, its
Board of Directors concluded that the company's previously issued
financial statements as of and for the year ended Dec. 31, 2004
and the quarter ended March 31, 2005, should not be relied upon
and should be restated. This conclusion was based on the results
of the previously announced internal investigation initiated by
the Company's Audit Committee to determine if the company
improperly failed to record and accrue for certain obligations for
the period and fiscal year ended Dec. 31, 2004.
Material Weakness
The circumstance of a restatement is a strong indicator that a
material weakness may have existed in the company's internal
control over financial reporting. Management is continuing to
evaluate whether there were one or more material weaknesses
related to the company's restatements.
EXCELLIGENCE LEARNING: Appeals Nasdaq Delisting Determination
-------------------------------------------------------------
Excelligence Learning Corporation submitted a notice of appeal to
the Nasdaq Listing and Hearing Review Council to review the Nasdaq
Listing Qualifications Panel's February 1, 2006 decision to delist
Excelligence from The Nasdaq Capital Market. Specifically,
Excelligence plans to ask the Council to reverse the Panel's
delisting determination, and to re-list the Company's securities
on The Nasdaq Capital Market. The Panel delisted Excelligence for
failing to comply with Nasdaq Marketplace Rule 4310(c)(14), which
requires that Nasdaq-listed issuers remain current in their
Securities and Exchange Commission filings, by January 31, 2006.
Excelligence regained compliance with this rule on February 15,
2006, with the filing of its outstanding Form 10-Q for the quarter
ended September 30, 2005. There can be no guarantee that the
Nasdaq Council will grant Excelligence's appeal.
Headquartered in Monterey, California, Excelligence Learning
Corporation -- http://www.excelligencelearning.com/-- is a
developer, manufacturer and retailer of educational products which
are sold to child care programs, preschools, elementary schools
and consumers. The company serves early childhood professionals,
educators, and parents by providing quality educational products
and programs for children from infancy to 12 years of age. With
its proprietary product offerings, a multi-channel distribution
strategy and extensive management expertise, the company aims to
foster children's early childhood and elementary education.
The company is composed of two business segments, Early Childhood
and Elementary School. Through its Early Childhood segment, the
company develops, markets and sells educational products through
multiple distribution channels primarily to early childhood
professionals and, to a lesser extent, consumers. Through its
Elementary School segment, the Company sells school supplies and
other products specifically targeted for use by children in
kindergarten through sixth grade to elementary schools, teachers
and other education organizations. Those parties then resell the
products either as a fundraising device for the benefit of a
particular school, student program or other community
organization, or as a service project to the school.
* * *
Financial Restatements
As reported in the Troubled Company Reporter on Sept. 15, 2005,
Excelligence Learning Corporation (Nasdaq:LRNSE) reported that, on
Sept. 7, 2005, and upon the recommendation of management, its
Board of Directors concluded that the company's previously issued
financial statements as of and for the year ended Dec. 31, 2004
and the quarter ended March 31, 2005, should not be relied upon
and should be restated. This conclusion was based on the results
of the previously announced internal investigation initiated by
the Company's Audit Committee to determine if the company
improperly failed to record and accrue for certain obligations for
the period and fiscal year ended Dec. 31, 2004.
Material Weakness
The circumstance of a restatement is a strong indicator that a
material weakness may have existed in the company's internal
control over financial reporting. Management is continuing to
evaluate whether there were one or more material weaknesses
related to the company's restatements.
GLOBAL SIGNAL: Moody's Rates $122 Mil. Class F Certificates at Ba1
------------------------------------------------------------------
Moody's Investors Service assigned definitive ratings to eight
classes of certificates issued by Global Signal Trust III.
The complete rating actions are:
Issuer: Global Signal Trust III
Assumed Final Distribution Date: February 2011
Rated Final Distribution Date: February 2036
* $352,444,000, 5.361% Class A-1-FX, Series 2006-1 Commercial
Mortgage Pass-Through Certificates, Aaa
* $350,000,000, Libor + 0.22% Class A-1-FL, Series 2006-1
Commercial Mortgage Pass-Through Certificates, Aaa
* $132,173,000, 5.450% Class A-2, Series 2006-1 Commercial
Mortgage Pass-Through Certificates, Aaa
* $175,709,000, 5.588% Class B, Series 2006-1 Commercial
Mortgage Pass-Through Certificates, Aa2
* $175,708,000, 5.707% Class C, Series 2006-1 Commercial
Mortgage Pass-Through Certificates, A2
* $175,709,000, 6.052% Class D, Series 2006-1 Commercial
Mortgage Pass-Through Certificates, Baa2
* $65,891,000, 6.495% Class E, Series 2006-1 Commercial
Mortgage Pass-Through Certificates, Baa3
* $122,366,000, 7.036% Class F, Series 2006-1 Commercial
Mortgage Pass-Through Certificates, Ba1
Global Signal Inc., is a large wireless communications tower owner
with a heavy presence in the top metropolitan areas of the United
States, particularly the Southeast. The firm is landlord to 2000+
individual wireless customers with over 26,000 leases. The firm
has approximately 11,000 tower sites of which 7,860 sites owned by
the Borrowers will constitute the cash flow stream for this
securitization. The 7,860 sites have an annualized run rate net
cash flow of $203.5 million as of Nov. 30, 2005.
The proceeds from this securitization will be used to retire
bridge facilities extended to Global Signal by financial
institutions to acquire tower assets, including the 2005
acquisition of the Sprint tower portfolio. In addition certain
assets from the first Global Signal securitization concluded in
early 2004 are being refinanced.
The mortgage loans will be secured by a first mortgage lien on
sites representing approximately 82.5% of the annualized run rate
net cash flow derived from all sites as of Nov. 30, 2005. Global
Signal Holdings V LLC, the direct parent of the Borrowers, will
also pledge all of the equity interests of the Borrowers in
support of its guarantee of the mortgage loans.
In the remaining sites without a mortgage and in the mortgaged
sites there will be a perfected security interest in the personal
property and fixtures owned by the Borrower. The assets owned by
the Borrowers include communication towers, real property and
associated rights, leased third-party sites, tenant leases, its
owned equipment on towers or at sites, FCC registrations and
systems.
GOODMAN GLOBAL: Strong Earnings Prompt Moody's to Lift Ratings
--------------------------------------------------------------
Moody's Investors Service upgraded the ratings of Goodman Global
Holdings, Inc., a leading domestic manufacturer of heating,
ventilation and air conditioning products for residential and
light commercial use.
Ratings upgraded are:
* Corporate Family Rating, from B2 to B1;
* $175 million senior secured revolving credit facility due
2010, from B2 to B1;
* $350 million senior secured term loan B due 2011, from B2 to
B1;
* $250 million senior unsecured floating rate notes due 2012,
from B3 to B2;
* $400 million senior subordinated notes due 2012, from Caa1
to B3.
Outlook remains stable.
SGL-2 rating confirmed.
The rating upgrade reflects the strong earnings growth and
resulting de-leveraging that Goodman has accomplished since the
end of fiscal 2004. The rating action also credits Goodman for
its ability to successfully offset significant price increases in
several of its key raw materials as evidenced by the improvement
in adjusted gross margin over the past year from 22.6% at year-end
2004 to 23.2% in third quarter 2005. The ratings further consider
the company's position as a leading domestic supplier to the value
segment of the HVAC market, which Moody's believes stands to
benefit from above-market growth as a result of the recent
industry transition to 13 SEER.
On the other hand, the ratings are constrained, in part, by the
working capital investment necessary to support its business model
and its expected growth as well as by its exposure to new home
construction. Due to seasonality, Goodman invests significantly
in working capital in its first two fiscal quarters and, as a
result, does not generate free cash flow that can be applied to
permanent debt reduction until its last fiscal quarter. An
unanticipated increase in working capital usage could have a
material impact on the level of free cash flow. Although Moody's
anticipates significant improvements in free cash flow generation
going forward, Goodman's ratio of trailing LTM free cash flow to
debt is expected to remain positive but low relative to current
debt levels until the end of fiscal 2006.
The recent 13 SEER transition is expected to increase overall HVAC
market revenues, in dollar terms, as higher priced 13 SEER
products rebase industry pricing. Growth in unit terms, however,
will be harder to achieve due to the strong industry growth
achieved in 2005. The value segment of the HVAC market, in which
Goodman primarily competes, gained significant share in the
previous industry transition from 8.5 to 10 SEER and Moody's
anticipates similar out-performance over the next twelve to
eighteen months as consumer price sensitivity increases.
The SGL-2 rating reflects Moody's expectation of good liquidity
for the next twelve months. We anticipate that at the peak of its
working capital cycle, Goodman will utilize between 40% and 50% of
its $175 million revolver commitment, all of which should be
repaid by the end of the third quarter. Decreasing capital
expenditure requirements coupled with projected increases in top-
line growth and in margins should result in good cash flow
generation. The company is expected to maintain compliance with
its existing covenants.
The B1 rating on the senior credit facilities reflects their
seniority in the capital structure as well as the benefits of the
security package which consists of a first priority pledge of the
capital stock of Goodman and its unrestricted subsidiaries. The
B2 rating for the senior floating rate notes reflects their
unsecured nature as well as their contractual and effective
subordination to senior secured debt, including outstandings under
the revolving credit facility. Lastly, the B3 rating on the $400
million 7.875% senior subordinated notes due 2012 reflects their
junior position in the capital structure coupled with a lack of
tangible asset coverage.
The ratings and or outlook may improve if the company successfully
gains market share and translates this growth into higher free
cash flow available for permanent debt reduction. A ratings
upgrade would be likely if the company was able to reduce its
total debt to EBITDA to less than 3.5 times, generate free cash
flow equal to at least 15% of outstanding debt on a sustainable
basis and improve its interest coverage to above 3 times. These
targets compare with the following estimated ratios as of
Sept. 30, 2005: approximately 5.5 times for debt to adjusted
EBITDA, 5% for free cash flow as a percentage of total debt, and
approximately 2.4 times for adjusted EBIT to interest expense.
Conversely, the ratings or outlook could deteriorate if the
company were to lose market share or sustain a significant
reduction in free cash flow such that free cash flow for fiscal
2006 were negative or its debt leverage were to increase
materially.
Goodman Global Holdings, Inc., based in Houston, Texas, is the
second largest domestic manufacturer of heating, ventilation and
air conditioning, or HVAC, products for residential and light
commercial use based on unit volumes. Apollo Management, L.P.
purchased a controlling stake in Goodman in late 2004.
HARRY ANDREWS: Case Summary & 12 Largest Unsecured Creditors
------------------------------------------------------------
Debtors: Harry L. Andrews
Julia Qing Tao
13272 Yockey Street #H
Garden Grove, California 92844
Bankruptcy Case No.: 06-10216
Chapter 11 Petition Date: February 28, 2006
Court: Central District Of California (Santa Ana)
Judge: Erithe A. Smith
Debtors' Counsel: Daniel I. Barness, Esq.
Sprio Moss Barness Harrison & Barge LLP
11377 West Olympic Boulevard 5th Floor
Los Angeles, California 90064-1683
Tel: (310) 235-2468
Fax: (310) 235-2496
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtors' 12 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
David Hudson $725,033
2122 North Broadway, Suite 200
Santa Ana, CA 92706-2614
Blumberg Law Corporation $35,000
100 Oceangate, Suite 1100
Long Beach, CA 90802-0403
Internal Revenue Service $30,000
Insolvency 1 Stop 5022
300 North Los Angeles Street #4062
Los Angeles, CA 90012-9903
Chase Cardmember SVC $20,102
Advanta Bank Corp. $20,000
California Franchise Tax BD $15,000
Dennis Mitosinka $8,636
Bank of America $8,484
Bank of America (VISA) $5,000
Capital One $3,378
Capital One - Lowes $2,495
Household Card Services $2,460
HEALTHCARE BUSINESS: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Healthcare Business Solutions, Inc.
fdba Newport Hospital and Clinic, Inc.
P.O. Box 1240
2000 McLain Street
Newport, Arizona 72112
Bankruptcy Case No.: 06-10682
Type of Business: The Debtor provides healthcare services
and operates a hospital.
Chapter 11 Petition Date: March 1, 2006
Court: Eastern District of Arkansas (Batesville)
Debtor's Counsel: Basil V. Hicks, Jr., Esq.
P.O. Box 5670
North Little Rock, Arizona 72119-5670
Tel: (501) 301-7700
Fax: (501) 301-7999
Estimated Assets: Less than $50,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 largest unsecured
creditors.
HEALTHSOUTH CORP: Settles Investor Lawsuits for $445 Million
------------------------------------------------------------
HealthSouth Corp. reached a global, preliminary agreement in
principle with:
(1) the lead plaintiffs in the federal securities class
actions and the derivative actions, and
(2) its insurance carriers,
to settle litigation filed against the Company, certain of its
former directors and officers and other parties.
The suit was filed in the U.S. District Court for the Northern
District of Alabama and the Circuit Court in Jefferson County,
Alabama in relation to the company's financial reporting and
related activity in March 2003.
Settlement Terms
Under the proposed settlement federal securities and fraud
claims brought in the class action against the Company and
certain of its former directors and officers will be settled for
consideration consisting of HealthSouth common stock and
warrants valued at $215 million and cash payments by
HealthSouth's insurance carriers of $230 million or aggregate
consideration of $445 million.
In addition, the federal securities class action plaintiffs will
receive 25% of any net recoveries from future judgments obtained
by or on behalf of the Company with respect to claims against
Richard Scrushy, the company's former chief executive officer,
Ernst & Young, the company's former auditors, and UBS, the
company's former primary investment bank, each of which remains
a defendant in the derivative actions as well as the federal
securities class actions. The proposed settlement is subject to
the satisfaction of a number of conditions, including the
successful negotiation of definitive documentation and final
court approval.
"This proposed settlement represents a major milestone in
HealthSouth's recovery and a powerful symbol of the progress we
have made as a company," said HealthSouth President and Chief
Executive Officer Jay Grinney. "With the support of our
dedicated employees across the country, HealthSouth is on the
verge of putting another issue from the past behind us."
"Over the past two years, HealthSouth has successfully
negotiated a number of significant legal obstacles resulting
from the massive fraud perpetrated against us," said Gregory L.
Doody, HealthSouth's General Counsel and Secretary. "The
proposed settlement with our stockholders and bondholders, when
completed -- together with our agreement with the Securities and
Exchange Commission in 2005, our bondholder consent agreement in
June of 2004 and our previous settlement with the U.S.
Department of Justice - Civil Division and the Centers for
Medicare & Medicaid Services in December 2004 -- will put the
bulk of the legal issues relating to pre-March 2003 periods
behind us and allow us to move forward."
The proposed settlement will not contain any admission of
wrongdoing by the Company or any other settling defendant.
Securities issued by the Company in the proposed settlement will
consist of an aggregate of 25,118,856 shares of its common stock
and eleven-year warrants to purchase an aggregate of 40,756,326
additional shares of HealthSouth common stock at an exercise
price of $8.28 per share. The Company, the lead plaintiffs and
the insurance carriers are continuing discussions toward a
definitive settlement agreement. There can be no assurance,
however, that such an agreement can be reached or that the
proposed settlement will receive the required court approval.
The proposed settlement does not include Ernst & Young, UBS,
Scrushy or any former Company officer who entered a guilty plea
or was convicted of a crime in connection with the company's
former financial reporting activities.
The suit is styled "In re HealthSouth Corporation Litigation v.
Master Case Docket, et al., Case No. 03-cv-01500-KOB," filed in
the U.S. District Court for the Northern District of Alabama,
under Judge Karon O. Bowdre.
Representing the Plaintiff/s are:
(1) Richard Bemporad, Esq.
Vincent Briganti, Esq.
Neil L. Selinger, Esq.
LOWEY DANNENBERG BEMPORAD & SELINGER
One North Lexington Avenue, 11th Floor
White Plains, NY 10601-1714,
Tel: 1-914-997-0500,
(2) Max W. Berger, Esq.
John P. Coffey, Esq.
BERNSTEIN LITOWITZ BERGER & GROSSMAN LLP
1285 Avenue of the Americas
New York, NY 10019
Tel: 1-212-554-1400
Fax: 1-212-554-1444
(3) Patrick J Coughlin, Esq.
LERACH COUGHLIN STOIA & ROBBINS LLP
100 Pine Street, Suite 2600
San Francisco, CA 94111
Tel: 1-415-288-4545
Fax: 1-415-288-4534
(4) John T. Crowder, Jr., Esq.
Richard T. Dorman, Esq.
CUNNINGHAM BOUNDS YANCE CROWDER & BROWN
P.O. Box 66705
Mobile, AL 36660
Tel: 1-251-471-6191
Fax: 1-251-479-1031
(5) Edward P Dietrich, Esq.
Kathleen A. Herkenhoff, Esq.
William S. Lerach, Esq.
Valerie McLaughlin, Esq.
Debra J. Wyman, Esq.
LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP
401 B Street, Suite 1700
San Diego, CA 92101
Phone: 1-619-231-1058
Fax: 1-619-231-7423
(6) David R Donaldson, Esq.
David J. Guin, Esq.
Tammy McClendon Stokes, Esq.
DONALDSON & GUIN LLC
Two North Twentieth Building
2 North 20th Street, Suite 1100
Birmingham, AL 35203
Tel: (205) 226-2282
Fax: (205) 226-2357
(7) Russell Jackson Drake, Esq.
G. Douglas Jones, Esq.
Othni J. Latham, Esq.
Joe R. Whatley, Esq.
WHATLEY DRAKE LLC
2323 Second Avenue North
Post Office Box 10647
Birmingham, AL 35202-0647
Tel: 205-328-9576
(8) M. Clay Ragsdale, IV, Esq.
RAGDSDALE LLC
Concord Center, Suite 820
2100 Third Avenue North
Birmingham, AL 35203
Tel: 205-251-4775
Fax: 205-251-4777
(9) Andrew M. Schatz, Esq.
SCHATZ & NOBEL PC
One Corporate Center
20 Church Street, Suite 1700
Hartford, CT 06106-1851
Tel: 1-860-493-6292
Fax: 1-860-493-6290
Representing the Defendant/s are:
(1) W. Michael Atchison, Esq.
Anthony C. Harlow, Esq.
STARNES & ATCHISON LLP
P.O. Box 598512
Birmingham, AL 35259-8512
Tel: (205) 868-6000
(2) Patrick J Ballard, Esq.
BALLARD LAW OFFICE
2214 2nd Avenue North, Suite 100
Birmingham, AL 35203
Tel: 205-321-9600
Fax: 205-323-9805
(3) H. L. Ferguson, Jr., Esq.
FERGUSON FROST & DODSON LLP
2500 Acton Road, Suite 200
P.O. Box 430189
Birmingham, AL 35243-0189
Tel: 205-879-8722
(iv) James L Goyer, III,
MAYNARD COOPER & GALE PC,
AmSouth Harbert Plaza, Suite 2400,
1901 6th Avenue North, Birmingham, AL 35203-2618,
Phone: 205-254-1000,
(v) M. Kay Kelley, Esq.
MESTRE & KELLEY LLC
The Massey Building
2025 Third Avenue, North, Suite 500
Birmingham, AL 35203
Tel: 205-251-1248
Fax: 205-251-1211
HealthSouth Corporation -- http://www.healthsouth.com/-- is one
of the nation's largest providers of outpatient surgery,
diagnostic imaging and rehabilitative healthcare services,
operating facilities nationwide.
At Dec. 31, 2004, HealthSouth Corporation's balance sheet showed a
$1,109,420,000 stockholders' deficit, compared to a $963,837,000
deficit at Dec. 31, 2003.
HEALTHSOUTH CORP: Plans $300 Million Convertible Stock Offering
---------------------------------------------------------------
HealthSouth Corporation (OTC Pink Sheets: HLSH) reported that it
plans to issue up to $300 million of convertible perpetual
preferred stock through an offering to qualified institutional
buyers pursuant to a private placement exemption under the
Securities Act of 1933. This preferred stock will be convertible
into HealthSouth common stock.
The purpose of the preferred stock issuance is to reduce
HealthSouth's outstanding indebtedness. If HealthSouth
successfully completes its recapitalization transactions, the
amount of senior unsecured interim term loans HealthSouth will be
permitted to borrow in connection with the recapitalization
transactions will be reduced by the amount of gross proceeds that
HealthSouth receives from the preferred stock issuance.
If the recapitalization transactions are not completed,
HealthSouth will use the net proceeds that it receives from the
preferred stock issuance to repay a portion of its outstanding
senior unsecured indebtedness.
The issuance of the preferred stock will be subject to market
conditions and other conditions and there can be no assurance that
the issuance will be consummated.
