/raid1/www/Hosts/bankrupt/TCR_Public/060303.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, March 3, 2006, Vol. 10, No. 53
Headlines
AAR CORP: Good Credit Protection Prompts S&P's Positive Outlook
ACCEPTANCE INSURANCE: Has Until June 9 to File Chapter 11 Plan
ALLIED HOLDINGS: Wants Until June 26 to Decide on Leases
ALLIED HOLDINGS: U.S. Trustee Amends Committee Membership
ALLIED HOLDINGS: Court Approves Cushman & Wakefield Retention
ANCHOR GLASS: Court Approves Disclosure Statement
ANCHOR GLASS: Has Until March 7 to Decide on Arkema Contract
ARVINMERITOR: Fitch Rates Planned $200 Million Notes at BB+
ATA AIRLINES: Court Sets May 11 as C8 Airlines' Disclosure Hearing
ATA AIRLINES: Liquidating Units Have Until April 3 to File Plan
ATLANTIC GULF: Trustee Wants to Terminate New York Escrow Account
ATLANTIC WINE: Posts $704,835 Net Loss in Quarter Ended Dec. 31
BAYOU STEEL: Earns $3.2 Million in Fiscal 2006 First Quarter
BLUE BEAR: Wants Exclusive Plan-Filing Period Extended to Mar. 17
BROOKS SAND: Lease & Insurance Problems Forced Chapter 11 Filing
BROOKS SAND: Wants Wise DelCotto as Bankruptcy Counsel
BUILDERS FIRSTSOURCE: Reports 4th Quarter & FY 2005 Fin'l Results
CALPINE CORP: Bankrupt Status Cues Moody's to Withdraw Ratings
CANADA MORTGAGE: Insured Mortgages Prompt DBRS to Affirm Ratings
CARIBBEAN MOTEL: Case Summary & 4 Largest Unsecured Creditors
CATHOLIC CHURCH: Court Rejects Portland's Disclosure Statement
CERADYNE INC: Earns $16.1 Million in Fourth Quarter 2005
CERADYNE INC: CEO Moskowitz Selling 200,000 Shares Over a Year
COLLINS & AIKMAN: Inks New Headquarters Lease with TTERTT
COLLINS & AIKMAN: Can Hire New Executives According to KERP
COLLINS & AIKMAN: Court Approves Steam Purchase Deal with Primary
COMMERCIAL CAPITAL: Fitch Holds B- Rating on $17 Mil. Class G Debt
CONGOLEUM CORP: U.S. Trustee Appoints 3-Member Bondholders' Panel
CONGOLEUM CORP: Wants Ernst & Young to Continue as Auditor
CONSUMERS TRUST: Panel to Conduct Probe of Voucher Program Agents
CORUS GROUP: Finance Unit Allows Early Stock Redemption
CREDIT SUISSE: Fitch Affirms BB Rating on Two Certificate Classes
DELTA AIRLINES: Comair Flight Attendants Considering Strike
DOBSON COMMS: Completes Redemption of All Outstanding Stock
EASYLINK SERVICES: Earns $352,000 in Fourth Quarter
EMCOR GROUP: Earns $19.5 Million from 2005 Continuing Operations
ENGINEERED METALS: Case Summary & 20 Largest Unsecured Creditors
ENTRAVISION COMMS: Incurs $9.66 Net Loss in Fiscal Year 2005
ERA AVIATION: Wants to Assume AAL Aircraft Trust Lease
FACEPRINT GLOBAL: Dec. 31 Balance Sheet Upside-Down by $1.4 Mil.
FIBERVISIONS DELAWARE: Moody's Junks Rating on $20MM Senior Loan
FIBERVISIONS DELAWARE: S&P Junks Rating on $20 Mil. Sr. Facility
FIRST FRANKLIN: DBRS Assigns BB (High) Rating to Class B Certs.
FOUNDATION COAL: S&P Affirms $685 Mil. Facility's Rating at BB-
FREESTAR TECH: Posts $1.7 Mil. Net Loss in Quarter Ended Dec. 31
FRONTIER OIL: Earns $272.5 Million in 2005
GE CAPITAL: Fitch Downgrades Class B1 Certificate's Rating to C
GE CAPITAL: Moody's Junks Rating on $4.8 Mil. Class O Certificates
GENERAL MOTORS: Fitch Downgrades Issuer Default Rating to B
GENTIVA HEALTH: Completes $454 Million Buy of Healthfield Group
GREEN TREE: S&P Downgrades Three Transaction Class Ratings to D
GREY WOLF: Strong Liquidity Prompts Moody's to Review B1 Ratings
GOODMAN GLOBAL: S&P Revises Outlook to Stable & Affirms B+ Rating
GT BRANDS: Can Walk Away from Real Property & Equipment Leases
HEALTH CHOICE: Case Summary & 20 Largest Unsecured Creditors
HEALTHSOUTH CORPORATION: Lenders Consent to Prepayment of Loans
INTEGRATED ELECTRICAL: Taps Vinson & Elkins as Bankruptcy Counsel
INTEGRATED ELECTRICAL: Taps Gordian Group as Financial Advisors
INTEGRATED ELECTRICAL: Taps Glass & Associates as Restr. Advisors
INTRAWEST CORP: S&P Puts BB- Corp. Credit Rating on Negative Watch
ISA INTERNATIONALE: Posts $130K Net Loss in Quarter Ended Dec. 31
IVI COMMS: Balance Sheet Upside-Down by $1.7 Mil. at December 31
JO-ANN STORES: Board Chairman Alan Rosskamm to Step Down
JO-ANN STORES: Increases Senior Secured Facility to $425 Million
JOE DAICHES: Case Summary & 20 Largest Unsecured Creditors
JOHN MANEELY: Moody's Rates Proposed $290 Million Term Loan at B2
JOHN MANEELY: S&P Puts B Rating on $290 Mil. 1st-Lien Term Loan
KAYDON CORP: Earns $14.4 Million in Fourth Quarter Ended Dec.31
KING PHARMACEUTICALS: Earns $117.8M of Net Income in 4th Quarter
LEGACY ESTATE: Wants to Hire Chanin Capital as Investment Banker
LEGACY ESTATE: U.S. Trustee Objects to Hiring of Chanin Capital
LUCENT TECHNOLOGIES: J.A. Kritzmacher Replaces F. D'Amelio as CFO
MANITOWOC CO: Declares Stock Dividend; Plans 2-for-1 Stock Split
MEG ENERGY: Moody's Rates Pending $750 Mil. Senior Facility at Ba3
MERISTAR HOSPITALITY: Completes $367 Mil. Sale of 10 Fla. Resorts
MIRANT CORP: NY-Gen Unit Wants $4.5M to Remediate N.Y. Facility
MIRANT CORP: Issuing Stock to Settle Kern River's $81.77MM Claim
MMRENTALSPRO LLC: Meeting of Creditors Scheduled for March 17
MOUNT REAL: Judge Lalonde Declares Company Bankrupt
MUSICLAND HOLDING: Wants to Implement Supplemental Incentive Plan
MUSICLAND HOLDING: Panel Balks at Intercompany Claim Protocol
NEW WORLD: Balance Sheet Upside-Down by $126. Million at January 3
NOBEX CORP: Judge Sontchi Sets March 16 as Claims Bar Date
NORTHWEST AIRLINES: Incurs $1.3 Billion Net Loss in Fourth Quarter
PEGASUS SOLUTIONS: S&P Rates Proposed $120 Million Debts at B
PENINSULA GAMING: Moody's Holds B2 Rating on $230 Mil. Sr. Notes
PINNACLE ENTERTAINMENT: Earns $14.7 Million For Fiscal Year 2005
PLIANT CORP: Sec. 341 Meeting of Creditors Continued to March 28
PLIANT CORP: Senior Noteholders Wants to Conduct Rule 2004 Exam
PLYMOUTH RUBBER: Wants to Expand Employment of O'Connor Wright
PROFESSIONAL GOLF: Case Summary & 19 Largest Unsecured Creditors
PS BUSINESS: Moody's to Review Ba1 Ratings for Possible Upgrade
REFCO INC: Refco LLC Wants Ch. 11 Case Converted to Chapter 7
REFCO INC: Wants to Hire DJM Asset as Real Estate Consultant
REFCO INC: Creditor Panel Taps Campbells as Cayman Islands Counsel
REMOTE DYNAMICS: Gets $6.5 Million from Private Notes Sale
RICHARD STRAUCH: Case Summary & 20 Largest Unsecured Creditors
RUSSEL METALS: Equity Deal Prompts S&P's Positive Watch
SAINT VINCENTS: Asks Court to Extend Plan-Filing Period to June 30
SAINT VINCENTS: Creditors Agree to Continued Cash Collateral Use
SAINT VINCENTS: Wants to Use Gifts & Contributions to Pay Claims
STELCO INC: Ontario Superior Court Extends Stay Period to March 31
STELCO INC: TSX Wants Common Shares Delisted
STRATUS SERVICES: Converts Pinnacle's $20K Note to 2.78M Shares
SUN HEALTHCARE: Equity Deficits Narrows 43x to $2.895M at Dec. 31
TENFOLD CORP: Loan from CEO Robert W. Felton Now Totals $850,000
TERAYON COMMUNICATIONS: Restating 2004 & 2005 Financials
THILMANY LLC: Merger Deal Prompts Moody's to Review Ratings
TITAN CRUISE: Wants to Hire GrayRobinson as Special Counsel
TITAN CRUISE: Has Until March 31 to File Chapter 11 Plan
TRUMAN CAPITAL: Loan Loss Severities Cue Moody's Rating Review
UAL CORP: Wants to Grab $19,852,110 from LAX Airport Escrow
UNIVERSAL COMMS: Dec. 31 Balance Sheet Upside-Down by $2.8 Mil.
US LEC CORP: Posts $30 Million Net Loss in Fourth Quarter
USG CORP: Bankr. Court Okays $1.8BB Rights Offering Backstop Pact
WESTERN FINANCIAL: Wachovia Merger Cues Fitch to Upgrade Ratings
WESTERN FINANCIAL: Merger Prompts Moody's to Upgrade Ratings
WILLIAMS COS: Earns $66.8 Million of Net Income in Fourth Quarter
XEROX CORP: S&P Upgrades Corporate Credit Rating to BB+ from BB-
* FTI Consulting Names Richard Davis as VP for Strategic Planning
* Venable Names Two New Partners in New York Office
* Venezuela Delays Suspension of U.S. Flights Until March 30
* BOOK REVIEW: Risk, Uncertainty and Profit
*********
AAR CORP: Good Credit Protection Prompts S&P's Positive Outlook
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on AAR
Corp. to positive from stable.
At the same time, Standard & Poor's affirmed its ratings,
including the 'BB-' corporate credit rating, on the aviation
support services provider. About $300 million of debt is
outstanding (excluding $28 million of nonrecourse debt), pro forma
for the $150 million of notes issued in January 2006 and
conversion of $38 million of debt into equity that month.
"The outlook revision is based on improving credit protection
measures, stemming from increasing profitability and equity base,"
said Standard & Poor's credit analyst Roman Szuper.
The ratings on AAR reflect:
* the risks associated with highly cyclical and competitive
conditions in the airline industry, the firm's primary
market; and
* modest, albeit strengthening, profitability.
Those factors are offset in part by:
* the company's established business position;
* moderate financial policies; and
* sufficient liquidity.
The global airline industry stabilized in 2004 and continued to
recover in 2005 and 2006, spurred by a healthier economy and
growing air traffic, although very high oil prices have
constrained or reversed gains at many air carriers. The recovery
follows a severe downturn in the aftermath of the Sept. 11, 2001,
attacks and other shocks to the aviation system, which caused a
significant decline in AAR's business and resulted in weak
financial performance in the 2002-2004 period.
The company's:
* extensive cost reductions;
* strength in the defense-related manufacturing and logistics
business (35%-40% of revenues);
* diversified customer base; and
* strategy to expand operations in Asia and Europe
have helped cushion the impact.
As a result, operating margins and return on capital rebounded to
the 11%-12% and 8%-9% ranges, respectively. Although further
progress is anticipated, a highly competitive business environment
will likely limit the extent of improvement. Moreover, AAR's
absolute levels of earnings and cash flows remain modest.
Recent profit increases and conversion of debt to equity
strengthened credit protection measures to appropriate levels,
with funds from operations to debt in the 20%-25% area, EBITDA
interest coverage in the 4x-4.5x range, and debt to EBITDA of
around 4x.
Wood Dale, Illinois-based AAR is the largest independent provider
of aviation support services, operating in four groups:
* aviation supply chain (50%-55% of revenues);
* maintenance, repair, and overhaul (15%-20%);
* structures and systems (25%-30%); and
* aircraft sales and leasing (less than 5%).
North America is the largest market, accounting for around 75% of
sales. AAR is well positioned for continued outsourcing by
airlines and U.S. government in view of its:
* broad service offerings;
* investment in new capabilities;
* low cost structure;
* good reputation; and
* the customers' focus on core activities and operating
efficiency.
Sustained recovery in the airline industry, gains in AAR's
profitability, additional debt reduction, and further improvements
in credit protection measures could warrant an upgrade in the
intermediate term. An outlook revision to stable could occur if
renewed problems in the airline industry cause the company's
revenue and profit improvement to stall.
ACCEPTANCE INSURANCE: Has Until June 9 to File Chapter 11 Plan
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Nebraska further
extended, until June 9, 2006, the time within which Acceptance
Insurance Companies Inc. has the exclusive right to file a chapter
11 plan. The Debtor also has until April 9, 2006, to exclusively
solicit acceptances of that plan from its creditors.
The Debtor tells the Court that its principal assets consist of
its interest in Acceptance Insurance Company and a takings claim
against the United States. Acceptance Insurance Company has been
under the supervision of the Nebraska Department of Insurance
since Dec. 20, 2002, under the terms of a Supervision Order posted
at http://researcharchives.com/t/s?603
Extensions of its exclusive periods will give the Debtor the
opportunity to manage and complete the claims resolution process
within Acceptance Insurance Company. The extension will also give
the Debtor more time to focus its efforts on the takings claim
proceeding, which is currently in the initial stages of
litigation.
Headquartered in Council Bluffs, Iowa, Acceptance Insurance
Companies Inc. -- http://www.aicins.com/-- owns, either directly
or indirectly, several companies, one of which is an insurance
company that accounts for substantially all of the business
operations and assets of the corporate groups. The Company filed
for chapter 11 protection on Jan. 7, 2005 (Bankr. D. Nebr. Case
No. 05-80059). The Debtor's affiliates -- Acceptance Insurance
Services, Inc., and American Agrisurance, Inc. -- filed separate
chapter 7 petitions (Bankr. D. Nebr. Case Nos. 05-80056 & 05-
80058) on Jan. 7, 2005. John J. Jolley, Esq., at Kutak Rock LLP,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed
$33,069,446 in total assets and $137,120,541 in total debts.
ALLIED HOLDINGS: Wants Until June 26 to Decide on Leases
--------------------------------------------------------
Allied Holdings, Inc., and its debtor-affiliates continue to be
parties to around 53 non-residential real property leases.
Thomas R. Walker, Esq., at Troutman Sanders LLP, in Atlanta,
Georgia, tells the Court that with the large number of leases, the
Debtors need more time to determine which leases should be assumed
or rejected.
Accordingly, the Debtors ask the U.S. Bankruptcy Court for the
Northern District of Georgia to extend their deadline under
Section 365(d)(4) of the Bankruptcy Code to assume or reject their
non-residential real property leases -- except the lease for their
corporate headquarters in Decatur, Georgia -- through and
including until June 26, 2006.
Mr. Walker assures the Court that the Debtors have paid and will
continue to pay all postpetition lease obligations under the
Leases. "No harm to the landlords to the Leases will result from
an extension of [the Debtors' Lease Decision Period] because all
lease obligations will continue to be paid."
A list of the 53 Leases is available for free at:
http://researcharchives.com/t/s?601
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor. Anthony J. Smits,
Esq., at Bingham McCutchen LLP, provides the Official Committee of
Unsecured Creditors with legal advice and Russell A. Belinsky at
Chanin Capital Partners, LLC, provides financial advisory services
to the Committee. When the Debtors filed for protection from
their creditors, they estimated more than $100 million in assets
and debts. (Allied Holdings Bankruptcy News, Issue No. 17;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALLIED HOLDINGS: U.S. Trustee Amends Committee Membership
---------------------------------------------------------
Stanfield Capital Partners, LLC, represented by Robert Paine, has
resigned from the Official Committee of Unsecured Creditors in
Allied Holdings, Inc., and its debtor-affiliates' Chapter 11
cases.
Felicia S. Turner, the United States Trustee for Region 21,
reports that the Creditors Committee is now comprised of:
A. Wells Fargo Bank, as Indenture Trustee
Attn: Thomas M. Korsman, Vice President
Sixth & Marquette
Mac # N9303-120
Minneapolis, MN 55479
Phone: (612) 466-5890 Fax: (612) 667-9825
E-Mail: thomas.m.korsman@wellsfargo.com
B. International Brotherhood of Teamsters
Attn: Frederick Perillo, Counsel
Previant, Goldberg, Uelmen, Gratz,
Miller & Brueggeman, S.C.
l555 North RiverCenter Drive
Suite 202, P.O. Box 12993
Milwaukee, WI 53212
Phone: (414) 271-4500 Fax: (414) 271-6308
E-Mail: fp@previant.com
C. Cummins South, Inc.
Attn: Susan Stephens, Controller
5125 Highway 85
Atlanta, Georgia 30349
Phone: (404) 765-5104 Fax: (404) 766-2132
D. Exotic Auto Transport, LLC
Attn: Bradley M. Segebarth, President
P.O. Box 72, 500 W. Elm
Lebanon, MO 65536
Phone: (417) 532-9808 Fax: (417) 532-9815
E-Mail: Exoticautoplaza@earthlink.net
E. D. E. Shaw Laminar Portfolios, LLC
Attn: John Chiang
120 West 45th Street
New York, NY l0036
Phone: (212) 487-0685 Fax: (212) 845-1685
E-Mail: john.chiang@deshaw.com
F. Eton Park Capital Management, L.P., as representative
and Manager of Eton Park Funds
Attn: Joshua Astrof, Representative
825 Third Avenue, 8th Floor
New York, New York 10022
Phone: (212) 756-5300 Fax: (212) 756-5361
E-Mail: joshua.astrof@etonpark.com
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor. Anthony J. Smits,
Esq., at Bingham McCutchen LLP, provides the Official Committee of
Unsecured Creditors with legal advice and Russell A. Belinsky at
Chanin Capital Partners, LLC, provides financial advisory services
to the Committee. When the Debtors filed for protection from
their creditors, they estimated more than $100 million in assets
and debts. (Allied Holdings Bankruptcy News, Issue No. 17;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALLIED HOLDINGS: Court Approves Cushman & Wakefield Retention
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia
authorized Allied Holdings, Inc., and its debtor-affiliates to
employ Cushman & Wakefield LePage, Inc., as their broker, nunc pro
tunc to Nov. 29, 2005.
As reported in the Troubled Company Reporter on Feb. 14, 2006,
Cushman will have exclusive authority to market and solicit bids
for the Debtors' property in Windsor, Ontario, Canada, pursuant to
a brokerage agreement.
According to Alisa H. Aczel, Esq., at Troutman Sanders LLP, in
Atlanta, Georgia, Cushman has marketed the Property before the
Petition Date. Ms. Aczel discloses that the firm secured a bid
for the Property with a per-acre purchase price in excess of its
per-acre appraisal value on December 22, 2005.
Ms. Aczel relates that Cushman will have a 5% commission upon the
successful completion of a Property sale.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor. Anthony J. Smits,
Esq., at Bingham McCutchen LLP, provides the Official Committee of
Unsecured Creditors with legal advice and Russell A. Belinsky at
Chanin Capital Partners, LLC, provides financial advisory services
to the Committee. When the Debtors filed for protection from
their creditors, they estimated more than $100 million in assets
and debts. (Allied Holdings Bankruptcy News, Issue No. 17;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ANCHOR GLASS: Court Approves Disclosure Statement
-------------------------------------------------
Anchor Glass Container Corporation reported that on Wednesday,
Mar. 1, 2006, it received approval from the United States
Bankruptcy Court Middle District of Florida in Tampa to submit for
voting its proposed Plan of Reorganization and Disclosure
Statement.
Anchor's Plan will reduce the company's long-term debt by
approximately $370 million. The Plan calls for a debt-for-equity
swap that will give Anchor's Senior Secured Noteholders 100
percent of the company's equity. Anchor will exit chapter 11 as a
privately held company with long-term debt of $135 million.
To ensure strong liquidity, Anchor intends to put in place a
revolving credit facility of approximately $65 million. Unsecured
creditors will receive a cash distribution of approximately $8.6
million. Based upon current estimates, unsecured claims
approximate $120 million. Current equity holders will receive no
distribution and their shares will be cancelled.
Assuming court approval of the plan, Anchor expects to emerge from
Chapter 11 in late April 2006. The Bankruptcy Court will convene
a hearing on April 17, 2006 to consider confirmation of the
Debtor's Plan.
"This plan of reorganization is an important milestone for us.
With the support of our customers, vendors and employees we have
the framework in place to enable Anchor Glass to remain a strong
and innovative competitor in the marketplace," said Mark Burgess,
Anchor's Chief Executive Officer.
The Ad Hoc Committee of Noteholders and the Official Committee of
Unsecured Creditors have advised Anchor Glass that they will
recommend the acceptance of this plan.
Classification and Treatment of Claims
As reported in the Troubled Company Reporter on Feb. 24, 2006, the
Debtor its First Amended Plan of Reorganization and Disclosure
Statement to the Bankruptcy Court on Feb. 15, 2006.
The Plan outlines this scheme for classifying claims in accordance
with 11 U.S.C. Sec. 1122:
Class Description Estimated Amt. Impairment
----- ----------- -------------- ----------
N/A Administrative $34,735,000 Unimpaired
Claims
N/A Note Purchase $125,000,000 Unimpaired
Agreement Claims
N/A Priority Tax $4,500,000 Unimpaired
Claims
1 Other Priority $160,000 Unimpaired; deemed to
Claims have accepted the Plan
2 Senior Note $368,302,778 Impaired; entitled to
Secured Claims vote
3 GE Capital $9,659,574 Unimpaired; deemed to
Secured Claim have accepted the Plan
4 Other Secured $830,000 Unimpaired; deemed to
Claims have accepted the Plan
5 General $120,000,000 Impaired; entitled to
Unsecured Claims vote
6 Common Stock Impaired; deemed to
Interests have rejected the Plan
Noteholders Will Own the Reorganized Company
The Plan proposes that holders of Class 2 Senior Note Secured
Claims will receive all shares of the New Common Stock, subject to
dilution by exercise of the New Equity Incentive Options.
Existing Securities Will Be Cancelled
Class 6 Common Stock Interest Holders will not receive nor retain
any property on account of their Common Stock Interests.
On the Effective Date, the Existing Securities of Anchor Glass
will be deemed cancelled. All of Anchor Glass' obligations under
the Existing Securities will be consequently discharged.
However, the Senior Notes Indenture will continue in effect solely
to allow a Senior Notes Representative to make the distributions
under the Plan and permit the Representative to maintain any
rights it may have for fees, costs and expenses under the Senior
Notes Indenture. In addition, the cancellation of the Senior
Notes Indenture will not impair the rights and duties under all
agreements between the Senior Notes Trustee and the beneficiaries
of the trust created.
New Securities to be Issued
Reorganized Anchor Glass will:
(a) on the Effective Date, authorize 25,000,000 shares of New
Common Stock;
(b) on the Distribution Date, issue up to 10,000,000 shares of
New Common Stock for distribution to holders of Allowed
Senior Notes Claims; and
(c) reserve for issuance the number of shares of New Common
Stock necessary to satisfy the required distributions of
options granted under the New Equity Incentive Plan.
The New Common Stock issued under the Plan will be subject to
dilution based on:
(i) the issuance of New Common Stock pursuant to the New
Equity Incentive Plan; and
(ii) any other shares of New Common Stock issued post-
emergence.
A full-text copy of Anchor Glass' First Amended Plan of
Reorganization is available for free at:
http://researcharchives.com/t/s?5c2
A full-text copy of Anchor Glass First Amended Disclosure
Statement is available for free at:
http://researcharchives.com/t/s?5c3
Headquartered in Tampa, Florida, Anchor Glass Container
Corporation is the third-largest manufacturer of glass containers
in the United States. Anchor manufactures a diverse line of flint
(clear), amber, green and other colored glass containers for the
beer, beverage, food, liquor and flavored alcoholic beverage
markets. The Company filed for chapter 11 protection on Aug. 8,
2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano,
Esq., at Carlton Fields PA, represents the Debtor in its
restructuring efforts. Edward J. Peterson, III, Esq., at
Bracewell & Guiliani, represents the Official Committee of
Unsecured Creditors. When the Debtor filed for protection from
its creditors, it listed $661.5 million in assets and $666.6
million in debts.
ANCHOR GLASS: Has Until March 7 to Decide on Arkema Contract
------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida
extended, Until March 7, 2006, Anchor Glass Container
Corporation's deadline to decide whether to assume or reject its
CERTINCOAT System Agreement with Arkema, Inc., fka ATOFINA
Chemicals, Inc.
As reported in the Troubled Company Reporter on Jan. 16, 2006,
the Debtor asked the Bankruptcy Court to extend the period within
which it may assume or reject its agreement with Arkema until the
confirmation of a plan of reorganization.
On Jan. 1, 2004, Arkema and the Debtor entered into a contract
wherein Arkema agreed to impart on the Debtor the handling,
processing and manufacturing techniques, abilities and capacities
needed to utilize the CERTINCOAT System to apply a coating
composition to glass containers. Arkema also agreed to sell to
the Debtor the "Formulation" -- organotin chemicals used in the
process of depositing a hot tin oxide on glass.
"Sufficient cause exist to extend the time period in which Anchor
may assume or reject this Agreement until confirmation," Kathleen
S. McLeroy, Esq., at Carlton Fields, P.A., in Tampa, Florida,
told the Court.
Ms. McLeroy related that due to the complex issues of the Chapter
11 case, the Debtor has not yet completed its analysis of the
Agreement. If contracts and lease are hastily assumed, Ms.
McLeroy said, the estate will be exposed to unnecessary
administrative claims.
Headquartered in Tampa, Florida, Anchor Glass Container
Corporation is the third-largest manufacturer of glass containers
in the United States. Anchor manufactures a diverse line of flint
(clear), amber, green and other colored glass containers for the
beer, beverage, food, liquor and flavored alcoholic beverage
markets. The Company filed for chapter 11 protection on Aug. 8,
2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano,
Esq., at Carlton Fields PA, represents the Debtor in its
restructuring efforts. Edward J. Peterson, III, Esq., at
Bracewell & Guiliani, represents the Official Committee of
Unsecured Creditors. When the Debtor filed for protection from
its creditors, it listed $661.5 million in assets and $666.6
million in debts. (Anchor Glass Bankruptcy News, Issue No. 18;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ARVINMERITOR: Fitch Rates Planned $200 Million Notes at BB+
-----------------------------------------------------------
Fitch Ratings assigned an indicative rating of 'BB+' to
ArvinMeritor's announced $200 million offering of convertible
senior unsecured notes maturing in 2026. The company expects to
use proceeds from the offering, together with cash and proceeds
from the recent sale of Purolator, to fund purchases of up to $450
million of the company's outstanding debt, pursuant to its pending
tender offer. The Outlook is Stable.
The indicative rating is supported by Fitch's view that the
offering will enable the company to push significant maturities
past 2007, while cash-on-hand will enable the company to reduce
total debt. This combination better positions ArvinMeritor going
into 2007 when a 35% to 40% downturn in the North American
commercial vehicle industry, one of the company's primary markets,
is anticipated to occur. In addition, Fitch expects ArvinMeritor
to benefit from already completed restructuring actions,
contributing to estimated positive free cash flow of $120 million
to $170 million in fiscal 2006.
At the end of the company's fiscal first quarter at Dec. 31, 2005,
ArvinMeritor had trailing 12 month operating EBITDA of $436
million and positive free cash flow of $121 million. TTM total
debt-to-operating EBITDA was 3.5x, down from the peak of 4.0x at
the end of the fiscal third quarter of 2005. Free cash flow-to-
total adjusted debt was 7.9x, up from a low of negative 13.0x in
the fourth quarter of 2005.
ATA AIRLINES: Court Sets May 11 as C8 Airlines' Disclosure Hearing
------------------------------------------------------------------
Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana,
argues that there is no basis in the Bankruptcy Code to grant "co-
exclusive" status for confirming a plan. Either the debtor's
exclusivity is extended, or exclusivity is ended.
Ms. Hall points out that NatTel, LLC, gives no reason for its
objection to C8 Airlines, Inc.'s request for a Disclosure
Statement hearing date. C8 also gives no reason for its request
for "co-exclusivity" except that it finds it may need to object to
C8's Liquidation Plan and Disclosure Statement.
Ms. Hall informs the U.S. Bankruptcy Court for the District of
Southern Indiana that NatTel's only actual financial interest in
the case is a scheduled C8 claim for $579 that NatTel filed 45
days after the Petition Date -- and after the Court determined
that NatTel was not a qualified bidder. In addition,
NatTel has already filed an administrative claim against C8 for
$250,000, asserting fees and expenses for "substantial
contribution" to the C8 estate.
Besides, Ms. Hall adds, nothing is preventing NatTel from filing
an objection to C8's Disclosure Statement.
Ms. Hall informs Judge Lorch that C8 has received constructive
comments from the Unsecured Creditors' Committee, the ATSB, and
others on its filed Disclosure Statement and the Plan. Ms. Hall
says:
* none of the comments entailed substantive changes;
* no substantive objection has been communicated; and
* C8 continues to work with its responsible creditors.
For these reasons, C8 asks the Court to deny NatTel's request for
co-exclusivity.
"NatTel has not contributed anything . . . but additional fees and
costs," Ms. Hall tells Judge Lorch.
The creditors of the C8 estate will not be well served by
potentially expending what proceeds there are in the estate to pay
NatTel. The time and energy expended in attending to these issues
again wastes resources of the C8 estate and pushes it further into
administrative insolvency.
* * *
The Court sets the hearing to consider the Disclosure Statement
filed by C8 Airlines, Inc., to May 11, 2006, at 10:30 a.m., in
Indianapolis.
Judge Lorch allows "each side" to file a statement, which will
supplement the Disclosure Statement. Judge Lorch clarifies that:
* statements are not to be inflammatory; and
* parties are to exchange statements as well as comments prior
to filing documents.
Documents are to be filed as a "Proposed Addendum to Disclosure
Statement".
C8 has until March 15, 2006, to file an Amended Disclosure
Statement.
Moreover, the Court sets May 22, 2006, as the hearing date to
consider confirmation of C8's Liquidating Plan.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. Daniel H.
Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland,
Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the
Official Committee of Unsecured Creditors. When the Debtors filed
for protection from their creditors, they listed $745,159,000 in
total assets and $940,521,000 in total debts. (ATA Airlines
Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ATA AIRLINES: Liquidating Units Have Until April 3 to File Plan
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana
extends the period during which only Ambassadair Travel Club,
Inc., and Amber Travel, Inc., may:
-- file Chapter 11 plans to, and including, April 3, 2006; and
-- obtain acceptance of their plans, to and including June 2,
2006.
As reported in the Troubled Company Reporter on Feb. 9, 2006,
Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis,
Indiana, related that Ambassadair and Amber are not yet positioned
to make a responsible and informed determination of whether filing
liquidating plans or converting each of their cases to Chapter 7
cases is in the best interest of their creditors.
Additionally, Ambassadair and Amber needed more time to analyze
the claims filed against them to determine the administrative
solvency of their estates.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. Daniel H.
Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland,
Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the
Official Committee of Unsecured Creditors. When the Debtors filed
for protection from their creditors, they listed $745,159,000 in
total assets and $940,521,000 in total debts. (ATA Airlines
Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ATLANTIC GULF: Trustee Wants to Terminate New York Escrow Account
-----------------------------------------------------------------
Michael B. Joseph, the Chapter 7 Trustee overseeing the
liquidation of Atlantic Gulf Communities Corporation and its
debtor-affiliates, asks the U.S. Bankruptcy Court for the District
of Delaware for authority to terminate an escrow arrangement
created by the Debtor in 1976.
Escrow Arrangement
The Debtors created the escrow arrangement in connection with its
then core business of individual homesite and community
development activities and related installment sales programs for
buyers and brokers in the State of New York. The Debtors had
discontinued the business of selling individual homesites in 1992.
Under the scheme, the Debtors registered subdivided land it
planned to offer for sale. As a condition for the registration,
the Debtor deposited funds into the escrow account. The Debtors
withdrew monies from the account to pay for the construction of
central water and sewer facilities for the homesites. They have
spent in excess of $200 million from this, and another, escrow
account, to construct the required facilities of its homesites.
John D. McLaughlin, Jr., Esq., at Young Conaway Stargatt & Taylor,
LLP, tells the Bankruptcy Court that the Debtors are no longer
responsible for or capable of using the funds placed in escrow for
constructing central water and sewer facilities.
Mr. Joseph wants to terminate and liquidate the escrow account,
which is subject to the liens of the Debtors' term lenders. The
Bankruptcy Court had previously approved an Agreement of
Liquidation of collateral securing the term lenders' claims.
Headquartered in Fort Lauderdale, Florida, Atlantic Gulf
Communities Corporation was a developer and operator of luxury
residential real estate communities. The Company and its
affiliates filed for chapter 11 protection on May 1, 2001 (Bankr.
D. Del. Case Nos. 01-01594 through 01-01597). Michael R.
Lastowski, Esq., at Duane Morris LLP represents the Debtor. The
Bankruptcy Court converted the Debtors' chapter 11 cases to a
chapter 7 liquidation proceeding on June 18, 2002. Michael B.
Joseph is the chapter 7 Trustee for the Debtors' estates. John D.
McLaughlin, Jr., Esq., at Young Conaway Stargatt & Taylor, LLP
represents the chapter 7 Trustee. When the Debtors filed for
chapter 11 protection, they listed $148,546,000 in assets and
$170,251,000 in liabilities.
ATLANTIC WINE: Posts $704,835 Net Loss in Quarter Ended Dec. 31
---------------------------------------------------------------
Atlantic Wine Agencies, Inc., delivered its financial results for
the quarter ended Dec. 31, 2005, to the Securities and Exchange
Commission on Feb. 21, 2006.
Atlantic Wine reported a $704,835 net loss on $739,792 of net
sales for the three months ended Dec. 31, 2005, versus a $454,828
net loss on $6,980 of net sales for the three months ended Dec.
31, 2004.
Management reports that the Company's current quarter reflects
major growth in revenue and increased trading both in South Africa
and Europe. However due to aggressive global trading conditions,
oversupply of fruit from the New World and tough trading
conditions within the South African sector, the Company has had to
compromise with lower margin in sales.
At Dec. 31, 2005, Atlantic Wine's balance sheet showed $3,650,370
in total assets and $1,418,673 in total liabilities.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?5fd
Going Concern Doubt
Meyler & Company, LLC, expressed substantial doubt about Atlantic
Wine's ability to continue as a going concern after it audited the
Company's financial statements for the years ended March 31, 2005
and 2004. The auditing firm pointed to the Company's cumulative
losses of $2,812,566 since inception and uncertainty over its
ability to obtain capital and operate successfully.
About Atlantic Wine
Headquartered in London, Atlantic Wine Agencies, Inc. --
http://www.atlanticwineagencies.com/-- is a public listed company
supported by a small group of key investors who are passionate
wine enthusiasts. The Company purchased Mount Rozier Estatem, a
world-class vineyard estate in Stellenbosch, South Africa, in
February 2004. The group has two key business areas; a brand
building wine business and a leisure/lifestyle development
business. Each is operated separately with management and
organizations within the group under the control of the main
board.
BAYOU STEEL: Earns $3.2 Million in Fiscal 2006 First Quarter
------------------------------------------------------------
Bayou Steel Corporation reported its financial results for the
2006 first fiscal quarter ending Dec. 31, 2005.
The Company reported net income of $3.2 million on sales of
$67.2 million for the first quarter of fiscal year 2006 ending
Dec. 31, 2005, compared to net income of $4.2 million on sales of
$63.1 million for the same quarter last year.
Net sales for the first quarter of fiscal 2006 increased
$4.1 million when compared to the same period in fiscal 2005.
This increase in sales is due to shipping 123,417 tons which is
10,000 tons or a 7% higher than the prior year quarter.
Jerry M. Pitts, President and CEO of the Company, commented,
"Demand and prices have risen to levels not seen in our products
in quite some time creating a strong business climate for Bayou
Steel. Our backlog at the end of December was the highest in
almost five years. Steel inventories at our customers are low by
historical standards; so, we expect shipments to continue to grow
this year and look forward to what we believe will be a strong
market for the rest of fiscal 2006."
Mr. Pitts continued, "We are still dealing with circumstances
created by the two major storms that made landfall along the Gulf
Coast in 2005. Available labor and record high energy prices are
still issues that are affecting operations. The Company has been
able to maintain strong but less than maximum production levels
and minimize production cost increases with the exception of
energy costs which increased operating costs 24% over the same
prior year period. Due to the success of our recent initiatives
to attract and retain personnel in the wake of the challenges
brought about by the hurricanes, we expect to increase operations
by approximately 20% during the second fiscal quarter."
Mr. Pitts concluded, "We increased available cash by $9.4 million
to $14.6 million as of Dec. 31, 2005. We also have an available
unused line of credit of $43 million with a major bank."
Bayou Steel Corporation -- http://www.bayousteel.com/--
manufacturers light structural and merchant bar products in
LaPlace, Louisiana and Harriman, Tennessee. The Company also
operates three stocking locations along the inland waterway system
near Pittsburgh, Chicago, and Tulsa.
Bayou and its affiliates filed for Chapter 11 protection on
Jan. 22, 2003 (Bankr. N.D. Tex. 03-30816). Patrick J. Neligan,
Jr., Esq., at Neligan, Tarpley, Andrews & Foley, LLP, represented
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed
$176,113,143 in total assets and $163,402,260 in total debts.
Bayou emerged from bankruptcy on Feb. 18, 2004.
* * *
As reported in the Troubled Company Reporter on July 22, 2005,
Moody's Investors Service assigned a B2 corporate family
(previously called senior implied) rating to Bayou Steel
Corporation, and placed a B3 rating on Bayou's $50 million
senior secured term loan B due April 4, 2012, arranged by Credit
Suisse and sponsored by Black Diamond. This was the first time
Moody's rated Bayou since it emerged from Chapter 11 bankruptcy on
Feb. 18, 2004. On July 20, 2005, Moody's said Bayou's outlook was
stable.
BLUE BEAR: Wants Exclusive Plan-Filing Period Extended to Mar. 17
-----------------------------------------------------------------
Blue Bear Funding, LLC, asks the U.S. Bankruptcy Court for the
District of Colorado to extend its exclusive periods to:
a) file a plan of reorganization until March 17, 2006; and
b) solicit acceptances of that Plan until May 18, 2006.
The Debtor's key concern has been the tax impact of the Plan on
the claims of unsecured creditors -- consisting primarily of the
former investors with claims of $18 million or more.
The Debtor and the Official Committee of Unsecured Creditors have
consulted with tax experts and considered different ways of
treating those claims and the Debtor's legal structure post-
confirmation.
The Debtor says the tax issues are very complex and not capable of
easy resolution because they are intertwined with other
significant potential creditor claims.
In the interests of efficiency, economy and a successful
reorganization, the Debtor argues that the Court should maintain
the status quo at this time and leave the Debtor in control of the
plan process.
The Debtor believes that a 15-day extension of its exclusive plan-
filing period is well within a reasonable time period to
negotiate, draft, and create a complex, confirmable plan.
Headquartered in Windsor, Colorado, Blue Bear Funding, LLC --
http://www.bluebearfunding.com/-- provides invoice factoring
services. The Company filed for chapter 11 protection on Aug. 22,
2005 (Bankr. D. Colo. Case No. 05-31300). Alice A. White, Esq.,
and Douglas W. Jessop, Esq., at Jessop & Company, P.C., represent
the Debtor in its restructuring efforts. When the Debtor
filed for protection from its creditors, it estimated it had
$1 million to $10 million in assets and liabilities of $10 million
to $50 million.
BROOKS SAND: Lease & Insurance Problems Forced Chapter 11 Filing
----------------------------------------------------------------
As previously reported in the Troubled Company Reporter, Brooks
Sand and Gravel LLC and Smith Mining and Materials LLC filed for
chapter 11 protection on Feb. 9, 2006, in the U.S. Bankruptcy
Court for the Western District of Kentucky in Louisville.
Brooks Sand leases an 184-acre sand reserve and processing plant
in Bethlehem, Indiana, in Clark County and employs about 15
people. Smith Mining owns a 226-acre limestone quarry in Brooks,
Kentucky, in Bullitt County and employs about 25 people.
Brooks Mining, LLC, owns 100% of the equity in the two mining
companies. Hollis Smith and Cobalt Mining, LLC, are the two
members with equal voting rights in Brooks Mining.
Dean A. Langdon, Esq., at Wise DelCotto PLLC in Lexington,
Kentucky, tells the Court that Cobalt designated Todd Blue as its
representative. Mr. Blue resigned as a director on Feb. 12, 2006.
David Roth replaced Mr. Blue on the Brooks Mining board of
directors.
Mr. Smith tells the Court that Debtors have experienced cash flow
difficulties due to various circumstances, including their large
debt service payments and reduced income during the off-season.
Mr. Smith says the Debtors filed for bankruptcy because:
-- Smith Mining defaulted on a lease on Feb. 9, 2006.
The lease is essential to its operation, and
-- the Debtors' general liability insurance coverage was
cancelled on Feb. 9, 2006.
As a result of the cancellation of their liability insurance, the
Debtors ceased all operations on that date.
As of their bankruptcy filing, the Debtors owes more than
$15 million to Bank of America. That debt is secured by all of
their assets. Mr. Smith has guaranteed that debt. Brooks Sand
has unsecured debts of approximately $750,000.00 and Smith Mining
has unsecured debts of approximately $1 million dollars.
Judge Cooper directed joint administration of the Debtors' cases
on Feb. 22, 2006.
Headquartered in Louisville, Kentucky, Brooks Sand and Gravel LLC
leases an 184-acre sand reserve and processing plant in Bethlehem,
Indiana, in Clark County and employs about 15 people. Smith
Mining and Materials LLC owns a 226-acre limestone quarry in
Brooks, Kentucky, in Bullitt County and employs about 25 people.
Brooks Sand and Smith Mining filed for chapter 11 protection on
Feb. 9, 2006 (Bankr. W.D. Ky. Case No. 06-30259). Laura Day
DelCotto, Esq., Dean A. Langdon, Esq., and M. Tyler Powell, Esq.,
at Wise DelCotto PLLC represent 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.
BROOKS SAND: Wants Wise DelCotto as Bankruptcy Counsel
------------------------------------------------------
Brooks Sand and Gravel LLC and Smith Mining and Materials LLC ask
the Honorable Joan L. Cooper of the U.S. Bankruptcy Court for the
Western District of Kentucky in Louisville for permission to
employ Wise DelCotto PLLC as their bankruptcy counsel, nunc pro
tunc to Feb. 9, 2006.
Wise DelCotto will:
(a) take all necessary action to protect and preserve the
Debtors' estates, including:
-- prosecution of actions on the Debtors' behalf,
-- defense of any actions commenced against the Debtors,
-- negotiations concerning all litigation in which the
Debtors are involved, and
-- objection to claims filed against the Estates;
(b) prepare on behalf of the Debtors, as Debtors-in-possession,
necessary motions, applications, answers, orders, reports
and papers in connection with the administration of the
Debtors' cases;
(c) negotiate and prepare, on behalf of the Debtors, a plan or
plans of reorganization and all related documents; and
(d) perform all other necessary legal services in connection
with the Debtors' bankruptcy cases.
Laura Day DelCotto, Esq., a member at Wise DelCotto PLLC,
discloses that the Firm received a [$10,000 or $15,000] retainer.
Bank of America, which the Debtors believe have a prior perfected
lien on cash collateral, consented to the deposit of the retainer
into an escrow account. Wise DelCotto will negotiate or request a
carve-out from the postpetition lender's lien to permit payment of
ongoing fees and expenses of counsel, as well as other Court-
appointed professionals.
The Firm's professionals bill:
Designation Hourly Rate
----------- -----------
Members and Associates $150 to $290
Paralegals $80 to $100
Ms. DelCotto assures the Court that Wise DelCotto PLLC is
disinterested as that term is defined in Section 101(14) of the
U.S. Bankruptcy Code. She further assures the Court that the Firm
holds no interest adverse to the Debtors and their estates as to
the matters with respect to which it is to be employed.
Headquartered in Louisville, Kentucky, Brooks Sand and Gravel LLC
leases an 184-acre sand reserve and processing plant in Bethlehem,
Indiana, in Clark County and employs about 15 people. Smith
Mining and Materials LLC owns a 226-acre limestone quarry in
Brooks, Kentucky, in Bullitt County and employs about 25 people.
Brooks Sand and Smith Mining filed for chapter 11 protection on
Feb. 9, 2006 (Bankr. W.D. Ky. Case No. 06-30259). When the
Debtors filed for protection from their creditors, they estimated
assets and debts between $10 million to $50 million.
BUILDERS FIRSTSOURCE: Reports 4th Quarter & FY 2005 Fin'l Results
-----------------------------------------------------------------
Builders FirstSource, Inc. (Nasdaq: BLDR) disclosed its financial
results for its fourth quarter and fiscal year ended December 31,
2005.
Total sales for the fourth quarter were $565.9 million, an
increase of 11.9%, versus $505.6 million for the same period in
2004. For the fourth quarter ended December 31, 2005, the
company's net income grew 30.1% from $15.0 million in 2004 to
$19.5 million in 2005. On an adjusted basis, net income increased
21.2% year-over-year.
"We were able to deliver outstanding results in 2005 by leveraging
our competitive strengths and aggressively executing our
strategy," said Floyd Sherman, Builders FirstSource President and
Chief Executive Officer. "Our fiscal year accomplishments were
highlighted by successfully completing our initial public offering
and by achieving record sales and adjusted net income, as adjusted
for items related to the IPO and refinancing transactions. In
addition, our adjusted net income for the year increased an
impressive 43 percent compared to 2004."
During the fourth quarter of 2005, the company repaid $25.0
million of its long-term debt with cash generated from operations.
Long-term debt, including current portion, was $315.0 million at
December 31, 2005. Net of cash on hand, long-term debt was $285.5
million.
Commenting on the fourth quarter results, Charles Horn, Builders
FirstSource Senior Vice President and Chief Financial Officer,
said, "We closed our fiscal year on solid financial footing by
reporting double digit gains in sales and net income for the
quarter. Overall, we benefited from favorable housing trends in
our geographic markets, market share gains, higher lumber prices
and improved product mix."
Fiscal Year 2005 Financial Results
The company reported total sales of $2.34 billion for the fiscal
year ended December 31, 2005 compared to $2.06 billion for the
same period in 2004. Net income was $48.6 million in 2005
compared to $51.6 million in 2004, representing a decrease of 5.7%
due to items solely relating to the IPO and refinancing
transactions. On an adjusted basis, net income was $82.2 million,
an increase of 43.0% compared to $57.5 million in 2004.
Outlook
Commenting on the company's outlook, Mr. Sherman said, "We believe
we are well positioned to continue our positive momentum and look
forward to 2006 with confidence. We expect that market share
gains will continue to be a strong driver for year-over-year sales
growth in 2006. We also believe that our enhanced product mix and
improved working capital management will supplement our top line
growth and drive increased profitability in 2006."
Mr. Sherman concluded, "We remain committed to enhancing
shareholder value by continuing to leverage our competitive
strengths and executing our long-term growth strategy."
Headquartered in Dallas, Texas, Builders FirstSource, Inc. --
http://www.bldr.com/-- is a leading supplier and manufacturer of
structural and related building products for residential new
construction. The company operates in 11 states, principally in
the southern and eastern United States, and has 63 distribution
centers and 52 manufacturing facilities, many of which are located
on the same premises as our distribution facilities. Manufacturing
facilities include plants that manufacture roof and floor trusses,
wall panels, stairs, aluminum and vinyl windows, custom millwork
and pre-hung doors. Builders FirstSource also distributes windows,
interior and exterior doors, dimensional lumber and lumber sheet
goods, millwork and other building products.
Builders FirstSource's Second Priority Senior Secured Floating
Rate Note due 2012 carries Moody's Investor Service's B3 rating
and Standard & Poor's Rating Services at B rating.
CALPINE CORP: Bankrupt Status Cues Moody's to Withdraw Ratings
--------------------------------------------------------------
Moody's Investors Service withdrew the ratings of Calpine
Corporation and several of its wholly owned subsidiaries, all of
which filed a voluntary petition for protection under federal
bankruptcy law on Dec. 20, 2005.
The withdrawal of the ratings is in accordance with Moody's
practice of withdrawing the debt ratings of issuers in bankruptcy.
Ratings withdrawn include:
* Calpine's senior unsecured notes and senior unsecured
convertible notes, Ca
* Calpine Canada Energy Finance's senior unsecured notes, Ca
* Calpine's Corporate Family Rating, Caa1
* Calpine Generating Company, LLC's first priority senior
secured revolving credit and term loan facilities, B3
* CalGen second priority term loans and floating rate notes,
Caa1
* CalGen third priority notes, Caa2
* South Point Energy Center, LLC, Broad River Energy LLC and
RockGen Energy LLC Pass Through Certificates, Caa2
* Tiverton Power Associates Ltd. Partnership and Rumford Power
Associates Ltd Partnership Pass Through Certificates, Ca
Headquartered in San Jose, California, Calpine is a major North
American power company capable of delivering nearly 27,000
megawatts of electric generation in the US and Canada. The
company owns, leases and operates integrated systems of natural
gas-fired and geothermal plants.
CANADA MORTGAGE: Insured Mortgages Prompt DBRS to Affirm Ratings
----------------------------------------------------------------
Dominion Bond Rating Service finalized the ratings on the Mortgage
Pass-Through Certificates, Series 2006-C4 issued by Canada
Mortgage Acceptance Corporation:
Mortgage Pass-Through Certificates, Series 2006 - C4
* Class A-1 -- AAA
* Class A-2 -- AAA
* Initial Class VFC -- AAA
* Class IO-P -- AAA
* Class IO-C -- AAA
* Class B -- AA
* Class C -- A
* Class D -- BBB
* Class E -- BB
* Class F -- B
The ratings of the Certificates are based on these factors:
(1) The relative levels of structural enhancement for each
rated class;
(2) Generally high-quality borrowers;
(3) The experience of GMAC Residential Funding of Canada,
Limited and its parent, Residential Funding Corporation in
the residential mortgage market; and
(4) The inclusion of insured mortgages, which are expected to
experience very low credit loss.
The Class IO-P and Class IO-C Certificates represent interest-only
"strips" and are sensitive to prepayment assumptions. The AAA
rating reflects the Class IO Certificateholders' interest in
excess interest collections over expenses and certificate
interest, and does not evaluate the risks associated with
prepayment.
Generally, the non-insured mortgages originated by RFOC are
classified as prime, Alt-A, or sub-prime. Alt-A and sub-prime
mortgages typically experience higher foreclosure frequency and
loss severity than prime mortgages. A large percentage of Alt-A
and sub-prime mortgages is from i declare product, which
represents 43.2% of all mortgages. The i declare product does not
verify the income level of borrowers. Lack of income verification
can suggest income volatility, but subordination levels have been
sized to provide for this.
RFOC is a wholly owned subsidiary of Residential Funding
Corporation and is focusing on insured, Alt-A, prime, and sub-
prime mortgages in Canada.
CARIBBEAN MOTEL: Case Summary & 4 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Caribbean Motel, Inc.
dba Diamond Crest Motel
7011 Atlantic Avenue
Wildwood Crest, New Jersey 08260
Bankruptcy Case No.: 06-11496
Type of Business: The Debtor operates a motel.
Chapter 11 Petition Date: March 2, 2006
Court: District of New Jersey (Camden)
Debtor's Counsel: David Kasen, Esq.
Kasen, Kasen & Braverman
1874 East Route 70, Suite 3
P.O. Box 4130
Cherry Hill, New Jersey 08034
Tel: (856) 424-4144
Fax: (856) 424-7565
Estimated Assets: Less than $5,000
Estimated Debts: $1 Million to $10 Million
Debtor's 4 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Monzo Catanese $25,195
211 South Main Street, Suite 104
Cape May Court House, NJ 08210
Division of Taxation, State of New Jersey $17,244
Bankruptcy Unit, CN 245
Trenton, NJ 08695
Dept. of Labor, State of New Jersey $2,079
Bankruptcy Unit
P.O. Box 379
Trenton, NJ 08625
Sea Breeze Development, LLC $100
2700 Pacific Avenue
Wildwood, NJ 08260
CATHOLIC CHURCH: Court Rejects Portland's Disclosure Statement
--------------------------------------------------------------
The Honorable Elizabeth L. Perris declined to approve the
disclosure statement explaining the Archdiocese of Portland's plan
of reorganization on February 14, 2006.
The Court found two major flaws:
i) the disclosure statement did not provide creditors with
adequate estimates of claims against the estate; and
ii) the disclosure statement describes an illegal plan that
can't be confirmed because it categorically disallows
claims for punitive damages.
Chapter 11 doesn't deal specifically with punitive damages.
However, in order to meet the best interests test for confirmation
set out in section 1129(a)(7) of the Bankruptcy Code, the plan
must provide that an impaired class receive at least as much as
the class would receive in a chapter 7 liquidation. The Debtor's
plan classifies the tort claims, but excludes from the
classification any claim for punitive damages by saying they'll be
disallowed.
The Bankruptcy Court stated that it couldn't estimate the
unresolved tort claims including present child sex abuse claims,
for purposes of establishing a cap on the fund to be made
available to pay those claims. If the Debtor pursues any
estimation, the Court will make a report and recommendation to the
District Court after further discussion with the parties about
methodology and considering appropriate evidence.
In addition, if the Debtor does not pursue estimation for purposes
of capping liability, the Bankruptcy Court can estimate the claims
for purposes of voting and plan confirmation.
The Court concluded that as a matter of law, the Debtor couldn't
obtain confirmation of a plan that categorically disallows
punitive damages.
The Debtor will file an amended disclosure statement and a
modified plan.
A further preliminary estimation hearing will be set on a date
that falls after the deadline for the Debtor to file its modified
plan. The purpose of that hearing will be to:
a) determine whether the Debtor seeks District Court
estimation,
b) discuss the exact methodology to be used, and
c) schedule the deadlines for submissions and for further
hearings.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents
the Official Tort Claimants Committee in Portland, and scores of
abuse victims are represented by other lawyers. David A. Foraker
serves as the Future Claimants Representative appointed in the
Archdiocese of Portland's Chapter 11 case. In its Schedules of
Assets and Liabilities filed with the Court on July 30, 2004, the
Portland Archdiocese reports $19,251,558 in assets and
$373,015,566 in liabilities.
CERADYNE INC: Earns $16.1 Million in Fourth Quarter 2005
--------------------------------------------------------
Ceradyne, Inc. (Nasdaq: CRDN) (Company) reported results for the
fourth quarter and twelve months ended December 31, 2005.
Sales for the fourth quarter 2005 increased 36.9% to a record
$114.2 million from $83.4 million in the fourth quarter of 2004.