HealthSouth Corporation -- http://www.healthsouth.com/-- is one
of the nation's largest providers of outpatient surgery,
diagnostic imaging and rehabilitative healthcare services,
operating facilities nationwide.
At Dec. 31, 2004, HealthSouth Corporation's balance sheet showed a
$1,109,420,000 stockholders' deficit, compared to a $963,837,000
deficit at Dec. 31, 2003.
HORIZON LINES: Good Performance Prompts S&P's Positive Outlook
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Horizon
Lines Inc., a cargo shipping company based in Charlotte, North
Carolina, to positive from stable. At the same time, the 'B'
corporate credit rating was affirmed. The outlook revision
reflects Horizon Line's solid operating performance and improving
financial profile.
"Ratings on Horizon Lines reflect its aggressive financial
profile, modest financial flexibility, participation in the
capital-intensive and competitive shipping industry, and an aging
fleet," said Standard & Poor's credit analyst Eric Ballantine.
Positive credit factors include barriers to entry afforded by the
Jones Act (which applies to intra-U.S. shipping) and stable demand
from the company's diverse customer base across its various
markets.
Horizon Lines is the largest Jones Act cargo shipping company and
transports goods between:
* the continental U.S. and Alaska,
* Puerto Rico,
* Hawaii, and
* Guam.
The Jones Act requires shipments between U.S. ports to be carried
on U.S.-built vessels registered in the U.S. and crewed by U.S.
citizens, thereby prohibiting direct competition from foreign-
flagged vessels. Customers include major manufacturing and
consumer products companies that provide food and other staples
to:
* Alaska,
* Puerto Rico,
* Hawaii, and
* Guam.
Competition from other modes of transportation is limited because
of cost and geographic considerations. The company operates 16
containerships, with at least a one-third market share in each of
its shipping lanes. On the Alaskan routes, Horizon Lines faces
competition from only one containership competitor, Totem Ocean
Trailer Express Inc. Similarly, Horizon Lines faces competition
from one carrier to Hawaii and Guam, Matson Navigation Co. Inc., a
subsidiary of Hawaii-based Alexander & Baldwin Inc. Horizon Lines
is one of four carriers serving Puerto Rico.
The shipping industry is very capital-intensive. Although Horizon
Lines' vessels average over 29 years in age and its oldest vessels
are over 35 years old, the company's routine maintenance programs
have kept its vessels in good operating order, although they are
more expensive to operate than newer vessels. In the
intermediate-to-long term, the company will likely replace some of
its older vessels, which could increase debt levels; however the
replacement of vessels is expected to take place over time.
Continued improvement in operating results and debt reduction
could result in a modest one-notch upgrade in the near term. If
debt leverage were to increase significantly from current levels,
or financial performance fall below expectations, the outlook
could be revised to stable. An outlook change to negative in the
near term is less likely.
HUGHES SUPPLY: Launches Tender Offers for Debt Securities
---------------------------------------------------------
Hughes Supply, Inc. (NYSE: HUG) commenced cash tender offers for
the public and private debt securities listed in the table below
issued by Hughes Supply and guaranteed by certain of its
subsidiaries, as well as related consent solicitations to amend
such securities and the indentures or note purchase agreements
pursuant to which they were issued. The offers and consent
solicitations for its public debt and private debt are being
conducted in connection with the previously announced definitive
merger agreement that provides for the acquisition of Hughes
Supply by The Home Depot, Inc. Holders tendering their notes will
be required to consent to proposed amendments to the notes and to
the indentures or note purchase agreements governing the notes,
which will eliminate substantially all of the restrictive
covenants contained in the notes and indentures or note purchase
agreements, as well as certain events of default.
Public Notes
Fixed Reference
Amount Spread Consent UST
Security Outstanding (bps) Fee Security
-------- ----------- ------ ------ ---------
5.50% Notes $300,000,000 50 $15 4.25%
due 2014 due 8/15/14
Private Notes
Fixed Reference
Amount Spread Consent UST
Security Outstanding (bps) Fee Security
-------- ----------- ------ ------ ---------
8.42% Notes 41,200,000 50 NA 3.5%
due 2007 due 5/31/07
7.96% Notes 51,332,400 50 NA 4.375%
due 2011 due 11/15/08
7.14% Notes 24,761,904 50 NA 3.875%
due 2012 due 5/15/09
7.19% Notes 40,000,000 50 NA 3.875%
due 2012 due 5/15/09
6.74% Notes 35,714,288 50 NA 3.375%
due 2013 due 10/15/09
The Offers will expire at 8 a.m., New York City time, on Mar. 31,
2006, unless extended or earlier terminated with respect to the
public debt or any series of the private debt (such date and time
with respect to the public debt or any series of the private debt,
as they may be extended). The Offers are subject to the
satisfaction of certain conditions, including receipt of consents
sufficient to approve the proposed amendments and the consummation
of the Acquisition.
Public Offer
The consent solicitation for the public debt securities will
expire at 8:00 a.m., New York City time, on Mar. 13, 2006.
Investors tendering before the Consent Payment Deadline will
receive consideration equal to the present value of future
payments on the Public Notes using a yield equal to a fixed spread
plus yield to maturity on a U.S. Treasury Note, minus accrued and
unpaid interest to, but excluding, the settlement date. Investors
tendering after the Consent Payment Deadline and before the
Expiration Time will receive such consideration minus the $15
consent fee per $1,000 principal amount of tendered Public Notes.
In addition, investors will be paid accrued interest to, but
excluding, the settlement date. Withdrawal rights will terminate
immediately following the Consent Payment Deadline. The pricing
of the Public Offer will be calculated at 2:00 p.m., New York City
time, on Mar. 29, 2006, unless prior to such time Hughes Supply
extends the Expiration Time, in which case pricing will be
calculated at 2:00 p.m., New York City time, on the second
business day prior to the Expiration Time.
Private Offers
Investors tendering the private debt securities before the
Expiration Time will receive consideration equal to the present
value of future payments on the Private Notes using a yield equal
to a fixed spread plus yield to maturity on a U.S. Treasury Note,
minus accrued and unpaid interest to, but excluding, the
settlement date. In addition, investors will be paid accrued
interest to, but excluding, the settlement date. Withdrawal
rights will terminate immediately following the Expiration Time.
The pricing in the Private Offer will be calculated at 2:00 p.m.,
New York City time, on Mar. 17, 2006, unless prior to such time
Hughes Supply extends the Expiration Time, in which case pricing
will be calculated at 2:00 p.m., New York City time, on the tenth
business day prior to the Expiration Time. Hughes Supply
currently anticipates that, immediately after the consummation of
the Acquisition, it will exercise its right of optional prepayment
for each series of Private Notes at the "make-whole" amount
provided under the Private Notes.
The Offers are made upon the terms and conditions set forth in the
Offer to Purchase and Consent Solicitation Statements dated
February 28, 2006 and related documents, copies of which may be
obtained from D.F. King, the information agent for the Offers, at
(212) 269-5550 (for banks and brokers only) or (800) 487-4870 (for
all others toll-free).
Hughes Supply has retained Morgan Stanley & Co. Incorporated to
act as the Dealer Manager for the tender offers and Solicitation
Agent for the consent solicitations. Morgan Stanley & Co.
Incorporated can be contacted at (212) 761-1457 (collect) and
(800) 624-1808 (toll-free).
Hughes Supply, Inc. -- http://www.hughessupply.com/-- founded in
1928, is one of the United States' largest diversified wholesale
distributors of construction, repair and maintenance-related
products, with over 500 locations in 40 states. Headquartered in
Orlando, Florida, Hughes employs approximately 9,600 associates
and generated annual revenues of over $4.4 billion in its last
fiscal year.
* * *
As reported in the Troubled Company Reporter on Jan. 12, 2006,
Moody's Investors Service placed Hughes Supply, Inc.'s ratings
under review for possible upgrade. The rating action follows the
recent announcement that The Home Depot will acquire Hughes for an
aggregate consideration of $3.47 billion, including the payment of
$46.50 per outstanding share and the assumption of $285 million in
net debt.
The review will clarify and assess:
1) the details on how the company will be positioned and
operated;
2) the status and disposition of Hughes' existing senior
unsecured debt following the acquisition;
3) the position of current lenders within a new capital
structure; and
4) the anticipated timing of the process.
These ratings have been affected:
1) Corporate Family Rating, Ba1
2) Guaranteed senior unsecured notes, due 2014, rated Ba1
INEX PHARMACEUTICALS: To Appeal Court Ruling on Noteholders Voting
-----------------------------------------------------------------
Inex Pharmaceuticals Corporation (TSX: IEX) intends to pursue an
appeal from the recent Supreme Court of British Columbia ruling
providing the holders of INEX's outstanding convertible promissory
notes the right to vote on INEX's Plan of Arrangement to spin-out
its Targeted Immunotherapy assets into a new company, Tekmira
Pharmaceuticals Corporation. The ruling was received Feb. 13,
2006 and the original hearing took place Jan. 5 and 6, 2006.
INEX is basing its appeal on the fact that the current terms of
the convertible debt do not provide the note holders a right to
vote in this type of a transaction and providing the note holders
a right to vote would be equivalent to re-writing the debt
agreement.
INEX has also received notice that Stark Trading and Shepherd
Investments International Ltd. will be pursuing appeals from the
same Supreme Court of British Columbia ruling. It is INEX's
understanding that Stark will be appealing both the dismissal of
the bankruptcy petition and the ruling that the spin-out of
Tekmira can take place given the terms of the convertible debt.
INEX believes that the decisions of the Supreme Court dismissing
the bankruptcy petition and ruling that the spin-out can take
place given the terms of the convertible debt were correct rulings
and INEX will continue to defend its position with respect to
these decisions.
Timothy M. Ruane, President and Chief Executive Officer of INEX,
said that INEX is working to expedite the appeals to complete the
spin-out of Tekmira in the second quarter of 2006. "We continue
to believe that the spin-out of Tekmira creates the greatest value
for all stakeholders and we are working to complete the
transaction as quickly as possible."
INEX has filed its application for leave to appeal the ruling and
is targeting to have this application heard by next week. If
leave is granted, the appeal will be heard as soon as can be
scheduled.
Stark is the majority holder of certain promissory notes issued by
Inex International Holdings, a subsidiary of INEX. The promissory
notes are not due until April 2007 and can be repaid in cash or in
shares, at INEX's option, at maturity.
INEX Pharmaceuticals Corporation -- http://www.inexpharma.com/--
is a Canadian biopharmaceutical company developing and
commercializing proprietary drugs and drug delivery systems to
improve the treatment of cancer.
INTERSTATE BAKERIES: Wants to Preserve NOL Carryforwards as Assets
------------------------------------------------------------------
Interstate Bakeries Corporation asks the U.S. Bankruptcy Court for
the Western District of Missouri for authority to:
* restrict trading in the company's equity securities by
persons directly or indirectly holding 2,042,851 shares or
more of the company's stock (approximately 4.5% of IBC's
outstanding stock) and
* require notice of stock holdings equal to or greater than
such amount.
In addition, IBC asked the Court to restrict the ability of
holders of its convertible notes to convert the notes and acquire
stock and to require holders of the convertible notes to provide
notice of their holdings to IBC.
The Court scheduled an interim hearing on the company's request on
March 3, 2006.
In its court filing, the company said the requested restrictions
are intended to preserve certain tax net operating loss (NOL)
carryforwards that may be used to offset taxable income it might
generate in future tax years, although there is no assurance that
such taxable income will be generated.
Under the U.S. tax code, transfers by shareholders with equity
holdings of 5% or more -- under certain circumstances -- may give
rise to a change in ownership that would limit the amount of a
company's income that can be offset for tax purposes.
According to the motion, IBC estimated NOLs of approximately $34
million for fiscal 2005 and approximately $56 million of NOLs
during the first eight periods of fiscal 2006.
Restrictions on the transfer of a debtor company's equity
securities are routinely sought when a company files for
bankruptcy. However, at the time IBC entered bankruptcy in
September 2004, there were no identifiable tax attributes that
could be considered assets of the company. During the course of
its bankruptcy proceedings and its operational restructuring, IBC
has generated sufficient NOLs that the company determined to seek
the relief requested in order to protect that NOL asset.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. Kenneth A. Rosen, Esq., at
Lowenstein Sandler, PC, represents the Official Committee of
Unsecured Creditors. Peter D. Wolfson, Esq., at Sonnenschein Nath
& Rosenthal, LLP, represents the Official Committee of Equity
Security Holders. When the Debtors filed for protection from
their creditors, they listed $1,626,425,000 in total assets and
$1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior
subordinated convertible notes due August 15, 2014, on August 12,
2004) in total debts.
INTRAWEST CORP: Taps Goldman Sachs to Review Strategic Options
--------------------------------------------------------------
Intrawest Corporation has initiated a review of strategic options
available to the company for enhancing shareholder value,
including, but not limited to, a capital structure review,
strategic partnerships or business combinations. The company has
retained Goldman, Sachs & Co. to assist in the review. There can
be no assurance that the review will result in any specific
strategic or financial transaction. Intrawest's strategic review
is already underway, but no timetable has been set for its
completion.
"During the past 24 months, Intrawest has made significant
progress in broadening its range of leisure businesses, most
notably with the acquisition and expansion of Abercrombie & Kent,
as well as extending our business reach into Europe and Asia,"
said Joe Houssian, Intrawest's chairman, president and chief
executive officer. "We have enhanced our ability to support this
growth through various operational initiatives and have made great
strides in building a centralized marketing and sales capability
to enable us to migrate our customers across a growing array of
travel experiences. We now have a unique opportunity to leverage
these assets, our strong financial profile and the experience of
our management team to build our business to deliver significant
shareholder value over the long term."
"Intrawest stands at a pivotal point in its evolution," continued
Mr. Houssian. "It makes sense for us at this time to evaluate all
of the different ways in which we can capitalize on the
opportunities in front of us for the benefit of shareholders, and
to ensure that we have the best possible capital structure in
place. Given current robust market conditions, and new
opportunities resulting from our recent successes, our Board
believes it is appropriate to undertake a comprehensive review of
all our strategic and financial options before finalizing our
strategic plans for the next several years."
Headquartered in Vancouver, B.C., Intrawest Corporation (IDR:NYSE;
ITW:TSX) -- http://www.intrawest.com/-- is one of the world's
leading destination resort and adventure-travel companies.
Intrawest has interests in 10 mountain resorts in North America's
most popular mountain destinations, including Whistler Blackcomb,
a host venue for the 2010 Winter Olympic and Paralympic Games.
The company owns Canadian Mountain Holidays, the largest heli-
skiing operation in the world, and a 67% interest in Abercrombie &
Kent, the world leader in luxury adventure travel. The Intrawest
network also includes Sandestin Golf and Beach Resort in Florida
and Club Intrawest -- a private resort club with nine locations
throughout North America. Intrawest is developing five additional
resort village developments at locations in North America and
Europe.
* * *
As reported in the Troubled Company Reporter on Jan. 9, 2006,
Standard & Poor's Ratings Services affirmed its 'BB-' long-term
corporate credit and 'B+' senior unsecured debt ratings on ski and
golf resort operator Intrawest Corp. S&P said the outlook is
stable.
As reported in the Troubled Company Reporter on Sept. 24, 2004,
Moody's Investors Service assigned a B1 rating to Intrawest
Corporation's U.S. dollar-denominated 7.5% senior unsecured note
offering, due 2013 and Canadian dollar-denominated 7.5% senior
unsecured note offering, due 2009, for an aggregate amount of
approximately US$325 million. In addition, these rating actions
were taken by Moody's:
* Ratings assigned:
-- U.S. dollar-denominated 7.5% senior notes, due 2013
rated B1
-- Canadian dollar-denominated 7.5% senior notes, due 2009
rated B1
* Ratings affirmed:
-- Senior implied rating at Ba3
-- Senior unsecured issuer rating at B1
-- US$350 million 7.5% senior notes due 2013 rated B1
-- US$125 million 10.5% senior notes due 2010 rated B1
-- US$135 million 10.5% senior notes due 2010 rated B1
-- US$125 million 10.5% senior notes due 2010 rated B1
Moody's said the ratings outlook is stable.
KGEN LLC: S&P Affirms Low-B Ratings on $475 Million Loans
---------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' rating on KGen
LLC's first-lien $325 million loan and its and 'B-' rating on the
company's second-lien $150 million loan.
At the same time, Standard & Poor's affirmed its '1' recovery
rating on the first-lien loan and raised the recovery rating on
the second-lien loan to '2' from '4'.
KGen owns nine gas-fired generation facilities with a nominal
capacity of 5,325 MW through two subsidiaries:
* KGen Power LLC, and
* KGen Murray LLC.
The change in the recovery rating for the second-lien loan
reflects better data with which to value the peakers, including an
actual sale that should close by mid-April 2006.
"The stable outlook on KGen reflects the portfolio's ability to
sustain uncertain pricing scenarios, given the adequate financial
liquidity, low value needed for sale of the peakers, and 100% cash
sweep mechanism during the term of the loans," said Standard &
Poor's credit analyst Arleen Spangler.
A '1' recovery rating indicates that lenders can expect to receive
full recovery of principal in the event of default, and a '2'
recovery rating indicates the lenders can expect to receive
substantial recovery (80% to 100%) of principal in a default
scenario.
LONGVIEW FIBRE: Moody's Rates Proposed Senior Unsec. Notes at B1
----------------------------------------------------------------
Moody's Investors Service affirmed Longview Fibre Company's
corporate family rating at Ba3, senior secured debt at Ba2, and
senior subordinate debt at B2. The rating agency also assigned a
rating of B1 to the REIT's proposed senior unsecured notes.
Longview Fibre's rating outlook is stable.
According to Moody's, these ratings reflect Longview Fibre's
progress towards completing its conversion to a REIT, which was
first announced in July 2005, as well as the firm's intention to
continue pursuing its established business strategy of operating
in the timber, paper and paperboard, and converted products
segments. The proceeds of the planned senior note issuance, as
well as common equity, will be utilized to pay the cash portion of
the earnings and profits distribution required for REIT
conversion, which is anticipated to range between $70 and $75
million, as well as to tender for Longview Fibre's senior
subordinated notes due 2009.
Longview Fibre's credit metrics are sound in comparison to both
similarly-rated REITs and paper and forest products firms;
however, its manufacturing segment produces volatile cash flows
due to commodity markets exposure. The REIT also has a partly
unencumbered timber asset base supporting the unsecured note, a
credit plus. Attenuating these positives, Longview Fibre's
ratings incorporate the absence of limitations on additional debt
issuances, including secured debt, recent over-harvesting, certain
gaps in the age class distribution of standing timber, geographic
concentration in Washington and Oregon, a complex legal structure
with some structural subordination, and moderate customer
concentration.
Moody's remarked that the stable rating outlook is supported by
steady credit metrics in relation to both similarly rated REITs
and paper and forest companies, an ability to retain some cash at
the parent level due to classification of a portion of earnings as
capital gain, and a reduction in corporate-level taxes. In
addition, Longview Fibre has ample liquidity with a virtually
undrawn $200 million secured revolver.
Upward rating movement would be difficult in the near term, and
would depend on consistent cash-positive operation of its
manufacturing businesses, material and leverage-neutral growth of
the timberlands portfolio to at least $1.6 billion, and successful
remediation of internal control deficiencies identified through
Sarbanes-Oxley 404 compliance. In addition, Moody's would not
expect any meaningful shifts in Longview Fibre's leverage or
coverage.
Downward pressure on ratings would occur should Longview Fibre's
fixed charge coverage decline to below 3X, leverage increase to
above 20%, or FAD payout rise to over 75%. In addition, any
deterioration in the unencumbered pool, sustained cash losses at
the manufacturing businesses, and persistent accounting and
internal control irregularities would also be credit negatives.
These ratings were affirmed with a stable outlook:
-- Longview Fibre Company:
* corporate family rating at Ba3
* senior secured debt rating at Ba2
* senior subordinate debt rating at B2
This rating was assigned with a stable outlook. Issuance of this
security has been announced by the REIT:
-- Longview Fibre Company
* senior unsecured debt rating at B1
Longview Fibre Company is an integrated timberlands, paper and
packaging REIT, and is headquartered in Longview, Washington, USA.
At Dec. 31, 2005, it had assets of $1.2 billion and equity of $444
million.
LONGVIEW FIBRE: S&P Rates Proposed $150 Million Notes at BB-
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' senior
unsecured debt rating to Longview Fibre Co.'s proposed $150
million notes due 2016. At the same time, the rating agency
affirmed its 'BB' corporate credit rating and other ratings on
the company. The outlook is stable.