Net income for the fourth quarter 2005 increased 82.7% to a record
$16.1 million compared to net income of $8.8 million in the fourth
quarter of 2004. Fourth quarter 2005 net income included a
non-recurring, non-cash after tax expense of $1.7 million related
to the write off of unamortized loan fees resulting from the
repayment in full of the Company's 2004 credit facility which was
replaced with a fixed rate convertible bond issued in December
2005. Fully diluted average shares outstanding for the fourth
quarter were 25,479,000 compared to 24,823,000 in the same period
in 2004.
Gross profit margin increased to 36.7% of net sales in the fourth
quarter of 2005 from 31.3% of net sales in the fourth quarter of
2004.
The provision for income taxes was 34.6% in the fourth quarter
2005, compared to 34.4% in the fourth quarter 2004.
Sales for the year ended December 31, 2005, increased to a
record $368.3 million, up 70.8% from $215.6 million in 2004.
For the year ended December 31, 2005, net income increased to
$46.8 million on 25,107,000 average shares outstanding, from
$27.6 million, or $1.12 per diluted share, on 24,598,000 average
shares outstanding, for the year ended December 31, 2004. Net
income for the year ended December 31, 2005 was up 69.7% over last
year, and earnings per diluted share for 2005 increased 66.1%
compared to 2004.
Fourth quarter 2005 new orders were $200.9 million compared to
$145.1 million in fourth quarter 2004. For the year 2005, new
orders were $443.6 million compared to $276.0 million in 2004.
Total order backlog on December 31, 2005 was $276.4 million
compared to the prior year backlog of $199.9 million.
Joel P. Moskowitz, Ceradyne chief executive officer, commented:
"In addition to the record fourth quarter 2005 operating
performance reported above, in December 2005 Ceradyne successfully
issued 2,070,000 shares of its common stock and $121,000,000 of a
2-7/8 percent fixed rate convertible bond. After underwriting fees
and expenses relating to these concurrent offerings, the Company
netted approximately $84.7 million related to the equity portion
and $116.8 million related to the convertible bond. We used
approximately $118.7 million to retire the floating rate debt we
had raised in 2004 related to our acquisition of ESK Ceramics,
with the balance of approximately $82.8 million intended for
working capital, capital expenditures, other general corporate
purposes, and possibly for acquisitions."
Ceradyne develops, manufactures and markets advanced technical
ceramic products and components for defense, industrial,
automotive/diesel and commercial applications. Additional
information about the Company can be found at www.ceradyne.com.
Ceradyne Inc. -- http://www.ceradyne.com/-- develops,
manufactures and markets advanced technical ceramic products and
components for defense, industrial, automotive/diesel and
commercial applications.
* * *
As reported in the Troubled Company Reporter on July 15, 2004,
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to advanced technical ceramics manufacturer,
Ceradyne Inc.
At the same time, Standard & Poor's assigned its 'BB-' senior
secured bank loan rating and recovery rating of '3' to the
company's proposed $160 million senior secured bank facility. S&P
said the outlook is stable.
CERADYNE INC: CEO Moskowitz Selling 200,000 Shares Over a Year
--------------------------------------------------------------
Ceradyne, Inc. (Company) (Nasdaq: CRDN), reported that Joel P.
Moskowitz, the company's Chairman, CEO and President, has
established a pre-arranged trading plan to sell a portion of his
company stock over time as part of his individual long-term
strategy for asset diversification and liquidity. The plan was
adopted in accordance with guidelines specified in Rule 10b5-1 of
the Securities Exchange Act of 1934.
Rule 10b5-1 allows corporate officers and directors to adopt
written, pre-arranged stock trading plans when they do not have
material, non-public information. Using these plans, insiders can
gradually diversify their investment portfolios, can spread stock
trades out over an extended period of time to reduce any market
impact, and can avoid concerns about whether they had material,
non-public information when they sold their stock.
Under his Rule 10b5-1 plan, Mr. Moskowitz may sell up to 200,000
shares of Ceradyne stock over a period of approximately 12 months
based on a series of laddered price and volume triggers for the
sale of the shares. Mr. Moskowitz has owned these shares since
1983. If Mr. Moskowitz completes the sale of all 200,000 shares
under his Rule 10b5-1 plan, he would beneficially own
approximately 1,557,000 shares of Ceradyne stock (including shares
subject to currently exercisable options and restricted stock
units).
The sales under this plan will commence no earlier than
March 14, 2006, and will be disclosed publicly through Form 144
and Form 4 filings with the Securities and Exchange Commission.
Ceradyne Inc. -- http://www.ceradyne.com/-- develops,
manufactures and markets advanced technical ceramic products and
components for defense, industrial, automotive/diesel and
commercial applications.
* * *
As reported in the Troubled Company Reporter on July 15, 2004,
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to advanced technical ceramics manufacturer,
Ceradyne Inc.
At the same time, Standard & Poor's assigned its 'BB-' senior
secured bank loan rating and recovery rating of '3' to the
company's proposed $160 million senior secured bank facility. The
outlook is stable.
COLLINS & AIKMAN: Inks New Headquarters Lease with TTERTT
---------------------------------------------------------
Collins & Aikman Corporation asks the U.S. Bankruptcy Court for
the Eastern District of Michigan for authority to into a new
Headquarters Lease with TTERTT Associates, LLC.
Since the Petition Date, the Debtors have been evaluating their
real property leases and interests. Marc J. Carmel, Esq., at
Kirkland & Ellis LLP, in Chicago, Illinois, tells Judge Rhodes
that during the course of the evaluation, the Debtors determined
that they were paying substantially above-market rent for their
corporate headquarters at 150, 250 and 350 Stephenson Highway, in
Troy, Michigan. In addition, the Existing Headquarters Leases
provided the Debtors with more space than was necessary for
ongoing operations.
After attempting to renegotiate, the Debtors decided to reject
the Existing Headquarters Leases.
In pursuing a new location for their headquarters, the Debtors,
with the assistance of their advisors, carefully scrutinized
several potential alternatives for their headquarters. After
conducting these analyses, the Debtors determined that entering
into a new headquarters lease with TTERTT was the best available
alternative.
Mr. Carmel relates that under the New Headquarters Lease, the
Debtors will pay significantly less in rent than they were
previously paying. Monthly rent expense for the New Headquarters
Lease will be $194,000 less for 2007 than the rent expense for
the two buildings that the Debtors currently occupy.
Under the New Headquarters Lease, the Debtors do not begin to pay
base rent until January 1, 2007. According to Mr. Carmel,
monthly rental expense for the Existing Headquarters Leases
increases each year from $402,000 per month in 2007 to $472,000
per month in 2015. Conversely, the monthly rental expense in the
New Headquarters Lease does not increase.
The Debtors' facilities under the New Headquarters Lease will
have a new interior with build-to-suit renovations. This helps
the Debtors reduce their total leased square footage by 50,000
square feet and increase the efficiency of the corporate
headquarters. Moreover, the New Headquarters Lease contains a
favorable termination option, which substantially reduces the
administrative expense risk associated with entering into a new
long-term lease. Mr. Carmel points out that the Debtors will not
be paying for idle, unoccupied space, but will have the ability
to expand their facilities should they need to do so.
Material terms of the New Headquarters Lease:
(a) Lease Term is 10 years and six months.
(b) Rent is $121,150 per month plus the Debtors' share of
expenses and taxes, beginning January 1, 2007.
(c) The Debtors will have the right to terminate the New
Headquarters Lease effective November 30, 2007, with at
least six months' advance written notice. In the event
the Debtors terminate the lease, they will be liable for
the costs of any lessor-made improvements to the
headquarters -- estimated to be $3,300,000 -- and an
additional $1,000,000.
(d) The Debtors will have the right of first refusal to lease
additional space at the new headquarters location during
the first two years of the Lease Term.
(e) Ttertt Associates will be responsible for the costs of
repair, maintenance and replacement of all internal and
external structural parts of the headquarters.
Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP,
represents C&A in its restructuring. Lazard Freres & Co., LLC,
provides the Debtor with investment banking services. Michael S.
Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents
the Official Committee of Unsecured Creditors Committee. When the
Debtors filed for protection from their creditors, they listed
$3,196,700,000 in total assets and $2,856,600,000 in total debts.
(Collins & Aikman Bankruptcy News, Issue No. 26; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: Can Hire New Executives According to KERP
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
authorized Collins & Aikman Corporation and its debtor-affiliates
to employ certain new executives and senior managers pursuant to
the terms of their Key Employee Retention Program.
As reported in the Troubled Company Reporter on Feb. 10, 2006, the
Debtors have concluded that certain changes are necessary to
enhance the quality of their senior management team and improve
prospects for maximizing recoveries for creditors.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, related that the
Debtors are seeking to fill these critical positions, each of
which is critical to overseeing the success of the Debtors'
business operations:
* Executive Vice President and Chief Technology Officer;
* Executive Vice President Commercial and Program Management;
* Vice President Advanced Manufacturing and Tooling;
* Vice President Finance Plastics; and
* Executive Vice President Human Resources
Employment Agreements
The Debtors want to proceed with employment offers to several new
executives and senior managers.
Mr. Schrock noted that the principal terms of the Employment
Agreements are similar and they include:
A. Annual Base Salaries
Position Annual Base Salary
-------- ------------------
EVP & Chief Technology Officer $400,000
EVP - Commercial & Program Management 425,000
EVP - Human Resources 250,000
VP - Advanced Manufacturing & Tooling 325,000
VP - Finance Plastics 225,000
B. Bonuses
(1) The Executive Vice President and Chief Technology Officer
and the Executive Vice President Commercial and Program
Management will each be paid a guaranteed annual bonus.
The annual bonus percentage will be 50% of the Employee's
base salary for the Employee's first year of employment.
The Employee also will be eligible to participate in the
Success Sharing Plan, under the Debtors' Key Employee
Retention Plan, at the discretion of the chief executive
officer.
(2) The Executive Vice President Human Resources and the Vice
President Advanced Manufacturing and Tooling will each be
entitled to participate in the Debtors' Retention Plan
pursuant to the KERP.
(3) The Vice President Finance Plastics will be paid a
guaranteed annual bonus. The annual bonus percentage for
the Employee will be 30% of the Employee's base salary for
the Employee's first year of employment. The Employee
also will be eligible to participate in the Success
Sharing Plan at the discretion of the chief executive
officer.
C. The Employee will be entitled to fringe benefits and
perquisites and to participate in pension, savings plan and
benefit plans, as are generally made available to similarly
situated executives and senior managers of the company during
the term of the employment agreement.
D. The company will reimburse the Employee for all reasonable
travel, entertainment and other reasonable business expenses
incurred by the Employee in connection with the performance
of his or her duties under the employment agreement, provided
that the Employee furnishes to the company adequate records
or other evidence respecting those expenditures. The
Executive Vice President and Chief Technology Officer will
also receive a moving allowance equal to $150,000.
E. The Executive Vice President and Chief Technology Officer and
Executive Vice President Commercial and Program Management
are each entitled to severance. If the Employee's employment
under the employment agreement is terminated prior to the
expiration of the term of the employment agreement as a
result of a No Cause Termination or a Constructive
Termination, the company will pay and provide to the Employee
base salary for 12 months in the case of the Executive Vice
President and Chief Technology Officer or six months in the
case of the Executive Vice President Commercial and Program
Management, based on the rate of base salary in effect
immediately preceding the Termination Date.
F. Every payment and distribution obligation of the Debtors
under the Employment Agreements will be treated as an
administrative expense pursuant to Section 503(b)(1)(A) of
the Bankruptcy Code.
Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP,
represents C&A in its restructuring. Lazard Freres & Co., LLC,
provides the Debtor with investment banking services. Michael S.
Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents
the Official Committee of Unsecured Creditors Committee. When the
Debtors filed for protection from their creditors, they listed
$3,196,700,000 in total assets and $2,856,600,000 in total debts.
(Collins & Aikman Bankruptcy News, Issue No. 26; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: Court Approves Steam Purchase Deal with Primary
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
authorized Collins & Aikman Corporation and its debtor-affiliates
to enter into an amended Steam Purchase Contract agreement with
Primary Energy of North Carolina LLC.
As reported in the Troubled Company Reporter on Feb. 10, 2006, the
Debtors operate a number of manufacturing plants throughout the
United States, each of which needs utility services based on the
manufacturing processes in those plants. In their plant at 1803
N. Main Street, Roxboro, North Carolina, the Debtors use steam as
part of the manufacturing process. Pursuant to a Steam Purchase
Contract entered into in December 1985, Primary Energy agreed to
provide steam to the Debtors.
On December 23, 2005, the Debtors and Primary Energy amended the
Agreement to provide that:
(a) Starting January 1, 2006, Primary Energy will not provide
the Debtors with compressed air, and Primary Energy will
continue to provide the Debtors with steam.
(b) Starting January 1, 2006, the cost of steam will be set at
a fixed rate rather then determined based on the formula
set forth in the Agreement.
(c) Primary Energy will provide a credit to the Debtors for
$50,000 to be applied in 12 equal monthly amounts.
In addition, the Debtors and Primary Energy executed a new Steam
Purchase Contract on December 23, 2005, with a term that begins
when the original Agreement expires on August 31, 2007.
The New Agreement provides that:
(a) Primary Energy agrees to supply and the Debtors commit to
purchase certain levels of steam generated by Primary
Energy's equipment at a price to be calculated based on
the provisions of the New Agreement.
(b) The term of the New Agreement is from September 1, 2007,
through August 31, 2017, but the Debtors' obligations
under the New Agreement terminate if the Debtors' dying
operations cease at the Roxboro, North Carolina plant on
six months' notice to Primary Energy.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, relates that
before agreeing to the Amendment and the New Agreement, the
Debtors explored alternative suppliers and considered building
their own steam generation facility. If the Debtors were to
pursue an alternative to Primary Energy, they would have to
contract with that alternative supplier in the near term so that
the proper infrastructure could be constructed, at significant
costs, in time to replace Primary Energy when the original
Agreement expires.
Because pursuing an alternative supplier is time and capital
intensive, the Debtors lose leverage in their negotiations with
Primary Energy as the expiration of the Original Agreement gets
closer, Mr. Schrock explains. Building their own steam
generating facility would require significant capital
expenditures by the Debtors for assets that likely would not be
marketable if the Debtors later choose to exercise their
bankruptcy rights and exit the Roxboro, North Carolina plant
Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP,
represents C&A in its restructuring. Lazard Freres & Co., LLC,
provides the Debtor with investment banking services. Michael S.
Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents
the Official Committee of Unsecured Creditors Committee. When the
Debtors filed for protection from their creditors, they listed
$3,196,700,000 in total assets and $2,856,600,000 in total debts.
(Collins & Aikman Bankruptcy News, Issue No. 26; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
COMMERCIAL CAPITAL: Fitch Holds B- Rating on $17 Mil. Class G Debt
------------------------------------------------------------------
Commercial Capital Access One, Inc.'s commercial mortgage
series 3, is upgraded by Fitch Ratings as:
-- $43.4 million class B to 'AAA' from 'AA+'
-- $43.4 million class C to 'A+' from 'A'
-- $19.5 million class D to 'BBB+' from 'BBB'
-- $6.5 million class E to 'BBB' from 'BBB-'
Fitch affirms these classes:
-- $183.7 million class A2 at 'AAA'
-- $100,000 class X at 'AAA'
-- $10.8 million class F at 'BB'
-- $17.3 million class G to 'B-'
Fitch does not rate class H. Class A-1 has paid off in full.
The upgrades are the result of improved credit enhancement levels
from principal paydown and amortization. As of the January 2006
distribution report, the transaction has paid down 28.5% to $311.3
million from $433.7 million at issuance. Bank of New York, as
master servicer, is not required and does not prepare a watchlist
for the portfolio. In addition, the transaction has historically
been slow to report financials.
34% of the remaining pool is covered by a limited guaranty
provided by Sun America, Inc. The guaranty requires Sun America
to pay the special servicer, on behalf of the trustee, an amount
equal to any realized losses arising from specially serviced
loans, or to purchase the specially serviced loans directly from
the trust. Prior losses have reduced the outstanding coverage
from $14.4 million at issuance to approximately $11.3 million.
There are two loans (10.5%) in special servicing. The largest
loan in special servicing (7.54%) is secured by a 618,899 square
foot office property located in St. Paul, Minnesota. The loan
transferred to the special servicer due to monetary default.
Foreclosure proceedings have begun, and recent appraisal value
indicates losses at liquidation.
The second largest asset in special servicing (2.51%) is secured
by a 230-room limited-service hotel located in Sandston, Virginia.
The loan transferred to special servicer due to monetary default
and became real estate owned in the end of year 2003. The
property is being marketed for sale. Recent appraisal value
indicates a potential loss upon the disposition of this asset.
CONGOLEUM CORP: U.S. Trustee Appoints 3-Member Bondholders' Panel
-----------------------------------------------------------------
Kelly Beaudin Stapleton, the United States Trustee for Region 3,
appointed three members to the Official Committee of Unsecured
Bondholders in Congoleum Corporation and its debtor-affiliates'
bankruptcy cases.
The Unsecured Bondholders' Committee members are:
(a) Robert A. Conrad
HSBC Bank USA, N.A.
As Successor Trustee Under Indenture
452 Fifth Avenue
New York, NY 10018
Tel: (212) 525-1314
Fax: (212) 525-1366
(b) Michael A. Brown
Deutsche Asset Management
1735 Market Street, 37th Floor
Philadelphia, PA 19103
Tel: (215) 405-5813
Fax: (215) 405-5974
(c) Philip Susser
Wells Capital Management
550 California Street
San Francisco, CA 94104
Tel: (415) 222-1563
Fax: (415) 975-7235
Headquartered in Mercerville, New Jersey, Congoleum Corporation --
http://www.congoleum.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The Company filed for
chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No.
03-51524) as a means to resolve claims asserted against it related
to the use of asbestos in its products decades ago. Richard L.
Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennanat, Esq.,
at Pillsbury Winthrop Shaw Pittman LLP represent the Debtors in
their restructuring efforts. Elihu Insulbuch, Esq., at Caplin &
Drysdale, Chartered, represents the Asbestos Claimants' Committee.
R. Scott Williams serves as the Futures Representative, and is
represented by lawyers at Swidler Berlin LLP. When Congoleum
filed for protection from its creditors, it listed $187,126,000 in
total assets and $205,940,000 in total debts.
At Sept. 30, 2005, Congoleum Corporation's balance sheet showed
a $35,614,000 stockholders' deficit compared to a $20,989,000
deficit at Dec. 31, 2004. Congoleum is a 55% owned subsidiary of
American Biltrite Inc. (AMEX: ABL).
CONGOLEUM CORP: Wants Ernst & Young to Continue as Auditor
----------------------------------------------------------
Congoleum Corporation and its debtor-affiliates ask the Honorable
Kathryn C. Ferguson of the U.S. Bankruptcy Court for the District
of New Jersey for permission to continue employing Ernst & Young
LLP as their auditor, nunc pro tunc to Feb. 1, 2006.
On Jan. 22, 2003, the Debtors asked the Court to approve E&Y's
employment as their auditor and tax advisor and the Court granted
that request on Apr. 12, 2004.
On Dec. 23, 2004, the Debtors requested that Ernst & Young
continue its work as the Debtors' auditor, and the Court approved
that extended engagement on Jan. 27, 2005.
Under a Supplemental Audit Engagement Letter, Ernst & Young's
scope of services will expand to include:
(a) annual audit of the financial statements of Congoleum
Corporation, included in its Annual Report on Form 10-K,
for the year ended Dec. 31, 2005;
(b) quarterly review of the financial information of Congoleum
Corporation, included in its 2006 Quarterly Reports on
Form 10-Q;
(c) research and consultations with management of the Company
regarding financial accounting and reporting matters;
(d) participation in all scheduled meetings of the Audit
Committee of Congoleum Corporation;
(e) attendance at Annual Meeting of the Shareholders of
Congoleum Corporation;
(f) preparation of management letter; and
(g) consultations and assistance in connection with the
Company's Sarbanes Oxley Section 404 compliance.
Jaime Pereira, a partner at Ernst & Young, discloses that the
Firm's professionals bill:
Designation Hourly Rate
----------- -----------
Partners & Principals $575 to $675
Senior Managers $515 to $550
Managers $430 to $480
Senior $310 to $380
Staff $180 to $240
Mr. Pereira assures the Court that Ernst & Young continues not to
hold or represent any interest materially adverse to the Debtors
in the matter the Firm has been retained.
Headquartered in Mercerville, New Jersey, Congoleum Corporation --
http://www.congoleum.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The Company filed for
chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No.
03-51524) as a means to resolve claims asserted against it related
to the use of asbestos in its products decades ago. Richard L.
Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennanat, Esq.,
at Pillsbury Winthrop Shaw Pittman LLP represent the Debtors in
their restructuring efforts. Elihu Insulbuch, Esq., at Caplin &
Drysdale, Chartered, represents the Asbestos Claimants' Committee.
R. Scott Williams serves as the Futures Representative, and is
represented by lawyers at Swidler Berlin LLP. When Congoleum
filed for protection from its creditors, it listed $187,126,000 in
total assets and $205,940,000 in total debts.
At Sept. 30, 2005, Congoleum Corporation's balance sheet showed
a $35,614,000 stockholders' deficit compared to a $20,989,000
deficit at Dec. 31, 2004. Congoleum is a 55% owned subsidiary of
American Biltrite Inc. (AMEX: ABL).
CONSUMERS TRUST: Panel to Conduct Probe of Voucher Program Agents
-----------------------------------------------------------------
The Hon. Robert E. Gerber of the U.S. Bankruptcy Court for the
Southern District of New York authorized The Consumers Trust and
its Official Committee Of Unsecured Creditors to examine, pursuant
to Rule 2004 of the Federal Rules of Bankruptcy Procedure:
-- Richard Caplan, Wesley Harrison, Andrew Davis and Dennis
Bonley;
-- Caplans Solicitors and the Davis Bonley accounting firm;
-- Consumer Promotions, Inc., and its principal, James P.
Rigsby;
-- CP Promotions Ltd.;
-- Eurofinance SA and its principal Adrian Roman;
-- Robin Wertheimer, Esq.;
-- Aaron J. Racine, Esq., and his law firm Monaco, Sanders,
Gotfredson, Racine & Barber, LC;
-- James R. Hobbs, Esq., and his law firm Wyrsch Hobbs &
Mirakian, PC; and
-- GT Enterprises, Inc.
The Committee and the Debtor, through David Rubin and Henry Lan --
Receivers appointed by order of the High Court of Justice,
Chancery Division in the United Kingdom -- will investigate the
Rule 2004 parties to gain a clear and accurate understanding of
the Debtor's business and financial affairs, and to determine if
there are additional assets, including potential causes of action,
to satisfy the claim of creditors.
The Receivers tell the Bankruptcy Court that the Rule 2004 parties
are effectively the owners, operators, attorneys, management and
sales agents of a sales promotion program launched by the Debtor
in 2002.
The Voucher Program
Under the sales promotion program, the Debtor issued redeemable
vouchers to consumers through merchants. Consumers who were
issued a voucher had the opportunity to redeem it for an amount of
up to the face amount of the voucher. Merchants were supposed to
pay the Debtor 15% of the face amount of each issued voucher.
The Debtor expected their scheme to work based on consumers
forgetting to redeem their vouchers and the rejection of vouchers
that fail to meet the qualifications of the program.
Mr. Roman had claimed that the Debtor needed only 40% of the 15%
paid by merchants to satisfy all validly redeemed vouchers. The
Debtor currently has over 65,000 creditors who hold vouchers,
issued through the sales promotion program, with an unsecured
claim amount that could exceed $163 million. The Debtor currently
has less than $9 million in cash-on-hand.
Fund Transfers
The Receivers have alleged that the Debtor receive over $24
million from merchants based on the structure of the voucher
program. They say that approximately $16 million, or 60%, of the
amount was transferred out from the Debtor and to the Rule 2004
parties.
Headquartered in London, England, The Consumers Trust filed for
chapter 11 protection on Dec. 5, 2005 (Bankr. S.D.N.Y. Case No.
05-60155). Jeff J. Friedman, Esq., at Katten Muchin Rosenman LLP,
represents the Debtor in its restructuring efforts. David L.
Barrack, Esq., at Fulbright & Jaworski L.L.P represents the
Official Committee of Unsecured Creditors. When the Debtor filed
for protection from its creditors, it estimated between $1 million
to $10 million in total assets and more than $100 million in total
debts.
CORUS GROUP: Finance Unit Allows Early Stock Redemption
-------------------------------------------------------
Stockholders of Corus Finance plc, a subsidiary of Corus Group
PLC, passed a resolution to grant the Company the ability to
redeem the stock early. The relevant supplemental trust deed has
now been executed.
The Company announces that:
(a) stock which is the subject of a valid offer to sell
pursuant to the invitation made on Feb. 1, 2006 (as
amended by RNS announcement on Feb. 13, 2006) will be
purchased on the terms of that offer; and
(b) stock which is not the subject of a valid offer to sell
pursuant to such invitation will be redeemed.
The Settlement Date is today, March 3, 2006.
Corus Group PLC -- http://www.corusgroup.com/-- is one of the
world's largest metal producers with a turnover of over
GBP9 billion and major operating facilities in the U.K., the
Netherlands, Germany, France, Norway, Belgium and Canada.
Operating through four divisions -- Strip Products, Long
Products, Aluminium and Distribution & Building Systems -- Corus
has over 48,000 employees in over 40 countries and sales offices
and service centers worldwide.
Corus was created through the merger of British Steel plc and
Koninklijke Hoogovens N.V. It suffered six years ago from the
crisis in British manufacturing, which prompted it to shake up
management, close plants, cut jobs, and sell assets to lower
debt. Its debt was thought to stand at GBP1.6 billion in 2002.
After posting a net loss of GBP458 million in 2003, it embarked
on a restructuring program, signed a new EUR1.2 billion banking
facility, and issued GBP307 million worth of shares. It
returned to operating profit in the first quarter of 2004. The
recent recovery of steel prices and the strength of the euro are
expected to help it achieve relatively strong earnings.
* * *
As reported in the Troubled Company Reporter-Europe on Feb. 9,
Fitch Ratings affirmed U.K.-based steel company Corus Group
PLC's ratings at Senior Unsecured 'BB-' and Short-term 'B'. The
Outlook is Stable.
At the same time, Fitch affirmed the ratings of Corus' debt
instruments as follows:
(a) Corus Group PLC EUR800 million 7.5% senior notes 'B+';
(b) Corus Group PLC EUR307 million 3.0% convertible
bonds 'B+';
(c) Corus Finance PLC GBP200 million 6.75% guaranteed
bonds 'B+';
(d) Corus Finance PLC EUR20 million 5.375% guaranteed
bonds 'B+'; and
(e) Corus Finance PLC GBP150 million 11.5% debenture
stock 'BBB-'.
Fitch also affirmed the ratings of Corus' other debt instruments
as below and simultaneously withdrawn them due to lack of
information. The agency will no longer provide rating coverage
of three instruments:
(a) Corus Group PLC EUR800 million senior secured bank
facilities 'BB';
(b) Corus Nederland BV EUR152 million 4.625% convertible
subordinated bonds 'BB+'; and
(c) Corus Nederland BV EUR136 million 5.625% unsecured
bonds 'BB+'.
The ratings reflect Corus' leading market position as the third-
largest steel producer in Europe by volume, and the continued
turnaround in the company's financial performance since 2003.
CREDIT SUISSE: Fitch Affirms BB Rating on Two Certificate Classes
-----------------------------------------------------------------
Fitch Ratings affirmed these Credit Suisse First Boston mortgage-
backed and home equity asset trust transactions (HEAT).
CSFB HEAT, Series 2004-1:
-- Class A at 'AAA'
-- Class M-1 at 'AA
-- Class M-2 at 'A'
-- Class M-3 at 'A'
-- Class B-1 at 'BBB+'
-- Class B-2 at 'BBB'
-- Class B-3 at 'BBB-'
CSFB HEAT, Series 2004-2:
-- Class A at 'AAA'
-- Class M-1 at 'AA
-- Class M-2 at 'A'
-- Class M-3 at 'A'
-- Class B-1 at 'A-'
-- Class B-2 at 'BBB+'
-- Class B-3 at 'BBB-'
CSFB HEAT, Series 2004-3:
-- Class A at 'AAA'
-- Class M-1 at 'AA
-- Class M-2 at 'A'
-- Class M-3 at 'A-'
-- Class B-1 at 'BBB+'
-- Class B-2 at 'BBB'
-- Class B-3 at 'BBB-'
CSFB HEAT, Series 2004-4:
-- Class A at 'AAA'
-- Class M-1 at 'AA+
-- Class M-2 at 'AA'
-- Class M-3 at 'AA-'
-- Class M-4 at 'A+'
-- Class M-5 at 'A'
-- Class M-6 at 'A-'
-- Class B-1 at 'BBB+'
-- Class B-2 at 'BBB'
-- Class B-3 at 'BBB-'
CSFB HEAT, Series 2004-5:
-- Class A at 'AAA'
-- Class M-1 at 'AA+
-- Class M-2 at 'AA'
-- Class M-3 at 'AA-'
-- Class M-4 at 'A+'
-- Class M-5 at 'A'
-- Class M-6 at 'A-'
-- Class B-1 at 'BBB+'
-- Class B-2 at 'BBB'
-- Class B-3 at 'BBB-'
CSFB HEAT, Series 2004-6:
-- Class A at 'AAA'
-- Class M-1 at 'AA+
-- Class M-2 at 'AA'
-- Class M-3 at 'AA-'
-- Class M-4 at 'A+'
-- Class M-5 at 'A+'
-- Class M-6 at 'A'
-- Class B-1 at 'A-'
-- Class B-2 at 'BBB+'
-- Class B-3 at 'BBB'
-- Class B-4 at 'BBB-'
CSFB HEAT, Series 2004-7:
-- Class A at 'AAA'
-- Class M-1 at 'AA+
-- Class M-2 at 'AA+'
-- Class M-3 at 'AA'
-- Class M-4 at 'AA-'
-- Class M-5 at 'A+'
-- Class M-6 at 'A'
-- Class B-1 at 'A-'
-- Class B-2 at 'BBB+'
-- Class B-3 at 'BBB'
-- Class B-4 at 'BBB-'
CSFB HEAT, Series 2004-8:
-- Class A at 'AAA'
-- Class M-1 at 'AA+
-- Class M-2 at 'AA'
-- Class M-3 at 'AA-'
-- Class M-4 at 'A+'
-- Class M-5 at 'A'
-- Class M-6 at 'A'
-- Class B-1 at 'A-'
-- Class B-2 at 'BBB+'
-- Class B-3 at 'BBB'
-- Class B-4 at 'BBB-'
CSFB mortgage-backed certificates, series 2005-1 Groups 1 & 3:
-- Class IA, IIIA at 'AAA'
-- Class CB-1 at 'AA'
-- Class CB-2 at 'A'
-- Class CB-3 at 'BBB'
-- Class CB-4 at 'BB'
CSFB mortgage-backed certificates, series 2005-2
Groups 1, 3 & 4:
-- Class IA, IIIA, IVA at 'AAA'
CSFB mortgage-backed certificates, series 2005-2
Groups 2, 5, & 6:
-- Class IIA, VA, VIA at 'AAA'
-- Class DB-3 at 'BBB-'
CSFB mortgage-backed certificates, series 2005-3
Groups 1, 2 & 6:
-- Class IA, IIA, VIA at 'AAA'
CSFB mortgage-backed certificates, series 2005-3
Groups 3, 4, 5 & 7:
-- Class IIA, IVA, VA, VIIA at 'AAA'
-- Class CB-1 at 'AA'
-- Class CB-2 at 'A'
-- Class CB-3 at 'BBB'
-- Class CB-4 at 'BB'
The affirmations reflect a stable relationship between credit
enhancement (CE) and expected loss and affect approximately $5.10
billion in outstanding certificates.
CE for the above HEAT transactions is provided by subordination,
overcollateralization, and excess interest cash flow. CE for all
the other transactions is provided only through subordination.
The collateral for the above HEAT transactions consists of first
and second lien, fixed- and adjustable-rate mortgages extended to
subprime borrowers. The collateral for all the other transactions
consist of fixed-rate mortgage loans secured by first liens on
one- to four-family residential properties.
As of the January 2006 distribution date, the transactions are
seasoned from a range of only 10 to 20 months and the pool factors
(current mortgage loan principal outstanding as a percentage of
the initial pool) range from 35% to 89%.
The mortgage loans are being serviced by Ocwen Financial Corp.
('RPS2', rated by Fitch) and Wells Fargo Bank, N.A. ('RMS1' rated
by Fitch). The depositor is Credit Suisse First Boston.
DELTA AIRLINES: Comair Flight Attendants Considering Strike
-----------------------------------------------------------
The executive board of Teamsters Local 513 yesterday passed a
resolution that lays the foundation for a possible strike by 818
Comair Airlines flight attendants. Cincinnati-based Local 513
Executive Board members unanimously passed the resolution,
condemning the company's unreasonable concession demands.
As previously reported in the Troubled Company Reporter, Comair,
Inc., a debtor-affiliate of Delta Air Lines, asked the U.S.
Bankruptcy Court for the Southern District of New York for
authority to reject its collective bargaining agreement with 970
flight attendants, represented by the International Brotherhood of
Teamsters.
Hearings are scheduled in New York City from March 27-29. The
average Comair flight attendant, who Delta estimates to earn
$28,000 per year, would see a cut of $10,880, or 38% -- including
deep cuts in health care coverage and the elimination of their
retirement plan.
"This resolution establishes the process of seeking workers'
authorization for a strike -- the ultimate decision will come from
the workers," said Victoria Gray, International Representative for
the Teamsters Airline Division. "The company's demands are
unreasonable, and we plan to fight them in court, ensuring that
this strike doesn't come about."
Founded in 1903, the Teamsters Union represents more than 1.4
million hardworking men and women in the United States and Canada.
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.
DOBSON COMMS: Completes Redemption of All Outstanding Stock
-----------------------------------------------------------
Dobson Communications Corporation (Nasdaq:DCEL) completed the
redemption of all of the remaining outstanding shares of its:
* 12-1/4% Senior Exchangeable Preferred Stock
(CUSIP: 256069-30-3) and
* 13% Senior Exchangeable Preferred Stock
(CUSIP: 256072-50-5).
The cash redemption price for the 12-1/4% Senior Exchangeable
Preferred Stock is $1,220.38 per share, which represents 100.000%
of the liquidation preference, plus an amount in cash equal to all
accumulated and unpaid dividends (including applicable interest
for accrued but unpaid dividends) up to, but not including, the
redemption date of March 1, 2006. The cash redemption price for
the 13% Senior Exchangeable Preferred Stock is $1,270.98 per
share, which represents 104.333% of the liquidation preference,
plus an amount in cash equal to all accumulated and unpaid
dividends (including applicable interest for accrued but unpaid
dividends) up to, but not including, the redemption date of
March 1, 2006.
The total redemption price of $41.7 million for the Preferred
Stock was funded from a distribution of cash on hand from Dobson
Cellular Systems, Inc., an indirect wholly-owned subsidiary of the
Company. The redemption reduces outstanding Preferred Stock by
$33 million and will save the Company approximately $4 million in
future annual dividends.
Headquartered in Oklahoma City, Dobson Communications Corporation
-- http://www.dobson.net/-- provides wireless phone services to
rural markets in the United States and owns wireless operations in
16 states.
Dobson Communications Corp.' 8-7/8% Senior Notes due 2013 carry
Moody's Investors Service's Caa2 rating and Standard & Poor's CCC
rating.
EASYLINK SERVICES: Earns $352,000 in Fourth Quarter
---------------------------------------------------
EasyLink Services Corporation (NASDAQ: EASY) disclosed its
financial results for the fourth quarter and year ended
December 31, 2005.
Net income was $352,000 compared to net income of $765,000 for the
fourth quarter of 2004. Revenues for the fourth quarter of 2005
were $18.5 million as compared to $19.7 million during the third
quarter of 2005 and $20.9 million in the fourth quarter of 2004.
Gross margin was 61% in the fourth quarter of 2005 and 2004 as
compared to 59% in the third quarter of 2005.
The Company further reported that it achieved Earnings before
interest, taxes, depreciation and amortization (EBITDA) of
$1.6 million in the fourth quarter of 2005 as compared to EBITDA
during the fourth quarter of 2004 of $2.8 million. EBITDA for the
fourth quarter included a gain of $.4 million related to the
settlement with our former minority partner in our Singapore and
Malaysia businesses which concludes the restructuring of these
operations begun earlier in 2005. The company's fourth quarter
2004 EBITDA included a gain of $984,000 related to debt
restructuring. EBITDA is not a financial measure within generally
accepted accounting principles (GAAP).
The Company's cash and cash equivalents balance at the end of the
fourth quarter 2005 was $6.3 million as compared to $8.4 million
as of September 30, 2005, and $12.2 million as of Dec. 31, 2004.
The year over year decline in cash includes the retirement of
subordinated debt in the first quarter of 2005 of $1.4 million,
principal payments on existing debt of $2.4 million and capital
spending of $4.6 million, an increase of $2 million over 2004.
This cash outlay was partially offset by the sale of our
Infocrossing stock for $1.0 million and the sale of the call
right to the Domain Name service line for $1.8 million of which
$.8 million of cash was received in 2005. Net cash from operating
activities in 2005 was approximately breakeven.
Thomas Murawski, Chairman, President and Chief Executive Officer
of EasyLink, said, "We finished the fourth quarter of 2005 where
we expected as we continue to re-architect this business around
Transaction Management Services to reverse the trend of revenue
declines and put the company on a sustainable growth footing.
While we continued to make progress during 2005, we were not at
the pace we originally anticipated, primarily due to delays
introduced by the restructuring of our sales organization, as well
as project implementation delays with certain customers. Still,
our Transaction Management showed good growth ending the year at
$16.3 million, up $4 million or 33% from a year ago. Transaction
Management now represents approximately 21% of EasyLink's total
business, up from 16% a year ago. Based on a healthy pipeline of
new Transaction Management business generated by our restructured
sales organization, which is now fully trained and becoming
increasingly productive, we expect Transaction Management revenue
to show continued strong growth.
Transaction Delivery Services revenue continued to decline
throughout 2005, in line with our expectations. However, it is
important to remember that Transaction Delivery continues to
generate cash to fund EasyLink's growth initiatives, and, based on
our analysis of this business, we expect to reduce the rate of
decline from 19% during 2005 to an estimated 11% this year. The
Company expects this improvement to be driven by modest growth in
EDI revenue, and a lower rate of decline in our legacy text-to-fax
services revenue.
The net of all of this is reflected in our guidance for 2006,
which indicates a range of performance improvement from a
significant slowing in the Company's revenue decline to a modest
growth versus 2005. The Company believes this plan is attainable
due to the increasing productivity of our sales organizations,
visibility into already closed and ramping business, increasing
new business pipeline, and favorable indicators relating to the
rate of decline of our Transaction Delivery revenue".
Full Year 2005 Results (Unaudited)
Revenues for the year ended December 31, 2005 were $78.7 million
as compared to $91.8 million in the year ended December 31, 2004.
The Company reported a net loss for the year ended December 31,
2005 of $ (1.3) million compared to net income of $7.7 million for
the year ended December 31, 2004. Earnings before interest,
taxes, depreciation and amortization for the full year 2005
amounted to $5.4 million as compared to $17.7 million for the full
year 2004, which included gains on the sale of our Mailwatch and
Domain Name service lines.
Business Outlook
EasyLink expects this revenue performance for the first and second
quarters of 2006:
-- first quarter revenues in the range of $18.3 million to
$18.5 million with TMS revenues in the range of $4.3 million
to $4.5 million and TDS revenues of approximately
$14 million;
-- second quarter revenues in the range of $18.5-$19.5 with TMS
revenues in the range of $5.0 million to $5.5 million and
TDS revenues in the range of $13.5 million to $14 million;
For the full year 2006 EasyLink expects:
-- revenues are expected to be in the range of $75 million to
$80 million; and
-- Net income per share is expected to be approximately
breakeven.
EasyLink Services Corporation (NASDAQ: EASYE), --
http://www.EasyLink.com/-- headquartered in Piscataway, New
Jersey, is a leading global provider of outsourced business
process automation services that enable medium and large
enterprises, including 60 of the Fortune 100, to improve
productivity and competitiveness by transforming manual and
paper-based business processes into efficient electronic business
processes. EasyLink is integral to the movement of information,
money, materials, products, and people in the global economy,
dramatically improving the flow of data and documents for
mission-critical business processes such as client communications
via invoices, statements and confirmations, insurance claims,
purchasing, shipping and payments. Driven by the discipline of
Six Sigma Quality, EasyLink helps companies become more
competitive by providing the most secure, efficient, reliable, and
flexible means of conducting business electronically.
* * *
Going Concern Doubt
KPMG LLP expressed substantial doubt about EasyLink's ability to
continue as a going concern after it audited the company's
financial statements for the fiscal year ended Dec. 31, 2004.
The company said it again received that going concern
qualification notwithstanding the significant improvements in its
financial condition and results of operations over the past three
years. The auditors point to the company's working capital
deficiency and accumulated deficit. The company also received
qualified opinions from its auditors in 2000, 2001, 2002 and 2003.
EMCOR GROUP: Earns $19.5 Million from 2005 Continuing Operations
----------------------------------------------------------------
EMCOR Group, Inc., earned $19.5 million from continuing operations
for the fourth quarter of 2005. The income is an increase of
89.5% compared to income from continuing operations of $10.3
million in the fourth quarter of 2004.
EMCOR's revenues in the 2005 fourth quarter rose 1.2% to $1.24
billion from $1.22 billion in the same quarter of the preceding
year. For the same quarter period, the Company's operating income
is $31.2 million compared to operating income of $22.8 million in
the fourth quarter of 2004, which 2004 fourth quarter included
restructuring expenses of $2.3 million.
The Company's operating margin improved to 2.5% of revenues in the
2005 fourth quarter, compared to 1.9% for the fourth quarter of
2004. According to the Company, the improvement reflects improved
market conditions and actions it has taken to control costs and
shift its total backlog mix to a higher percentage of private
sector commercial contracts.
Due to increased incentive compensation expense, the Company's
selling, general and administrative expenses for the fourth
quarter of 2005 is $125.2 million, compared to $103.2 million in
the fourth quarter of 2004.
At Dec. 31, 2005, the Company's contract backlog is $2.76 billion,
approximately even with backlog levels at both Dec. 31, 2004 and
Sept. 30, 2005.
The Company's backlog levels have been managed in keeping with its
strategy throughout 2005 to reduce its exposure to selected public
sector construction projects and to conserve capacity for the more
lucrative private sector market. Private sector commercial
backlog represented 35% of total backlog at Dec. 31, 2005,
compared to 28% of total backlog in 2004.
For the year ended Dec. 31, 2005, the Company's income from
continuing operations increased 84.2% to $61.3 million versus
$33.3 million for 2004, while its net income for 2005 is $60.0
million, an increase of 80.8% from net income of $33.2 million in
2004.
For 2005, the Company's revenues totaled $4.71 billion, roughly
equal to revenues of $4.72 billion in the prior year and its
operating income for 2005 rose 92.0% to $81.1 million from $42.3
million in 2004.
The Company's financial results for the fourth quarter and full
year periods have been adjusted to reflect its 2-for-1 stock
split, effective Feb. 10, 2006.
"[O]ur performance in the fourth quarter of 2005. . .capped an
excellent year for [the Company] both operationally and
financially. Our results are the culmination of the successful
execution of our strategy to realign resources so as to focus on
our core operational areas, to exercise discipline in our project
bidding and to optimize our cost structure," Frank T. MacInnis,
Chairman and CEO of EMCOR Group, remarks.
Headquartered in Norwalk, Connecticut, EMCOR Group, Inc. --
http://www.emcorgroup.com/-- is a worldwide leader in mechanical
and electrical construction services and facilities services.
* * *
EMCOR Group, Inc.'s $200 million subordinated debt carries Moody's
Ba3 rating. With a stable outlook, Moody's also rated the
Company's long term corporate family rating at Ba1. Both ratings
were placed on Oct. 31, 2002.
On Jan. 28, 2005, Standard & Poor's assigned the Company BB+
issuer credit ratings with a stable outlook.
ENGINEERED METALS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: The Engineered Metals Company, Inc.
dba EMCO
8754 Avator Circle
Fair Oaks, Texas 78015
Bankruptcy Case No.: 06-50331
Type of Business: The Debtor previously filed for chapter 11
protection on April 22, 2005 (Bankr. W.D. Tex.
Case No. 05-52307).
Chapter 11 Petition Date: February 28, 2006
Court: Western District of Texas (San Antonio)
Judge: Leif M. Clark
Debtor's Counsel: Claiborne B. Gregory, Jr., Esq.
Jackson Walker L.L.P.
112 East Pecan, Suite 2100
San Antonio, Texas 78205
Tel: (210) 978-7700
Fax: (210) 242-4607
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
------ --------------- ------------
Emerson Construction Co., Inc. $255,000
c/o Paul H. Sanderford, Esq.
Pratt & Sanderford, P.C.
2114 Birdcreek Dr., Suite 100
Temple, TX 76502
Metecno-Api $206,921
Metcno Building Systems, Inc.
P.O. Box 460
Ceres, CA 95307
R.E. Williams General $78,484
Contractor Inc.
c/o Jared G. Le Blanc, Esq.
700 Louisiana, Suite 5100
Houston, TX 77002
Morin Corp. $59,828
Alcoa Cladding $50,000
Centre Insurance Company $49,097
H & E Highlift $48,512
Noack & Dean $45,000
Sunbelt Rentals Judgment $39,310
Fabral $33,038
Hertz Equipment Rental $27,008
Atlas Bolt & Screw $24,526
Aluma Shield Industries $21,910
Rolls Scaffolding $18,511
Dynamic Fastener $15,990
Airolite $14,445
Umicore Building Products $14,356
USA, Inc.
Michael Shipley $11,358
William L. Baker, Esq. $10,130
Metal Structural Systems, $9,808
Inc.
ENTRAVISION COMMS: Incurs $9.66 Net Loss in Fiscal Year 2005
------------------------------------------------------------
Entravision Communications Corporation (NYSE: EVC) reported
financial results for the fourth quarter and fiscal year ended
December 31, 2005.
For the fourth quarter 2005, the company reported a $3.42 million
of net income compared to a $2.6 million of net income for the
same period of 2004.
Net revenue increased to $73.2 million for the three-month period
ended December 31, 2005 from $68.0 million for the three-month
period ended December 31, 2004, an increase of $5.2 million, or
8%. The overall increase came mainly from the company's
television segment, which accounted for an increase of $3.0
million. The increase from this segment was primarily
attributable to an increase in local and national advertising
sales, primarily due to an increase in advertising rates.
Additionally, $1.4 million of the overall increase came from the
company's radio segment. The increase from this segment was
primarily attributable to an increase in local advertising rates,
as well as revenue associated with radio station KDLD-FM/KDLE-FM.
The remaining $800,000 of the increase came from the company's
outdoor segment and was primarily attributable to an increase in
advertising rates and higher occupancy, as well as revenue
associated with the expansion of the company's outdoor division in
Sacramento.
Company operating expenses increased to $44.1 million for the
three-month period ended December 31, 2005 from $41.6 million for
the three-month period ended December 31, 2004, an increase of
$2.5 million, or 6%. Of the overall increase, $1.1 million came
from the company's television segment. The increase from this
segment was primarily attributable to an increase in commissions
and other sales-related expenses associated with the increase in
net revenue. Additionally, $700,000 of the overall increase came
from the company's radio segment. The increase from this segment
was primarily attributable to expenses associated with radio
station KDLD-FM/KDLE-FM, as well an increase in sales related
expenses and talent fees. The remaining $700,000 of the overall
increase came from the company's outdoor segment and was primarily
attributable to increased leasing expense and expenses associated
with the expansion of the company's outdoor division in
Sacramento.
Broadcast cash flow increased to $29.0 million for the three-month
period ended December 31, 2005 from $26.4 million for the three-
month period ended December 31, 2004, an increase of $2.6 million,
or 10%.
Corporate expenses were $4.2 million for each of the three-month
periods ended December 31, 2005 and 2004. The company experienced
increased expenses, primarily attributable to higher wages and
expenses associated with the company's compliance with the
Sarbanes-Oxley Act of 2002 that were offset by lower legal and
insurance expense.
Financial Results for Fiscal Quarter 2005
For the fiscal quarter 2005, the company reported $9.66 million
net loss compared to a $6.16 million of net income for the same
period of 2004.
Net revenue increased to $281.0 million for the year ended
December 31, 2005 from $259.1 million for the year ended
December 31, 2004, an increase of $21.9 million, or 8%. Of the
overall increase, $10.3 million came from the company's television
segment. The increase from this segment was primarily
attributable to an increase in local and national advertising
sales, primarily attributable to increased advertising sold.
Additionally, $8.3 million of the overall increase came from the
company's radio segment. The increase from this segment was
primarily attributable to an increase in local advertising rates,
as well as revenue associated with radio station KBMB-FM acquired
in the second half of 2004 and from radio station KDLD-FM/KDLE-FM.
The remaining $3.3 million of the increase came from the company's
outdoor segment and was primarily attributable to an increase in
both local and national advertising rates, as well as revenue
associated with the expansion of the company's outdoor division in
Sacramento.
Company operating expenses increased to $171.8 million for the
twelve-month period ended December 31, 2005 from $162.3 million
for the twelve-month period ended December 31, 2004, an increase
of $9.5 million, or 6%. Of the overall increase, $4.0 million
came from the company's television segment. The increase from
this segment was primarily attributable to a one-time recovery of
expenses of $1.0 million in the prior year in accordance with the
terms of an amendment to the company's TeleFutura marketing and
sales agreement with Univision, an increase in commissions and
other sales-related expenses associated with the increase in net
revenue, an increase in salaries due to the addition or expansion
of the company's newscast operations in the San Diego, Santa
Barbara and Boston markets, partially offset by a decrease in bad
debt expense. Additionally, $3.3 million of the overall increase
came from the company's radio segment. The increase from this
segment was primarily attributable to expenses associated with
radio station KBMB-FM acquired in the second half of 2004 and
radio station KDLD-FM/KDLE-FM. The remaining $2.2 million of the
increase came from the company's outdoor segment and was primarily
attributable to increased leasing expense and expenses associated
with the expansion of the company's outdoor division in
Sacramento.
Broadcast cash flow increased to $109.2 million for the twelve-
month period ended December 31, 2005 from $96.7 million for the
twelve-month period ended December 31, 2004, an increase of $12.5
million, or 13%.
Corporate expenses decreased to $16.7 million for the year ended
December 31, 2005 from $16.8 million for the year ended
December 31, 2004, a decrease of $100,000. The company
experienced increased expenses, primarily attributable to higher
wages and expenses associated with the company's compliance with
the Sarbanes-Oxley Act of 2002, including internal controls, that
were offset by expenses related to financing the repurchase of the
company's Series A preferred stock in the prior year.
Headquartered in Santa Monica, California, Entravision
Communications -- http://www.entravision.com/-- is a diversified
Spanish-language media company utilizing a combination of
television, radio and outdoor operations to reach approximately
75% of Hispanic consumers across the United States, as well as the
border markets of Mexico. Entravision is the largest affiliate
group of both the top- ranked Univision television network and
Univision's TeleFutura network, with television stations in 20 of
the nation's top 50 Hispanic markets in the United States.
Entravision owns and operates one of the nation's largest groups
of primarily Spanish-language radio stations, consisting of 54
owned and operated radio stations in 21 U.S. markets.
Entravision's outdoor advertising operations consist of
approximately 11,100 advertising faces located primarily in Los
Angeles and New York. Entravision shares of Class A Common Stock
are traded on The New York Stock Exchange under the symbol: EVC.
* * *
As reported in the Troubled Company Reporter on Sept. 9, 2005,
Moody's Investors Service assigned a Ba3 rating to Entravision
Communications Corporation's proposed senior secured bank credit
facilities totaling $650 million ($150 million revolving credit
facility, $500 million term loan). In addition, Moody's upgraded
the corporate family rating to Ba3 from B1. The proceeds from the
new facilities will be used to:
* refinance outstandings under the existing senior secured
credit facilities;
* tender for the company's 8.125% senior subordinated notes
due 2009; and
* fund general corporate purposes.
The ratings assignment and upgrade continue to reflect:
* the company's strong operating performance;
* the robust growth prospects of Spanish-language media;
* Moody's belief that the company's aggressive acquisition
strategy has slowed given the lack of opportunities deemed
attractive by management; and
* the likelihood of further deleveraging due to continued
organic growth in cash flow.
Moody's took these rating actions:
1) assigned a Ba3 rating to $150 million senior secured
revolving credit facility due 2012;
2) assigned a Ba3 rating to $500 million senior secured term
loan due 2013; and
3) upgraded the corporate family rating to Ba3 from B1.
Moody's withdrew the B1 ratings on the company's existing senior
secured credit facilities. Additionally, Moody's will withdraw
the B3 rating on the $225 million of 8.125% senior subordinated
notes due 2009 upon completion of the redemption.
Moody's said the rating outlook is stable.
ERA AVIATION: Wants to Assume AAL Aircraft Trust Lease
------------------------------------------------------
Era Aviation, Inc., asks the U.S. Bankruptcy Court for the
District of Alaska for permission to assume its Aircraft Lease
Agreement dated June 10, 2005, with AAL Aircraft Trust, c/o Wells
Fargo Delaware Trust Company.
The Lease Agreement covers the lease of a DeHavilland Dash 8 - 37
passenger twin propeller aircraft with Registration Number N735AG,
Serial Number 258. Under that Lease Agreement, the Debtor
exercised the first of three one-year lease extensions on
Sept. 27, 2005, extending the term of the aircraft lease for 12
months until Dec. 10, 2006.
Pursuant to 11 U.S.C. Section 1110(a)(2), the Debtor agrees to
perform all obligations required under the Aircraft Lease
Agreement with AAL Aircraft. The Debtor tells the Court that due
to the importance of the Lease Agreement to its air transportation
business, assumption of the lease is in the best interests of its
estate so it can continue its core operations of providing
passenger air transportation.
The Debtor assures the Court that it has provided adequate
assurance of future performance under Section 365(b)(1)(C) of the
Bankruptcy Code because it has more than sufficient cash to
satisfy all of its ongoing obligations under the lease.
Headquartered in Anchorage, Alaska, Era Aviation, Inc. --
http://www.flyera.com/-- provides air cargo and package express
services. The Company filed for chapter 11 protection on Dec. 28,
2005 (Bankr. D. Ak. Case No. 05-02265). Cabot C. Christianson,
Esq., at Christianson & Spraker, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated assets and debts between $10 million
and $50 million.
FACEPRINT GLOBAL: Dec. 31 Balance Sheet Upside-Down by $1.4 Mil.
----------------------------------------------------------------
FacePrint Global Solutions, Inc., delivered its quarterly report
on Form 10-QSB for the quarter ended Dec. 31, 2005, to the
Securities and Exchange Commission on Feb. 21, 2006.
FacePrint reported a $470,915 net loss on $65 of revenue the
quarter ended Dec. 31, 2005. At Dec. 31, 2005, the Company's
balance sheet showed $5,855 in total assets and $1,483,586 in
total liabilities, resulting in a stockholders' deficit of
$1,477,731.
A full-text copy of the regulatory filing is available at no
charge at http://researcharchives.com/t/s?5fe
Going Concern Doubt
Pritchett, Siler & Hardy, PC, expressed substantial doubt about
FacePrint's ability to continue as a going concern after it
audited the Company's financial statements for the years ended
March 31, 2005 and 2004. The auditing firm pointed to the
Company's failure to establish profitable operations and working
capital deficit.