Longview, Washington-based Longview Fibre will use the proceeds
from this offering and from its proposed equity offering to retire
the company's $215 million of subordinated notes and to fund the
cash portion of its earnings and profits distribution associated
with its conversion to a real estate investment trust (REIT). The
earnings and profits distribution will total $355 million-$365
million, with the cash portion capped at approximately 20%.
"We rate the unsecured debt one notch below the corporate credit
rating, indicating the disadvantaged position of the unsecured
creditors relative to bank lenders and other priority
liabilities," said Standard & Poor's credit analyst Kenneth L.
Farer. "The one-notch distinction also reflects our notching
threshold for REITs, as encumbered assets will generate more
than 50% of the company's earnings."
Despite achievement of credit measures that are now in line with
ratings expectations, Longview Fibre's business profile could only
support a higher rating if the company had a much more
conservative capital structure. Standard & Poor's could revise
the outlook to negative if the company's financial policy becomes
more aggressive with regard to:
* dividends,
* timberland purchases, and/or
* leverage.
MCMILLIN COMPANIES: Moody's Rates $100 Million Senior Notes at B2
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Moody's Investors Service assigned a B2 rating to the $100 million
of senior secured notes of the McMillin Companies, LLC that were
issued last year and affirmed the company's B1 corporate family
rating. The ratings outlook is stable.
The stable outlook reflects Moody's expectation that McMillin will
continue to show capital structure discipline as it seeks further
diversification opportunities and that the company will receive an
unqualified audit opinion in 2005.
The ratings reflect McMillin's geographic concentration, the
increased competition in its markets from the large national
homebuilders, its complex LLC and holding company structure
combined with numerous off-balance sheet ventures, the proportion
of secured construction debt in its capital structure that is
senior to the secured notes being rated herein, and the company's
dependence on earnings from residential land, commercial and other
real estate ventures which are perceived to have greater risks
than the homebuilding operations.
The ratings also incorporate the qualified audit opinion that the
company received in 2004 due to a disagreement with its new
auditors over recognition of revenues, costs and profits on
transactions with affiliated joint ventures and on computation of
equity earnings in joint ventures. These auditors have now been
replaced with Ernst & Young, who are proposing changes to the
company's accounting policies in 2005 to address these issues.
At the same time, the ratings acknowledge the improvement in the
company's financial ratio performance. The ratings also consider
the steady growth in the company's equity base and on-balance
sheet assets, its 45-year history, its strong brand name
recognition, and its long-standing relationships with suppliers,
subcontractors, and governmental agencies.
These actions were taken with respect to McMillin's ratings:
* Corporate family rating affirmed at B1
* B2 rating assigned on the $100 million of senior secured
notes due April 2012
* B2 rating withdrawn on the $70 million of senior secured
notes due February 2009
The $100 million senior secured notes, which were privately placed
last year, were used to refinance the old $70 million issue of
senior secured notes as well as to pay down some senior secured
construction debt. The $100 million senior secured notes, which
are being issued by McMillin Companies, LLC, carry the upstream
guaranties of the company's operating subsidiaries. These notes,
however, are junior to the company's consolidated construction
debt as well as to its unconsolidated construction debt, both of
which carry the guarantee of McMillin's parent holding company
group.
McMillin's homebuilding and off-balance sheet land development
operations are centered in three Southern California counties and
in four central California counties, resulting in considerable
geographic concentration. In an effort to diversify into new
markets, the company acquired Gordon Hartman Homes, a private
homebuilder in San Antonio, Texas, for approximately $85 million
in 2005.
The company has a complex organizational structure which results
in a capital structure that requires additional comment. McMillin
Companies, LLC is a Delaware limited liability company with a
parent holding company group consisting of five entities known as
the McMillin Companies Selected Corporate Entities. The McMillin
family, through various family trusts, owns 100% of the equity of
SCE. In addition, at Sept. 30, 2005, McMillin Companies, LLC
conducted activities through consolidated entities as well as
unconsolidated entities, most of the latter of which were joint
ventures with profit participations ranging from 5% to 57%. These
unconsolidated entities consisted of 24 homebuilding entities, 12
residential land entities, and two commercial real estate
entities.
At the time McMillin establishes its joint ventures, it typically
capitalizes them with 50% third party debt and 50% members'
equity, of which McMillin's own share is usually 5% to 10%. As a
result, in the early stages of these joint ventures, much of the
cash flow not used in operations is distributed to the other
partners in the form of preference payments and return of capital,
after which the distributions are usually split 50%/50%.
Similarly, McMillin's investment in these joint ventures and its
share of the equity capital of the joint ventures peak in the
first half of the joint ventures' life cycle, after which growing
distributions reduce the company's investment and equity share
significantly.
Several of McMillin's larger joint venture operations are
currently in the late stages of their anticipated lives. Revenues
and net income of the company's unconsolidated operations for the
nine months ended Sept. 30, 2005, were $669 million and $207
million, respectively, compared to the company's consolidated
revenue and operating earnings of $591 million and $114 million,
respectively.
For the next several years, the existing unconsolidated entities'
contributions to McMillin's operating results will diminish as
these projects are completed. These existing unconsolidated
entities are currently capitalized similarly to the company, with
$215 million of debt supported by $130 million of owners' capital,
of which McMillin's share has effectively been reduced to almost
zero as a result of deferrals of gains at certain residential land
ventures and distributions received by the company in excess of
its basis. A pro forma consolidation of these unconsolidated
entities would cause McMillin's debt/capitalization to change
modestly, from the reported 56.6% as of Sept. 30, 2005, to 59.8%.
The $100 million senior secured notes due 2012 are collateralized
by all personal property of the company, which totaled $315
million at Sept. 30, 2005. Approximately half of the personal
property is comprised of unrestricted cash that was inflated by
large distributions from unconsolidated entities in the third
quarter and which will be used for an estimated $30 million in
distributions and a $60 million pay down of construction notes
outstanding by year-end 2005. The $100 million of secured notes
are subordinated to the consolidated and unconsolidated
construction notes outstanding of the company.
At Sept. 30, 2005, $369 million of consolidated real estate assets
secured the $98 million of on-balance sheet construction notes
outstanding, while $362 million of unconsolidated real estate
assets collateralized the $215 million of unconsolidated debt
outstanding. Importantly, SCE, the parent holding company group
of McMillin, guaranteed both the consolidated and most of the
unconsolidated real estate-secured debt, but not the $100 million
of senior secured notes being rated.
McMillin has improved its credit profile since the time of its
last upgrade in June 2004. While debt leverage continues to be
representative of a single B rating, some of McMillin's other key
metrics map to far higher ratings. The equity base has grown from
$87 million at March 31, 2004 to $179 million at Sept. 30, 2005,
while debt leverage was reduced from 63.8% to 56.6% over the same
time period. However, EBIT coverage of interest incurred rose
significantly from 4.9x to 10x as a result of a sharp increase in
return on assets, from 21.2% to 33.3%.
Going forward, the outlook and ratings would benefit from:
-- a substantial increase in the equity base;
-- a deleveraging of the balance sheet to below 55%;
-- continued successful geographic diversification away from
Southern and Central California; and
-- a simplification of the company's organizational and
capital structure.
The outlook and ratings could be stressed by a significant
releveraging of the balance sheet, a material economic downturn in
either Southern or Central California, a misstep in its
diversification efforts, or material adjustments to the company's
financial statements as a result of the changes in accounting
policies proposed by its new auditors, Ernst & Young.
Headquartered in San Diego, California, McMillin Companies, LLC
designs, constructs, markets and sells single family detached
homes to entry level and move-up buyers. The company also makes
limited capital investments in and manages the development of
residential land and other real estate ventures. Consolidated
revenues and net income for the trailing twelve month period ended
Sept. 30, 2005, were $794 million and $206 million, respectively.
MCMORAN EXPLORATION: Converts $7.1MM of Sr. Notes to 500K Shares
----------------------------------------------------------------
McMoRan Exploration Co. converted $7.1 million of its 6%
Convertible Senior Notes due in 2008 into 500,000 shares of its
common stock based on the $14.25 per share conversion price.
These transactions are in reliance on the exemption from
registration provided under Section 3(a)(9) of the Securities Act
of 1933.
At Sept. 30, 2005, McMoRan had 24,660,000 shares issued and
outstanding. This new issue of 500,000 shares represents a
1.9% equity stake in the Company.
During the first quarter of 2006, the Company reduced the
principal amount its 6% Notes by $29.1 million and the principal
amount of its 5-1/4% Convertible Senior Notes due in 2011 by
$25.0 million, after this conversion and the previously reported
conversions.
The Company paid $4.3 million for the deal and expects to record
an approximate $4.0 million net charge to expense in the first
quarter of 2006. The Company funded $3.5 million of the cash
payment from restricted cash held in escrow for funding of the
first six semi-annual interest payments on the Notes and the
remaining portion with its available unrestricted cash. The
cumulative annual interest cost savings are about $3.1 million.
After giving effect to these transactions, the Company's common
shares outstanding total approximately 28.3 million shares.
McMoRan Exploration Co. -- http://www.mcmoran.com/-- is an
independent public company engaged in the exploration, development
and production of oil and natural gas offshore in the Gulf of
Mexico and onshore in the Gulf Coast area. McMoRan is also
pursuing plans for the development of the MPEH(TM) which will be
used for the receipt and processing of liquefied natural gas and
the storage and distribution of natural gas.
As of Dec. 31, 2005, the company's stockholders' deficit widened
to $86,590,000 from a $49,546,000 deficit at Dec. 31, 2004.
MED GEN: Amends Quarter Ended June 30, 2005 Financials
------------------------------------------------------
Med Gen, Inc., filed amended financial reports for the third
fiscal quarter ended June 30, 2005, with the Securities and
Exchange Commission on Feb. 21, 2006.
Med Gen's amended reports show a $3,877,364 net loss on $181,034
of net sales for the three months ended June 30, 2005. At June
30, 2005, the company's amended balance sheet showed $979,776 in
total assets, $82,081 in total current liabilities and $14,041,914
in derivative instruments, resulting in a stockholders' deficit of
$13,144,219.
A full-text copy of Med Gen's restated financial reports for the
third quarter ended June 30, 2005, is available at no charge
at http://researcharchives.com/t/s?5ee
Going Concern Doubt
As reported in the Troubled Company Reporter on Jan. 26, 2006,
Stark Winter Schenkein & Co., LLP, expressed substantial doubt
about Med Gen's ability to continue as a going concern after it
audited the Company's financial statements for the fiscal years
ended Sept. 30, 2005 and 2004. The auditing firm pointed to the
Company's significant losses from operations as well as working
capital and stockholder deficiencies.
About Med Gen
Med Gen Inc. -- http://www.medgen.com/-- manufactures and markets
the world's first liquid spray snoring relief formula, Snorenz(R).
Since its existence, Med Gen has continued to develop its "sprays
the way" technology, and in 2003 introduced Good Night's Sleep(R)
to the sleep-aid market. Both Snorenz(R) and Good Night's
Sleep(R) are nationally advertised and marketed to major chain and
drug stores as well as direct sales via the company web site.
MESABA AVIATION: Final DIP Hearing Scheduled for March 28
---------------------------------------------------------
As reported in the Troubled Company Reporter on Oct. 18, 2005,
Mesaba Aviation, Inc., asked the U.S. Bankruptcy Court for the
District of Minnesota to approve its DIP credit facility with MAIR
Holdings.
The DIP Credit Facility consists of:
(1) a $15,000,000 Tranche A revolving credit facility
(with a $6,000,000 sublimit to back standby letters
of credit); and
(2) a $20,000,000 Tranche B revolving facility.
An outline of the terms and conditions for the parties' DIP
Credit Facility is available at no charge at:
http://ResearchArchives.com/t/s?5f0
The Court will convene a final hearing on March 28, 2006, at 1:30
p.m. to consider the Debtor's request. Responses must be filed
and delivered not later than March 23, 2006.
Mesaba Aviation, Inc., d/b/a Mesaba Airlines --
http://www.mesaba.com/-- operates as a Northwest Airlink
affiliate under code-sharing agreements with Northwest Airlines.
The Company filed for chapter 11 protection on Oct. 13, 2005
(Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at
Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in
its restructuring efforts. Craig D. Hansen, Esq., at
Squire Sanders & Dempsey, L.L.P., represents the Official
Committee of Unsecured Creditors. When the Debtor filed for
protection from its creditors, it listed total assets of
$108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy
News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-
7000).
MESABA AVIATION: Panel Wants Exclusive Period Ended by August 10
----------------------------------------------------------------
As reported in the Troubled Company Reporter on Feb. 22, 2006, The
Honorable Gregory F. Kishel of the U.S. Bankruptcy Court for the
District of Minnesota further extended, until Mar. 10, 2006, the
period within which Mesaba Aviation, Inc., doing business as
Mesaba Airlines, has the exclusive right to file a chapter 11
plan. Judge Kishel also extended the Debtor's period to solicit
acceptances of that plan to May 10, 2006.
The Debtor told the Court that it was continuing its negotiations
with the Official Committee of Unsecured Creditors regarding the
issues missed in the Debtor's request to extend exclusive periods.
Creditors Committee Responds
The Official Committee of Unsecured Creditors does not object to
the extension of the exclusive periods to file a plan and solicit
acceptances of that plan. However, Craig D. Hansen, Esq., at
Squire Sanders & Dempsey, L.L.P., in Phoenix, Arizona, says, the
Committee wants to ensure that the extension of the Exclusive
Periods will not be implemented in a way as to grant an unfair
negotiating advantage to the Debtor concerning the plan process.
The Committee wants to make sure that the extension of the
Exclusive Periods will not prohibit it, or any other party-in-
interest, from proposing a competing plan of reorganization if
the Debtor's plan provides:
-- for MAIR Holdings, Inc., the Debtor's parent company, to
receive or retain any equity interest in the Reorganized
Debtor; and
-- that the Debtor's unsecured creditors are not paid in full.
Accordingly, the Committee asks the Court to rule that the
Debtor's Exclusive Filing Period will terminate on the earlier to
occur of:
(a) August 10, 2006; or
(b) the Debtor's filing of a plan of reorganization that:
(i) impairs the claims of unsecured creditors,
including, without limitation, by not paying the
claims in full and in cash on the plan effective
date; and
(ii) permits MAIR to receive or retain any equity
interest in the Reorganized Debtor, including any
equity interest MAIR may receive on account of a
new capital contribution to the Debtor.
Mesaba Aviation, Inc., d/b/a Mesaba Airlines --
http://www.mesaba.com/-- operates as a Northwest Airlink
affiliate under code-sharing agreements with Northwest Airlines.
The Company filed for chapter 11 protection on Oct. 13, 2005
(Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at
Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in
its restructuring efforts. Craig D. Hansen, Esq., at
Squire Sanders & Dempsey, L.L.P., represents the Official
Committee of Unsecured Creditors. When the Debtor filed for
protection from its creditors, it listed total assets of
$108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy
News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-
7000).
MMRENTALSPRO LLC: Court Converts Ch. 11 Case to Ch. 7 Liquidation
-----------------------------------------------------------------
The Honorable R. Thomas Stinnett of the U.S. Bankruptcy Court for
the Eastern District of Tennessee converted MMRentalsPro, LLC's
chapter 11 case to chapter 7 liquidation proceeding at the behest
of GMAC Commercial Mortgage Corporation.
GMAC Commercial is the special servicer of LaSalle Bank National
Association, the trustee for the certificateholders of Morgan
Stanley Capital I Inc. Commercial Mortgage Pass-Through
Certificates Series 2004-HQ4.
LaSalle Bank is the only secured creditor in the Debtor's case,
holding a $17,962,157 claim. The Claim is secured in part by
the Company's three residential apartment complexes located in
Dalton, Georgia, with approximately 350 total rental units. In
December 2005, the Court allowed the conveyance of the Properties
to GMAC Commercial, at the behest of both the Debtor and GMAC
Commercial.
Since then, the Company no longer has any assets to manage. The
Company has ceased its operations. The Company has no employees
and conducts no business. It is no longer represented by counsel
and has no ability to secure representation.
Nelwyn Inman, Esq., at Baker, Donelson, Bearman, Caldwell &
Berkowitz, PC, in Chattanooga, Tennessee, therefore concludes that
the Company can no longer be rehabilitated.
The only remaining assets to be administered are causes of action
or other rights of recovery, some possibly adverse to the
Company's sole member and chief officer, Roy Michael Malone, Sr.
Accordingly, an independent party is needed to administer the
Company's case, Ms. Inman contends.
Headquartered in Chattanooga, Tennessee, MMRentalsPro, LLC, and
its owner, Roy Michael Malone, Sr., filed for chapter 11
protection on June 17, 2005 (Bankr. E.D. Tenn. Case No 05-13814).
Richard C. Kennedy, Esq., at Kennedy, Fulton & Koontz, represents
the Debtors. When the Debtors filed for protection from their
creditors, they estimated less than $50,000 in assets and between
$10 million to $50 million in debts.
MOVIE GALLERY: Weak Industry Fundamentals Cue S&P to Junk Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and bank loan ratings on Movie Gallery Inc. to 'CCC+' from 'B-'
and its unsecured note rating to 'CCC-' from 'CCC'. At the same
time, Standard & Poor's revised its bank loan recovery rating to
'5' from '3'. This indicates that lenders can expect negligible
recovery of principal (0%-25%) in the event of a payment default
or bankruptcy. The outlook is negative.
The downgrade reflects Standard & Poor's growing concern that the
Dothan, Alabama-based company's operating results will remain
pressured in 2006 by weak industry fundamentals. The company's
need to amend its credit facility for the second time in less than
one year is indicative of pressures on its current and near-term
performance.
"The revision in the recovery rating is attributable to the
further erosion of the video rental business," said Standard &
Poor's credit analyst Diane Shand, "and Standard & Poor's
expectation that consumers will continue their shift to technology
that brings movies to their homes."
MUSICLAND HOLDING: Delivers List of 19 Assumed & Assigned Leases
----------------------------------------------------------------
As reported in the Troubled Company Reporter on Feb. 21, 2006,
Judge Stuart M. Bernstein of the U.S. Bankruptcy Court for the
Southern District of New York approved the assumption and
assignment of certain Sale Agreements.
Musicland Holding Corp. and its debtor-affiliates delivered to the
Court a list of Media Play leases subject to Assumption and
Assignment and Sale Agreements and Lease Termination Agreements:
Shopping Center Lease No. Location
-------------------- --------- --------
2261 Hamilton Rd M08101 Columbus, Ohio
F.S. Building M08125 Williamsville, New York
Family Center at Orem M08120 Orem, Utah
Family Center at Midvalley M08121 Salt Lake City, Utah
Family Center at Fort Union M08122 Midvale, Utah
Family Center at Riverdale M08123 Riverdale, Utah
Forest Plaza M08100 Rockford, Illinois
Gaston Mall M08205 Gastonia, N. Carolina
Grand Chute M08147 Appleton, Wisconsin
Greenwood Point M08144 Indianapolis, Indiana
Harrisburg East M08190 Harrisburg, Pennsylvania
McKinley Mall S.C. M08124 Hamburg, New York
Merchants Walk M08107 Marietta, Georgia
North Point Market Center M08108 Alpharetta, Georgia
Ridgemont Plaza M08254 Greece, New York
Ross Park Mall M08295 Pittsburgh, Pennsylvania
Southlake Pavilion M08109 Morrow, Georgia
Spring Meadows Place M08292 Holland, Ohio
Wilshire Place M08180 Mishawaka, Indiana
Headquartered in New York, New York, Musicland Holding Corp., is a
specialty retailer of music, movies and entertainment-related
products. The Debtor and 14 of its affiliates filed for chapter
11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No.
06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis,
represents the Debtors in their restructuring efforts. Mark T.
Power, Esq., at Hahn & Hessen LLP, represents the Official
Committee of Unsecured Creditors. When the Debtors filed for
protection from their creditors, they estimated more than $100
million in assets and debts. (Musicland Bankruptcy News, Issue
No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000)
MUSICLAND HOLDING: Panel Balks at Investment & Deposit Guidelines
-----------------------------------------------------------------
As reported in the Troubled Company Reporter on Jan. 26, 2006,
Judge Stuart M. Bernstein of the U.S. Bankruptcy Court for the
Southern District of New York authorized the Debtors, on an
interim basis, to invest and deposit funds in the Investment
Account, in accordance with their prepetition practices, although
that practice may not strictly comply with the requirements of
Section 345 of the Bankruptcy Code.
Judge Bernstein allows, on an interim basis, all applicable banks
and other financial institutions to accept and hold or invest
funds, at the Debtors' direction, in accordance with the Debtors'
prepetition investment practices.