About FacePrint
Headquartered in Fresno, California, FacePrint Global Solutions,
Inc. -- http://www.faceprint.tv-- marshals the talent and
experience of its team of professionals to create imaginative
technology solutions addressing the critical needs in facial
recognition related to identity verification, crime-prevention and
worldwide efforts against terrorism. FGS is developing a new
methodology and industry standard called the "E-DNA Bioprint
Coding System, for the transmission of data related to individual
faces. Grounded in biometrics, FGS's solutions encompass a unique
composite-picture driven facial recognition system, as presently
demanded by both the private and public sectors.
FIBERVISIONS DELAWARE: Moody's Junks Rating on $20MM Senior Loan
----------------------------------------------------------------
Moody's Investors Service assigned a B2 Corporate Family Rating to
FiberVisions Delaware Corporation, a B2 rating to its $90 million
first lien credit facilities, comprised of a $20 million revolving
credit facility and $70 million first lien term loan, and a Caa1
rating to its $20 million second lien term loan. The debt is
being taken on in connection with the sale by Hercules Corporation
of a 51% interest in its FiberVisions subsidiary to Snow, Phipps &
Guggenheim L.P., an affiliate of SPG Partners LLC, a New York-
based private equity firm. The ratings outlook is stable. This
is a first time rating for the company.
Ratings Assigned:
Issuer: FiberVisions Delaware Corporation
* Corporate Family Rating -- B2
* $20 Million Guaranteed Senior Secured First Lien Revolving
Credit Facility Due 2011--B2
* $70 Million Guaranteed Senior Secured First Lien Term Loan
Due 2013 -- B2
* $20 Million Guaranteed Senior Secured Second Lien Term Loan
Due 2013 -- Caa1
The primary ratings factors currently influencing FiberVisions
rating and stable outlook are:
Size and Stability -- FiberVisions modest size with 2005
revenues of approximately $280 million is reflective of a B
rating. FiberVisions operates in a very fragmented market
with one division, as one would expect with a concentrated
product portfolio. The general cyclical nature of the
business and the volatility in FiberVisions EBITDA returns
over the past three years also indicate a B rating. A
positive for the firm is its relatively high market share
in the global polyolefin staple fiber market, which is more
than 50% larger than its nearest competitor.
Business Profile -- FiberVisions has a business profile
assessment score that places it in the B rating category.
Key criteria when considering FiberVisions business profile
assessment is the commodity-like nature of some of its
product line and the exposure to volatile raw materials --
polypropylene.
The firm is not backwardly integrated into polypropylene
and can not hedge its exposure to polypropylene, but must
attempt to pass through its raw materials cost increases to
its customers, something FiberVisions has been successful
at doing for most customers.
Moody's notes that FiberVisions narrow product line
contributes to risk as does the customer concentration, but
this is somewhat offset by the long-term relationships it
has had with its top ten customers, its sales to a wide
variety of applications across global markets and its
diverse manufacturing base with four plants located in the
US, Denmark and China. With the exception of the more
specialized bi-component fibers, FiberVisions products are
typically commodity-like, with relatively low margins and
generally lack patent protection. The bi-component fiber
area does use proprietary technology and enjoys higher
margins and performance advantages over other products, but
typically this advantage does not last long as competitors
in the market will improve their alternative products.
Also this business is conducted through a joint venture
with Chisso Corporation, who has been responsible for
developing much of the technology. However, going forward
all new technology will be controlled and owned by the
joint venture.
Financial Strength -- The past performance of FiberVisions has
been variable and generally not strong, primarily
reflecting the variability of gross margins resulting from
impacts of raw material price swings and other input costs.
Moody's notes that the company has taken steps to pass
through higher manufacturing costs to many, but not all
customers, and improve operating margins, but FiberVisions
may still be faced with higher polypropylene raw material
input costs in 2006 and must demonstrate that it can grow
volumes in key product areas to offset the declining
volumes in other areas.
The stable outlook reflects the expectation for modest growth in
FiberVisions end markets and the near-term outlook for lower
volatility in polypropylene raw material costs than experienced in
2005. The financial metrics might support a higher rating, if the
company were to meet its financial projections. This would
include achieving stable or growing product sales volumes,
improving EBITDA margins and generating meaningful free cash flow
which would be applied towards reducing debt. 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
financial strength metrics deteriorate.
The notching of the first lien bank debt at the level of the
corporate family rating reflects the fact that the first lien bank
debt represents the great majority of the company's debt. The
company's U.S. obligations under the first and second lien debt
will be secured by substantially all assets of the US borrower and
guarantors of the debt as well as 66% of the voting stock of any
foreign subsidiary. Additionally, the portion of the first lien
loan borrowed by FiberVisions' subsidiary in Denmark will benefit
from a perfected first-priority pledge of substantially all the
assets of the U.S. borrower, U.S. guarantors, the Danish borrower
and the Danish subsidiary guarantors, as well as 100% of the
capital stock of the Danish borrowers and Danish subsidiary
guarantors.
Hercules is selling a majority stake in its FiberVisions business
to SPG in exchange for a $109 million upfront cash payment and
potential payments based on FiberVisions' operating performance in
2006 and 2007. SPG will have an option to increase its ownership
by 14% to 65% in January 2007. The acquisition is being financed
with equity capital from SPG and $90 million of debt. Of the $70
million first lien term loan, $40 million will be borrowed by
FiberVisions' Danish subsidiary and the remaining $30 million will
be borrowed by FiberVisions in the U.S.
FiberVisions, headquartered in Wilmington, Delaware, is the
world's largest producer of polypropylene-based staple fiber for
nonwoven fabrics and textile fibers used in consumer and
industrial products. FiberVisions through its ES FiberVisions
joint venture is also the world's largest supplier of bi-component
fibers. The firm has four manufacturing facilities in three
continents and 510 employees worldwide. Revenues for LTM Dec. 31,
2005, were approximately $280 million.
FIBERVISIONS DELAWARE: S&P Junks Rating on $20 Mil. Sr. Facility
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to FiberVisions Delaware Corp. The outlook is
stable.
At the same time, Standard & Poor's assigned a 'B' bank loan
rating and recovery rating of '3' to FiberVisions' proposed $90
million first-lien senior secured credit facility, based on
preliminary terms and conditions. The rating on the first-lien
bank loan is the same as the corporate credit rating; this and the
'3' recovery rating indicate that bank lenders can expect
meaningful (50% to 80%) recovery of principal in the event of a
payment default.
Standard & Poor's also assigned a 'CCC+' bank loan rating and
recovery rating of '5' to FiberVisions' proposed $20 million
second-lien senior secured credit facility, based on preliminary
terms and conditions. The rating on the second-lien bank loan is
two notches below the corporate credit rating; this and the '5'
recovery rating reflect a limited security package, given the
substantial amount of priority obligations, indicating that
creditors would receive a negligible (0%-25%) amount of principal
in the event of a payment default.
Transaction proceeds will be used to finance the acquisition of a
51% equity stake in FiberVisions by Snow, Phipps & Guggenheim L.P.
(SPG), an affiliate of SPG Partners LLC., a New York City-based
private equity firm. Hercules Inc. (BB/Stable/--), the current
parent, will retain a 49% stake in the firm.
"The ratings on FiberVisions reflect a vulnerable business risk
profile with significant customer concentration and exposure to
technology changes in the nonwoven segment, as well as a highly
leveraged financial position," said Standard & Poor's credit
analyst George Williams.
Additional concerns include the company's relatively narrow
business focus and weak margins because of participation in the
fragmented and competitive staple fiber industry. These factors
are somewhat mitigated by:
* FiberVisions' leading market share in staple fibers;
* some geographical diversification through plant locations on
three continents; and
* moderate end-market diversity.
With about $283 million in sales in 2005, Wilmington, Delaware-
based FiberVisions is a well-established producer of polypropylene
staple fibers used in the:
* sanitary,
* textile,
* industrial, and
* construction industries.
The stable outlook is supported by:
* expectations of continued growth in the wipes and bicomponent
fibers markets; and
* the company's continued generation of modest free cash flow
to use for debt reduction.
These factors should offset concerns about low profit margins and
FiberVisions' narrow scope of operations. Ratings could be
lowered if margins decline or if the company fails to maintain
adequate liquidity. The ratings could also come under pressure
if:
* poor operating performance,
* higher capital expenditures,
* debt-financed acquisitions, or
* shareholder initiatives
hinder debt reduction.
Prospects for a rating upgrade will be limited by the company's
vulnerable business risk profile.
FIRST FRANKLIN: DBRS Assigns BB (High) Rating to Class B Certs.
---------------------------------------------------------------
Dominion Bond Rating Service assigned these ratings to Mortgage
Pass-Through Certificates, Series 2006-FF2 issued by First
Franklin Mortgage Loan Trust 2006-FF2:
Mortgage Pass-Through Certificates, Series 2006-FF2
* US$215.8 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class A1 -- AAA
* US$229.9 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class A2 -- AAA
* US$56.2 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class A3 -- AAA
* US$97.7 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class A4 -- AAA
* US$45.4 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class A5 -- AAA
* US$44.7 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class M1 -- AA
* US$13.4 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class M2 -- AA (low)
* US$10.7 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class M3 -- A (high)
* US$11.1 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class M4 -- A
* US$6.5 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class M5 -- A (low)
* US$6.5 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class M6 -- BBB (high)
* US$6.1 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class M7 -- BBB
* US$3.8 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class M8 -- BBB (low)
* US$6.1 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class M9 -- BBB (low)
* US$4.6 million, Mortgage Pass-Through Certificates, Series
2006-FF2, Class B -- BB (high)
The AAA ratings on the Class A Senior Certificates reflect 15.60%
of credit enhancement provided by the subordinate classes, initial
overcollateralization, and monthly excess spread. The AA rating
on Class M1 reflects 9.75% of credit enhancement. The AA (low)
rating on Class M2 reflects 8.00% of credit enhancement. The A
(high) rating on Class M3 reflects 6.60% of credit enhancement.
The "A" rating on Class M4 reflects 5.15% of credit enhancement.
The A (low) rating on Class M5 reflects 4.30% of credit
enhancement. The BBB (high) rating on Class M6 reflects 3.45% of
credit enhancement. The BBB rating on Class M7 reflects 2.65% of
credit enhancement. The BBB (low) rating on Class M8 reflects
2.15% of credit enhancement. The BBB (low) rating on Class M9
reflects 1.35% of credit enhancement. The BB (high) rating on
Class B reflects 0.75% of credit enhancement.
The ratings of the certificates also reflect the quality of the
underlying assets and the capabilities of Aurora Loan Services LLC
as Master Servicer, as well as the integrity of the legal
structure of the transaction. U.S. Bank National Association will
act as Trustee. The trust will enter into an interest rate swap
agreement with HSBC Bank USA, National Association. The trust
will pay to the Swap Provider a fixed payment ranging from 5.01%
to 5.18% per annum and receive a floating payment at LIBOR from
the Swap Provider.
Interest and principal payments collected from the mortgage loans
will be distributed on the 25th day of each month commencing in
March 2006. Interest will be paid to the Class A Certificates,
followed by interest to the subordinate classes. Unless paid down
to zero, principal collected will be paid exclusively to the Class
A Certificates until the step-down date. After the step-down
date, and provided that certain performance tests have been met,
principal payments may be distributed to the subordinate
certificates. Additionally, provided that certain performance
tests have been met, the level of overcollateralization may be
allowed to step down to 1.50% of the then-current balance of the
mortgage loans.
The mortgage loans in the Underlying Trust were originated by
First Franklin Mortgage Corporation. As of the cut-off date ,
Feb. 1, 2006, the aggregate principal balance of the mortgage
loans is US$764,274,823. The weighted average mortgage coupon is
7.293%, the weighted average FICO is 651, and the weighted average
original loan-to-value ratio is 80.28%.
FOUNDATION COAL: S&P Affirms $685 Mil. Facility's Rating at BB-
---------------------------------------------------------------
Standard & Poor's Rating Services said today that it revised its
outlook on Linthicum Heights, Maryland-based Foundation Coal Corp.
to positive from stable. At the same time, Standard & Poor's
affirmed its 'BB-' corporate credit rating and 'B' senior
unsecured debt rating on the company.
In addition, Standard & Poor's affirmed its 'BB-' bank loan rating
and raised its recovery rating to '2' from '4' on Foundation's
$685 million secured credit facility. The facility consists of:
* a $350 million revolving credit facility maturing in 2009;
and
* a $335 million term loan B facility maturing in 2011.
The 'BB-' bank loan rating and the '2' recovery rating indicate a
substantial (80%-100%) expectation of recovery of principal in the
event of a payment default.
"The outlook revision reflects the company's improved operating
and financial performance and our belief that strong coal markets
and Foundation's expansion efforts will offset cost pressures and
potential increases in debt," said Standard & Poor's credit
analyst Paul Vastola. "Nevertheless, the company has recently
said it is considering increasing returns to shareholders. We
would predicate a ratings upgrade on Foundation's willingness and
ability to prudently fund its shareholder and growth initiatives
so that it maintains an adequate financial profile for a higher
rating."
The upgrade of the recovery rating on Foundation's senior secured
bank loan facility reflects improved recovery prospects because of
voluntary prepayments of the term loan by the company. Since the
end of 2004, Foundation has reduced its term loan by $135 million,
to $335 million, mostly through its excess free cash flows.
"The positive outlook incorporates the continuation of favorable
coal industry fundamentals and that Foundation's expansion efforts
will offset cost pressures and potential increases in debt levels
and enable the company to sustain improved credit metrics over the
next couple of years. We could revise the outlook to stable or
negative if shareholder and growth initiatives weaken its credit
metrics, if expansion efforts are unsuccessful, or if margins
contract," Mr. Vastola said.
FREESTAR TECH: Posts $1.7 Mil. Net Loss in Quarter Ended Dec. 31
----------------------------------------------------------------
FreeStar Technology Corporation reported a $1,769,178 net loss
for the three months ended Dec. 31, 2005, a 31% increase compared
to the $1,350,303 net loss incurred for the three months ended
Dec. 31, 2004.
The Company reported $577,946 of revenues for the three months
ended Dec. 31, 2005, a 36% increase compared to $424,772 of
revenues for the three months ended Dec. 31, 2004. Management
attributes a substantial portion of the increase to the generation
of consulting and development fees by the Company's subsidiary,
Rahaxi Processing Oy.
FreeStar's balance sheet at Dec. 31, 2005, showed $5,764,693 in
total assets and $1,941,927 in liabilities.
Going Concern Doubt
Russell Bedford Stefanou Mirchandani LLP raised substantial doubt
about FreeStar Technology'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 auditors cited the company's
difficulty in generating sufficient cash flow to meet its
obligations and sustain operations.
About FreeStar Technology
FreeStar Technology Corporation -- http://www.freestartech.com/--
is a payment processing company. Its wholly owned subsidiary
Rahaxi Processing Oy., based in Helsinki, is a robust Northern
European BASE24 credit card processing platform. Rahaxi currently
processes in excess of 1 million card payments per month for such
companies as Finnair, Ikea, and Stockman. FreeStar is focused on
exploiting a first-to-market advantage for its Enhanced
Transactional Secure Software, which is a software package that
empowers consumers to consummate e-commerce transactions with a
high level of security using credit, debit, ATM (with PIN),
electronic cash or smart cards. The company, based in Dublin,
maintains satellite offices in Helsinki, Santo Domingo, Dominican
Republic, and Geneva.
FRONTIER OIL: Earns $272.5 Million in 2005
------------------------------------------
Frontier Oil Corporation (NYSE: FTO) delivered its financial
results for the fourth quarter and year ended Dec. 31, 2005, to
the Securities and Exchange Commission on Feb. 23, 2006.
The Company reported net income of $63.0 million for the quarter
ended December 31, 2005, compared to net income of $239,000 for
the same period of 2004. For the fiscal year ended December 31,
2005, net income totaled a record $272.5 million compared to $69.8
million for the fiscal ended December 31, 2004. The record $272.5
million earned for the year ended December 31, 2005, represents a
dramatic increase over the prior record of $107.7 million earned
in 2001.
Frontier's record results are attributable to record diesel crack
spreads, wide light/heavy crude oil differentials and improved
gasoline crack spreads. The diesel crack spread increased to an
average of $24.69 per barrel for the recent quarter, well more
than double the $9.84 per barrel in the fourth quarter of 2004
while the gasoline crack spread also more than doubled to an
average of $8.59 per barrel in the fourth quarter compared to an
average $3.71 per barrel in 2004. The light/heavy crude oil
differential increased to $18.11 per barrel for the quarter
compared to $13.34 for the same period in 2004. The WTI/WTS crude
oil differential decreased slightly to $5.56 per barrel for the
quarter compared to $5.82 per barrel for the fourth quarter of
2004.
Frontier's crude oil charge for the fourth quarter of 2005
averaged 156,489 barrels per day, approximately 10,321 bpd more
than the average 146,168 bpd the Company charged in the fourth
quarter of 2004. Total product sales averaged a record 181,436
bpd for the fourth quarter 2005, compared to 169,518 bpd in the
fourth quarter of 2004.
For the twelve months ending December 31, 2005, Frontier generated
$360.3 million cash from operating activities while investing
approximately $109.7 million in capital expenditures. Frontier's
cash balance at year-end was $356.1 million and there were no
borrowings under the Company's revolving credit facility.
Frontier's cash exceeded its debt by $206.1 million as of
December 31, 2005.
Beginning in March of 2006, the Company plans to run Canadian
heavy crude oil at its El Dorado Refinery. Initially, Frontier
anticipates running approximately 20,000 barrels a day of heavy
crude oil in El Dorado. Based on the current light/heavy crude
oil differential, Frontier expects this development to have a
significant positive impact on second quarter earnings.
Frontier's Chairman, President and CEO, James Gibbs, commented,
"Our record fourth quarter earnings were a fitting end to a record
year. Our record profitability and cash flow allowed us to
accomplish many of our previously stated goals including:
approving high-return internal improvement and expansion projects,
increasing the quarterly dividend, paying a special dividend and
repurchasing shares of our common stock. Looking forward, we
remain optimistic about the fundamentals of our business and
believe we are well positioned for continued success. We are
particularly excited about crude oil differentials. Currently,
the light/heavy crude oil spread is trading at a historically wide
level and for the first time in our history we will be able to
capture that discount at both plants."
The fourth quarter 2005 results include an after-tax inventory
loss of approximately $14.3 million compared to a loss of $8.1
million for the same period of 2004. The twelve months ended
December 31, 2005 include an after-tax inventory gain of $29.4
million compared to a gain of $19.8 million for the twelve-month
period ended December 31, 2004. On December 31, 2005, the company
adopted Financial Accounting Standard Board's Interpretation 47
"Accounting for Conditional Asset Retirement Obligations." This
new accounting standard resulted in Frontier recording a $5.5
million liability for future asset retirement obligations.
Headquartered in Houston, Texas, Frontier Oil Corporation --
http://www.frontieroil.com/-- operates a 110,000 bpd refinery
located in El Dorado, Kansas, and a 52,000 bpd refinery located in
Cheyenne, Wyoming, and markets its refined products principally
along the eastern slope of the Rocky Mountains and in other
neighboring plains states.
* * *
As reported in the Troubled Company Reporter on Dec. 6, 2005,
Fitch rated Frontier's $150 million of 6-5/8% senior unsecured
notes 'BB-' and the company's secured credit facility 'BB'. Fitch
said the Rating Outlook was Stable at that time.
GE CAPITAL: Fitch Downgrades Class B1 Certificate's Rating to C
---------------------------------------------------------------
Fitch Ratings took rating actions on these GE Capital home equity
loan pass-through certificates:
Series 1997-HE4:
-- Classes A6, A7 affirmed at 'AAA'
-- Class M affirmed at 'AA'
-- Class B1 downgraded to 'C' from 'CC'
-- Class B2 remains at 'C'
-- Class B3 remains at 'D'
-- Class B4 remains at 'D'
The affirmations, affecting $10.6 million of outstanding
certificates, is due to stable collateral performance and moderate
growth in credit enhancement.
The downgrade, affecting approximately $2.0 million of the
outstanding certificates, reflects the deterioration of credit
enhancement (CE) relative to consistent or rising monthly losses.
As of the January 2006 distribution, the transaction has suffered
a net loss of $199,784, increasing the cumulative loss to $5.54
million. Class B2, the source of CE for class B1 has been fully
depleted. The 90+ delinquencies represent 14.78% of the mortgage
pool, foreclosures and REO represent 4.40% and 1.75%,
respectively.
The mortgage loans consist of fixed- and adjustable-rate, closed-
end home equity mortgage loans, secured by residential properties
which have original terms to maturity of 15 or 30 years. The pool
factor (current principal balance as a percentage of original) is
approximately 7%.
GE CAPITAL: Moody's Junks Rating on $4.8 Mil. Class O Certificates
------------------------------------------------------------------
Moody's Investors Service upgraded the ratings of six classes,
downgraded the rating of one class and affirmed the ratings of ten
classes of GE Capital Commercial Mortgage Corporation, Commercial
Mortgage Pass-Through Certificates, Series 2002-2:
* Class A-1, $28,437,643, Fixed, affirmed at Aaa
* Class A-2, $222,220,000, Fixed, affirmed at Aaa
* Class A-3, $462,687,000, Fixed, affirmed at Aaa
* Class X-1, Notional, affirmed at Aaa
* Class X-2, Notional, affirmed at Aaa
* Class B, $35,227,000, Fixed, upgraded to Aaa from Aa2
* Class C, $12,147,000, Fixed, upgraded to Aaa from Aa3
* Class D, $31,583,000, Fixed, upgraded to Aa2 from A2
* Class F, $9,717,000, Fixed, upgraded to A2 from Baa2
* Class G, $10,933,000, Fixed, upgraded to A3 from Baa2
* Class H, $13,362,000, Fixed, upgraded to Baa2 from Baa3
* Class J, $19,436,000, Fixed, affirmed at Ba1
* Class K, $18,221,000, Fixed, affirmed at Ba2
* Class L, $7,288,000, Fixed, affirmed at Ba3
* Class M, $4,859,000, Fixed, affirmed at B1
* Class N, $14,577,000 Fixed, affirmed at B2
* Class O, $4,859,000, Fixed, downgraded to Caa1 from B3
As of the Feb. 13, 2006 distribution date, the transaction's
aggregate principal balance has decreased by 3.7% to $935.6
million from $971.8 million at securitization. The Certificates
are collateralized by 111 loans, the same as at securitization.
The loans range in size from less than 1.0% to 4.3% of the pool,
with the top ten loans representing 30.2% of the pool. Seven
loans, representing 8.1% of the pool, have defeased and are
collateralized by U.S. Government securities.
The pool has not experienced any losses since securitization. Two
loans, representing 1.5% of the pool, are in special servicing.
Moody's is projecting aggregate losses of $2.0 million for the
specially serviced loans. Twenty-five loans, including three of
the top 10 loans, are on the master servicer's watchlist. The
watchlisted loans total 21.6% of the pool.
Moody's was provided with year-end 2004 operating results for
100.0% of the pool, excluding the defeased loans, and partial year
2005 operating results for 85.0% of the pool. Moody's weighted
average loan to value ratio is 89.6%, essentially the same as at
securitization. The upgrade of Classes B, C, D, F, G and H is due
to increased credit support, stable overall pool performance and a
relatively high percentage of defeased loans. The downgrade of
Class O is due to anticipated losses and increased LTV dispersion.
Based on Moody's analysis, 11.2% of the pool has an LTV greater
than 100.0%, compared to 0.0% at securitization. Fourteen loans,
representing 11.6% of the pool, have an actual debt service
coverage ratio of 0.9x or less based on the borrowers' most recent
reported operating performance and the actual loan constant.
The top three loans represent 12.5% of the pool. The largest loan
is the Town Center at the Waterfront Loan, which is secured by a
374,000 retail center located approximately 5 miles southeast of
downtown Pittsburg in Homestead, Pennsylvania. The property is
98.0% occupied, essentially the same as at securitization. Major
tenants include Loews Theaters, Dave & Buster's and Barnes &
Noble. The center is adjacent to a larger retail development that
includes Marshall's, T.J. Maxx, Office Depot, Dick's Sporting
Goods and Target. Property performance has improved due to higher
revenues. Moody's LTV is 80.6%, compared to 87.8% at
securitization.
The second largest loan is the 584 Broadway Loan, which is secured
by two adjacent Class B office buildings totaling 226,000 square
feet. The buildings are located in the Soho submarket of New York
City. Occupancy has increased to 96.0% from 89.0% at
securitization. The property is occupied by small tenants, mostly
in design, public relations or marketing. Property performance
has improved due to higher occupancy and rental rates. Moody's LTV
is 75.5%, compared to 90.5% at securitization.
The third largest loan is the Lakeview Apartments Loan, which is
secured by a 676 unit multifamily complex located in Mesa,
Arizona. The loan is on the master servicer's watchlist due to a
low DSCR. The property's performance has been impacted by a weak
multifamily market. Occupancy is 85.0%, compared to 90.0% at
securitization. Rental rates are lower than at securitization due
to concessions. Moody's LTV is 98.7%, compared to 95.8% at
securitization.
The pool's collateral is a mix of retail, multifamily, office and
mixed use, industrial and self storage and U.S. Government
securities. The collateral properties are located in 27 states
and Washington D.C. The highest state concentrations are
California, New York, Florida, Arizona and Texas. All of the
loans are fixed rate.
GENERAL MOTORS: Fitch Downgrades Issuer Default Rating to B
-----------------------------------------------------------
Fitch Ratings downgraded the Issuer Default Rating of General
Motors to 'B' from 'B+'. Fitch has also assigned an 'RR4'
Recovery Rating to GM's senior unsecured debt, indicating average
recovery prospects (30-50%) for this class of creditors in the
event of a bankruptcy filing. GMAC's 'BB' rating remains on
Rating Watch Evolving by Fitch pending further developments in
GM's intent to sell a controlling interest in GMAC.
The downgrade of GM reflects lack of substantive progress on
reducing GM's cash operating costs, which Fitch believes will
result in negative cash flows persisting through 2007. It is
becoming increasingly apparent that the UAW contract may not be
re-opened until the official September 2007 date, limiting GM's
ability to realize substantive cost reduction targets on a timely
basis. When combined with:
* revenue pressures,
* restructuring costs,
* a stressed supplier base, and
* projected financial support to resolve the Delphi situation;
liquidity will continue to deteriorate from current healthy
levels.
Fitch's expectation of:
* continued operating losses,
* declining liquidity, and
* a financially stressed supplier base
raises the risk that suppliers could begin to restrict trade
credit to GM.
Trade credit represents a critical component of GM's current
liability structure. Fitch has not seen evidence of this to date.
In addition, event risk associated with a potential labor strike
at Delphi remains high, and a disruption in Delphi's supply of
parts to GM would quickly shut down production at GM and drain
liquidity. Risks associated with the restructuring of the U.S.
auto supplier industry (which could result in supply disruptions
or require financial support from GM) will continue for the
intermediate term. Suppliers are also facing more limited access
to capital. The inability to reduce costs rapidly in the supply
chain highlights the need for GM to achieve fundamental reductions
in other structural cost areas, cost factors that remain highly
inflexible.
Fitch's analysis of a potential restructuring scenario provides a
recovery value of approximately 40% for general senior unsecured
creditors in the event of a bankruptcy. (Note: Fitch provides
recovery values for rated securities of all corporate issuers that
have IDR's of B+ or below. This exercise is not meant to be a
predictive model of the course of events, but an analysis of a
company's operating profile, assets and liabilities in the event
that a restructuring becomes necessary.)
Recovery values were derived from an analysis and valuation of a
restructured GM North American automotive operation, supplemented
by:
* asset values associated with GM's Asian operations;
* various shareholdings; and
* a retained 49% interest in GMAC.