According to the Debtors' internal investment policies, the
investment account may only invest in these types of securities:
-- overnight repurchase agreements;
-- debt instruments issued by the Federal National Mortgage
Association or the Federal Home Mortgage Corporation with a
rating of P1/A1;
-- asset-backed floating rate securities or corporate floating
rate note with a rating of Aaa/AAA;
-- domestic time deposits/negotiable certificates of deposit
or money market securities;
-- domestic commercial paper with a rating of A1/P1; and
-- money market mutual funds that invest in securities
approved under the Debtors' policy.
Creditors Committee Objects
The Official Committee of Unsecured Creditors tells the Court that
it is necessary for it to review information concerning the
investment guidelines that the Debtors want to continue to utilize
and any alternative guidelines that were considered, in order to
properly respond to the Debtors' request.
According to Mark S. Indelicato, Esq., at Hahn & Hessen LLP, in
New York City, the Committee has requested information about the
guidelines from the Debtors and their financial advisors.
As of January 25, 2006, neither the Committee nor its financial
advisors have received sufficient information to enable the
Committee to evaluate the merits of the Debtors' request.
Accordingly, the Committee asks the Court to adjourn the hearing
until the Committee and the Court can properly review the
Investment and Deposit Guidelines.
Headquartered in New York, New York, Musicland Holding Corp., is a
specialty retailer of music, movies and entertainment-related
products. The Debtor and 14 of its affiliates filed for chapter
11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No.
06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis,
represents the Debtors in their restructuring efforts. Mark T.
Power, Esq., at Hahn & Hessen LLP, represents the Official
Committee of Unsecured Creditors. When the Debtors filed for
protection from their creditors, they estimated more than $100
million in assets and debts. (Musicland Bankruptcy News, Issue
No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NEW WORLD: Posts $14 Million Net Loss in Fiscal Year Ended Jan. 3
-----------------------------------------------------------------
New World Restaurant Group, Inc. (OTC: NWRG) reported improved
financial results for its 2005 fourth quarter and fiscal year
ended Jan. 3, 2006.
Revenue in 2005, which included one additional week of sales
compared with 2004, increased 4.1% to $389.1 million versus
$373.9 million in 2004. Retail comparable store sales increased
5.2% for the year as a result of a 5.4% increase in average check
partially offset by a 0.2% decrease in transactions. The Company
achieved 12 consecutive months of comparable store sales growth in
2005. When calculated on a comparative 53-week basis for both
fiscal 2005 and 2004, company-operated retail sales increased
2.4%.
Gross profit increased 9.7% to $73.7 million from $67.2 million in
2004. This increase was primarily attributable to 12.5% margin
growth in company-operated retail locations, where the Company is
benefiting from careful food cost modeling and incremental sales
growth.
Total operating expenses increased 4.2% in 2005 to $64.3 million
versus $61.7 million in 2004. General and administrative expenses
increased $3.3 million, or 10.2%, primarily reflecting increased
compensation expense associated with improved operating
performance. Depreciation and amortization expense decreased by
$1.5 million due to a portion of the Company's asset base becoming
fully depreciated. Loss on sale, disposal or abandonment of
assets also decreased, to $314,000 from $1.6 million. Impairment
charges in 2005 increased to $1.6 million from $450,000 a year
ago.
Income from operations in 2005 increased 71.6% to $9.4 million
from $5.5 million in 2004. Because 2005 included 53 weeks of
operations, the Company made three semi-annual interest payments
versus two in the prior year. Accordingly, cash flow from
operations was impacted by the additional $10.4 million interest
payment, and the Company generated $2.1 million in cash from
operations in 2005 as compared with $11.1 million in 2004.
The improved operating results enabled New World to reduce its
working capital deficit by $6.9 million in 2005 to $11.7 million
from $18.7 million in 2004. Cash balances at Jan. 3, 2006, were
$1.6 million in cash and $3.2 million in restricted cash versus
cash of $9.8 million and restricted cash of $3.8 million in 2004.
Again, this decline reflected the extra cash interest payment of
$10.4 million as well as monthly rent payments that were payable
on January 1, 2006. The Company invested $10.3 million in cash in
2005 for new property and equipment, including new stores and
store equipment, remodeling of existing stores, manufacturing
operations and general corporate purposes.
New World reduced its net loss for 2005 by 19.5%, to $14 million
from $17.4 million in 2004.
Fourth Quarter Results
The Company reported fourth quarter revenue of $103.9 million, up
6.8% from revenue of $97.3 million in the same quarter last year.
Revenue in the fourth quarter included one additional week of
sales compared to 2004. The increase in revenue was attributable
to a 3.9% improvement in comparable store sales for the period.
The average check size in the fourth quarter increased 3.8% while
transactions grew by 0.1%. When calculated on a comparative
14-week basis for both fiscal 2005 and 2004, company-operated
retail sales increased 0.6%.
Gross profit increased 19.0% to $21.5 million in the fourth
quarter from $18.1 million in the same quarter last year. The
increase primarily reflected improved margins at company-operated
retail stores.
Total operating expenses increased 10.2% in the fourth quarter to
$16.1 million versus $14.6 million in the fourth quarter of 2004.
General and administrative expense increased 23.3% to $9.2 million
as a result of performance-driven compensation expense.
Impairment charges and other related costs increased to $119,000
from $48,000. Depreciation and amortization declined slightly and
the Company had a loss on sale, disposal or abandonment of assets
of $45,000 versus a small gain in the year-ago quarter.
Income from operations increased 56.8% to $5.4 million in the
fourth quarter from $3.4 million in the same quarter a year ago.
The Company consumed $686,000 in cash in the fourth quarter. As
previously mentioned, because 2005 included 53 weeks of
operations, cash flow from operations in the fourth quarter was
impacted by an additional cash interest payment of $10.4 million.
Net loss in the fourth quarter was sharply reduced to $723,000
from $2.1 million in the same quarter a year ago.
"New World Restaurant Group achieved positive results in virtually
all of it key performance categories in 2005," Paul Murphy,
president and CEO said. "We attribute this success to the hard
work and commitment of employees at all levels of our
organization. Together we have made important improvements to all
facets of our operations and laid the groundwork to pursue
continued growth in our nationwide network and achieve steady
progress toward our ultimate goal of enhancing shareholder value."
"With strong year-over-year improvement in revenue, same store
sales, and all of our primary profit metrics, we are now beginning
to achieve the kind of results our shareholders expect from us.
Our objective for 2006 is to sustain and build on these
achievements," Rick Dutkiewicz, chief financial officer, added.
Debt Refinancing
In January 2006 New World announced its intention to redeem
$160 million in 13% senior secured notes due in 2008, retire its
$15 million revolving credit facility and refinance that debt with
$170 million in new term loans and a $15 million revolver at more
favorable interest rates and a more balanced repayment schedule.
The transaction, which includes a prepayment feature, is designed
to lower capital costs, strengthen the Company's balance sheet and
improve after-tax cash flow by $5.34 million per year. The
Company has sent notice of redemption to holders of the 13% senior
secured notes. Those notes would be redeemed with proceeds of the
new funding, which management anticipates will close by the end of
February.
Headquartered in Golden, Colorado, New World Restaurant Group,
Inc. (OTC: NWRG.PK) -- http://www.newworldrestaurantgroup.com/--
is a leading company in the quick casual restaurant industry that
operates locations primarily under the Einstein Bros. and Noah's
New York Bagels brands and primarily franchises locations under
the Manhattan Bagel brand. As of Jan 3, 2006, the Company's
retail system consisted of 626 locations, including 435 company-
owned locations, as well as 121 franchised and 70 licensed
locations in 34 states, and the District of Columbia. The Company
also operates a dough production facility.
At Jan. 3, 2006, New World Restaurant Group Inc.'s balance sheet
showed a $126,211,000 stockholders' deficit, compared to a
$112,483,000 deficit at Dec. 28, 2004.
* * *
As reported in the Troubled Company Reporter on Apr. 18, 2005,
Standard & Poor's Ratings Services assigned its 'CCC+' bank loan
rating to Golden, Colorado-based New World Restaurant Group Inc.'s
planned $140 million first-lien term loan. In addition, a 'CCC-'
bank loan rating was assigned to the company's $45 million second-
lien term loan. A recovery rating of '5' was assigned to both
loans, indicating the expectation for negligible recovery of
principal (0%-25%) in the event of a payment default. Proceeds
will be used to repay the company's $160 million senior secured
notes.
At the same time, Standard & Poor's revised the rating outlook on
New World to stable from negative. The 'CCC+' corporate credit
rating on the company was affirmed. The 'CCC+' rating on the $160
million senior secured notes will be withdrawn upon their
repayment.
NMHG HOLDING: Moody's Rates $225 Million Senior Secured Loan at B2
------------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to NMHG Holding
Co.'s $225 million, senior secured term loan facility. The rating
agency also affirmed the B2 Corporate Family Rating and B3 senior
unsecured rating. The rating outlook remains stable.
Moody's said that the B2 Corporate Family Rating reflects Moody's
expectation that:
1) NMHG will continue to benefit from broad regional
diversification and a highly competitive position in its
core equipment market;
2) the company's operating performance will show steady
improvements due to favorable trends in the economy; and
3) the financial strategy embraced by management will preserve
adequate levels of financial flexibility and liquidity.
Despite these strengths, NMHG continues to face important
operational and financial challenges that include:
1) concentration in one industry segment that is highly
competitive;
2) ongoing cyclicality; and
3) significant off balance commitments and guarantees.
NMHG is a leading lift truck manufacturer in the Americas, which
represents about 62% of the company's 2005 revenues. NMHG has
well known brands in its Hyster and Yale products, which are sold
to a diverse customer base through a strong dealer network. NMHG
is the second largest producer of lift trucks in North America
with 25% market share and the third largest in the world with
about 12% market share.
Moody's believes that NMHG is well positioned to take advantage of
the growing markets in the Americas and Europe. New product
introductions could help the company grow its market share. The
company's liquidity position is supported by internal cash
generation that should remain adequate to cover capital
expenditure and working capital requirements, about $60 million in
cash on hand at the end of September 2005, and the recent increase
in its asset-backed revolving credit facility to $175 million.
Despite these strengths, NMHG continues to face important
operating and financial challenges. The company is heavily
reliant on essentially one industry segment. In addition, despite
its relatively strong market share position, NMHG continues to
face intense competition from larger and better capitalized
companies such as Toyota, Linde/Komatsu, and Caterpillar. Each
has the financial flexibility and breadth of products to mitigate
the cyclicality of the lift truck industry. This highly
competitive market contributes to NMHG's relatively low EBIT
margins of approximately 3%. In addition, the company's capital
structure includes considerable off balance sheet commitments.
These commitments exceeded $400 million at the end of 3Q05.
Approximately $126 million represents debt guarantees on behalf of
NMHG Financial Services, Inc., NMHG's 20% owned financing
subsidiary. A further $257 million are related to operating
leases, which are supporting predominately revenue generating
equipment.
Moody's believes that NMHG's operating credit metrics are
supportive of the B2 Corporate Family Rating level. Key credit
metrics through LTM September 2005 include: EBIT margin of 3%;
Debt/EBITDA of 5x, EBIT/Interest of 1.4x; and Free Cash Flow/Debt
of 4%. Moody's believes that NMHG is well positioned and should
be able to capitalize on the favorable trends in the economy and
favorable industry outlook. NMHG should benefit from improved
pricing, operating margins, and cash generation. Furthermore,
credit metrics are expected to show moderate improvement during
2006. To the degree that this occurs, NMHG would be better
positioned in the rating category within the next twelve months.
The B2 rating on the senior secured term loan facility reflects
the junior position relative to the security assets of the $175
million asset-backed facility. The term loan benefits from a
first lien priority on the company's domestic fixed assets. The
term loan has a delay draw mechanism. Proceeds from the term loan
with cash on hand will be used to repurchase the $250 million,
senior unsecured notes in May 2006, after which the term loan will
represent the majority of debt in NMHG's capital structure. NACCO
Materials Handling Group, Inc., is the borrower of the term loan
with NMHG providing a guarantee.
The B3 rating on the senior unsecured notes reflects their
unsecured nature and effective subordination to senior secured
debt. The B3 rating will be withdrawn once the senior unsecured
notes are redeemed. Moody's does not rate the $175 million asset-
backed revolving credit facility.
Factors which could contribute to an improvement in the NMHG's
ratings would be the company's ability to capitalize on the
continuing strong demand fundamentals in the lift truck sector and
thereby further improve its credit metrics. Achieving the
following credit metrics would warrant consideration for possible
upgrades: EBIT margins exceeding 6%; Debt/EBITDA of 3.0x,
EBIT/Interest of 3.0x; or Free Cash Flow/Debt around 10%.
Future events which might result in pressure on NMHG's ratings
include erosion in the company's financial performance resulting
from softening demand in the lift truck industry; increased
leverage from overly aggressive expansion in working capital or
acquisitions; shareholder return actions beyond those
contemplated; or using the senior secured term loan for other than
repaying the senior unsecured notes.
NMHG is a wholly owned subsidiary of NACCO Industries, Inc., a
holding company that also controls the North American Coal Company
Corporation, the Kitchen Collections, Inc., and Hamilton
Beach/Procter Silex, Inc. NMHG Holding Co., headquartered in
Portland, Oregon, is a major manufacturer of industrial lift
trucks.
OCEAN WEST: Amends Sept. 30, 2005 Financials After Failed Spin-Off
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Ocean West Holding Corporation restated its financial statements
for the quarter ended Sept. 30, 2005, after determining that the
proposed spin-off of its subsidiary, Ocean West Enterprise, could
not occur until approved by the Securities and Exchange
Commission.
Pursuant to a Stock Purchase Agreement dated as of Dec. 30, 2005,
Container/ITW, Inc., a recently formed unaffiliated Delaware
corporation with no substantial assets, purchased 100% of the
capital stock of OWE.
The Company's restated balance sheet at Sept. 30, 2005, showed
$2,329,168 in total assets and $3,285,876 in liabilities,
resulting in a stockholders' deficit of $956,708. For the three
months ended Sept. 30, 2005, the Company incurred a $1,602,377 net
loss on $164,119 of revenue.
A copy of the amended regulatory filing is available for free
at http://researcharchives.com/t/s?5ec
Going Concern Doubt
Chavez and Koch CPA's expressed substantial doubt about Ocean West
Holding Corporation's ability to continue as a going concern after
it audited the Company's financial statements for the fiscal year
ended Sept. 30, 2004. The auditing firm points to the Company's
recurring losses from operations and accumulated deficit of
$6,149,853 as of Sept. 30, 2004.
About Ocean West
Ocean West Holding Corporation is a retail and wholesale mortgage
banking company primarily engaged in the business of originating
and selling loans secured by real property with one-to-four units.
The Company offers a wide range of products aimed primarily at
high quality, low risk borrowers, currently in the state of
California. Under its current business strategy, it makes most of
its loans to: purchase existing residences, refinance existing
mortgages, consolidate other debt, and finance home improvements,
education or similar needs.
ODYSSEY RE: Fitch Rates $100 Mil. Floating Rate Sr. Notes at BB+
----------------------------------------------------------------
Fitch Ratings assigned a 'BB+' rating to Odyssey Re Holding
Corp.'s new private issuance of $100 million floating rate senior
notes. In addition, Fitch affirmed Odyssey Re's 'BB+' long-term
issuer rating as well as the ratings on its outstanding debt.
The Rating Outlook is Stable.
The senior note issuance brings the total capital raised by
Odyssey Re since the end of third-quarter 2005 to approximately
$300 million, which includes:
* $100 million in preferred shares; and
* $100 million in common stock,
both issued in October 2005.
The total capital recently raised is more than Odyssey Re's
current estimate of its net after-tax loss from Hurricanes
Katrina, Rita and Wilma of $283.5 million.
Following the issuance, Fitch estimates Odyssey Re's pro forma
debt-to-capital ratio to be approximately 26%. Fitch expects
Odyssey Re to maintain a debt-to-capital ratio of no more than
25%-30%, with fixed charge coverage of at least 8x.
Odyssey Re Holdings Corp.
Fitch rates these with a Stable Outlook:
-- $50 million series A unsecured due 2021 'BB+'
-- $50 million series B unsecured due 2016 'BB+'
These ratings are affirmed; Outlook Stable:
-- Long-term issuer at 'BB+'
-- $40 million unsecured due 11/30/06 at 'BB+'
-- $80 million convertible due 6/15/22 at 'BB+'
-- $225 million unsecured due 11/1/13 at 'BB+'
-- $125 million unsecured due 5/1/15 at 'BB+'
OMEGA HEALTHCARE: Exchanging $50M of Notes for Registered Bonds
---------------------------------------------------------------
Omega Healthcare Investors, Inc., is offering to exchange up to
$50 million aggregate principal amount of its outstanding
7% Senior Notes due 2014 issued on December 2, 2005, for new notes
with materially identical terms that have been registered under
the Securities Act of 1933, and are generally freely tradable.
Terms of the Notes
The Notes mature on April 1, 2014. The exchange notes bear
interest at the rate of 7% per year. The Company will pay
interest on the exchange notes on April 1 and October 1 of each
year. The first interest payment will be made on April 1, 2006.
Interest will accrue from October 1, 2005.
The notes will represent the Company's unsecured senior
obligations and will rank equally with existing and future senior
unsecured debt and senior to all of the Company's existing and
future subordinated debt. The guarantees by the Company's
subsidiaries will rank equally with existing and future senior
unsecured debt of those subsidiaries and senior to existing and
future subordinated debt of those subsidiaries. The notes and the
related guarantees will be effectively subordinated to all of the
Company's secured indebtedness and that of the guarantors.
As of December 31, 2005, taking into account the notes offering,
borrowings under the senior credit facility and the application
of the net proceeds, the Company and its subsidiaries had
$566 million of senior debt, of which $58 million was secured. On
the same date, the Company had approximately $138 million of
availability under its senior credit facility. Last month, the
Company repaid approximately $3 million of borrowings under its
senior credit facility. As of February 24, 2006, $142 million was
available for borrowing under the Company's senior credit
facility. As of December 31, 2005, the Company's capitalization
and ratio of total debt to total capitalization were:
Senior credit facility $58,000,000
7% senior notes due 2014 310,000,000
7% senior notes due 2016 175,000,000
6.95% notes due 2007 20,682,000
Premium on 7% Notes due April 2014 1,306,000
Discount on 7% Notes due January 2016 1,559,000
Other long term borrowings 2,800,000
------------
Total debt $566,229,000
Total stockholders' equity 429,681,000
------------
Total capitalization $995,910,000
============
Total debt to total capitalization 56.9%
U.S. Bank National Association is serving as exchange agent in
connection with the exchange offer.
Depository Trust Company participants will be able to execute
tenders through the DTC Automated Tender Offer Program.
A full-text copy of the Prospectus is available at no additional
charge at http://ResearchArchives.com/t/s?5f1
Headquartered in Timonium, Maryland, Omega HealthCare Investors,
Inc. -- http://www.omegahealthcare.com/-- is a real estate
investment trust investing in and providing financing to the
long-term care industry. At September 30, 2005, the Company owned
or held mortgages on 216 skilled nursing and assisted living
facilities with approximately 22,407 beds located in 28 states and
operated by 38 third-party healthcare operating companies.
* * *
As reported in the Troubled Company Reporter on Feb. 1, 2006,
Standard & Poor's Ratings Services raised its corporate credit
rating on Omega Healthcare Investors Inc. to 'BB' from 'BB-'.
In addition, ratings are raised on the company's senior unsecured
debt and preferred stock, impacting $603.5 million in securities.
S&P said the outlook is stable.
As reported in the Troubled Company Reporter on Jan. 24, 2006,
Moody's Investors Service raised the ratings of Omega Healthcare
Investors, Inc. (senior unsecured debt to Ba3, from B1). Moody's
said the rating outlook is stable.
ON TOP COMMS: Taps Media Services to Market Three FM Stations
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District Of Maryland in
Greenbelt approved On Top Communications LLC and its debtor-
affiliates ' limited engagement of Media Services Group, Inc. as
Broker, nunc pro tunc to Jan. 18, 2006.
Media Services will facilitate the sale of the Debtors' FM radio
stations WRXZ-FM and WFFM-FM in Georgia and KNOU-FM in Louisiana.
The Debtors tell the Bankruptcy Court that Media Services has
extensive experience in brokering the sale of radio stations.
The Debtors propose to pay Media Services a commission equal to 5%
of the purchase price for the Louisiana station and 5% of the
purchase price for Georgia Stations. Payment to Media Services is
contingent on the successful sale of the stations.
To the best of the Debtors' knowledge, Media Services does not
hold any interest adverse to their estates.