Fitch assumes that any cash, asset or equity values associated
with GM's European and Latin American operations would be applied
to service operating requirements and liabilities in those
locations, providing no incremental recovery value for GM
debtholders. In the event of a filing, Fitch projects that the
vast majority of claims would be on a senior unsecured basis,
encompassing existing debt, drawdowns under the company's existing
credit facilities and substantial claims from trade creditors and
other general liabilities. Fitch also projects that in a
bankruptcy, GM would retain its pension plans due to high asset
levels and concessions that the UAW would make to ensure the plans
are not absorbed by the PBGC.
Recovery values in a bankruptcy would ultimately depend on the
terms of a new labor contract between GM and the UAW, providing a
high degree of uncertainty. In addition, the size and potential
complexity of a bankruptcy would be complicated by the
uncertainties surrounding the new, untested bankruptcy law.
GM remains on Rating Watch Negative, with a primary focus on
resolution of the Delphi situation. In order to avoid any supply
disruption that could force wide production shutdowns at GM,
further financial support from GM is regarded as a certainty. The
extended nature of the negotiations speaks to the difficulty of
the three-party discussions, and it is difficult to ascertain the
level of progress. In any scenario, Fitch expects that GM will
experience higher costs and a continuation of its competitive
disadvantage in supplier costs, thereby hindering GM's ability to
reverse margin erosion and stabilize cash flows.
The Rating Watch Negative status on GM also incorporates the risks
that he sale of a controlling interest in GMAC is not completed on
a timely basis. Fitch maintains its expectation that solid
progress on the sale will occur through the end of the first
quarter. Ratings on GM and GMAC would be reviewed at any time
Fitch believed that the sale was not solidly on track.
GM has healthy liquidity of $20.5 billion in cash and s/t VEBA as
of December 31, 2005, which is expected to be supplemented by
proceeds of a controlling interest in GMAC. In addition, GM has
approximately $15 billion in L/T VEBA, which is expected to be
drawn down to finance permitted expenses. Fitch projects that
liquidity requirements in a bankruptcy would be high, which could
accelerate the timing of any bankruptcy filing if rapid
stabilization of operating performance is not achieved.
Fitch has downgraded these ratings:
General Motors Corp.:
General Motors of Canada Ltd.:
-- Senior debt to 'B' from 'B+'
-- Issuer Default Rating (IDR) to 'B' from 'B+'
These ratings remain on Rating Watch Evolving:
General Motors Acceptance Corp.:
GMAC International Finance B.V.:
GMAC Bank GmbH:
General Motors Acceptance Corp. of Australia:
General Motors Acceptance Corp. of Canada Ltd.:
General Motors Acceptance Corp. (N.Z.) Ltd.:
-- Issuer Default Rating (IDR) 'BB'
-- Senior debt 'BB'
-- Short-term 'B'
Residential Capital Corp.:
-- Issuer Default Rating (IDR) 'BBB-'
-- Senior debt 'BBB-'
-- Short-term 'F3'
GMAC Bank:
-- Long-term deposits 'BBB'
-- Issuer Default Rating (IDR) 'BBB-'
-- Senior debt 'BBB-'
-- Short-term deposits 'F3'
GENTIVA HEALTH: Completes $454 Million Buy of Healthfield Group
---------------------------------------------------------------
Gentiva Health Services, Inc. (Nasdaq: GTIV) completed its
acquisition of The Healthfield Group, Inc. -- a leading provider
of home healthcare, hospice and related services with
approximately 130 locations primarily in eight southeastern states
-- for $454 million in cash and stock, excluding transaction costs
and subject to post-closing adjustments.
The transaction brings Gentiva's annualized revenues to more than
$1.1 billion and significantly increases its ability to serve the
home healthcare market in Alabama, Georgia, North Carolina, South
Carolina and Tennessee. Gentiva has also become one of the United
States' top 10 hospice providers and has acquired a range of
durable medical and respiratory equipment services, and infusion
therapy services.
Rod Windley, Healthfield's Chairman, CEO and founder, has been
elected Vice Chairman of Gentiva's Board of Directors. Tony
Strange, Healthfield President and COO, has been appointed
Executive Vice President of Gentiva Health Services, Inc., and
President, Gentiva Home Health.
"The closing of this transaction marks a transformation of Gentiva
and a sentinel event for our industry as two leading home health
providers join forces for the benefit of patients, employees,
payers and shareholders," said Gentiva Chairman and CEO Ron
Malone. "Our new platform for growth should bring us significant
opportunities for expansion and innovation in home healthcare,
hospice, specialty programs and related therapies and services.
We welcome Rod, Tony and an outstanding group of employees from
Healthfield as we move forward on what promises to be a rewarding
and fulfilling journey."
The purchase price included approximately $403 million in cash and
approximately 3.2 million shares of Gentiva common stock. In
connection with the transaction, Gentiva has secured a $370
million seven-year term loan and a $75 million six-year revolving
credit facility. Proceeds from the term loan and the Company's
available cash on hand were used to fund the cash portion of the
purchase price (including repayment of Healthfield's existing
debt) as well as transaction and financing costs. Lehman Brothers
Inc. served as financial advisor for the transaction and lead
underwriter for the financing. Weil, Gotshal & Manges LLP served
as Gentiva's counsel for the transaction.
Gentiva Health Services, Inc. - http://www.gentiva.com-- is the
United States' largest provider of comprehensive home health
services. Gentiva serves patients through more than 500 direct
service delivery units within over 400 locations in 36 states, and
through CareCentrix(R), which manages home healthcare services for
many major managed care organizations throughout the United States
and delivers them in all 50 states through a network of more than
2,500 third-party provider locations, as well as Gentiva
locations. The Company is a single source for skilled nursing;
physical, occupational, speech and neurorehabilitation services;
hospice services, social work; nutrition; disease management
education; help with daily living activities; durable medical and
respiratory equipment; infusion therapy services; and other
therapies and services. Gentiva's revenues are generated from
commercial insurance, federal and state government programs and
individual consumers.
* * *
As reported in the Troubled Company Reporter on Feb. 10, 2006,
Moody's Investors Service assigned first time ratings to the
proposed $445 million Senior Secured Credit Facility of Gentiva
Health Services, Inc. The proceeds from the facility will be used
to finance the purchase of The Healthfield Group for $454 million,
including the assumption of approximately $184 million of
outstanding Healthfield debt and the payment of transaction costs
and other expenses. Concurrently, Moody's assigned a first time
Speculative Grade Liquidity rating of SGL-2 reflecting the
expectation of good near term liquidity, minimal near-term debt
service requirements and modest capital expenditures. The ratings
outlook is stable.
The new ratings assigned are:
* $75 million Senior Secured Revolver, due 2012, rated Ba3
* $370 million Senior Secured Term Loan B, due 2013, rated Ba3
* Corporate Family Rating, rated Ba3
-- Stable ratings outlook
* Speculative Grade Liquidity Rating, SGL-2
The ratings are subject to the closing of the proposed acquisition
and our review of executed documentation.
GREEN TREE: S&P Downgrades Three Transaction Class Ratings to D
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on three
classes from three Green Tree-related Manufactured Housing
transactions to 'D'.
The lowered ratings reflect the reduced likelihood that investors
will receive timely interest and the ultimate repayment of their
original principal investments. Green Tree Financial Corp.
Manufactured Housing Trust 1998-8 reported an outstanding
liquidation loss interest shortfall for its B-1 class on the
February 2006 payment date. At the same time, Manufactured
Housing Contract Senior/Subordinate Pass-Thru Trust 2000-2
reported an outstanding liquidation loss interest shortfall for
its M-1 class, while Manufactured Housing Contract
Senior/Subordinate Pass-Thru Cert Series 2001-2 reported an
outstanding liquidation loss interest shortfall for its M-2 class.
Standard & Poor's believes that interest shortfalls for these
transactions will continue to be prevalent in the future, given
the adverse performance trends displayed by the underlying pools
of collateral, as well as the location of mezzanine and
subordinate class write-down interest at the bottom of the
transactions' payment priorities (after distributions of senior
principal).
As of the February 2006 payment date, series 1998-8, 2000-2, and
2001-2 had experienced cumulative net loss of 13.16%, 19.69%, and
20.68%, respectively, of their respective initial pool balances.
Standard & Poor's will continue to monitor the outstanding ratings
associated with these transactions in anticipation of future
defaults.
Ratings lowered:
Green Tree Financial Corp. Man Hsg Trust 1998-8
Rating
Class To From
----- -- ----
B-1 D CCC-
Manufactured Housing Contract Sr/Sub Pass-Thru Trust 2000-2
Rating
Class To From
----- -- ----
M-1 D CCC-
Manufactured Housing Contract Sr/Sub Pass-Thru Cert Series 2001-2
Rating
Class To From
----- -- ----
M-2 D CCC-
GREY WOLF: Strong Liquidity Prompts Moody's to Review B1 Ratings
----------------------------------------------------------------
Moody's placed the ratings for Grey Wolf, Inc., on review for
upgrade. The ratings impacted were the B1 corporate family rating
and the B1 rated $150 million 3.75% Contingent Convertible Senior
Notes. Moody's does not rate the company's $125 million floating-
rate convertible senior notes. Moody's anticipates this review
will be short-term and will likely result in a one-notch upgrade
of the current ratings.
The ratings review is prompted by:
-- the company's substantial improvement in its credit
metrics, particularly in its leverage and interest coverage
ratios which rank amongst the best in the peer group;
-- GW's improved scale and diversification of its premium rig
fleet;
-- the company's term contract cover which provides better
visibility for earnings and cash flows;
-- the continued favorable outlook for the drilling and well
services sector which continues to drive the positive
momentum in GW's earnings and cash flows trends; and
-- the company's strong liquidity.
Moody's ratings review will focus on the company's 2005 year-end
financial results:
a) a more detailed assessment of GW's fleet expansion and
upgrade plans vis-a-vis timing, cost and rig types
involved;
b) the potential impact on GW's markets from lower natural gas
prices and additional rigs coming into service over the
next 12-18 months;
c) a review of the term contract status of GW's fleet and the
earnings and cash flow cover it provides over the next 12
months; and
d) discussion with management regarding whether there any
potential plans for stock buybacks or acquisitions and if
so, how they might be funded.
On Review for Possible Upgrade:
Issuer: Grey Wolf, Inc.
* Corporate Family Rating, Placed on Review for Possible
Upgrade, currently B1
* Senior Unsecured Conv./Exch. Bond/Debenture, Placed on
Review for Possible Upgrade, currently B1
Outlook, Changed To Rating Under Review From Stable
Grey Wolf, Inc. is headquartered in Houston, Texas.
GOODMAN GLOBAL: S&P Revises Outlook to Stable & Affirms B+ Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Goodman
Global Holdings Inc. to stable from negative. At the same time,
Standard & Poor's affirmed its existing ratings, including its
'B+' corporate credit rating, on the Houston, Texas-based
residential heating, ventilation, and air-conditioning company.
"The outlook revision reflects our expectations that Goodman's
earnings and cash flow will benefit from the recent transition to
higher energy-efficiency standards (13 SEER), continued healthy
demand from residential end markets, and further expansion of its
distribution network," said Standard & Poor's credit analyst
Kenneth L. Farer. "As a result, the company's financial profile
should improve to a level that is acceptable for the current
rating over the near term."
Although Goodman intends to use a significant portion of proceeds
from its recently proposed IPO to redeem all of its $225 million
of preferred stock, some proceeds will be used to reduce debt,
which should also help the company strengthen leverage to at least
4.5x by the end of 2006. At Sept. 30, 2005, the last reported
date, Goodman had total debt, including capitalized operating
leases, of $1 billion.
"We could revise the outlook to negative if Goodman's leverage
does not gradually improve as expected because of an inability to
pass on additional raw material price increases or because of
changes in end-market demand," Mr. Farer said. "For us to revise
the outlook revision to positive, which we do not expect to do
over the intermediate term, Goodman's financial profile would
have to become substantially less aggressive."
GT BRANDS: Can Walk Away from Real Property & Equipment Leases
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized GT Brands Holdings LLC and its debtor-affiliates to
reject unexpired nonresidential real property leases related to
their South Carolina and New Jersey facilities, and certain
equipment leases.
The Debtors are deemed to have rejected the South Carolina lease
as of Jan. 11, 2006.
The Debtors are also deemed to have rejected the equipment leases
as of:
a) Jan. 25, 2006, with respect to the lease(s) for the use of
forklifts and related equipment located in Jersey City, New
Jersey; and
b) Jan. 31, 2006, with respect to the lease(s) for the use of
copiers and related equipment located in Jersey City, New
Jersey and in Columbia, South Carolina.
The Court also authorized the Debtors and the NJ Landlord to enter
into a stipulation providing for the rejection of the NJ real
estate lease and an expedited claims resolution procedure in
respect of any damages arising from the rejected NJ lease.
The Debtors told the Court that they are no longer conducting any
business at their SC facility. As for the NJ lease, the Debtors
expected to have vacated that facility by Feb. 3, 2006.
Therefore, the Debtors have no further need for that leases or the
related equipment leases, the retention of which would produce
only cash drain to the Debtors' estates without any perceptible
benefit.
A list of the Debtor's unexpired non-residential real property and
certain equipment leases is available for free at:
http://researcharchives.com/t/s?5f6
Headquartered in New York, New York, GT Brands Holdings LLC,
supplies home video titles to mass retailers. The Debtors also
develop and market branded consumer, lifestyle and entertainment
products. The Company and its affiliates filed for chapter 11
protection on July 11, 2005 (Bankr. S.D.N.Y. Case No. 05-15167).
Brian W. Harvey, Esq., at Goodwin Procter LLP, represents the
Debtors in their chapter 11 proceedings. When the Debtors filed
for protection from their creditors, they listed total assets of
$79 million and total debts of $212 million.
HEALTH CHOICE: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Health Choice, Inc.
93 Spring Street
Newton, NJ 07860
Bankruptcy Case No.: 06-11502
Chapter 11 Petition Date: March 2, 2006
Court: District of New Jersey (Newark)
Debtor's Counsel: John DiIorio, Esq.
Shapiro & Croland
Continental Plaza II, 6th Floor
411 Hackensack Avenue
Hackensack, New Jersey 07601-6328
Tel: (201) 488-3900
Estimated Assets: Less than $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Township of South Brunswick $523,819
Ridge Road
Monmouth Junction, NJ 08852
R.A.M. Insurance $134,682
484 West Side Avenue
Jersey City, NJ 07304
Thomas O'Leary $120,000
599 South Stevens Avenue
South Amboy, NJ 08879
Graham Curtin & Sheridan, PA $100,706
American Express $63,379
Thelen Reid & Priest, LLP $55,245
Beech Street $42,684
Nassau Benefit Consultants Inc. $36,640
CHN Solutions $31,046
Ronan, Tuzzion & Giannone $30,907
Elite Underwriting $29,502
Reliastar Life Ins. Co. $28,709
Fox Rothschild, LLC $22,213
Brazer & Littell $20,000
Excel Underwriters Alliance $18,253
Horizon $16,339
American Stop Loss $15,643
MBNA America $14,638
Facts Service, Inc. $14,495
DeCotis Fitzpatrick Cole, etc. $13,517
HEALTHSOUTH CORPORATION: Lenders Consent to Prepayment of Loans
---------------------------------------------------------------
HealthSouth Corporation (OTC Pink Sheets: HLSH) entered on
Feb. 15, 2006, a consent and waiver to the Senior Subordinated
Credit Agreement, dated as of Jan. 16, 2004, between the Company,
the lenders and Credit Suisse, as administrative agent and
syndication agent.
Pursuant to the terms of the Consent, the lenders consented to the
prepayment of all outstanding loans in full on or prior to
Mar. 20, 2006, and waived certain provisions of the Credit
Agreement to the extent those provisions prohibited such
prepayment. In connection with the Consent, the Company agreed,
to the extent a prepayment is made, to pay to each lender a
prepayment premium equal to 15.00% of the principal amount of
those lender's loans.
Term Loan Agreement
On Feb. 15, 2006, the Company also entered into an amendment and
waiver to the Term Loan Agreement, dated as of June 15, 2005,
among the Company, the lenders party thereto and JPMorgan Chase
Bank, N.A., as administrative agent, Citicorp North America,
Inc., as syndication agent, and J.P. Morgan Securities Inc. and
Citigroup Global Markets Inc., as co-lead arrangers and joint
bookrunners.
Pursuant to the terms of the Amendment, the lenders amended
certain provisions of the Loan Agreement to the extent those
provisions prohibited a prepayment of the loans prior to June 15,
2006.
In connection with the Amendment, the Company agreed, to the
extent a prepayment is made, to pay to each lender executing the
Amendment a consent fee equal to 1.00% of the principal amount of
those lenders' loans.
Recapitalization Transactions
HealthSouth Corporation will prepay substantially all existing
indebtedness with proceeds from a proposed series of
recapitalization transactions. The recapitalization will include
$2.55 billion of senior secured credit facilities and a
$1.3 billion senior unsecured interim loan. The Company
anticipates refinancing the $1.3 billion senior unsecured interim
loan in the first or second quarter of 2006 through an issuance of
predominantly debt securities, as well as equity securities.
"This is another major milestone in HealthSouth's efforts to put
our past behind us," HealthSouth President and CEO Jay Grinney
said. "The proposed capital structure will provide us with the
flexibility necessary to manage our debt while implementing our
plans for future growth."
"We believe the proposed new capital structure is a significant
first step toward addressing our balance sheet issue. It allows
us to better execute on key operational initiatives, address the
changing regulatory environment, take advantage of the strong
capital market conditions, and maximize pre-payable debt to allow
for future de-leveraging," HealthSouth Chief Financial Officer
John Workman added.
In connection with the recapitalization, HealthSouth will announce
a cash tender offer to purchase all $2.03 billion of outstanding
senior notes and $319 million senior subordinated notes. The
Company also announced it is requesting amendments to its
$200 million senior unsecured term loan and $355 million senior
subordinated term loan credit agreements to, among other things,
allow for the prepayment of each of these term loans, which the
company also intends to prepay along with its other indebtedness.
J.P. Morgan Securities Inc., Citigroup Global Markets Inc., and
Merrill Lynch & Co. will be joint lead arrangers and joint
bookrunners for the $2.55 billion senior secured credit facilities
and Merrill Lynch & Co., Citigroup Global Markets Inc. and J.P.
Morgan Securities Inc. will be joint bookrunners for the
$1.3 billion senior unsecured interim loan. Deutsche Bank
Securities Inc., Goldman, Sachs & Co., and Wachovia Capital
Markets, LLC., will be co-managers for the senior secured credit
facilities and the senior unsecured interim loan.
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.
INTEGRATED ELECTRICAL: Taps Vinson & Elkins as Bankruptcy Counsel
-----------------------------------------------------------------
Integrated Electrical Services, Inc., and its debtor-affiliates
seek U.S. Bankruptcy Court for the Northern District of Texas'
authority to employ Vinson & Elkins LLP as their attorneys,
effective as of the Petition Date.
Curt L. Warnock, IES senior vice president, discloses that over
the past months, Vinson has assisted the Debtors in exploring
restructuring alternatives and preparing for the Debtors' Chapter
11 filings. As a result, V&E has become familiar with the
Debtors' business operations and financial affairs, as well as
many of the legal issues that are likely to arise during the
course of their cases.
As bankruptcy counsel, V&E will:
(1) serve as attorneys of record for the Debtors in all
aspects of the cases, to include any adversary proceedings
commenced in connection with the cases, and to provide
representation and legal advice to the Debtors throughout
the cases;
(2) assist in the approval of a disclosure statement and the
confirmation of a Chapter 11 plan for the Debtors;
(3) consult with the United States Trustee, any statutory
committee and all other creditors and parties-in-interest
concerning the administration of the cases;
(4) take all necessary steps to protect and preserve the
Debtors' bankruptcy estates; and
(5) provide all other legal services required by the Debtors
and to assist the Debtors in discharging their duties as
the debtors in possession in connection with the cases.
Within the year prior to the Petition Date, the Debtors have
paid V&E $2,655,852, plus expenses. About $1,147,261 of the
fees and expenses were incurred in rendering services that
were in contemplation of, or in connection with, the Debtors'
restructuring efforts, including substantial work performed in
negotiating, preparing, and documenting the Chapter 11 cases.
As of the Petition Date, V&E holds in its retainer account
$50,000, less any amounts drawn down for fees and expenses. The
funds will be held in the retainer account, subject to further
Court order.
Vinson professionals' current hourly rates are:
Category Range
-------- -----
Partner $425 - $650
Associate $225 - $400
Paraprofessional $85 - $185
Specifically, the V&E professionals expected to render services
to the Debtors and their current billing rates are:
Professional Hourly Rate
------------ -----------
Daniel C. Stewart $650
Paul E. Heath $550
Courtney S. Lauer $350
Michaela C. Crocker $310
Mr. Warnock assures the Court that V&E is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code and does not hold or represent any interest
adverse to the Debtors' estates.
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. As of Dec. 31, 2005, Integrated Electrical reported
assets totaling $400,827,000 and debts totaling $385,540,000.
(Integrated Electrical Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc. 215/945-7000)
INTEGRATED ELECTRICAL: Taps Gordian Group as Financial Advisors
---------------------------------------------------------------
Integrated Electrical Services, Inc., and its debtor-affiliates
seek the U.S. Bankruptcy Court for the Northern District of Texas'
authority to employ Gordian Group, LLC, as their financial
advisors.
Beginning September of 2005, the Debtors consulted with and
retained Gordian to act as their financial advisors and to render
assistance and advice with respect to the potential restructuring
of the Debtors' debt or other restructuring of their financial
affairs.
As financial advisors, Gordian will:
(1) assist the Debtors in the planning, preparing for, and
implementation of a strategy regarding a potential
restructuring or corporate reorganization;
(2) locate, evaluate, and assist in negotiations with current
or potential lenders, creditors, shareholders, and other
interested parties regarding the Debtors' operations and
prospects and any potential Financial Transaction;
(3) assist with the development, negotiations, and
implementation of a financial transaction, including
participation in negotiations with creditors,
stockholders, and other parties involved in a Financial
Transaction;
(4) assist in valuing the Debtors and, as appropriate, valuing
the Debtors' assets or operations;
(5) at any time prior to consummation of a Financial
Transaction, provide, if required, expert advice and
testimony relating to financial matters related to a
Financial Transaction;
(6) advise as to potential mergers, acquisitions, or other
financings with respect to the debtors, and the sale or
other disposition of any of the Debtors' assets or
businesses;
(7) assist in preparing proposals to creditors, employees,
shareholders, and other parties-in-interest in connection
with any Financial Transaction;
(8) assist with presentations made to the Debtors' Boards of
Directors and creditors or stockholders regarding
potential Financial Transactions and other related issues;
and
(9) render other financial advisory and investment banking
services as the parties may agreed upon.
Pursuant to the terms of the Engagement Letter between the
Debtors and Gordian, the Debtors have agreed to pay these fees to
Gordian:
A. For each month of the engagement, a monthly fee of
$125,000 payable in advance; and
B. A transaction fee comprising:
(i) 0.5% of the face amount of all 9.375% Senior
Subordinated Notes due February 1, 2009, and 6.5%
Senior Convertible Notes due November 1, 2014,
compromised in a Financial Transaction for the
first $56,000,000 of outstanding Notes compromised;
plus
(ii) 0.75% of the face amount of all Notes compromised
in a Financial Transaction for up to the next
$56,000,000 of outstanding Notes compromised; plus
(iii) 1% of the face amount of all Notes compromised in a
in a Financial Transaction for up to the next
$56,000,000 of outstanding Notes compromised; plus
(iv) 2% of the face amount of all additional Notes
compromised; and
C. 1.5% of the Aggregate Consideration that is paid or
payable in connection with all other Financial
Transactions excluding replacement senior bank financing.
The Monthly Fees, together with the Transaction Fees, will not
exceed $2,500,000 in the event a Financial Transaction is
effected in Chapter 11.
The Debtors and Gordian have also agreed to work in good faith to
document their intent to have Gordian accept up to 50% of any
Transaction Fees in IES equity on terms mutually satisfactory to
both Gordian and IES.
Within the year prior to the Petition Date, the Debtors paid
Gordian $517,795 in fees and expenses for services performed and
expenses incurred pursuant to the Engagement Letter.
Peter S. Kaufman, managing director and head of the Restructuring
and Distressed M&A practice of Gordian, assures the Court that
the firm is a "disinterested person" within the meaning of
Section 101(14) of the Bankruptcy Code and does not hold or
represent any interest adverse to the Debtors' estates.
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. As of Dec. 31, 2005, Integrated Electrical reported
assets totaling $400,827,000 and debts totaling $385,540,000.
(Integrated Electrical Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc. 215/945-7000)
INTEGRATED ELECTRICAL: Taps Glass & Associates as Restr. Advisors
-----------------------------------------------------------------
Curt L. Warnock, senior vice president of Integrated Electrical
Services, Inc., relates that Integrated Electrical Services, Inc.,
and its debtor-affiliates need Glass & Associates, Inc., as
restructuring advisors to provide certain temporary employees to
assist them in their restructuring under the Chapter 11 cases.
The Debtors and Glass entered into an engagement letter dated
January 23, 2006, pursuant to which Glass will provide Sanford R.
Edlein as its representative to serve as chief restructuring
officer of the Debtors. In this capacity, the CRO will report to
the IES Restructuring Committee, the IES Board of Directors, and
the Ad Hoc Committee of Senior Subordinated Noteholders and its
advisors to insure that the strategic direction of the
reorganization of the Debtors is carefully constructed, approved,
and timely implemented to preserve and maximize enterprise value.
The CRO will be assisted by a staff of Temporary Employees
provided through Glass at various levels, all of whom have a wide
range of skills and abilities related to this type of assignment.
Mr. Warnock says the CRO and Glass Temporary Staff are well
suited to provide the restructuring services. Glass has
provided, or is currently providing, restructuring services in
numerous large cases, including most recently Sargent Electric
Company, Medical Technology, Inc., and Express Telephone
Services, Inc.
Sanford R. Edlein, a principal at Glass, assures U.S. Bankruptcy
Court for the Northern District of Texas that Glass is a
"disinterested person" within the meaning of Section 101(14) of
the Bankruptcy Code and does not hold or represent any interest
adverse to the Debtors' estates.
Glass' Services
The CRO and Temporary Staff began assisting the Debtors in their
restructuring efforts in December 2005, with respect to
implementing and developing ongoing business and financial plans,
and conducting restructuring negotiations with creditors, among
other things.
Under the Engagement Letter, Glass' scope of work will include:
a) The oversight of all financial restructuring activities
like:
* Review and implementation of a cash management system
that will enhance the visibility of operating unit
performance and insure that cash is controlled on a
company wide basis;
* Supervision of vendor classification and payment control;
* Oversight of key vendor negotiations, including
landlords;
* Supervision and review of accounts receivable and billing
processes;
* Design and development of forecasting tools to integrate
the expected business unit performance into the cash
forecast and borrowing base calculations;
* Review and analysis of variances from cash forecasts and
supervision of forecast revisions;
* Liquidity plan and contingency analysis;
* Review of the claims and risk management systems and
procedures; and
* Flash reporting and dashboard of key indicators;
b) The oversight of operating restructuring activities, like
the review and analysis of:
* Business unit forecasts including planned gross margin
improvement, revenue enhancements, and expense controls;
* Project bidding and performance initiatives;
* Variation analysis and plan modifications based upon
performance;
* Flash reporting;
* Strategy and services including cap ex needs;
* Review, assessment, and implementation of various
operating unit integration and centralization
initiatives, operationally and financially;
* Potential economies of scale, including cross utilization
of specialty staff, equipment, and overhead;
* Strategic improvements, including consolidation of
activities either by line of business, region, or other
appropriate classification;
* Review of home office organization, structure, and costs;
* Feasibility analysis of business units to sell or
liquidate; and
* Assist in the development of general revenue enhancement
and cost containment strategies;
c) Evaluation of key management personnel;
d) Lead and control the continuous communication process with
all key constituencies;
e) Lead the development of an interim business plan;
f) Assessment of management, policy, operations, facilities,
equipment, and operating practices;
g) Oversight of all restructured or new debt, including
debtor-in-possession and exit financing and surety
bonding;
h) Active involvement in the operating activities within the
company to insure that the operating plan is consistent
with the restructuring process and that interim objectives
are attained;
i) Participate in the drafting of all public announcements;
and
j) Preparation of all financial reporting, including monthly
operating reports.