Headquartered in Lanham, Maryland, On Top Communications, LLC, and
its affiliates acquire, own and operate FM radio stations located
in the Southeastern United States. The Company and its debtor-
affiliates filed for chapter 11 protection on July 29, 2005
(Bankr. D. Md. Case No. 05-27037). Thomas L. Lackey, Esq., of
Bowie, Maryland, represents the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they estimated assets and debts of $10 million to $50
million.
OWENS CORNING: Incurs $4.099 Billion Net Loss in 2005
-----------------------------------------------------
Owens Corning (OTC Bulletin Board: OWENQ) reported record annual
sales of $6.323 billion in 2005, compared with $5.675 billion
in 2004, an 11.4% increase from the prior year. During the fourth
quarter of 2005, the company recorded record sales of $1.713
billion, compared with net sales of $1.484 billion in 2004, an
increase of 15% from the prior year.
Owens Corning made significant progress toward emergence from
Chapter 11 in 2005 following court rulings that addressed the
issues of asbestos estimation and substantive consolidation.
These court decisions resulted in the company recording non-cash
charges of approximately $5 billion for asbestos reserves and
interest and fees on the company's pre-petition bank debt. As a
result, the company recorded a net loss of $4.099 billion for the
year 2005, compared with a net income of $204 million in 2004.
"Strong demand continued for our products and services throughout
2005," said Dave Brown, president and chief executive officer.
"As we enter 2006, we believe that we are well positioned to
accelerate our performance by taking advantage of the many
opportunities available to our company."
"As a company, we will deliver significant productivity
improvements in 2006 that will offset a portion of the expected
increases for energy-related costs in commodities and
transportation across our company," said Mr. Brown. "We will
maintain our focus on the profitable growth and expansion of our
businesses to meet the world's demand for energy-efficient
building materials and glass-composite solutions."
In 2005, Owens Corning:
-- continued focus on employee safety, resulting in a 36
percent reduction in injuries;
-- reached agreement to acquire a key composite
manufacturing facility in Japan, positioning the
company to capitalize on emerging opportunities within
the Asia Pacific region. The acquisition is expected
to be complete in the second quarter of 2006;
-- realigned and consolidated businesses to better serve
customers and streamline business operations;
-- leveraged higher volumes with high capacity
utilization in Building Materials to offset higher
costs for energy-related commodities; and
-- increased focus on specialized Composite products to
further diversify the business portfolio to maximize
profitable growth.
Primarily as a result of charges related to the company's Chapter
11 case, Owens Corning recorded a loss from operations for the
year 2005 of $3.743 billion, compared to income from operations of
$427 million in 2004.
When communicating to its Board of Directors and employees
regarding the operating performance of the company, management
excludes certain items, including those related to the company's
Chapter 11 proceedings, asbestos liabilities and restructuring
activities. These items included a $4.267 billion charge related
to an additional provision for asbestos litigation claims net of
recoveries and additional net charges of $27 million during 2005,
compared to a net charge of $25 million for 2004. Excluding
these items, income from operations increased by 22 percent in
2005 compared to 2004. The company recognizes that excluding
these items is not necessarily a more meaningful measure of
performance than is operating income (loss) reported on a GAAP
basis. In addition, such presentation is not necessarily
indicative of the results that the company would have achieved if
the company was not subject to Chapter 11 proceedings.
Fourth Quarter
For the fourth quarter of 2005, Owens Corning reported income from
operations of $230 million, including a $74 million credit for
asbestos litigation claims related primarily to insurance
recoveries, compared to income from operations of $146 million
for the fourth quarter of 2004.
Outlook
Although market demand remained strong through the end of 2005,
Owens Corning continues to be cautious about the ability of the
United States economy to maintain the current level of housing
demand throughout 2006. We believe that a continued rising
interest rate environment could cause the United States housing
market to soften from the recent high levels. Two factors that
may continue to mitigate the affect of softening demand are the
Energy Policy Act of 2005 and the effect of the 2005 hurricanes
in the southeastern United States. Increased costs for
energy-related commodities and services are also likely to
continue to exert pressure on the company's margins in 2006.
Plan of Reorganization
Owens Corning filed a revised plan of reorganization, available at
http://www.ocplan.comwith the United States Bankruptcy Court for
the District of Delaware on December 31, 2005. While this filing
is a key step toward emergence, a number of additional steps
remain in the process, including creditor voting and Court
approval.
The Bankruptcy Court scheduled Owens Corning's disclosure
statement hearing for April 5, 2006, where it will determine
whether the plan provides sufficient information to allow
creditors to cast an informed vote on the plan. Confirmation
hearings in the company's Chapter 11 case are currently set for
July 2006.
While the revised plan of reorganization is not yet a fully
consensual plan, the company continues to negotiate with each of
its creditors to reach agreement. Owens Corning remains committed
to emerging from Chapter 11 with a plan that deals fairly and
equitably with all of our creditors and is in the best interests
of our employees, customers and company.
A full-text copy of Owens Corning's Annual Report filed with the
Securities and Exchange Commission on Form 10-K is available at
no charge at http://ResearchArchives.com/t/s?5f3
Owens Corning -- http://www.owenscorning.com/-- manufactures
fiberglass insulation, roofing materials, vinyl windows and
siding, patio doors, rain gutters and downspouts. Headquartered
in Toledo, Ohio, the Company filed for chapter 11 protection on
October 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L.
Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu
Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the
Official Committee of Asbestos Creditors. James J. McMonagle
serves as the Legal Representative for Future Claimants and is
represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP.
OWENS CORNING: Century Wants Inapplicability of Stay Determined
---------------------------------------------------------------
On June 19, 1985, Owens Corning and Century Indemnity Company
became parties to an agreement between a number of insurers and a
number of producers of asbestos-containing products to settle
disputes over liability insurance coverage for asbestos-related
claims against the Subscribing Producers.
The agreement is commonly referred to as the Wellington Agreement
because it was negotiated with the assistance of Harry
Wellington, who was Dean of the Yale Law School at the time.
The Wellington Agreement provides for reciprocal and continuing
rights and obligations of the Subscribing Insurers and the
Subscribing Producers with respect to the handling and funding of
liabilities arising out of asbestos-related personal injury
litigation.
Among others, the Wellington Agreement contains comprehensive,
confidential and mandatory Alternative Dispute Resolution
Procedures that require parties to resolve through alternative
dispute resolution any disputed issues within the scope of the
Agreement.
James S. Yoder, Esq., at White & Williams LLP, relates that
between March 1989 and October 1994, Century paid Owens Corning
and its affiliates $30,000,000 with respect to asbestos claims
under an excess general liability insurance policy issued to the
Debtors by Century's predecessor, Insurance Company of North
America. As a result, Century believes that the limits of the
Policy have been exhausted or overpaid. The combined single
limit of the Policy is $10,000,000 per occurrence, Mr. Yoder
says.
Despite the Overpayment, Owens Corning sought additional
insurance coverage from Century under the Wellington Agreement
with respect to the same Insurance Policy. Century disputes that
any additional insurance coverage is available to the Debtor.
Pursuant to the ADR Procedures, the parties attempted to resolve
their issues. In 2000, prior to the Petition Date, Owens Corning
initiated the negotiation phase of the ADR Procedures under the
Wellington Agreement. In 2002, after the Petition Date, Owens
Corning notified Century that it was initiating an arbitration
under the arbitration trial phase of the ADR Procedures.
As previously reported, Century asked the U.S. Bankruptcy Court
for the District of Delaware to compel Owens Corning to assume the
Wellington Agreement as an executory contract as a condition of
proceeding with the Wellington Arbitration. Although Owens
Corning refused to assume the Wellington Agreement as an executory
contract, Owens Corning agreed to be bound by any award entered in
the Arbitration pursuant to a Court-approved stipulation between
the parties.
Century has not filed a counterclaim and has not yet sought
affirmative relief in the Wellington Arbitration, Mr. Yoder
states. Accordingly, Century did not seek relief from the
automatic stay. The parties neither addressed the automatic stay
issue in the Stipulation.
Century has raised in the Wellington Arbitration a number of
defenses to the Debtors' assertion of coverage for asbestos-
related personal injury claims. Century also reserved its rights
to assert a claim for recoupment of the Overpayment.
The Wellington Agreement provides that the losing party will pay
the costs of the Arbitration proceedings.
Mr. Yonder notes that on January 19, 2006, the Court of Appeals
for the Third Circuit held in ACandS, Inc. v. Travelers Casualty
and Surety Company, that an arbitration proceeding arising out of
an insurance coverage dispute similar to the dispute between the
Debtors and Century is stayed by Section 362 of the Bankruptcy
Code.
Before January 19, 2006, Century believed that it could assert
all coverage defenses and its right of recoupment under the
Wellington Agreement without first obtaining relief from the
automatic stay. Mr. Yonder explains the belief was based on the
Stipulation and on various judicial decisions interpreting the
scope of the automatic stay, like in Charter Crude Oil Company v.
Enron Oil Trading and Transportation Company, f/k/a P & O Falco,
Inc., where the creditor could assert affirmative defense of
setoff in action brought by the debtor without obtaining relief
from bankruptcy stay.
Century asserts that the Third Circuit ruling in ACandS creates
uncertainty and potential prejudice to it if it proceeds with the
Wellington Arbitration without clarification that any award
entered in the arbitration will not be void.
Mr. Yonder argues that it would be inequitable and contrary to
the Bankruptcy Code:
-- for Owens Corning to obtain the benefits of the Wellington
Agreement and the ADR Procedures while retaining the option
of seeking to vacate any award based on a subsequent
assertion that the arbitration violated the automatic stay;
and
-- to force Century and the trial judge to proceed with the
Wellington Arbitration and possibly risk sanctions for
violation of the stay.
Proceeding to arbitration without a determination that the
proceedings do not violate the automatic stay will also result in
the expenditure of vast amounts of litigation costs by both
Century and the Debtors' estate without any assurance that the
Wellington Arbitration will finally resolve the dispute over the
extent of insurance coverage available under the Policy, Mr.
Yonder adds.
Century also believes that it will be unfairly prejudiced if it
is forced to participate in the Wellington Arbitration without
the ability to assert any defenses and counterclaims under the
Policy and the Wellington Agreement.
Against this backdrop, Century asks Judge Fitzgerald to find that
the automatic stay is not applicable to the Wellington
Arbitration or any coverage defenses or claim for recoupment
raised by Century under the Wellington Agreement.
If the Court determines that the automatic stay is applicable,
Century alternatively asks the Court to annul the automatic stay
retroactive to the Petition Date:
-- to allow the Wellington Arbitration to proceed; and
-- so Century may assert any other claims available to it
under the Wellington Agreement including its right to
recover costs of the proceedings in the event it is the
prevailing party in the Wellington Arbitration.
Pursuant to Section 107(b)(2), Century seeks the Court's
permission to file under seal some exhibits related to its
request. The exhibits are subject to the confidentiality
agreement among the parties to the Wellington Agreement.
Owens Corning -- http://www.owenscorning.com/-- manufactures
fiberglass insulation, roofing materials, vinyl windows and
siding, patio doors, rain gutters and downspouts. Headquartered
in Toledo, Ohio, the Company filed for chapter 11 protection on
October 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L.
Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu
Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the
Official Committee of Asbestos Creditors. James J. McMonagle
serves as the Legal Representative for Future Claimants and is
represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP.
(Owens Corning Bankruptcy News, Issue No. 125; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
OWENS CORNING: Hiring American Appraisal as Valuation Consultant
----------------------------------------------------------------
Owens Corning and its debtor-affiliates seek the U.S. Bankruptcy
Court for the District of Delaware's consent to employ American
Appraisal Associates, Inc., as their valuation consultants, nunc
pro tunc to February 10, 2006.
The Debtors need American Appraisal to provide valuation services
required to assist them in achieving compliance with some
Financial Accounting Standards Board regulations. In preparation
for their emergence from Chapter 11, the Debtors are required to
value the assets and liabilities of each of their operating units
at fair market value, as of the date of emergence.
American Appraisal will:
a. assist Owens Corning in meeting its financial reporting
requirements for fresh start accounting by providing an
independent and objective opinion of the fair market value
of tangible and intangible assets by operating segments;
b. analyze the Assets, including, but not limited to
researching relevant economic, industry and company
specific factors, conduct site visits and interviews,
determine preliminary asset values, and allocate asset
values to operating segments and reporting units;
c. prepare, present and deliver preliminary reports and issue
final reports;
d. assist with the preparation fresh start balance sheets and
impairment testing by reporting unit;
e. assist with data management and SAP conversion; and
f. perform all other necessary services to the Debtors in
connection the fresh start accounting and the appraisal of
the Assets.
American Appraisal's hourly billing rates are:
Senior Vice President $650
Managing Principal $575
Principal $450
Engagement Director $325
Senior Appraiser $275
Staff Appraiser $225
Associate Appraiser $150
In addition, American Appraisal will seek reimbursement of out-
of-pocket expenses.
Michael Rathburn, Esq., Associate General Counsel for American
Appraisal, attests that neither he, the firm, nor its partners,
principals or staff members who will work on the proposed
engagement:
-- are related to the Debtors in their Chapter 11 cases, their
creditors, parties-in-interest, the United States Trustee,
or any Judge of the U.S. Bankruptcy Court for the District
of Delaware; or
-- has any connection with or holds or represents any interest
adverse to the Debtors, their estates, their creditors or
any other parties-in-interest on the matters on which the
firm is to be employed.
Mr. Rathburn assures the Court that American Appraisal is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code, as modified by Section 1107(b).
Owens Corning -- http://www.owenscorning.com/-- manufactures
fiberglass insulation, roofing materials, vinyl windows and
siding, patio doors, rain gutters and downspouts. Headquartered
in Toledo, Ohio, the Company filed for chapter 11 protection on
October 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L.
Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu
Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the
Official Committee of Asbestos Creditors. James J. McMonagle
serves as the Legal Representative for Future Claimants and is
represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP.
(Owens Corning Bankruptcy News, Issue No. 126; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PARKWAY HOSPITAL: Wants Until April 30 to Remove Civil Actions
--------------------------------------------------------------
The Parkway Hospital, Inc., asks the U. S. Bankruptcy Court for
the Southern District of New York, to extend the time within which
it may file notices of removal of petition civil actions until
April 30, 2006.
The Debtor knows of approximately 70 active and threatened
Prepetition Civil Actions, including both commercial and medical
cases.
As part of its reorganization efforts, the Debtor began its claims
reconciliation process including liquidation of the Prepetition
Civil Actions. However, the Debtor tells the Court, it has not
have a full opportunity to review the Prepetition Civil Actions.
Hence, it can't determine at this time whether to remove some, all
or none of those Prepetition Civil Actions to Federal court.
The Debtor needs the Extension to preserve the status quo until
the time it can make appropriate decisions.
The Debtor believes that the Extension will allow it to make fully
informed decisions concerning the removal of those Prepetition
Civil Actions.
The Debtor emphasizes that the Extension will not prejudice the
rights of any party and that any party to a Prepetition Civil
Action that is removed may seek to have it remanded to the state
court.
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.
PEABODY ENERGY: Good Performance Prompts Moody's to Lift Ratings
----------------------------------------------------------------
Moody's Investors Service upgraded Peabody Energy Corporation's
corporate family rating to Ba1 from Ba2 and senior unsecured
ratings to Ba2 from Ba3.
The upgrade recognizes the significant improvement in Peabody's
operating performance, cash flow and debt protection measurements
over the past three years as the company's diversity has enabled
it to take full advantage of strong coal markets during this
period.
The upgrade also reflects Moody's view that Peabody is positioned
to sustain strong operating results and cash flow, which should
enable the company to finance organic growth through internally
generated funds and continue to generate positive free cash flow.
The rating outlook is stable.
1) Reserves: Peabody is the world's largest coal company, with
Dec. 31, 2004 proven and probable coal reserves of
approximately 9.3 billion tons, diversified in the five
principal U.S. coal mining regions: Powder River Basin,
Midwest, Southwest, Colorado and Appalachia as well as in
Australia and, through a joint venture, in Venezuela.
2) Cost Efficiency and Profitability: Moody's expects the two
key return measurements to remain robust over the next two
years whereas the other liabilities to equity measure
reflects Peabody's very high level of legacy liabilities
and continues to weigh on Peabody's ratings.
3) Financial Policies: Moody's expects the leverage ratio to
continue in the Baa range over the next two years and,
concurrently, the debt to capitalization ratio to improve
to the Baa range as the company finances organic growth
targets with internally generated funds.
4) Financial Strength: Peabody generated positive FCF in 2005,
which Moody's expects to continue over the next few years.
5) Business Diversity and Size: Peabody's diversity across and
within regions enables it to optimize production and manage
delivery schedules to mitigate the impact of transportation
related delays and other operating issues that impact
industry participants.
Moody's rates Peabody's senior unsecured debt one notch below the
corporate family rating reflecting the heavy weighting of prior
ranking obligations in the capital structure. Peabody Energy's
SGL-1 speculative grade liquidity rating reflects the company's
very good liquidity and Moody's expectation that the company's
cash and operating cash flow will adequately cover interest,
capital expenditures, debt amortization and dividends over the
next 12 months.
The stable outlook reflects the stable nature of Peabody's
business and cash flow, which can be attributed to its diverse
coal operations, vast reserves, long-term sales contracts, and
coal's importance as a fuel for electricity generation. The
corporate family rating could be upgraded to Baa3 if the company
is able to continue to reduce the other liabilities to equity
ratio such that it falls below the 75% threshold indicative of Ba
rated companies and its FCF to debt ratio, in Moody's view, is
sustainable in the four to five percent range. However, even with
these targets being met, Moody's would not upgrade Peabody to
investment grade given the existence of secured debt in its
capital structure. The rating is unlikely to be lowered in the
near term given the company's expected performance but could be
reduced if the company's earnings and cash flow metrics
deteriorate back to the Ba range from the Baa range in which most
of them reside.
Peabody Energy Corporation, headquartered in St. Louis, Missouri,
is the world's largest private-sector coal company with revenues
in 2005 of $4.6 billion.
PERFORMANCE TRANSPORTATION: Jack Stalker Resigns as CFO
-------------------------------------------------------
Jack Stalker, who has served as Vice President and Chief Financial
Officer of Performance Transportation Services, Inc., since
September 2005, has resigned effective March 15, 2006, to pursue
other interests.
Mr. Stalker's responsibilities will be assumed by members of his
current team and the company's financial consultants, FTI
Consulting, until a permanent CFO is named. A search for a
permanent CFO will begin immediately.
"PTS is grateful to Jack for assuming the CFO role during a very
challenging time for the Company. Jack worked tirelessly for PTS
over the last several months to help us through a difficult period
and to keep all of our suppliers shipping and our trucks on the
road. We thank him and wish him well in his future endeavors,"
said Jeff Cornish, PTS President and Chief Executive Officer.
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).
James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A.
Hirsch, Esq., at Kirkland & Ellis, LLP, and 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 TRANSPORTATION: Gets OK to Pay Critical Vendor Claims
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of New York
authorized Performance Transportation Services, Inc., and its
debtor-affiliates, on a final basis, to pay up to $1,000,000 in
Critical Vendor Claims.
The Court directs the Debtors to provide the Official Committee of
Unsecured Creditors' financial advisors, Huron Consulting Group,
with at least 24 hours prior notice of any proposed payment of
Critical Vendor Claims.
Huron, who is being retained by the Committee to protect the
interests of the Debtors' General Unsecured Creditors, must be
given an opportunity to insure that all the critical vendor
payments are made in good faith, William F. Savino, Esq., at Damon
& Morey LLP, in Buffalo, New York, contends.
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).
James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A.
Hirsch, Esq., at Kirkland & Ellis, LLP, and 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 $11 Mil. DIP Financing Facility
------------------------------------------------------------------
The Honorable Stan Bernstein of the U.S. Bankruptcy Court for the
Eastern District of New York gave his final approval for
Photocircuits Corporation to obtain postpetition debtor-in-
possession financing from Stairway Capital Management, L.P., up to
$11,724,222, with a limit for the issuance of:
(a) $1,000,000 documentary letters of credit, and
(b) a standby letter of credit to replace the existing
$3,500,000 letter of credit.
Judge Bernstein also authorized the Debtor to use cash collateral
and granted adequate protection to the prepetition secured lenders
in connection with a loan and security agreement dated May 6,
2002. Stairway Capital is the administrative agent for itself and
a syndicate of financial institutions.
Judge Bernstein also authorized the Debtor to grant an allowed
superpriority claim to the agent and DIP Lenders prepetition
lenders required under Section 507(b) of the U.S. Bankruptcy Code
for any diminution in the value of their collateral a replacement
lien to the same extent, validity and priority as the prepetition
lien.
But, any and all liens granted to the DIP lender, prepetition
agent and the prepetition lenders will be subordinated in right of
payment and in priority to any liens in favor of the City of Glen
Cove on any real property located in Glen Cove, New York.
A full-text copy of the amended final DIP order given by Judge
Bernstein to Photocircuits Corporation is available for a fee at
http://www.researcharchives.com/bin/download?id=060301022946
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.
PLY GEM: Closes $120 Million AWC Holding Acquisition
----------------------------------------------------
Ply Gem Industries, Inc. and its private equity sponsor, Caxton-
Iseman Capital, Inc., closed the acquisition by Ply Gem of AWC
Holding Company and its subsidiaries for approximately
$120 million in cash, which included approximately $31 million to
repay outstanding indebtedness of Alenco. Alenco is a leading,
low-cost, vertically integrated manufacturer of aluminum and vinyl
windows and doors.
The acquisition was financed with:
* approximately $3 million of cash on hand,
* $118 million of new term loan borrowings under Ply Gem's
existing credit facility which was amended for the
transaction, and
* $8 million of proceeds from the sale of equity securities to
members of Alenco's management.
Lee D. Meyer, President and Chief Executive Officer of Ply Gem,
said: "We expect the combination of Ply Gem and Alenco will enable
us to capitalize on attractive market opportunities. Alenco is an
important element in establishing a footprint to serve our growing
regional and national customers and provide us with a great
platform to accelerate our growth in the window segment. Alenco's
products and service capabilities are extremely well respected and
utilized in the new construction market. We look forward to
joining forces with Brian Redpath, President and Chief Executive
Officer of Alenco, his outstanding management team and all of the
Alenco employees."
Robert A. Ferris, a Managing Director of Caxton-Iseman Capital,
said: "We are pleased by the progress we have made in our Ply Gem
investment. Since we acquired the company in February of 2004,
Lee Meyer and his team have continued to post solid financial and
operating results. We believe the acquisition of Alenco and its
great product line presents Ply Gem with many exciting
opportunities and look forward to our new partnership with the
outstanding Alenco management team led by Brian Redpath."
Ply Gem Industries, headquartered in Kearney, Missouri,
manufactures and distributes a range of products for use in the
residential new construction, do-it-yourself and professional
renovation markets. Principal products include vinyl siding,
windows, patio doors, fencing, railing, decking and accessories
marketed under the Variform, MW, Patriot, Great Lakes, Napco, Kroy
and CWD brand names.
* * *
AS reported in the Troubled Company Reporter on Feb. 13, 2006,
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on Kearney, Missouri-based vinyl siding and window
manufacturer Ply Gem Industries Inc. (PGI) and revised the outlook
to negative from stable.
At the same time, Standard & Poor's assigned its 'BB-' bank loan
rating and '1' recovery rating to PGI's proposed amended and
restated $70 million revolving credit facility due in 2009 and
$398 million term loan due 2011, based on preliminary terms and
conditions.
PXRE CAPITAL: Tax Asset Write-Down Cues Moody's to Lower Ratings
----------------------------------------------------------------
Moody's Investors Service lowered the insurance financial strength
rating of PXRE Reinsurance Company to Baa3 from Baa2 and the debt
rating of PXRE Capital Trust I to B3 from B1. The ratings remain
on review for possible further downgrade.
The rating action follows the company's recent earnings
announcement where it revised its 2005 storm loss estimates
upward, received notice of cancellation from two of its
retrocessionaires, and recorded a substantial write-down of its
deferred tax asset.
The action follows Moody's action on Feb. 17, 2006, when the
rating agency downgraded the ratings of PXRE Reinsurance Co., and
PXRE Capital Trust I, and placed the ratings on review for
possible further downgrade, following the company's announcement
that it had significantly increased its loss estimates from the
impact of Hurricanes Katrina, Rita, and Wilma.
According to Moody's, the downgrade of PXRE reflects heightened
risk to the company's business franchise, based on the company's
disclosure that approximately 75% of its premium volume is subject
to counter-party cancellation provisions, as well as a weakened
balance sheet with limited financial flexibility and potential
challenges in managing its liquidity profile, including demands of
potential collateralization of contracts. Further, pursuant to
Bermuda holding company regulations, PXRE Group Ltd. announced
that it is currently prohibited from paying dividends or making
distributions to its shareholders. However, the company's board
of directors has determined that it is in the best interests of
PXRE to reallocate the amounts in its share premium account such
that it will be able to make dividend distributions, subject to
shareholder approval.
Moody's noted that the wider notching between the operating
company's insurance financial strength rating and the U.S. holding
company's debt rating reflects heightened concerns regarding the
ultimate parent company's ability to support subsidiary debt
obligations as well as the inability of the US operating company,
PXRE Reinsurance Co., to upstream statutory dividends to its
parent, PXRE Corporation due to its negative unassigned surplus
position, stemming from 3Q05 storm losses.
According to Moody's, the continuing review for possible further
downgrade will focus on the magnitude of actual losses reported,
the company's financial flexibility including its liquidity
position, its ability to meet both creditor and policyholder
obligations, and the company's decision to explore strategic
options.
These ratings have been lowered and remain on review for possible
further downgrade:
* PXRE Capital Trust I -- capital securities to B3 from B1;
* PXRE Reinsurance Co. -- insurance financial strength to Baa3
from Baa2.
PXRE Group Ltd., is a publicly-traded reinsurance holding company
providing reinsurance products and services to a worldwide
marketplace. For the year ended Dec. 31, 2005, PXT reported net
premiums earned of $388 million and a net loss of $705 million.
As of Dec. 31, 2005, shareholders' equity was $465 million.
RUSSEL METALS: 10 Mil. Share Deal Cues Moody's to Review Ratings
----------------------------------------------------------------
Moody's Investors Service placed its ratings for Russel Metals
Inc., under review for possible upgrade. The action follows
Russel's agreement to sell, on a bought-deal basis, at least
10 million common shares at CN$25.75 a share, for gross proceeds
of CN$257.5 million.
The proceeds of the financing will be used to repay debt and for
future acquisitions. Given Russel's solid operating performance
over the last two years, its modest leverage as of year-end 2005,
and the discipline it has demonstrated in the past with respect to
acquisitions, Moody's has placed the company's ratings under
review for possible upgrade. The equity offering is expected to
close on or about March 16. Moody's plans to conclude its review
at around this same time.
These ratings were placed under review for possible upgrade:
* Corporate family rating of Ba2
* Senior unsecured rating of Ba3
In 2005, Russel reported operating income of C$201million and cash
from operating activities of C$136 million, completing its second
year of very solid results. At Dec. 31, 2005, Russel carried
CN$206 million of debt, primarily its US dollar-denominated senior
unsecured notes due 2014, and had shareholders equity of CN$539
million.
Russel Metals Inc., headquartered in Mississauga, Ontario, is one
of the largest metals distribution companies in North America.
SHAW GROUP: Increases Credit Facility to $750 Million
-----------------------------------------------------
The Shaw Group Inc. (NYSE: SGR) completed an amendment to increase
its current bank credit facility to $750 million, an increase of
$200 million. The entire $750 million is available for
performance letters of credit and up to $425 million is available
for working capital revolving credit loans and financial letters
of credit. The amendment is effective immediately and the term of
the credit facility remains unchanged at April 25, 2010.
Robert L. Belk, Jr., Executive Vice President and Chief Financial
Officer of Shaw, said, "The past several months have been very
active for Shaw. We are extremely pleased to have announced a
number of significant contracts recently including awards by
Dominion, Duke Energy, CLECO, SABIC, DOW/Petrochemical Industries,
and the most recent award by Xcel. This amendment to our credit
facility enhances our financial flexibility and improves our
ability to meet the needs of our clients, including our expanding
emergency response activities."
The Shaw Group Inc. -- http://www.shawgrp.com/-- is a leading
global provider of technology, engineering, procurement,
construction, maintenance, fabrication, manufacturing, consulting,
remediation, and facilities management services for government and
private sector clients in the energy, chemical, environmental,
infrastructure and emergency response markets. Headquartered in
Baton Rouge, Louisiana, with over $3 billion in annual revenues,
Shaw employs approximately 20,000 people at its offices and
operations in North America, South America, Europe, the Middle
East and the Asia-Pacific region.
The company's credit rating carries Standard & Poor's BB rating.
That rating was assigned July 27, 2005.
SINGING MACHINE: Receives $3 Mil. Equity Investment from Starlight
------------------------------------------------------------------
The Singing Machine Company (AMEX:SMD) reported that koncepts
International Ltd., a Hong Kong subsidiary of Starlight
International Holdings Ltd. (SEHK:485), has agreed to acquire
approximately 12.9 million newly issued, unregistered shares of
the Company's common stock (representing approximately 56% of the
total number of shares issued and outstanding following the
closing of the proposed transaction) for a total of $3 million, or
$0.233 per share. In addition, the investor would receive
warrants to acquire up to an additional 5.0 million shares over a
four-year period at prices ranging from $0.233 to $0.350 per
share.
This privately negotiated transaction is subject to the successful
restructuring by The Singing Machine of the $4 million
subordinated debenture which came due on Feb. 20, 2006, as well as
to the approval of the American Stock Exchange and the
shareholders of Starlight International Holdings Ltd. as per the
requirement of the Hong Kong Stock Exchange. The Company hopes to
close this transaction within the next 60 days.
The Singing Machine is currently in discussions with the holders
of the subordinated debenture.
About Starlight International Holdings Ltd.
Starlight International Holdings Ltd. is an investment holding
company listed on the Hong Kong Stock Exchange whose subsidiaries
are principally engaged in the design, manufacture and sale of a
wide range of electronic products, securities trading and property
development. It is currently one of the key suppliers for The
Singing Machine Company.
About The Singing Machine
Incorporated in 1982, The Singing Machine Company develops and
distributes a full line of consumer-oriented karaoke machines and
music as well as other products under The Singing Machine(TM),
Motown(TM), MTV(TM), Nickelodeon(TM), Hi-5(TM) and other brand
names. The first to provide karaoke systems for home entertainment
in the United States, The Singing Machine sells its products in
North America, Europe and Asia.
As of Dec. 31, 2005, Singing Machine's balance sheet showed
$9,333,161 in total assets and $12,650,279 in total liabilities,
resulting in a stockholders' deficit of $3,317,118. At Dec. 31,
2005, the company had an accumulated deficit of $15,056,444.
* * *
Going Concern Doubt
Berkovits, Lago & Company, LLP, expressed substantial doubt about
The Singing Machine Company, Inc.'s ability to continue as a going
concern after it audited the Company's financial statements for
the fiscal year ended March 31, 2005. The auditors point to the
Company's inability to obtain outside long term financing,
increasing stockholders' deficit and recurring losses from
operations.
SMART-TEK: December 31 Balance Sheet Upside-Down by $422,796
------------------------------------------------------------
Smart-tek Solutions Inc., fka Royce Biomedical Inc., delivered its
financial results for the quarter ended Dec. 31, 2005, to the
Securities and Exchange Commission on Feb. 17, 2006.
Smart-tek's net loss decreased by 74% from a $50,138 net loss for
the three months ended Dec. 31, 2004 to a $13,046 net loss for the
three months ended Dec. 31, 2005. The decrease in net loss was
primarily due to a substantial increase in revenues offset by
personnel related costs incurred in the acquisition of its wholly
owned subsidiary, Smart-tek Communications, Inc..
For the three months ended Dec. 31, 2005 and 2004, revenues
increased to $783,136. The Company did not generate any revenue
for the three-month period ended Dec. 31, 2004. All revenues
reported come from the operations of SCI, acquired on April 15,
2005.
The Company's balance sheet at Dec. 31, 2005, showed $1,237,882 in
total assets and $1,660,678 in liabilities, resulting in a
stockholders' deficit of $422,796. As of Dec. 31, 2005, the
Company had a $656,949 working capital deficiency.
Smart-tek does not have any significant available credit, bank
financing or other external sources of liquidity. Due to
historical operating losses, the Company's operations have not
been a source of liquidity and the Company had satisfied its cash
requirements through shareholder loans and deferral of salary
payments to its officers.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?5ed
Going Concern Doubt
Weinberg & Company, PA, expressed substantial doubt about Smart-
tek's 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 net loss of
$286,096 and a negative cash flow from operations of $83,541
during the year ended June 30, 2005 as well as a working capital
deficiency of $ 637,726 and a shareholders' deficiency of $340,956
at June 30, 2005.
About Smart-tek Solutions Inc.
Smart-tek Solutions Inc. is a technology holding company in the
security and surveillance sector providing turnkey state-of-the-
art systems design and installation through its wholly owned
subsidiary, Smart-tek Communications, Inc. Smart-tek
Communications, Inc. -- http://www.smart-tek.com/-- is the
Company's initial acquisition in this sector and is appropriately
positioned to pursue additional acquisitions in order to restore
and enhance shareholder value. Located in Richmond, British
Columbia, SCI specializes in the design, sale, installation and
service of the latest in security technology with proven
electronic hardware and software products.
SOLUTIA INC: Provides Details of $825M Addt'l Financing under DIP
-----------------------------------------------------------------
As previously reported, the Debtors obtained up to $500,000,000
in DIP Financing from Ableco Finance LLC, Wells Fargo Foothill,
Inc., Congress Financial Corporation and a consortium of lenders.
In January 2004, the DIP Facility was increased to $525,000,000,
pursuant to a Financial Agreement with Citicorp USA, Inc., as
agent, and Wells Fargo, and a syndicate of financial
institutions.
Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York,
relates that since then, the Debtors' DIP Facility has been
thrice modified regarding the mandatory prepayment terms,
disposition of assets and investments, notice provisions and
interest rates. The DIP Agreement, as amended, will mature on
June 19, 2006.
Although the Debtors expect that the Plan will be confirmed by
June 19, 2006, Mr. Henes asserts that assuring access to
postpetition financing after June 2006 will provide the Debtors
with adequate time to confirm the Plan. Mr. Henes adds that it
would be beneficial for the Debtors to have added liquidity and
flexibility to address operational costs, including pension
obligations during 2006 and early 2007.
Consequently, the Debtors and Citigroup Global Markets Inc., on
behalf of Citigroup -- CGMI, Citibank, N.A., CUSA, and Citicorp
North America, Inc. -- engaged in extensive discussions and
arm's-length negotiations to further amend the DIP Agreement.
The amendment to the DIP Agreement will provide sufficient
financial and operational flexibility to satisfy the Debtors'
obligations and emerge from their Chapter 11 cases, Mr. Henes
says.
The salient terms of the Fourth Amendment provide for:
(a) the Debtors to (i) borrow an additional $300 million in
Tranche B Term Loans and (ii) convert $50 million in
existing Tranche A Term Loans into Tranche B Term Loans,
(b) an extension of the term of the DIP Agreement to March 31,
2007,
(c) an increase of certain thresholds that allow the Loan
Parties to retain more of the proceeds from certain
dispositions and other extraordinary receipts,
(d) the approval of the disposition of certain assets of the
Loan Parties,
(e) the refinancing of, and certain amendments to, the Euro
Notes,
(f) an amendment of certain financial and other covenants, and
(g) other miscellaneous modifications.
Solutia has received a fully underwritten commitment from
Citigroup Global Markets Inc. for the financing to be provided
under the Fourth Amendment.
The $825,000,000 Amended Superpriority Senior Secured Financing
Facility will consist of:
-- $175,000,000 revolving credit facility with a
-- $150,000,000 letter of credit sublimit and a
-- $650,000,000 Term Loan B
The Debtors covenant with the Lenders that Consolidated EBITDA
will be no less than:
Twelve-Month Period Ended Minimum Consolidated EBITDA
------------------------- ----------------------------
March 31, 2006 $120,800,000
April 30, 2006 $124,300,000
May 31, 2006 $127,000,000
June 30, 2006 $125,400,000
July 31, 2006 $124,400,000
August 31, 2006 $134,700,000
September 30, 2006 $135,800,000
October 31, 2006 $148,900,000
November 30, 2006 $151,900,000
December 31, 2006 $157,500,000
January 31, 2007 $153,000,000
February 28, 2007 $151,100,000
Citigroup's commitment will terminate on the earlier of (a) the
date documentation relating to the Commitment Letter becomes
effective, and (b) April 15, 2006, if the Bankruptcy Court has
not approved the Commitment Letter and Amended Facility by that
date. Citigroup will do its best to execute the Operative
Documents on or before March 21, 2006.
Citigroup is represented by Skadden Arps Slate Meagher & Flom
LLP.
A full-text copy of the Commitment Letter is available for free
at http://ResearchArchives.com/t/s?5f5
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. Solutia is represented by
Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden,
Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin
Gump Strauss Hauer & Feld LLP represent the Official Committee of
Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey
Howard & Zukin Capital provides the Creditors' Committee with
financial advice. (Solutia Bankruptcy News, Issue No. 56;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
STRATUS TECHS: S&P Junks Rating on Proposed $125 Million Term Loan
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating
and '2' recovery rating to Stratus Technologies Inc.'s proposed
$205 million first-lien senior secured bank facility, reflecting
its expectation of substantial (80%-100%) recovery of principal by
lenders in the event of a payment default or bankruptcy.
At the same time, Standard & Poor's assigned its 'CCC' rating
and '5' recovery rating to the company's proposed $125 million
second-lien term loan, indicating its expectation that second-lien
creditors would likely achieve negligible (0%-25%) recovery of
principal in the event of a payment default or bankruptcy.
Standard & Poor's also lowered its corporate credit rating to
'B-' from 'B' on the Maynard, Massachusetts-based company. The
downgrade reflects:
* lack of revenue growth;
* vulnerability in Stratus' revenue and earnings base due to
its declining Continuum product base; and
* increased leverage.
Proceeds from the first- and second-lien facilities will be used
in part to finance the recently announced proposed tender offer
for its 10.375% senior notes due 2008. Although Standard & Poor's
is currently affirming the 'B' rating on the 10.375% notes, upon
completion of the tender offer, its rating on the senior notes
will be withdrawn. The outlook is stable.
STRATUS TECHNOLOGIES: Receives Loan Commitments for $330 Million
----------------------------------------------------------------
Stratus Technologies, Inc. reported that it and its affiliate,
Stratus Technologies Bermuda Ltd., received commitments for new
credit facilities in the aggregate principal amount of $330
million, consisting of:
(i) a senior first lien secured term loan facility in the
amount of $175 million,
(ii) a senior first lien secured revolving credit facility in
the amount of $30 million, and
(iii) a senior second lien secured term loan facility in the
amount of $125 million.
Stratus said that its fourth quarter and fiscal year 2006 ended on
Feb. 26, 2006, and that the results are not yet complete and will
be undergoing audit in the next few weeks. Stratus expects fourth
quarter revenues to be in the same range as the fiscal 3rd
quarter, with a continued shift in revenues towards the
ftServer(R) line. In addition, Stratus said that its latest
estimate of annualized savings related to the 10-year joint
product development and server supply agreement entered into with
NEC is $13.3 million.
Tender Offer
Stratus also disclosed that it expects to launch a tender offer
for all of its outstanding 10.375% Senior Notes due 2008.
Proceeds from the new credit facilities will be used, in part, to
fund the proposed tender offer. The terms and conditions of the
tender offer will be announced at a later time and will be
contained in an offer to purchase. The tender offer will be
conditioned upon entering into the new credit facilities.
Stratus Technologies is a global solutions provider focused
exclusively on helping its customers achieve and sustain the
availability of information systems that support their critical
business processes. Based upon its 25 years of expertise in
server and services technology for continuous availability,
Stratus is a trusted solutions provider to customers in
telecommunications, financial services, banking, manufacturing,
life sciences, public safety, transportation & logistics, and
other industries.
* * *
As reported in the Troubled Company Reporter on Mar. 1, 2006,
Moody's Investors Service affirmed Stratus Technologies corporate
family rating of B2 and assigned B1 rating to its proposed first
lien term loan and Caa1 rating to its proposed second lien term
loan. Net proceeds from the $175 million first lien term loan and
$125 million second lien term loan will be used to refinance
existing $145 million senior notes and repurchase $130 million
preferred stock held largely by the company's sponsors. The
rating outlook is stable.
This rating was affirmed:
* B2 corporate family rating
These ratings were assigned:
* $30 million revolving credit facility due 2011 -- B1
* $175 million first lien term loan due 2011 -- B1
* $125 million second lien term loan due 2012 -- Caa1
This rating will be withdrawn:
* $170 million senior unsecured note due 2008 -- B3
As reported in today's Troubled Company Reporter, Standard &
Poor's Ratings Services assigned its 'B-' rating and '2' recovery
rating to Stratus Technologies Inc.'s proposed $205 million first-
lien senior secured bank facility, reflecting its expectation of
substantial (80%-100%) recovery of principal by lenders in the
event of a payment default or bankruptcy.