The Debtors will pay Glass based on its hourly rates:
Category Range
-------- -----
Principals $375 - $550
Case Directors $325 - $450
Senior Associates $250 - $380
Consultants $200 - $300
Clerical/Administrative
Staff $75 - $95
The Glass professionals who will primarily provide services and
their rates are:
Professional Category Hourly Rate
------------ -------- -----------
Sanford R. Edlein CRO $425
Sam Heigle Case Director $300
Tom Russell Senior Consultant $300
Ken Ollwerther Consultant $250
Kris Horner Consultant $225
Shaun Donnellan Quality Control $450
Glass received a $100,000 retainer under the Engagement Letter to
be applied against its compensation, including expenses, specific
to the engagement. Any unearned portion of the retainer will be
returned to the Debtors upon the termination of the engagement.
Prior to the commencement of the Debtors' cases, the Debtors paid
Glass $271,861 for services rendered and expenses incurred
through February 5, 2006.
Pursuant to Section 363 of the Bankruptcy Code, the Debtors ask
the Court to:
(i) authorize the employment of Glass as their restructuring
advisors; and
(ii) designate Mr. Edlein as their chief restructuring officer.
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. As of Dec. 31, 2005, Integrated Electrical reported
assets totaling $400,827,000 and debts totaling $385,540,000.
(Integrated Electrical Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc. 215/945-7000)
INTRAWEST CORP: S&P Puts BB- Corp. Credit Rating on Negative Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on resort
operator Intrawest Corp., including its 'BB-' long-term corporate
credit rating, on CreditWatch with negative implications. The
CreditWatch placement follows the company's announcement that it
has retained Goldman Sachs & Co. to explore various options to
enhance shareholder value. Vancouver, B.C.-based Intrawest has
about US$682 million in unsecured debentures.
The CreditWatch action reflects the potential for the ratings to
be negatively affected if Intrawest adopts a more aggressive
capital structure no longer suitable for its rating category.
Examples of possible transactions that might have a negative
effect include:
* the acquisition by a lower rated entity;
* a material increase in leverage of the company; or
* a higher business risk profile due to the sale of business
units.
"In resolving the CreditWatch, we will continue to monitor
developments within Intrawest as they become publicly available,"
said Standard & Poor's credit analyst Christian Green. "As the
company may not provide ongoing guidance relative to its progress,
we might decide to resolve the CreditWatch listing at a later date
if it appears that a transaction is unlikely to occur," Mr. Green
added.
ISA INTERNATIONALE: Posts $130K Net Loss in Quarter Ended Dec. 31
-----------------------------------------------------------------
ISA Internationale Inc. delivered its financial results for the
quarter ended Dec. 31, 2005, to the Securities and Exchange
Commission on Feb. 21, 2006.
ISA reported a $130,485 net loss on zero revenues for the three
months ended Dec. 31, 2005. At Dec. 31, 2005, the Company's
balance sheet showed $1,097,667 in total assets and $1,218,658 in
total liabilities, resulting in a $120,991 stockholders' deficit.
The Company has incurred losses since its inception and, as a
result, has an accumulated deficit of $7,447,029 at Dec. 31, 2005.
Default
ISA issued convertible debentures in a private placement between
November 1999 and May 2000. These debentures were convertible at
the option of the holder into common stock at $1.50 per share and
bear interest, which is payable quarterly beginning June 30, 2000
at 12%. The debentures had a term of three years and mature
between November 2002 and May 2003.
As of Dec. 31, 2005, ISA was in default on the terms of payment of
quarterly interest on these debentures amounting to $115,574.
Accordingly, two remaining convertible debentures have been
classified as a current liability amounting to $150,000.
A full-text copy of the regulatory filing is available at no
charge at http://researcharchives.com/t/s?5fa
Going Concern Doubt
De Joya Griffith & Company expressed substantial doubt about ISA's
ability to continue as a going concern after it audited the
Company's financial statements for the fiscal year ended Sept. 30,
2005. The auditing firm pointed to the Company's debt default,
recurring losses and lack of ongoing operations.
About ISA
Based in St. Paul, Minnesota, ISA Internationale, Inc. engages in
the troubled debt collection business. It has contractual
relationships with third party agencies to conduct collection
activities.
IVI COMMS: Balance Sheet Upside-Down by $1.7 Mil. at December 31
----------------------------------------------------------------
IVI Communications, Inc., delivered its financial results for the
quarter ended Dec. 31, 2005, to the Securities and Exchange
Commission on Feb. 21, 2006.
IVI incurred a $1,953,170 net loss for the quarter ended Dec. 31,
2005, from a net loss of $427,952 for the quarter ended Dec. 31,
2004.
Revenue for the three months ended Dec. 31, 2005 was $633,350, in
contrast to $750 for the comparable period in 2004. Management
attributes the increase in revenues primarily to $590,250 from the
operations of IBC Wireless and AppState.net, LLC, which were
acquired in the fourth quarter of the year ended March 31, 2005.
IBC's revenue for the quarter ended Dec. 31, 2005 consisted of
$499,342 in equipment sales, $23,500 from consulting services, and
$7,390 from other miscellaneous services.
IVI's balance sheet at Dec. 31, 2005, showed $4,012,347 in total
assets and $5,786,178 in liabilities, resulting in a $1,773,831
stockholders' deficit. The Company's working capital deficit
increased to $5,008,650 at Dec. 31, 2005 from $4,618,372 at Sept.
30, 2005 and from $4,757,796 at June 30, 2005. As of Dec. 31, the
Company had an accumulated operating deficit of $24,970,778.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?5fc
Default Judgment
On Dec. 1, 2004, a $1,367,500 judgment was entered against
Internet Ventures, Inc., IVI's predecessor company, in favor of
Catherine and Joe Santistevan. The Santistevans filed the suit
against Internet Ventures, Inc., to enforce obligations under a
promissory note issued in August 2000.
The Superior Court of San Joaquin County in Stockton, California
informed the Company on July 14, 2005, that the motion to set
aside the default judgment was denied. The Company appealed the
decision and is currently in negotiations with the Santistevans'
counsel to settle the matter amicably. The Company currently has
$459,755 recorded in notes and notes interest payable and has
established a $934,136 contingent liability.
In addition, IVI has seven default judgments against it for a
total amount of $163,367. Five of these judgments have
settlements in place with total aggregate balances of $85,778.
The amounts are recorded in accounts payable. The Company is
currently not performing under the terms of the settlements.
About IVI
IVI Communications, Inc. -- http://www.ivn.net/-- acquires,
consolidates and profitably operates locally branded ISPs to offer
state of the art dialup and fixed wireless (WIMAX) broadband
Internet access and other services such as VoIP Internet Telephony
to residential and business customers.
IVI has three wholly owned subsidiaries, Internet Business
Consulting, Inc., Futura, Inc., and AppState.Net. IBC is a VoIP
services provider and a source of turnkey wireless networks that
has the expertise required to engineer, install, and support
wireless applications and solutions. Futura, founded in September
1995, is a regional Internet Service Provider serving dialup, DSL
and VoIP in communities surrounding Little Rock, Arkansas.
AppState.net is an Internet Service Provider founded in July 1999
providing wireless and dialup Internet access to the Appalachian
State University town of Boone, NC.
JO-ANN STORES: Board Chairman Alan Rosskamm to Step Down
--------------------------------------------------------
Jo-Ann Stores, Inc. (NYSE:JAS), has decided to add the
responsibilities of Chairman of the Board to its previously
announced search for a new President and Chief Executive Officer.
Alan Rosskamm, the Company's current Chairman, President and Chief
Executive Officer will step down from his positions with the
Company and become an outside director upon the naming of his
replacement.
Mr. Rosskamm stated: "As a major shareholder and director, I have
both a strong desire and fiduciary duty to make sure that we
attract the most qualified and capable chief executive to guide
the Company's future growth, while maximizing value for all our
shareholders. The board and I believe that expanding the role to
include the responsibilities of Chairman will attract the broadest
range of qualified candidates."
Gregg Searle, Jo-Ann's Lead Director, said: "Alan's decision to
step down as Chairman, in order to ensure that we have access to
the best possible candidates, is consistent with his unwavering
commitment to doing whatever is in the best interests of the
Company's success. We are especially appreciative of his
extraordinary and continuing efforts over the last several months
in addressing the challenges facing the Company in light of
general softness in the industry."
The CEO search is being conducted by SpencerStuart, a national
executive search firm, at the direction of a Search Committee
chaired by Tracey Thomas Travis, a director of the Company.
Jo-Ann Stores, Inc. -- http://www.joann.com/-- is the leading
U.S. fabric and craft retailer with locations in 47 states,
operates 688 Jo-Ann Fabrics and Crafts traditional stores and 154
Jo-Ann superstores.
* * *
As reported in the Troubled Company Reporter on Feb. 17, 2006,
Moody's Investors Service lowered all ratings of Jo-Ann Stores,
Inc., including the rating on a $100 million issue of 7.5% senior
subordinated notes due 2012 to B3 from B2. The rating downgrade
was prompted by the adverse impact that weak merchandising
programs and a slowdown in several categories have had on sales,
cash flow, and working capital. "Key credit metrics have fallen
well below levels that are typical for the company's previous
ratings," Moody's said, and the rating agency "does not expect
that debt protection measures will soon regain prior levels."
Moody's rating outlook was revised to negative too. Moody's does
not rate Jo-Ann's secured bank credit facility.
JO-ANN STORES: Increases Senior Secured Facility to $425 Million
----------------------------------------------------------------
Jo-Ann Stores, Inc. and all of its wholly-owned guarantor
subsidiaries entered into a fifth amendment to its existing
amended senior secured credit facility with these lenders of that
facility, led by Bank of America Retail Finance, Inc.
The Fifth Amendment to Credit Agreement, among other things,
increases the size of the facility from its current $350 million
to $425 million, improves advance rates on inventory during peak
borrowing periods, and modifies the required consolidated net
worth covenant.
Jo-Ann Stores, Inc. -- http://www.joann.com/-- is the leading
U.S. fabric and craft retailer with locations in 47 states,
operates 688 Jo-Ann Fabrics and Crafts traditional stores and 154
Jo-Ann superstores.
* * *
As reported in the Troubled Company Reporter on Feb. 17, 2006,
Moody's Investors Service lowered all ratings of Jo-Ann Stores,
Inc., including the rating on a $100 million issue of 7.5% senior
subordinated notes due 2012 to B3 from B2. The rating downgrade
was prompted by the adverse impact that weak merchandising
programs and a slowdown in several categories have had on sales,
cash flow, and working capital. "Key credit metrics have fallen
well below levels that are typical for the company's previous
ratings," Moody's said, and the rating agency "does not expect
that debt protection measures will soon regain prior levels."
Moody's rating outlook was revised to negative too. Moody's does
not rate Jo-Ann's secured bank credit facility.
JOE DAICHES: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Joe Daiches Credit Jewelers, Inc.
101 Houston Street
Fort Worth, Texas 76102
Bankruptcy Case No.: 06-40571
Type of Business: The Debtor sells jewelry.
Chapter 11 Petition Date: March 2, 2006
Court: Northern District of Texas (Ft. Worth)
Judge: Russell F. Nelms
Debtor's Counsel: Susan B. Hersh, Esq.
Susan B. Hersh, P.C.
12770 Coit Road, Suite 1100
Dallas, Texas 75251
Tel: (972) 503-7070
Fax: (972) 503-7077
Debtor's financial condition as of February 27, 2006:
Total Assets: $1,100,000
Total Debts: $1,678,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Larry Daiches Past Compensation $339,000
6921 Tumbling Trail & Stock Buyout
Fort Worth, TX 76116
Alvin Daiches Loans and Past $311,000
6804 Del Prado Avenue Compensation
Fort Worth, TX 76133
JP Morgan Chase Bank $92,000
Small Business
Financial Services
P.O. Box 78039
Phoenix, AZ 85062
Citi Advantage Business Card $35,800
Gemdiam, Inc. $25,000
Henry Jewelry, Inc. $21,469
Dynamic Design Group, Inc. $20,000
Amit Diamond Jewelry $18,764
Advanta Bank Card $16,211
MGM Jewelry MFG, Inc. $14,000
Capitol One $11,241
Luminar Creations $10,088
Romance Ring a/k/a $9,500
Star Ring, Inc.
Aurafin Oro America $9,000
L.I.D. Ltd. $8,584
Premesco Seamless Ring Co. $7,007
M&J Grosbard, Inc. $6,000
M&B Enterprise of Carefree Inc. $5,321
Real Creations, Inc. $5,000
Fantasy Diamond Corporation $4,780
JOHN MANEELY: Moody's Rates Proposed $290 Million Term Loan at B2
-----------------------------------------------------------------
Moody's Investors Service assigned a B1 corporate family rating to
John Maneely Company, a Ba3 rating to the proposed $200 million
senior secured revolving credit facility and a B2 rating to the
proposed $290 million senior secured term loan. The rating
outlook is stable. This is the first time that Moody's has rated
the debt of Maneely.
Drawings of approximately $120 million under the revolver together
with the term loan will be applied to funding the purchase of
Maneely by the Carlyle Group. Approximately $211 million in
goodwill is being created in the transaction. The ratings assume
that the transaction will close on the terms advised.
These ratings were assigned:
* Proposed $200 million 5-year senior secured revolving credit
facility -- Ba3
* Proposed $290 million 7-year senior secured term loan -- B2
* Corporate family rating -- B1
The B1 corporate family rating reflects the company's significant
exposure to the non- residential construction market, particularly
for its standard steel pipe and electrical conduit products, and
the volatility of these markets, its dependence upon relatively
robust demand conditions and hence prices in the markets it
serves, the relatively high degree of leverage under which it will
be operating under its new ownership structure compared with its
historical experience of not operating with a leveraged profile,
and the relatively modest size of the company. However, the rating
reflects the leadership position the company enjoys in its key
product areas, where it is number 1 or 2, its history of cash
generation, the expectation that borrowings under the revolver
will be repaid over the next 24 month period, and the absence of
material debt maturities until 2011.
The Ba3 rating for the senior secured revolver reflects the
superior value of its structure and security package. The
revolver is secured by inventory and receivables, and borrowings
are tied to the lesser of a borrowing base calculation and the
aggregate size of the facility. Given this structure, Moody's
believes that the position of this facility is superior in the
capital structure. The revolver has a second security interest in
the non-current assets that secure the term loan. The B2 rating
on the term loan reflects Moody's view that the value of the non-
current assets, particularly plant, property and equipment, is
insufficient to cover the level of the term loan and that
meaningful excess current assets would not be available to cover
the deficiency.
The stable outlook incorporates Moody's view that conditions for
the non-residential construction market will continue solid for
the next 12-15 months. As a consequence, Moody's expects Maneely
to continue to show earnings and cash flow generation comparable
to 2004 and 2005, and be able to delever by the end of its 2007
fiscal year-end. Repayment of borrowings under the revolver
incurred to help finance the acquisition, and continuation of
shipment levels and gross margins that allow for free cash flow
generation in less robust market conditions, could result in an
upgrade in the rating. Conversely, the rating could be lowered
should the company be unable to reduce debt over the next 12 to 15
months or should volumes and margins deteriorate to a point where
cash flow generation is insufficient to cover capital
expenditures.
Maneely manufactures small diameter steel pipe as well as tubular
products at seven domestic manufacturing facilities. Sales are
predominately into the more commodity oriented standard pipe
market followed by the electrical conduit market, which provides a
greater degree of value added product. The company enjoys leading
market positions in these segments, which combined account for
roughly 80% of revenues. The company also sells into the fence
pipe and tubing, fire sprinkler pipe, galvanized mechanical tube,
and fittings markets. Products are sold to plumbing and
electrical distributors. The rating reflects the good market
position of Maneely but considers that significant growth in
margins on a sustainable basis is limited due to the "margin on
metals" nature of its business profile and that margins per ton
are more likely to retreat from the high levels experienced in the
2004 and 2005 period. However, Moody's would expect that prices
realized would continue to trend comparable to the movement in
prices for the company's raw material requirements, principally
hot rolled steel, which provides a relative degree of stability in
earnings performance.
Headquartered in Collingswood, New Jersey, Maneely had net
revenues of $713 million in its fiscal year ended Sept. 30, 2005.
JOHN MANEELY: S&P Puts B Rating on $290 Mil. 1st-Lien Term Loan
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to John Maneely Co. (JMC) Standard & Poor's also
assigned its 'BB-' senior secured bank loan rating and '1'
recovery rating to the company's proposed $200 million, first-lien
asset-based revolving credit facility due 2011. The '1' rating
indicates a high expectation of full recovery of principal in the
event of payment default.
In addition, Standard & Poor's assigned its 'B' senior secured
bank loan rating to the company's $290 million first-lien term
loan due in 2013 and a recovery rating of '4'. The '4' recovery
rating indicates the likelihood of a marginal (25%-50%) recovery
of principal in the event of a payment default.
The outlook on the Collingswood, New Jersey-based company is
stable.
"We expect that relatively favorable market conditions over the
intermediate term will enable the company to maintain adequate
performance," said Standard & Poor's credit analyst Paul Vastola.
"We could revise the outlook to positive if the company can
continue to expand and diversify its operations without increasing
its aggressive financial leverage. We could revise the outlook to
negative if an economic downturn severely affected market
conditions or if a significant influx of imports weakened its
financial profile."
Standard & Poor's expects total debt pro forma for the proposed
transaction to be $410 million. The Carlyle Group (unrated) will
use the proceeds from the proposed bank borrowings, together with
an equity contribution to purchase privately held JMC. The
Carlyle Group is a private investment firm focused on leveraged
buyouts.
John Maneely is a niche manufacturer of small-diameter steel pipe
and tubular products in North America. It operates seven
manufacturing facilities in the central northeastern and
midwestern U.S. It is also a primary supplier of electrical metal
tubular products to the electrical fittings market.
At the close of the transaction, John Maneely expects to have $50
million available under its $200 million revolving credit facility
due 2011. The revolving credit facility is subject to a borrowing
base. Debt maturities are currently manageable for the next
several years.
The business has modest fixed-capital requirements, with capital
expenditures expected to remain below $20 million, but has high
working capital intensity. Free cash flows should be positive in
the intermediate term, but working-capital swings can be
significant.
The $200 million asset-based revolving credit facility will be
secured by a first-priority security interest in accounts
receivable, inventory, and proceeds thereof plus a second-priority
security interest in all other assets. The $290 million senior
secured term loan facility will be secured by a first lien on
machinery and equipment, real estate, leaseholds, intangible
assets and proceeds thereof, plus a second-priority security
interest on inventory and accounts receivable.
Intercreditor provisions in the financing documentation set the
priority rights of creditors in respect of the collateral. Asset-
based lenders will have first priority on current assets (ABL
credit facility primary collateral), and senior term facility
lenders will have first priority on all other collateral assets
(senior term facility primary collateral). Each facility's
lenders will have a secondary position in the other's primary
collateral.
KAYDON CORP: Earns $14.4 Million in Fourth Quarter Ended Dec.31
---------------------------------------------------------------
Kaydon Corporation (NYSE: KDN) reported its financial results for
the fourth quarter and full year ended Dec. 31, 2005.
The company earned $14,408,000 of net income on $89,653,000 of net
sales for the three months ended Dec. 31, 2005.
Full Year 2005 Highlights
-- Sales, including recent acquisitions, increased 19.5%, to
$354.6 million, on strengthened demand across most key
product lines;
-- After tax income increased 28.0% to $46.5 million;
-- Order entry increased 25.5% to $398.3 million;
-- Ending backlog increased 47.8% to $150.2 million;
-- Cash and cash equivalents increased to $320.8 million; and
-- EBITDA, a non-GAAP measure, increased 14.8% to
$86.7 million, equal to 24.4% of sales, and covered interest
expense by more than 9.0 x.
"We are pleased with our fourth quarter and full year results,
both of which improved nicely over 2004's comparable periods,"
Brian P. Campbell, Kaydon's President and Chief Executive Officer
commented. "Our strong order intake during the year and the
resultant year-end backlog, reflect the strength in our key
markets during the year. Our performance also reflects the
success of our efforts to drive growth through new product
development and application engineering, our continued success in
providing performance critical products to meet demanding customer
needs, and our operational excellence initiatives."
Sales of continuing operations during the fourth quarter of 2005
equaled $89.7 million compared to $72.2 million during the fourth
quarter of 2004, a 24.1% increase. Increased sales across most of
the Company's product lines, including specialty bearings, split
roller bearings, sealing products, and metal forming equipment
were only partially offset by decreases totaling $1.1 million
related to lower sales of certain filtration products, specialty
metal alloys, and specialty ball products. Sales of continuing
operations for the full year 2005 were $354.6 million, an increase
of 19.5 percent compared to $296.7 million during 2004.
Gross profit from continuing operations equaled $37.2 million or
41.5% of sales during the fourth quarter of 2005 as compared to
$29.9 million or 41.4% of sales during the fourth quarter of 2004.
Although higher material costs continued to have an impact on
gross margins during the fourth quarter of 2005, they were
substantially offset by selling price increases initiated during
the third quarter of 2005.
Affected by operating inefficiencies during the first half of the
year related to new programs for military and wind power
applications and by higher material costs that were not offset by
selling price increases, gross profit from continuing operations
equaled $139.0 million or 39.2% of sales during the full year 2005
as compared to $121.2 million or 40.8% of sales during the full
year 2004.
Selling, general, and administrative expenses of continuing
operations equaled $17.6 million during the fourth quarter of
2005, as compared to $14.2 million during the fourth quarter of
2004. Both amounts represented 19.7% of sales.
During the fourth quarter, costs associated with Sarbanes-Oxley
compliance declined $1.1 million when compared to 2004. At the
same time, the company experienced increased SG&A costs related to
higher sales volumes and increased amortization primarily
associated with recent acquisitions. SG&A expenses of continuing
operations equaled $68.9 million, or 19.4% of sales, during the
full year 2005 as compared to $58.8 million, or 19.8% of sales,
during full year 2004.
Operating income from continuing operations during the fourth
quarter of 2005 was $19.5 million, or 21.8% of sales, compared to
$15.7 million, or 21.7% of sales in 2004, an increase of 24.5%.
Operating income from continuing operations during full year 2005
was $70.2 million, compared to $62.4 million in 2004.
Interest income increased to $3.0 million during the fourth
quarter of 2005, compared with $1.4 million during the fourth
quarter of 2004. Interest income increased to $8.7 million during
full year 2005, compared with $4.0 million during 2004.
The effective tax rate for continuing operations for the fourth
quarter of 2005 was 28.7%, reflecting $1.1 million of reductions
to the tax provision resulting from several tax audit settlements
during the quarter related to deductions previously not recognized
for financial reporting purposes.
The fourth quarter 2005 effective tax rate also reflects the
elimination of a valuation allowance attributable to the expected
utilization of foreign net operating loss carry forwards that were
previously not expected to be realized, additional deductions
available under the American Jobs Creation Act of 2004, and an
increase in the U.S. federal tax benefit of the Extraterritorial
Income Exclusion.
The effective tax rate during the fourth quarter of 2004 was 36%.
For the full year 2005, the effective tax rate for continuing
operations was 32.9% compared to 36.0% in 2004. The Company
expects the effective tax rate for 2006 to be approximately 36.0%.
Income from continuing operations for the fourth quarter of 2005
was $14.4 million. During the fourth quarter of 2004 Kaydon
generated income from continuing operations of $9.4 million.
Income from continuing operations for the full year 2005 was
$46.5 million and full year 2004 income from continuing operations
was $36.3 million.
Income from discontinued operations for the full year 2005 equaled
$27.4 million, including the after tax gain of $25.4 million on
the sale of the Power and Data Transmission Products Group.
Income from discontinued operations for 2004 equaled $2.0 million.
Including discontinued operations, net income for the full year
2005 was $73.9 million. Net income for 2004 was $38.4 million.
Reflecting increased orders for many of our specialty products
from various key markets, order entry for continuing operations
during the fourth quarter of 2005 equaled $112.7 million, making
it the strongest quarter of the year, and bringing total order
entry for 2005 to $398.3 million, a 25.5% increase over 2004.
Backlog equaled $150.2 million at Dec. 31, 2005, a 47.8% increase
compared to a backlog for continuing operations of $101.6 million
at Dec. 31, 2004.
Affected by a $16.6 million tax payment related to the gain on
sale of discounted operations, net cash flow from operating
activities of continuing operations during the fourth quarter 2005
equaled $10.1 million, compared to fourth quarter 2004 cash flow
from operations of $14.8 million.
Operating cash flow provided by net income and working capital
items increased to $26.7 million before the effect of the tax
payment. Also during the fourth quarter 2005, the Company paid
common stock dividends of $3.4 million and invested $5.7 million
in net capital expenditures.
Net cash flow from operating activities for full year 2005 totaled
$41.2 million, after giving effect to the $16.6 million tax
payment related to the divestiture, compared to $48.2 million
during 2004.
During 2005, the Company invested $42.7 million for an
acquisition, repurchased a total of 207,771 shares of Company
common stock for $6.1 million, paid common stock dividends of
$13.5 million, and invested $12.6 million in net capital
expenditures.
Depreciation and amortization of continuing operations equaled
$4.2 million during the fourth quarter of 2005, compared to
$3.3 million during the comparable period last year, due
principally to the increased amortization of intangible assets
associated with recent acquisitions. Depreciation and
amortization of continuing operations for 2005 equaled
$16.5 million, compared to $13.1 million in 2004.
EBITDA from continuing operations, or earnings before interest,
taxes, depreciation and amortization, a non-GAAP measure, equaled
$23.8 million during the fourth quarter 2005 as compared to
$19.0 million during the fourth quarter 2004.
For the full year 2005, EBITDA from continuing operations equaled
$86.7 million, an increase of 14.8% over the $75.5 million of
EBITDA generated from continuing operations in 2004, and covered
2005 interest expense by 9.0 x.
Segment Discussion
During the fourth quarter of 2005 sales of the Friction and Motion
Control Products segment equaled $51.0 million, a 22.9% increase
over the fourth quarter of 2004. This segment continues to
benefit from increased demand for specialty bearings utilized in
defense, heavy equipment, wind power, and various industrial
markets.
Operating income during this year's fourth quarter equaled
$14.6 million, a 36.4% increase compared to the $10.7 million
generated in the fourth quarter of 2004. Although fourth quarter
2005 operating income continued to be affected by higher, but
moderating, material costs and subcontracting expenses, these
higher costs were substantially offset by selling price and
capacity increases initiated during the third quarter.
During 2005, sales of the Friction and Motion Control Products
segment increased $31.2 million, to $195.0 million, or 19.0% when
compared with 2004. Operating income increased $8.6 million or
20.9%, to $49.5 million.
Sales for the fourth quarter 2005 of the Velocity Control Products
segment were $11.0 million compared to sales of $12.3 million for
the fourth quarter 2004. Due in part to lower Sarbanes-Oxley
compliance costs at certain foreign locations, fourth quarter
operating income increased $600,000, to $1.8 million. Aided by
the small product line acquisition completed in September 2004,
full year 2005 sales of this segment increased 5.5%, to
$53.8 million, compared with 2004. Operating income increased to
$12.2 million compared to $11.8 million in 2004.
Fourth quarter sales of the Sealing Products segment increased
$3.1 million, or 45.0%, to $10.0 million as the segment benefited
from increased demand from all its key markets.