At the same time, Standard & Poor's assigned its 'CCC' rating and
'5' recovery rating to the company's proposed $125 million second-
lien term loan, indicating its expectation that second-lien
creditors would likely achieve negligible (0%-25%) recovery of
principal in the event of a payment default or bankruptcy.
SUPERB SOUND: Wants Plan-Filing Period Extended to May 15
---------------------------------------------------------
Superb Sound, Inc., d/b/a Ovation, Ovation Audio/Video, and
Ovation Home, asks the U.S. Bankruptcy Court for the Southern
District of Indiana to extend, until May, 15, 2006, the time
within which it alone has the right to file a chapter 11 plan.
The Debtor also asks the Court to extend, until July 11, 2006,
the period within which it can solicit acceptances of that plan.
The Debtor tells the Court that it needs more time to file a plan
because there are multiple pending sales of all or substantially
all of its assets. Allowing other parties to file a plan at this
point, the Debtor says, would disrupt these pending sales. The
Debtor is convinced that the sale transactions are the best way to
maximize the value of the Debtor's assets for the benefit of its
estate and its creditors.
Headquartered in Indianapolis, Indiana, Superb Sound, Inc.,
dba Ovation, Ovation Audio/Video and Ovation Home --
http://www.ovation-av.com/-- is an audio, video and mobile
electronics specialist. The Company filed for chapter 11
protection on Oct. 14, 2005 (Bankr. S.D. Ind. Case No. 05-29137).
William J. Tucker, Esq., at William J. Tucker & Associates, LLC,
represents the Debtor in its restructuring efforts. The Debtor
hired Stan Mills at Richey, Mills & Associates, LLP, as its
financial advisor. Jeffrey A. Hokanson, Esq., at Ice Miller LLP,
represents the Official Committee of Unsecured Creditors. When
the Debtor filed for protection from its creditors, it listed
$9,416,642 in assets and $14,546,796 in debts.
SUPERIOR PLUS: S&P Affirms Corporate Credit Rating at BB+
----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BBB-' senior
secured debt rating to Calgary, Atlanta-based Superior Plus
Inc.'s (Superior; the company) C$200 million senior notes 5.5%
10-year MTN issue maturing March 3, 2016. At the same time,
Standard & Poor's affirmed its 'BB+' long-term corporate credit
and 'BBB-' senior secured debt ratings on the company. The
outlook is stable.
"The ratings on Superior reflect the company's aggressive
financial profile with limited financial flexibility and modest,
but stable margins," said Standard & Poor's credit analyst Bhavini
Patel. "Furthermore, the company's acquisition-related growth
strategy into new business lines introduces a source of
uncertainty to the credit profile," Ms. Patel added.
These weaknesses are alleviated by the strong market positions of
the propane distribution and specialty chemicals businesses and
the diversity of the company's assets, on a consolidated basis,
across end markets, products, and customers.
Superior is a wholly owned subsidiary of Superior Plus Income
Fund, a limited-purpose, unincorporated trust. All of the fund's
revenues and cash flows are derived from Superior, the operating
company, and these cash flows are used to service the fund's
consolidated debt, including secured debt at Superior and
convertible debentures of the fund, and trust unit distributions.
Standard & Poor's takes a consolidated approach to the ratings
and focuses on the consolidated financial results of the fund.
Consistent with Standard & Poor's rating methodology, Superior's
secured notes are rated one notch higher than the long-term
corporate credit rating due to the amount of collateral securing
the debt.
The company owns and operates five distinct business divisions:
1) Superior Propane, the largest propane distributor in
Canada;
2) ERCO Worldwide, a specialty chemicals producer;
3) the recently acquired JW Aluminum, a specialty flat-rolled
aluminum manufacturer;
4) Winroc, a North American building products distributor; and
5) Superior Energy Management, a fixed-price natural gas
marketer.
The propane distribution, specialty chemical, and flat-rolled
aluminum businesses collectively contribute the bulk (close
to 85%) of operating income.
Superior's cost and profitability positions are fair. The propane
distribution business does face volume risk and although it has
the ability to pass on price fluctuations to its customers, the
timing of the price increases tends to lag the wholesale price
changes. Despite ERCO's exposure to the volatile pulp and paper
industry, sodium chlorate represents less than 5% of cost in the
pulp production process; therefore, the division's cash flows have
not experienced the same degree of volatility as the pulp and
paper industry. JWA is susceptible to margin pressures in a
housing and remodelling market deceleration, due both to declining
volumes and selling prices. Nevertheless, JWA is able to pass raw
material aluminum costs to its customers and is, therefore, not
exposed to aluminum commodity price risk. EBITDA margins from
the principal operations are 15% and 25% for Superior Propane and
ERCO, respectively.
The stable outlook reflects the expectation that the Superior's
business risk profile will remain relatively unchanged in 2006.
A negative rating action is possible if the fund acquires new
businesses with higher business risks, which are not appropriately
offset by a strengthening of its financial profile.
In addition, aggressively financed acquisitions, which weaken the
capital structure, would compromise the overall credit profile.
Any subsequent positive rating action would depend on a material
improvement in the company's overall business risk profile, which
is unlikely to occur within its current portfolio of assets.
A material strengthening of the company's financial profile is
not anticipated.
SYNAGRO TECHNOLOGIES: Issues Shares in Private Placement to GTCR
----------------------------------------------------------------
Synagro Technologies, Inc. (NASDAQ:SYGR)(ArcaEx:SYGR) reported
that in connection with the previously announced common stock
dividend of $0.10 per common share payable on Feb. 28, 2006, its
Board of Directors approved an agreement to issue shares of its
common stock in a private placement in exchange for the cash
dividend paid to GTCR Capital Partners LP, GTCR Co Invest LP, and
GTCR Fund VII LP.
As of Feb. 20, 2006, a total of 73,078,066 common shares were
outstanding, of which GTCR held an aggregate of 13,300,381 shares.
In connection with the private placement, the Company will issue
an aggregate of 284,806 shares to GTCR, resulting in the Company
having 73,362,872 common shares outstanding after this issuance.
The Company and GTCR have also agreed that the cash dividends
received by GTCR in next common stock dividend will also be
reinvested by GTCR in stock of the Company.
Commenting on the agreement with GTCR, the Company's Chief
Executive Officer, Robert C. Boucher, Jr., stated, "We appreciate
the confidence in our business that GTCR has demonstrated by
choosing to invest its dividend back into the Company. As a
result, the Company will receive approximately $2.6 million of
cash, including $1.3 million resulting from tomorrow's dividend,
which will provide cushion for future dividend payments under the
restricted payments section of our bank credit agreement and
provide capital in the Company that we plan to spend on new
facilities under construction in Kern County, California, and
Woonsocket, Rhode Island. The Company is in the process of
spending over $40 million on the construction of these two
facilities, which are expected to generate annual revenue in
excess of $15 million upon start-up of operations which is
expected during the fourth quarter of 2006."
Headquartered in Houston, Texas, Synagro Technologies, Inc. --
http://www.synagro.com/-- offers a broad range of water and
wastewater residuals management services focusing on the
beneficial reuse of organic, nonhazardous residuals resulting from
the wastewater treatment process, including drying and
pelletization, composting, product marketing, incineration,
alkaline stabilization, land application, collection and
transportation, regulatory compliance, dewatering, and facility
cleanout services.
The company's $180 million term loan due 2012, $30 million delayed
draw term loan due 2012, and $95 million revolving credit facility
due 2010, all carry Standard & Poor's BB- rating. Those ratings
were assigned on Jan. 31, 2005.
TELOGY INC: Disclosure Statement Hearing Set for March 16
---------------------------------------------------------
The Hon. Edward D. Jellen of the U.S. Bankruptcy Court for the
Northern District of California in Oakland will consider the
adequacy of the Disclosure Statement explaining Telogy, Inc., and
its debtor-affiliate, e-Cycle, LLC's First Amended Joint Plan of
Reorganization at 2:00 p.m. on March 16, 2006.
A copy of the Disclosure Statement is available for free
at http://researcharchives.com/t/s?5ef
Objections to the Debtors' Disclosure Statement must be filed with
the Bankruptcy Court and served on these parties no later than
seven days prior to the Disclosure Statement Hearing:
Counsel to the Debtors:
Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC
Attn: Ira Kharasch, Esq.
Ramon M. Naguiat, Esq.
150 California Street, 15th Floor
San Francisco, California 94111-4500
Tel: (415) 263-7000
Fax: (415) 263-7010
- and -
The U.S. Trustee:
Office of the United States Trustee
Attn: Matthew R. Kretzer, Esq.
1301 Clay Street Room 690N
Oakland, California 94612
Tel: (510) 637-3200
Fax: (510) 637-3220
Amended Plan
The Debtors' amended Plan is premised on a "deemed" substantive
consolidation of the Debtors for the sole purpose of the
allowance of claims, voting confirmation and distributions under
the Plan. The Plan does not contemplate a merger or dissolution
of any Debtor, or the commingling of their assets. The proposed
"deemed" consolidation will not affect the legal and corporate
structures of the Reorganized Debtors.
Reorganized Telogy will be authorized to issue five classes of
limited liability company membership interest in these amounts:
Number and Series Holders
----------------- -------
793,083 Series A Shares Holders of Class 2 Claims
3,826 Series A Shares Holders of Subordinated Claims
3,844 Series B Shares Reorganized Telogy Management
49,403 Series C Shares Reorganized Telogy Management
49,403 Series D Shares Reorganized Telogy Management
Treatment of Claims
DIP Facility Claims totaling $1 million will be paid in full on
the effective date of the Plan.
Allowed Tax Claims of $122,192 and Allowed Priority Claims of
$305,318 will be paid in full on the later of the effective date
or when the claims are allowed.
Holders of approximately $170.4 million in Senior Secured Claims
will receive on the effective date:
-- a Pro Rata share of the STA Cash;
-- a Pro Rata share of 793,083 Series A New Shares; and
-- cash to pay all costs and expenses incurred in
connection with the Debtor's reorganization.
The $3,000 allowed secured claim of Charter One will be paid
according to legal, equitable and contractual rights stated in its
original agreement with the Debtors.
Allowed Secured Claims of Pool Owners, Totaling approximately
$29.6 million as of the petition date, will be settled in
accordance with a Pool Purchase Offer and Compromise.
Claimholders rejecting the compromise will receive the collateral
securing their claims.
The Debtors Plan does not alter the legal, equitable or
contractual rights of the holders of Other Secured Claims,
estimated at $125 million to $140 million.
Holders of General Unsecured Claims, totaling $1.15 million, will
receive a Pro Rata share of $100,000.
Critical Vendors claims totaling $38,000 will be paid in full 30
days after the effective date of the Plan.
Holders of Subordinated Claims, totaling $61 million, will get:
-- a Pro Rata share of 3,826 Series A New Shares; and
-- two series of Subordinated Claim Warrants, Series X and
Series Y, to acquire 88,498 Series A New Shares.
Subordinated Claimholders rejecting the Plan will be treated as
general unsecured creditors.
Intercompany Claims will be cancelled on the effective date of the
Plan.
Junior Subordinated Claims totaling $14.3 million will be
discharged on the effective date and claimholders get nothing
under the Plan.
Equity Interest holders get nothing under the Plan.
Exit Facility
The Plan provides that the Debtors will reorganize through an
asset disposition transaction of the Debtors' businesses to the
Reorganized Debtors, newly formed Delaware limited liability
companies that will have a significantly deleveraged capital
structure as compared to the Debtors.
The Reorganized Debtors will operate the Debtors' business funded
from their ongoing business operations, and with the funding
available under the Exit Facility. Reorganized eCycle will be held
as a subsidiary of Reorganized Telogy.
On the Effective Date, Reorganized Debtors and will enter into an
exit financing agreements with financial entities yet to be
disclosed by the Debtors. The Exit Facility will provide for,
among other things a revolving credit facility of at least $20
million, partially drawn as of the Effective Date, with a term of
five years.
Headquartered in Union City, California, Telogy, Inc. --
http://www.tecentral.com/-- rents, sells, leases electronic test
equipment including oscilloscopes, spectrum, network, logic
analyzers, power meters, OTDRs, and optical, from manufacturers
like Tektronix, Rohde & Schwarz. Telogy, Inc., and its
debtor-affiliate, e-Cycle, LLC, filed for chapter 11 protection on
Nov. 29, 2005 (Bankr. N.D. Calif. Case No. 05-49371). Ramon M.
Naguiat, Esq., at Pachulski, Stang, Ziehl, Young Jones & Weintraub
P.C. represents the Debtor in its restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
estimated assets and debts of more than $100 million.
TELOGY INC: Wants Until June 27 to Decide on Two Unexpired Leases
-----------------------------------------------------------------
Telogy, Inc., and e-Cycle, LLC, ask the U.S. Bankruptcy Court for
the Northern District of California to extend until June 27, 2006,
the period within which they can assume, assume and assign, or
reject two unexpired nonresidential real property leases.
The Debtors are parties to two unexpired leases for property
located at:
Leased Premises Landlord
--------------- --------
3220 Whipple Road, Union City, Calif. Crossroads Technology Park, LLC
1210 California Circle, Milpitas, Calif. iStar CTL I GenPar, Inc.
An agreement extending the Debtors' lease of the Milpitas Premises
expires on May 31, 2006, and converts to a month-to-month
arrangement thereafter. Accordingly, the Debtors seek court's
approval that after May 31, they may continue to utilize the
Milpitas Facility as a month-to-month tenant.
According to the Debtors, the extension will provide them more
time to evaluate the leases in conjunction with their efforts to
reorganize their financial affairs. Furthermore, the extension
will allow the Debtors, in consultation with the major parties in
their cases, to make fully informed decision concerning the leases
based upon the value of the leases to the Debtors' reorganization
efforts.
Headquartered in Union City, California, Telogy, Inc. --
http://www.tecentral.com/-- rents, sells, leases electronic test
equipment including oscilloscopes, spectrum, network, logic
analyzers, power meters, OTDRs, and optical, from manufacturers
like Tektronix, Rohde & Schwarz. Telogy, Inc., and its
debtor-affiliate, e-Cycle, LLC, filed for chapter 11 protection on
Nov. 29, 2005 (Bankr. N.D. Calif. Case No. 05-49371). Ramon M.
Naguiat, Esq., at Pachulski, Stang, Ziehl, Young Jones & Weintraub
P.C. represents the Debtor in its restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
estimated assets and debts of more than $100 million.
As reported in the Troubled Company Reporter on Feb. 8, 2006,
Telogy and e-Cycle filed a Joint Plan of Reorganization with the
U.S. Bankruptcy Court for the Northern District of California on
January 23, 2005. The Joint Plan proposes that (x) secured
creditors will own the Reorganized Company; (y) unsecured
creditors will share, pro rata, a $100,000 pot of money; and (z)
subordinated debt holders will receive a small basket of new stock
and warrants.
THILMANY LLC: Packaging Dynamics Merger Cues S&P's Negative Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' corporate
credit and its other ratings on Thilmany LLC on CreditWatch with
negative implications. The action followed the company's
announcement that it will acquire unrated Packaging Dynamics
Corp. in a transaction valued at $268 million.
Details of the financing arrangements have not been made public.
"We assume that pro forma leverage would remain constant or
deteriorate depending on the amount of debt used in the
transaction," said Standard & Poor's credit analyst Dominick
D'Ascoli.
Assuming an all-debt-financed transaction, 2005 pro forma debt to
EBITDA could approach 6x.
Standard & Poor's expects the acquisition to close in the second
quarter of 2006. It is subject to approval by Packaging Dynamic's
stockholders and the expiration of the applicable waiting period
under the Hart-Scott Rodino Act.
Thilmany is a specialty paper producer based in Kaukauna,
Wisconsin.
TITAN CRUISE: Gets Okay to Hire Carter Belcourt as Tax Accountants
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida gave
Titan Cruise Lines and Ocean Jewel Casino & Entertainment, Inc.,
permission to employ Carter, Belcourt & Atkinson, P.A., as their
tax accountants.
The Debtor want Carter Belcourt to prepare their 2005 and final
2006 tax returns. Specifically, Carter Belcourt will:
a) prepare the federal, state, and local income tax returns for
each entity with supporting schedules; and
b) perform any accounting or bookkeeping services necessary for
preparation of the returns.
Ronald C. Atkinson, a Carter Belcourt officer, disclosed the
Firm's professionals' billing rates:
Professional Hourly Rate
------------ -----------
Shareholders $255 - $300
Managers $200 - $225
Senior Accountants $150
Administrative Staff $100
Mr. Atkinson assured the Court that his Firm does not represent
any interest materially adverse to the Debtors or their estates.
Headquartered in Saint Petersburg, Florida, Titan Cruise Lines and
its subsidiary owns and operates an offshore casino gaming
operation. The Company and its subsidiary filed for chapter 11
protection on August 1, 2005 (Bankr. M.D. Fla. Case Nos. 05-15154
and 05-15188). Gregory M. McCoskey, Esq., at Glenn Rasmussen &
Fogarty, P.A., represents the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they estimated assets and debts between $10 million to
$50 million.
TOMMY HILFIGER: European Commission Approves Sale to Apax Partners
------------------------------------------------------------------
Tommy Hilfiger Corporation (NYSE: TOM) reported that the European
Commission has issued its approval of the Company's agreement to
be acquired by funds advised by Apax Partners. This follows the
previously announced termination of the waiting period under the
U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Subject to shareholder approval and other previously disclosed
conditions, the Company expects that this transaction will be
completed in April 2006.
Tommy Hilfiger Corporation, through its subsidiaries, designs,
sources and markets men's and women's sportswear, jeans wear and
children's wear. The Company's brands include Tommy Hilfiger and
Karl Lagerfeld. Through a range of strategic licensing
agreements, the Company also offers a broad array of related
apparel, accessories, footwear, fragrance, and home furnishings.
The Company's products can be found in leading department and
specialty stores throughout the United States, Canada, Europe,
Mexico, Central and South America, Japan, Hong Kong, Australia and
other countries in the Far East, as well as the Company's own
network of outlet and specialty stores in the United States,
Canada and Europe.
* * *
As reported in the Troubled Company Reporter on Dec. 27, 2005,
Standard & Poor's Ratings Services said that its ratings on Tommy
Hilfiger USA Inc., including its 'BB-' corporate credit rating,
remain on CreditWatch with negative implications, where they were
placed on Nov. 3, 2004.
TRIAD HOSPITALS: Earns $226 Million in Fiscal Year 2005
-------------------------------------------------------
Triad Hospitals, Inc. (NYSE: TRI) reported its consolidated
financial results for the three months and year ended December 31,
2005.
For the three months, the Company's revenues of $1.3 billion;
earnings before interest, taxes, depreciation, amortization, and
other items of $176.7 million; net income of $54.6 million; income
from continuing operations of $59.0 million.
The Company reported a provision for doubtful accounts of $122.8
million, or 9.7% of revenue for the three months ended Dec. 31,
2005. Excluding the self-pay discounts of $45.2 million (which
reduced both provision for doubtful accounts as a percent of net
revenue and net revenue relative to what they would have been
without the discounts), the Company estimates that the provision
for doubtful accounts would have been 12.8% of revenue.
Cash flow from operating activities was $68.4 million, or $118.1
million excluding cash interest payments of $49.3 million and cash
tax payments of $0.4 million for the three months ended Dec. 31,
2005. Cash flow from operations was negatively impacted by an
increase in accounts receivable as a result of several items:
-- an increase in managed care revenues (which historically
have slower collection rates than Medicare) as a percentage
of total revenues;
-- A decrease in Medicare revenues (which historically have the
quickest collection rates of any payer) as a percentage of
total revenues;
-- New accounts receivable from Montclair Baptist Medical
Center, which was acquired in the fourth quarter of 2005;
and
-- Timing of claims billed and processed at Women and
Children's Hospital due to Hurricane Rita.
The Company spent $114.3 million on capital expenditures and
$116.2 million on an acquisition and received proceeds of $14.6
million from asset sales. Triad collected $15.9 million from
notes receivable and received $61.7 million in contributions from
minority partners. The Company also paid debt principal of $0.6
million and received proceeds of $8.1 million from the issuance of
common stock.
At December 31, 2005, cash and cash equivalents were $310.2
million, and the Company had $580 million available under its $600
million revolving line of credit, which was reduced by $20 million
of outstanding letters of credit. Long-term debt outstanding was
$1.7 billion, and stockholders' equity totaled $2.9 billion.
For the fiscal year of 2005, the Company reported revenues of $4.7
billion; adjusted EBITDA of $712.4 million; net income of $226.0
million; income from continuing operations of $229.4 million.
The Company reported a provision for doubtful accounts of $403.3
million, or 8.5% of revenue. Excluding the self-pay discounts of
$147.6 million (which reduced both provision for doubtful accounts
as a percent of net revenue and net revenue relative to what they
would have been without the discounts), the Company estimates that
the provision for doubtful accounts would have been 11.3% of
revenue.
Cash flow from operating activities was $419.6 million, or $608.7
million excluding cash interest payments of $111.9 million and
cash tax payments of $77.2 million for the fiscal year of 2005.
The Company spent $393.7 million on capital expenditures and
$277.5 million on acquisitions during the year. Triad collected
$15.9 million from notes receivable and received $71.2 million in
contributions from minority partners. The Company also paid debt
principal of $484.6 million, received proceeds of $520.0 million
from the issuance of new debt, and received proceeds of $318.3
million from the issuance of common stock.
On January 1, 2006, the Company closed on the sale of three
hospitals to Signature Hospital, LLC, for $75 million plus working
capital of $15 million: Gulf Coast Medical Center in Wharton,
Texas; Medical Park Hospital in Hope, Arkansas; and Pampa Regional
Medical Center in Pampa, Texas. The results from these hospitals
were reclassified as discontinued operations in the fourth quarter
of 2005, with all prior periods restated. The Company expects to
record a gain on the sale of approximately $28 million in the
first quarter of 2006.
Headquartered in Plano, Texas, Triad Hospitals, Inc. --
http://www.triadhospitals.com/-- through its affiliates, owns and
manages hospitals and ambulatory surgery centers in small cities
and selected larger urban markets. The Company currently operates
53 hospitals and 16 ambulatory surgery centers in 15 states with
approximately 8,690 licensed beds. In addition, through its QHR
subsidiary, the Company provides hospital management, consulting
and advisory services to more than 200 independent community
hospitals and health systems throughout the United States.
* * *
Moody's Investor Service, Standard & Poor's, and Fitch Ratings
assigned their low-B ratings to $600,000,000 of 7% Senior
Notes issued by Triad Hospitals maturing on May 15, 2012, and a
$600,000,000 issue of 7% Senior Subordinated Notes coming due on
Nov. 15, 2013.
US AIRWAYS: Incurs $138 Million Net Loss in Fourth Quarter
----------------------------------------------------------
The new US Airways Group, Inc. (NYSE: LCC) reported a fourth
quarter 2005 net loss of $261 million or $3.26 per diluted share.
This compares to a net loss of $69 million or $4.66 per diluted
share 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 or $1.72 per diluted share versus a net loss
excluding special items of $58 million or $3.89 per diluted share
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; and
* 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; and
* 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; and
* 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; and
* 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); and
* 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. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue
No. 115; Bankruptcy Creditors' Service, Inc., 215/945-7000)
US AIRWAYS: Issues New Replacement Warrants to AFS Cayman
---------------------------------------------------------
In January 2002, America West Holdings Corporation issued
warrants in connection with the closing of a $429,000,000 loan
supported by a $380 million government loan guarantee.
In connection with the merger of America West Holdings
Corporation and Barbell Acquisition Corp., a wholly owned
subsidiary of US Airways Group, Inc., US Airways issued new
replacement warrants to purchase 386,925 shares of US Airways
Group common stock to AFS Cayman Limited, the Company disclosed
in a regulatory filing with the Securities and Exchange
Commission dated February 10, 2006.
These new warrants replace and supersede the original warrants
issued by America West Holdings Corporation.
The warrants are exercisable for US Airways Group's common stock
at any time prior to January 18, 2012, at an initial exercise
price of $7.27 per share, subject to adjustments for anti-
dilution purposes.
US Airways Group's common stock is currently listed on the New
York Stock Exchange. On February 8, 2006, the closing price of
US Airways Group's common stock was $29.99 per share.
A full-text copy of US Airways' Prospectus concerning the
Replacement Warrants issued to AFS Cayman is available for free at
http://ResearchArchives.com/t/s?5f4
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue
No. 115; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WESTERN REFINING: Debt Repayment Cues Moody's to Withdraw Ratings
-----------------------------------------------------------------
Moody's Investors Service withdrew all ratings for Western
Refining Company. Upon its initial public offering, Western used
a portion of its net proceeds to repay all debt under its rated
term loan. Accordingly, the company no longer has any rated debt
outstanding.
Moody's withdrew the following ratings:
* B2 Corporate Family Rating
* B2 Rating on 7-year secured term loan
Western Refining is headquartered in El Paso, Texas.
WICKES INC: Gets Court OK to Hire Novare as Claims Administrator
----------------------------------------------------------------
Wickes Inc. sought and obtained authority from the U.S. Bankruptcy
Court for the Northern District of Illinois to employ Novare,
Inc., as its preference claims administrator, nunc pro tunc to
Nov. 29, 2005.
The Debtor tells the Court that it plans to pursue settlement or
litigation of payments made to certain providers of goods and
services within the 90-day period prior to Wickes' chapter 11
filing. Those Preference Payments are potentially avoidable under
Sections 547 and 550 of the Bankruptcy Code.
Novare Inc is expected to:
a. perform and provide detailed analyses of the preference
payments;
b. send demand letters;
c. negotiate settlements;
d. prepare settlement agreements, if necessary;
e. receive and process payments; and
f. administer, manage and direct any necessary litigation.
Jack B. Fishman, President of Novare Inc, disclosed that for any
settlements that the Firm successfully completes without the
commencement of litigation, the Firm will receive a 22% commission
based on the Debtor's gross recovery.
If litigation ensues, Mr. Fishman relates, then the Firm will
receive:
a. 25% contingency fee calculated on the gross settlement
amount less the $250 filing fee imposed by the Bankruptcy
Court; and
b. $100 for each adversary complaint filed, but which will
only to apply to the filing of the original complaint in
each adversary proceeding.
Mr. Fishman assures the Court that the Firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Vernon Hills, Illinois, Wickes Inc. --
http://www.wickes.com/-- is a retailer and manufacturer of
building materials, catering to residential and commercial
building professionals, repairs and remodeling contractors and
project do-it-yourself consumers. Wickes, Inc., and GLC Division,
Inc., filed for chapter 11 protection on January 20, 2004 (Bankr.
N.D. Ill. Case No. 04-02221). The Court dismissed GLC's case on
Feb. 17, 2005. Richard M. Bendix Jr., Esq., at Schwartz, Cooper,
Greenberger & Krauss and Steven J. Christenholz, Esq., David N.
Missner, Esq., and Deborah M. Gutfeld, Esq., at DLA Piper Rudnick
Gray Cary US LLP represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, it listed $155,453,000 in total assets and $168,199,000
in total debts.
WINN-DIXIE: AHG Group Buys Oviedo Store for $5 Million at Auction
-----------------------------------------------------------------
As reported in the Troubled Company Reporter on Feb. 9, 2006,
Winn-Dixie Stores, Inc., and its debtor-affiliates want to sell a
closed grocery store in Oviedo, Florida, to prevent further losses
and bring cash into the estate. The Oviedo grocery store operated
at a loss of over $400,000 in each of 2004 and 2005.
The Debtors marketed the Oviedo Property extensively through DJM
Asset Management, Inc., which sent over 10,000 sale notices to
potential purchasers. Through DJM's efforts, the Debtors have
received six offers, including an offer by Equity One (Florida
Portfolio), Inc., for $3,700,000. After reviewing all offers,
the Debtors have determined that Equity One's offer is the
highest or best offer for the Oviedo Property.
Auction Update
At the auction held on Feb. 8, 2006, AHG Group, LLC, submitted the
final bid of $5,000,000, representing the highest or otherwise
best offer received for the Assets. AHG Group outbid Equity One
(Florida Portfolio), Inc.'s $3,700,000 offer.
AHG Group delivered an earnest money deposit of $385,000 to
Smith, Gambrell & Russell, LLP, through its Jacksonville, Florida
office, as escrow agent. At Closing, the Deposit will be
credited against the Purchase Price, and the unpaid balance will
be due and payable in cash.
The conveyance of the Oviedo Property does not include furniture,
fixtures, and equipment.
The U.S. Bankruptcy Court for the Middle District of Florida
permits the Debtors to transfer the Assets to AHG Group, or its
designee, free and clear of all interests and Claims.
Judge Funk clarifies that the Debtors' transfer of the Assets
will not result in AHG Group having any liability:
(a) for any Claim and Interest against the Debtors or against
an insider of the Debtors; or
(b) to the Debtors.
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).
WODO LLC: Asks Court for Final Decree Closing Chapter 11 Case
-------------------------------------------------------------
WoDo LLC asks the U.S. Bankruptcy Court for the Western District
of Washington to enter a final decree closing its chapter 11 case.
Aimee S. Willig, Esq., at Bush Strout & Kornfeld, informs the
Court that after the plan was confirmed on January 24, 2006, a
number property sales closed. The Debtor still has some unsold
property. Except for certain administrative expense claims, all
Plan payments have been made. All motions, contested matters and
adversary proceedings have been finally resolved.
Headquartered in Bellingham, Washington, Wodo, LLC, fka Trillium
Commons, LLC, is a real estate company. The Company filed for
chapter 11 protection on January 18, 2005 (Bankr. W.D. Wash. Case
No. 05-10556). Gayle E. Bush, Esq., at Bush Strout & Kornfeld
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed total
assets of $90,380,942 and total debts of $21,451,210.
* Alvarez & Marsal Names Pat McCormick as Head of Solutions Group
-----------------------------------------------------------------
Veteran consulting professional Patrick McCormick has been named
head of the Financial Leadership Solutions group by Alvarez &
Marsal Business Consulting. Mr. McCormick, who has more than 25
years of consulting and business management experience, will lead
a national team formed around senior professionals with deep
expertise in helping to improve companies' financial management
capabilities.
"Whether the company is in a rapidly changing industry, on an
acquisitive path, underperforming, contemplating new strategies or
systems, or spun out of a larger entity, the operations and
management of its finance organization can play a key role in its
ability to successfully navigate change, minimize risk and
maximize value," said Mr. McCormick. "With our broad industry
experience and deep financial management skills, we have worked
with companies of all dimensions and sizes - from middle market
organizations to global enterprises - to successfully enhance
their financial management infrastructure and overall performance
as well as create and sustain value.
"When assessing the finance organization, it's not just about
cutting costs or ensuring regulatory compliance," Mr. McCormick
added. "It's about taking a fresh look at how finance works, how
information flows and how that information is driving decisions
and supporting the business's overall goals. It's about ensuring
the proper skill sets are in place, having the right tools at
hand, examining what a company really needs and looking beyond
finance to see the big picture."
Tom Elsenbrook, head of Alvarez & Marsal Business Consulting,
added: "For the past two years, we've been building our team to
deal with the key issues facing companies today - selecting and
attracting among the most experienced, dynamic and talented
finance leaders in the consulting industry. Their collaborative,
objective, hands-on and process-driven work style are in keeping
with what corporate finance executives, investors and audit
committee members need today. We're excited that, under Pat's
guiding hand, we are building something different here with a team
that draws from a legacy of world-class finance talent combined
with real-time momentum to drive business value."
For Mr. McCormick, being part of a privately held and owner-
operated consultancy enables Alvarez & Marsal Business Consulting
to be free from the conflicts of interest facing major accounting
firms and the earnings per share focus driving publicly owned
consulting firms.
"Our focus is on bringing the most relevant and resourceful people
to serve our clients - not just to meet revenue targets," he said.
"We put the needs of our clients first, and serve organizations
with an entirely different model of service. Instead of deploying
legions of junior consultants for on-the-job training paid by our
clients, we bring a compact team of seasoned professionals who are
able to quickly assess a client's needs, identify opportunities
for improvement and areas of risk. We then collaborate with the
company's in-house professionals to quickly put in place practical
solutions that can be sustained over the long term. We are
interested in successful operations, not merely successful
'implementations'."
Alvarez & Marsal Business Consulting's Financial Leadership
Solutions practice works with corporate management, boards of
directors and audit committees providing services including:
-- Financial Strategy, Structures and Organizational
Assessment - Establishing the best financial management
strategy for the company for the mid to long term, and
establishing the structure, hiring and retention practices
to attract and retain the best people for the roles in
financial management of the enterprise.
-- Finance Business Intelligence - Addressing and delivering
on the information a company needs to run the business.
A&M focuses on creating and delivering relevant, reliable
and readily available information that helps to create and
sustain value and to compel management action.
-- Enhancing Operational Performance - Defining business
practices, processes and structures to accomplish the work
of finance effectively and efficiently. A&M focuses on
creating economy of scale and economy of intellect, helping
clients to improve on the status quo or work to establish
new organizational frameworks, such as shared services or
outsourcing.
-- Accounting Remediation - Supporting companies with
executing near-term fixes to serious deficiencies in their
accounting processes and systems to get to the bottom of
key economic and accounting issues. A&M enables finance
organizations to fix, prepare and present meaningful
financial information to key stakeholders.
Over the course of his career, Mr. McCormick has consulted across
a variety of industry sectors including pharmaceuticals,
automotive, consumer products, industrial products, consumer and
business services, property and casualty insurance, life
insurance, banks, real estate development, publishing, engineering
and construction, and professional services. Prior to joining A&M
in 2005, Mr. McCormick served as the COO and CFO of a large
multifamily and office real estate development firm. Before that,
he was the co-managing partner, responsible for Andersen's
Business Consulting Finance Business Solutions practice in the
North America and Europe.
About Alvarez & Marsal Business Consulting
Alvarez & Marsal Business Consulting, LLC is comprised of a
dedicated team of senior consulting specialists who deliver
functional, process and technology skills to corporate management.
Building on Alvarez & Marsal's core operational and problem-
solving heritage, the team helps to improve the business processes
and performance of healthy as well as underperforming companies.
Alvarez & Marsal Business Consulting services include: strategy
and corporate solutions, information technology solutions, finance
solutions, human resource solutions, supply chain solutions,
customer and channel solutions, and outsourcing advisory services.
Alvarez & Marsal Business Consulting, LLC is a division of Alvarez
& Marsal, a global professional services firm that excels in
problem solving and value creation for businesses around the
world. Founded in 1983, the firm's network of seasoned
professionals in locations across the US, Europe, Asia and Latin
America provide services including turnaround and restructuring
advisory, crisis and interim management, performance improvement,
creditor advisory, corporate finance, transaction advisory,
dispute analysis and forensics, tax advisory, real estate advisory
and business consulting.
About Alvarez & Marsal
Alvarez & Marsal -- http://www.alvarezandmarsal.com/-- is a
leading global professional services firm with expertise in
guiding companies and public sector entities through complex
financial, operational and organizational challenges. Employing a
unique hands-on approach, the firm works closely with clients to
improve performance, identify and resolve problems and unlock
value for stakeholders. Founded in 1983, Alvarez & Marsal draws on
a strong operational heritage in providing services including
turnaround management consulting, crisis and interim management,
performance improvement, creditor advisory, financial advisory,
dispute analysis and forensics, tax advisory, real estate advisory
and business consulting. A network of nearly 400 seasoned
professionals in locations across the US, Europe, Asia and Latin
America, enables the firm to deliver on its proven reputation for
leadership, problem solving and value creation.
* American Capital Forms Technology Group Led By Andy Fillat
------------------------------------------------------------
American Capital Strategies Ltd. (Nasdaq: ACAS) plans to expand
its investment activities in the technology sector with the
opening of a Boston office led by Andy Fillat, Managing Director
and Tony Abate, Managing Director.
The company also anticipates further expanding the team in the
near future with an office in California.
"After considerable due diligence and market research American
Capital is developing a technology team to be led by Andy Fillat
and Tony Abate, two of the best investors in the industry,"
American Capital Chairman, President and CEO Malon Wilkus said.
"American Capital has invested approximately $900 million in 10
technology companies in its existing portfolio. These companies
generally are mature, high performing, cash flowing companies with
substantial EBITDA margins and excellent growth rates. They
operate across many different industry sectors and are driven by a
broad range of technologies. We anticipate Andy and Tony will
expand our existing technology investment business by investing in
earlier stage technology. Our low cost and permanent capital and
extensive origination system with nine offices worldwide,
including our ability to provide one-stop financing by funding
senior debt, subordinated debt and equity, should provide us
considerable competitive advantages as we expand our investments
in technology."
Mr. Fillat was previously associated with Advent International
Corp., a $10 billion global private equity firm, where he was a
Managing Director specializing in communications and information
technology related investments during his 16 years at the firm.
He was the lead dealmaker for over 40 completed transactions in
the U.S. and Europe, managed venture operations responsible for
over 100 deals, and served on the firm's Executive Committee.
He earned an SB and SM in computer science and electrical
engineering from the Massachusetts Institute of Technology and an
MBA from Harvard Business School.
Mr. Abate brings over 20 years of experience in the media and
information technology fields. He has been a private equity
investor the past 10 years, as a General Partner at Battery
Ventures, one of the premier venture firms in the U.S. managing
over $1.6 billion, and as Vice President at Whitney & Co., a
venture and private equity partnership that dates to 1946. Before
becoming an investor, Tony worked for McKinsey & Company and
served as an officer in the U.S. Air Force. Mr. Abate holds a BSE
in Electrical Engineering from Duke University and an MBA from
Harvard Business School with honors.
"American Capital's franchise is well suited to the launch and
establishment of a Technology Group," said American Capital
Managing Director Gordon O'Brien. "In particular, the Operations
Group will provide critical development assistance to early stage
as well as mature technology companies."
"American Capital is a very strong platform for doing technology
transactions because we can focus on the sectors and stages
appropriate to the market cycles rather than limiting ourselves
based on a fund's timing, size, or charter," said Mr. Fillat. "In
addition, American Capital has one of the largest streams of
investment opportunities in the industry. That, together with its
deep capital, knowledge and research base will open up more
transaction opportunities and allow us to address them faster and
more thoroughly."
American Capital has invested approximately $900 million in 10
technology companies in its existing portfolio.
They include:
-- $244 million in Mirion Technologies Inc., a global leader in
radiation detection formed through the merger of American
Capital's U.S. portfolio companies Global Dosimetry
Solutions Inc. and Imaging and Sensing Technology
Corporation with its French portfolio company SynOdys
Group SA;
-- $114 million in DelStar Technologies Inc., a leading
manufacturer of highly-engineered, thermoplastic nonwoven
products used by OEMs in filtration, healthcare and
industrial applications;
-- $108 million in Futurelogic Inc., a leading designer and
developer of customized small format embedded thermal
printing solutions;
-- $102 million in Bankruptcy Management Solutions, the leading
provider of case management software, financial and other
services to Chapter 7 bankruptcy trustees, Chapter 11
bankruptcy trustees and other fiduciaries;
-- $90 million in the recapitalization of Inovis International
Inc., a leading provider of business-to-business (B2B)
software and services;
-- $66 million in Tyden Group Inc., a leading provider of
global cargo security and product identification and
traceability solutions;
-- $65 million in 3SI Security Systems, the leading
global provider of security solutions utilizing pioneering
wireless tracking devices to protect currency from theft in
banks, ATMs, safes and transport applications;
-- $56 million in Unwired Technology LLC, a designer, marketer
and supplier of wireless headphones for automotive
entertainment systems;
-- $50 million in Electro-Component Assembly Company, the
leading firm specializing in the design, development and
manufacturing of disposable tools used in the installation
of pacemakers, defibrillators and other implantable medical
devices;
-- $39 million in eLynx, Ltd., a leading provider of secure
electronic document delivery solutions to the mortgage
industry; and
-- $16 million in Wausau Financial Systems, a leading provider
of fully-bundled software and hardware technology solutions
for remittance and check processing.
As of Jan. 31, 2006, American Capital shareholders have enjoyed a
total return of 403% since the Company's IPO -- an annualized
return of 21%, assuming reinvestment of dividends. American
Capital has paid a total of $961 million in dividends and paid
$19.11 dividends per share since its August 1997 IPO at $15 per
share.
Companies interested in learning more about American Capital's
flexible financing should contact:
Mark Opel
Senior Vice President
Business Development
American Capital Strategies Ltd.
461 Fifth Avenue, 25th Floor
New York, NY 10017
Tel: (800) 248-9340
American Capital Strategies Ltd. (Nasdaq: ACAS) --
http://www.AmericanCapital.com/-- is a publicly traded buyout and
mezzanine fund with capital resources of approximately $7 billion.
American Capital invests in and sponsors management and employee
buyouts, invests in private equity buyouts, provides capital
directly to early stage and mature private and small public
companies and through its asset management business is a manager
of debt and equity investments in private companies and commercial
loan obligations. American Capital provides senior debt,
mezzanine debt and equity to fund growth, acquisitions,
recapitalizations and securitizations. American Capital can
invest up to $300 million per transaction.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. 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
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $725 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
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