Fourth quarter 2004 sales were affected by a work stoppage at the
Baltimore, Maryland facility. Operating income of $2.1 million
increased $1.9 million when compared with the fourth quarter of
2004, despite increased material and energy costs. Primarily as a
result of increased sales of new industrial seal products and
industrial seal maintenance services, full year 2005 sales of this
segment increased 10.3%, to $38.5 million, when compared with
2004. Operating income for full year 2005 increased 2.5% to
$5.9 million compared with operating income last year of
$5.8 million. Full year 2004 included the $0.6 million favorable
effect of certain reserve adjustments.
Sales of the Company's remaining businesses equaled $17.6 million
during the fourth quarter of 2005, an increase from fourth quarter
2004 of $6.1 million. Sales from a recent acquisition and
increased sales of specialty metal forming equipment were
partially offset by a decrease in sales of specialty metal alloys
and liquid filtration products.
Operating income for these businesses, affected by unfavorable
sales mix and costs associated with the consolidation of the
manufacturing facilities of the liquid filtration products
business, totaled $1.3 million in the fourth quarter of 2005
compared to $1.2 million in the fourth quarter of 2004.
For full year 2005, sales of these businesses, including a recent
acquisition, increased 43.15, to $67.2 million, compared with
2004. Operating income increased to $4.6 million, compared with
$2.2 million in 2004, which included a $1.9 million goodwill
impairment loss.
Kaydon Corporation sold on July 26, 2005, its Power and Data
Transmission Products Group. Up to the date of disposition, 2005
sales of the Group equaled $22.1 million and operating income was
$3.0 million. For full year 2004, sales of the Group equaled
$37.1 million and operating income was $3.1 million. The Group's
operating income is reported as a component of income from
discontinued operations. The Power and Data Transmission Products
Group has been eliminated as a reportable segment.
Headquartered in Ann Arbor, Michigan, Kaydon Corporation --
http://www.kaydon.com/-- designs and manufactures custom-
engineered, performance-critical products, supplying a broad and
diverse group of industrial, aerospace, medical and electronic
equipment, and aftermarket customers.
* * *
As reported in the Troubled Company Reporter on Aug. 12, 2003,
Standard & Poor's Ratings Services assigned its 'BB+' corporate
credit rating to Kaydon Corp. At the same time, Standard & Poor's
assigned its 'BB-' subordinated debt rating to Kaydon's $200
million 4% convertible note issue due 2023. Standard & Poor's
said the outlook was stable on that date.
KING PHARMACEUTICALS: Earns $117.8M of Net Income in 4th Quarter
----------------------------------------------------------------
King Pharmaceuticals, Inc. (NYSE:KG), disclosed that total
revenues increased 36% to $1.77 billion during the year ended
December 31, 2005, compared to $1.30 billion for 2004. Including
special items, net income equaled $117.8 million during the year
ended December 31, 2005, compared to a net loss of $160.3 million
during the prior year.
Excluding special items, net earnings increased to $400.5 million
for the twelve months ended December 31, 2005, from net earnings
of $157.6 million in 2004.
Brian A. Markison, President and Chief Executive Officer of King,
stated, "King achieved many significant milestones in 2005, as we
refocused all aspects of our business and made tremendous progress
toward resolving our previously existing challenges. Evidencing
these achievements is our record high total revenues for the year
ended December 31, 2005, totaling approximately $1.8 billion."
Mr. Markison continued, "A particularly significant accomplishment
during 2005 is our strategic collaboration with Pain Therapeutics,
Inc., to develop and commercialize Remoxy(TM) and up to three
other abuse-resistant opioid painkillers, which exemplifies the
continued successful execution of our growth strategy. With this
collaboration, we believe we have significantly strengthened our
development pipeline providing greater potential to deliver long-
term value for our Company."
Mr. Markison added, "We plan to continue implementing our strategy
for long-term growth during 2006, focusing on our key therapeutic
areas of cardiovascular/metabolics, neuroscience, and
hospital/acute care. Relying on our best in class commercial
operations capability, we expect to maximize the potential of our
existing portfolio of branded pharmaceutical products. Our
research and development team, in collaboration with our partners,
will continue o advance a significant number of development
projects in our pipeline. This currently includes three products
in Phase III and two products in Phase II clinical trials. With a
focus on our key therapeutic areas, we also expect to further
expand our development pipeline as we continue to implement our
disciplined, systematic business development process leveraging
our core strengths."
Joseph Squicciarino, King's Chief Financial Officer, stated, "King
continued to generate very strong cash flows from operations,
totaling $519.5 million during the year ended December 31, 2005.
With such strong cash flows, our unrestricted cash and investments
in debt securities as of December 31, 2005, totaled approximately
$524.7 million. Our cash position and cash flows from operations
allow us to invest in products and commit to programs that are
consistent with our strategy for long-term growth."
For the fourth quarter ended December 31, 2005, total revenues
increased 24% to $423.3 million compared to $342.6 million in the
fourth quarter of 2004. Including special items, the Company had
a net loss of $94.6 million during the fourth quarter of 2005
compared to net earnings of $14.7 million in the same period of
the prior year. Excluding special items, net earnings increased
to $92.3 million during the fourth quarter ended December 31,
2005, from net earnings of $33.8 million and diluted earnings per
share of $0.14 in the fourth quarter of 2004.
During the fourth quarter of 2005, net sales of the Company's
key branded products were adversely affected by approximately
$30 million resulting from changes in wholesaler buying patterns.
The data upon which the Company relied and based its original
third-quarter 2005 estimates of wholesale inventory levels was
incorrect due to reporting errors made by two of the Company's
major wholesale customers. Inventory levels of Skelaxin(R)
(metaxalone) and Altace(R) (ramipril) were each slightly higher
than one month of estimated end-user demand as of the end of the
third quarter. King estimates that inventory levels of these
products were subsequently reduced during the fourth quarter of
2005. Accordingly, fourth-quarter 2005 net sales of Skelaxin(R)
and Altace(R) were adversely affected by $17 million and
$13 million.
King recorded special items during the fourth quarter
ended December 31, 2005, that resulted in a net charge of
$284.4 million, or $186.9 million net of tax.
Net revenue from branded pharmaceuticals totaled $365.5 million
for the fourth quarter of 2005, a 27% increase from the fourth
quarter of 2004, and equaled $1.5 billion for the year ended
December 31, 2005, a 36% increase from $1.1 billion during the
prior year. These increases were primarily due to higher unit
sales of the Company's branded pharmaceutical products and a lower
rate of reserves for returns for some of these products during the
fourth quarter and year ended December 31, 2005, as a result of
the effect of a higher level of wholesale channel inventory
reductions and actual returns of some of these products during
2004.
Altace(R) net sales equaled $150.3 million in the fourth quarter
and $554.4 million during the twelve months ended December 31,
2005, increases of 64% and 60% from $91.7 million in the fourth
quarter and $347.3 million during the twelve months ended
December 31, 2004.
Net sales of Skelaxin(R) totaled $70.0 million during the fourth
quarter of 2005, a decrease of 14% from $81.1 million in the
fourth quarter of 2004. For the twelve months ended December 31,
2005, net sales of Skelaxin(R) increased 44% to $344.6 million
compared to $238.6 million during the same period in 2004.
Thrombin-JMI(R) (thrombin, topical, bovine, USP) net sales equaled
$50.7 million during the fourth quarter of 2005 compared to
$50.5 million during the same period of the prior year. During
the twelve months ended December 31, 2005, Thrombin-JMI(R) net
sales increased 26% to $220.6 million from $174.6 million during
the same period of the prior year.
Net sales of Sonata(R) (zaleplon) equaled $24.8 million in the
fourth quarter and $83.1 million during the twelve months ended
December 31, 2005, increases of 125% and 38%, respectively, from
$11.0 million during the fourth quarter and $60.4 million during
the twelve months ended December 31, 2004.
Levoxyl(R) (levothyroxine sodium tablets, USP) net sales totaled
$22.1 million during the fourth quarter of 2005 compared to
$21.3 million during the fourth quarter of 2004. During the
twelve months ended December 31, 2005, net sales of Levoxyl(R)
totaled $139.5 million, an increase of 33% from $104.7 million for
the same period of the prior year.
Royalty revenues, derived primarily from Adenoscan(R) (adenosine),
totaled $18.2 million during the fourth quarter and $78.1 million
during the twelve months ended December 31, 2005, compared to
$20.3 million during the fourth quarter and $78.5 million during
the twelve months ended December 31, 2004.
King's Meridian Medical Technologies business contributed
$32.3 million to the Company's net revenue in the fourth quarter
of 2005 and $129.3 million during the year ended December 31,
2005, compared to $27.2 million during the fourth quarter and
$123.3 million during the twelve months ended December 31, 2004.
During the fourth quarter and year ended December 31, 2005,
revenue from contract manufacturing equaled $6.2 million and
$22.2 million compared to $7.5 million during the fourth quarter
and $26.0 million during the twelve months ended December 31,
2004.
The Company has entered into an agreement with Aventis Pharma
Deutschland GmbH (now known as Sanofi-Aventis Deutschland GmbH)
and Cobalt Pharmaceuticals, Inc. to dismiss the pending litigation
relating to the enforcement of patents pertaining to Altace(R).
Headquartered in Bristol, Tennessee, King Pharmaceuticals --
http://www.kingpharm.com/-- is a vertically integrated branded
pharmaceutical company. King, an S&P 500 Index company, seeks to
capitalize on opportunities in the pharmaceutical industry through
the development, including through in-licensing arrangements and
acquisitions, of novel branded prescription pharmaceutical
products in attractive markets and the strategic acquisition of
branded products that can benefit from focused promotion and
marketing and product life-cycle management.
As reported in the Troubled Company Reporter on Oct. 4, 2005,
Standard & Poor's Ratings Services affirmed its ratings on King
Pharmaceuticals Inc., including the 'BB' corporate credit rating,
and removed them from CreditWatch, where they were placed with
negative implications on Feb. 28, 2005. The CreditWatch listing
followed the cancellation of King Pharmaceuticals' potential
acquisition by Mylan Laboratories Inc. S&P said the rating
outlook is negative.
LEGACY ESTATE: Wants to Hire Chanin Capital as Investment Banker
----------------------------------------------------------------
The Legacy Estate Group LLC ask the U.S. Bankruptcy Court for the
Northern District of California for permission to employ Chanin
Capital Partners LLC as its investment banker and financial
advisor pursuant to Sections 327(a) and 328(a) of the Bankruptcy
Code.
Chanin Capital will:
1) review and analyze the Debtor's business and financial
projections and evaluate its strategic and financial
alternatives;
2) advise the Debtor on tactics and strategies for negotiating
with the holders of existing debt and other liabilities and
other stakeholders;
3) participate in meetings or negotiations with the Debtor's
creditors and other stakeholders and assist in evaluating,
structuring, negotiating and implementing the terms and
conditions of a transaction for renegotiating the Debtor's
debt and other liabilities;
4) assist the Debtor in preparing descriptive material to be
provided to potential properties to an M&A transaction,
financing transaction or DIP financing;
5) develop, update and review with the Debtor on an ongoing
basis list of parties that might participate in an M&A
transaction, financing transaction or DIP financing and
contact potential parties to those transactions;
6) assist in evaluating proposals received regarding an M&A
transaction, financing transaction or DIP financing and
provide expert testimony in proceedings before the
Bankruptcy Court; and
7) render all other investment banking and financial advisory
services to the Debtor that are necessary in its chapter 11
case.
Steven B. Sebastian, a member at Chanin Capital, discloses that
his Firm received a $100,000 retainer.
Mr. Sebastian reports that Chanin Capital will be paid with:
1) a $100,000 Contested Valuation Fee for providing valuation
evidence and expert witness testimony in relation to a
contested valuation in any contested matter or adversary
proceeding between the Debtor and any secured creditor;
2) a $1,500,000 Transaction Fee for a consummated transaction
with respect to an M&A transaction, financing transaction or
restructuring transaction, provided, however that only one
Transaction Fee will be payable;
3) a DIP Financing Fee equal to 2% of the gross available
proceeds of a successfully completed DIP financing
transaction; and
3) expense reimbursement for expenses incurred in connection
with the services to be provided under the Engagement
Agreement between Chanin and the Debtor.
Chanin Capital assures the Court that it does not represent any
interest materially adverse to the Debtor and it is a
disinterested person.
Headquartered in Saint Helena, California, The Legacy Estate Group
LLC -- http://www.freemarkabbey.com/-- owns Freemark Abbey
Winery, which produces a range of red, white, and dessert wines.
Legacy Estate and Connaught Capital Partners, LLC, filed for
chapter 11 protection on November 18, 2005 (Bankr. N.D. Calif.
Case No. 05-14659). John Walshe Murray, Esq., Lovee Sarenas,
Esq., and Robert A. Franklin, Esq., at the Law Offices of Murray
and Murray represent the Debtors in their restructuring efforts.
Lawyers at Winston & Strawn 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 between $50 million and $100 million.
LEGACY ESTATE: U.S. Trustee Objects to Hiring of Chanin Capital
---------------------------------------------------------------
Sara L. Kistler, the acting U.S. Trustee for Region 17 asks the
U.S. Bankruptcy Court for the Northern District of California to
deny The Legacy Estate Group LLC's request to employ Chanin
Capital Partners LLC as its investment banker and financial
advisor.
Ms. Kistler gives the Court five objections to the Debtor's
employment of Chanin Capital:
1) the application requests employment subject only to 11
U.S.C. Section 328(a) and not subject to any other standard
of review including 11 U.S.C. Section 330 and requests only
the Court may review and only the U.S. Trustee may object to
any fee request and interested parties may not object;
2) the application requests approval of terms which remove
liability or obligation of any nature whatsoever in
connection with the Engagement Agreement between the Debtor
and Chanin or the transactions the application contemplates,
and the Debtor waives and releases all claims related to the
liability or obligation;
3) the application requests approval of terms which require the
Debtor to reimburse each "Person" for all fees and expenses,
including legal fees in connection with any proceeding,
except for gross negligence or willful misconduct as
determined by a court of competent jurisdiction, and
requiring the Debtor to assume the defense of any action
including employment of counsel;
4) the application indicates Chanin has no interest adverse to
the estate and is disinterested, except the supporting
Steven B. Sebastian Declaration that indicates there is an
attached Exhibit "A" describing connections, but that
Declaration fails to include the attachment;
5) the application requests an additional $100,000 non-
refundable retainer in the event of contested valuation
which may be paid without further Court order and it
requests a $1,500,000 transaction fee without establishing
the reasonableness of the amount in light of any benefits
conferred; and
6) the application requests approval of maintaining time
records only in quarter-hour increments rather than tenth of
an hour increments as the Bankruptcy Court for the Northern
District of California Guidelines for Compensation and
Expense Reimbursement of Professionals and Trustees
requires.
Ms. Kistler tells the Court her objections justify cause to deny
the Debtor's employment of Chanin Capital.
Headquartered in Saint Helena, California, The Legacy Estate Group
LLC -- http://www.freemarkabbey.com/-- owns Freemark Abbey
Winery, which produces a range of red, white, and dessert wines.
Legacy Estate and Connaught Capital Partners, LLC, filed for
chapter 11 protection on November 18, 2005 (Bankr. N.D. Calif.
Case No. 05-14659). John Walshe Murray, Esq., Lovee Sarenas,
Esq., and Robert A. Franklin, Esq., at the Law Offices of Murray
and Murray represent the Debtors in their restructuring efforts.
Lawyers at Winston & Strawn 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 between $50 million and $100 million.
LUCENT TECHNOLOGIES: J.A. Kritzmacher Replaces F. D'Amelio as CFO
-----------------------------------------------------------------
Lucent Technologies Inc. named John A. Kritzmacher, 45, as the
company's chief financial officer. Mr. Kritzmacher, who had been
Lucent's corporate controller since 2001, succeeds Frank D'Amelio,
who took on a new role as the Company's chief operating officer in
January. The appointment is effective immediately and is for an
indefinite term.
As CFO, Mr. Kritzmacher will be responsible for all of Lucent's
financial operations, including corporate accounting, external
reporting, financial planning, treasury, tax and investor
relations. In addition, he will oversee internal audit, real
estate, and mergers and acquisitions. He will report directly to
Chairman and CEO Patricia Russo.
Mr. Kritzmacher joined an accelerated leadership development
program at Bell Labs in 1982, and has progressed through a number
of positions in finance, product marketing and operations at
Lucent and its predecessor, AT&T. Prior assignments included
finance leadership for the Switching Solutions Group, planning and
analysis for the former Network Systems Group, merger and
acquisition development, and market unit business management
within North America. Among his most recent financial roles, Mr.
Kritzmacher was responsible for providing financial leadership
across all of Lucent's products units.
Mr. Kritzmacher earned a bachelor's degree in math and economics
from Dartmouth College and an MBA from New York University's Stern
School of Business.
Headquartered in Murray Hill, New Jersey, Lucent Technologies --
http://www.lucent.com/-- designs and delivers the systems,
services and software that drive next-generation communications
networks. Backed by Bell Labs research and development, Lucent
uses its strengths in mobility, optical, software, data and voice
networking technologies, as well as services, to create new
revenue-generating opportunities for its customers, while enabling
them to quickly deploy and better manage their networks. Lucent's
customer base includes communications service providers,
governments and enterprises worldwide.
* * *
As reported in the Troubled Company Reporter on Oct. 28, 2005,
Fitch Ratings upgraded Lucent Technologies:
-- Issuer default rating to 'BB-' from 'B';
-- Senior unsecured debt to 'BB-' from 'B';
-- Subordinated convertible debentures to 'B' from 'CCC+'
-- Convertible trust preferred securities to 'B' from 'CCC+'.
MANITOWOC CO: Declares Stock Dividend; Plans 2-for-1 Stock Split
----------------------------------------------------------------
The Manitowoc Company, Inc. (NYSE: MTW)'s board of directors has
approved a quarterly dividend of 7.0 cents per share, payable on
March 20, 2006, to shareholders of record on March 10.
In addition, the board of directors has authorized a two-for-one
stock split of the company's outstanding common stock. Record
holders of Manitowoc's common stock at the close of business on
March 31, 2006, will receive one additional share of common stock
for every share of Manitowoc common stock they own as of that
date. The company anticipates that the additional shares
resulting from the split will be issued in book-entry form on the
distribution date of April 10, 2006. The company's common stock
will begin trading at its post-split price at the beginning of
trading on April 11, 2006. The two-for-one split will increase
the number of Manitowoc's authorized shares of common stock from
75 million to 150 million and the number of outstanding shares of
common stock from approximately 30.4 million to 60.8 million.
Terry D. Growcock, Manitowoc's chairman and chief executive
officer, said: "We are pleased to take this action as a result of
the company's solid operating results, recent stock price
performance, and strong outlook for 2006 and beyond. The
additional shares should also improve the trading volume and
liquidity of our stock going forward."
Manitowoc previously split its stock, on a three-for-two basis, on
March 31, 1999, June 30, 1997, and July 2, 1996.
The Manitowoc Company, Inc. -- http://www.manitowoc.com/-- is one
of the world's largest providers of lifting equipment for the
global construction industry, including lattice-boom cranes, tower
cranes, mobile telescopic cranes, and boom trucks. As a leading
manufacturer of ice-cube machines, ice/beverage dispensers, and
commercial refrigeration equipment, the company offers the
broadest line of cold-focused equipment in the foodservice
industry. In addition, the company is a leading provider of
shipbuilding, ship repair, and conversion services for government,
military, and commercial customers throughout the maritime
industry.
* * *
As reported in the Troubled Company Reporter on Nov. 17, 2005,
Standard & Poor's Ratings Services revised its outlook on The
Manitowoc Co. Inc. to positive from stable. The ratings on the
company were affirmed, including the 'BB-' corporate credit
rating.
MEG ENERGY: Moody's Rates Pending $750 Mil. Senior Facility at Ba3
------------------------------------------------------------------
Moody's assigned a Ba3 rating to privately-held MEG Energy's
pending $750 million senior secured loan facility, to be activated
upon MEG raising at least CDN$200 million in new common equity.
The facility includes a $50 million 3-year revolving credit and a
$700 million 7-year Term Loan B, of which $350 million would be
immediately drawn and $350 million permitted to be drawn down in
the 24 months after closing. MEG is early in the Phase I and II
CDN$1.264 billion development of a potentially major steam
assisted gravity drainage oil sands project on its large lease
holdings near Christina Lake within the Athabasca Oil Sands of
Alberta, Canada.
The rating outlook is stable. However, the outlook and ratings
are subject to:
-- the ultimate amount of equity MEG raises,
-- our review of final loan terms and conditions confirming
that lender protections match expectations built into the
rating,
-- MEG receiving all Phase II permits in 2006,
-- tight regional labor markets not materially harming project
timing or costs,
-- Phase I production, decline curve per well pair, and
critical steam/oil ratio reasonably meeting assumptions,
-- Phase II reasonably meeting budget for total production,
costs, production and decline curve per well pair, and
reinvestment needed to sustain production, and
-- expected realized prices continuing to remain historically
high to support unit costs and leverage.
Though MEG holds major resources, the ratings reflect the
uncertainties and challenges of a start-up SAGD project in the
face of exceptionally volatile and cyclical oil and natural gas
prices
The ratings are supported by:
a) a 3-year interest reserve account;
b) a very substantial equity cushion, expected to be at least
CDN$624 million after the current equity round, and ongoing
support from private equity funds with extensive experience
in the energy industry;
c) a very large bitumen resource base, engineered by a major
third-party engineering firm, that is estimated to include
approximately 52 million barrels of gross proven reserves,
403 million barrels of gross probable reserves, and large
possible reserve volumes;
d) comparatively low exploitation drilling risk on a large
established reserve base;
e) management's deep cumulative oil sands development,
operating, and marketing experience;
f) SAGD technology is more than 7 years into commercial status
after 20 years of pilot project experience in the region;
g) recent SAGD project cost and completion experiences have
been satisfactory; and
h) the potential strategic interest in the project by major
producers.
MEG's properties are on-trend with and adjacent to EnCana
Corporation's Christina Lake SAGD project which is beginning
commercial expansion after the pilot phase. Public data indicates
that EnCana's experience reasonably supports MEG's assumption of
at least 900 barrels per day of bitumen production per well pair.
SAGD production per well pair ramps up in the first year and
EnCana's data indicates that peak production can be sustained for
2 to 3 years, and declining fairly quickly thereafter, though at
slower rates than conventional reserves.
The ratings are restrained by:
-- substantial leverage and heavy front-end capital outlays;
-- exposure to highly cyclical crude oil prices, currently at
near historic highs, and to important price relationships
between light sweet and heavy sour crude oil, bitumen
blend, diluent, and natural gas before 2010 sustaining
production is attained;
-- inherent project cost, delay, and start-up risk;
-- inherent risk, though MEG has very substantial affirmative
coring data, of reservoir quality and homogeneity across
MEG's acreage, pay thickness, existence of sporadic
permeability barriers that can impede steaming and
production, and the amount of steam needed to per barrel of
produced bitumen; and
-- expected leveraged total unit costs that may render
increasingly unattractive cash flow coverage of debt
service in market conditions accompanying US$35 per barrel
or less of West Texas Intermediate crude oil.
Although MEG believes it has conservatively budgeted for capital
costs and operating expense, it appears likely to incur higher
invested capital costs per daily flowing design barrel than
previous SAGD projects. As a separate measure, third party
reserve engineering indicates it may require in the range of CDN$6
of capital investment per net barrel of reserves to fully produce
those reserves. Adding to that are estimates for unit operating
expense, unit interest expense, and unit royalty expense, it
appears that in a $35 WTI market MEG's total unit full-cycle costs
could be in the range of CDN$24/barrel and that it may realize in
the range of CDN$24/barrel to CDN$26/barrel of revenue. Unit
costs would be substantially higher during the 2007 through 2009
production ramp-up. In a $40/barrel WTI market, it appears that
unit full-cycle costs could be in the range of CDN$26/barrel
whereas realized prices on bitumen sold could be in the range of
CDN$28/barrel. It is far too premature to discern the degree to
which MEG will outperform or under-perform these cost estimates.
To maintain or improve its stable rating outlook, MEG will need to
reasonably attain its development pace, completion, cost, and
performance goals and oil and natural gas market conditions at
commercial ramp-up need to be historically strong. MEG's
assumptions of ample water, diluent, and natural gas availability
would also need to be reasonably attained. Moody's believes that
supply of those critical inputs is satisfactory for the sector
during its current new expansion phase but becomes much less
certain for the subsequent round of sector oil sands expansions.
Rating upside resides on sound performance, historically strong
realized prices and, if MEG proceeds with Phases III and IV, its
funding plan for heavy Phase III and IV capital spending,
especially during the sensitive 2006-2009 time frame. Assuming
sound technical performance, Moody's concludes that MEG needs
benchmark oil prices to average at least WTI $35 per barrel by
2009 and 2010, far higher than the $20 WTI averaged until 4 to 5
years ago, and price differentials between WTI and bitumen blend
to narrow as well.
Oil markets firmed to historic cyclical highs in the last 5 years,
and it is reasonable to believe there has been a step change to
much higher mean oil prices at least for the intermediate term.
However, it is exactly very high prices that shape demand and
supply responses that usher price corrections. It is also
reasonable to note that slowing world oil demand growth, softening
world economies, and modestly rising world production in response
to record prices could correct prices sharply down. The long time
prior to full cash flow exposes MEG's margins to the sorting out
of a wide range of historic up-cycle prices and price
differentials.
A narrowing of bitumen differentials would be difficult given the
rapid ramp-up of competing bitumen production in the region. For
all of the competing projects to attain their desired margins and
returns, we believe third party pipeline companies will need to
expand take away capacities to expand syncrude's access to North
American West Coast markets, to move deeper into the Mid-continent
and Midwest markets, and to provide first-time access to U.S. Gulf
Coast refiners. A typical refinery can run only small proportions
of syncrude before it yields too high a proportion of distillates
and too low a proportion of gasoline.
The credit facilities will partially fund a budgeted CDN$1.265
billion in costs for Phase I and II, of which CDN$260 million was
spent before 2006 and funded by CDN$424 million of private equity
raised to date. In addition to roughly C$566 million for
facilities, cogeneration, and initial well pair drilling costs,
Phase I and II costs also include MEG's 50% share of substantial
construction costs for the 216 mile ACCESS Pipeline and adjunct
facilities, a roughly CDN$175 million interest reserve fund and
CDN$72 million cost overrun fund as estimated by Purvin & Gertz.
ACCESS will carry essential diluent to the project's site and
transport diluted bitumen to market. We also expect a minimum of
an additional $70 million of initial Phase III and IV project
costs in 2006 and 2007.
If MEG's board approves the Phase III and IV expansion, we expect
a further CDN$500 million of Phase III and IV outlays in 2008 and
2009 which Moody's believes MEG would fund with a mix of
additional debt and equity. Roughly another CDN$735 million of
Phase III and IV capital would be spent in 2010 to 2013.
If MEG's project timelines are met, Phase I pilot production would
hit full capacity of 3,000 barrels per day in early 2008 but
commercial status would not arrive until Phase II production
commences satisfactorily in 2009 and hits full capacity of a
combined 25,000 bpd in 2010. Phase III production, if sanctioned
by MEG's board of directors, would commence in 2011.
If WTI oil prices average $35 per barrel in 2009 and MEG meets its
project goals, cash flow would modestly cover interest expense in
2009 and improve thereafter. Assuming a $35 WTI market and a
board decision to proceed with Phases III and IV, cash flow after
capital spending would be quite negative in 2009, roughly break-
even in 2010 due to low capital spending year, be substantially
negative in 2011 and 2012, and turn positive in 2013 upon
completion of Phase IV. In a $40 WTI market, 2010 cash flow may
comfortably cover capital spending and be modestly negative in
2011 and 2012 whereas a $45 WTI market would generate robust cash
flow cover of capital spending from 2010 and beyond. Assuming
supportive oil prices, which cannot be assured, and assuming Phase
II performance reasonably meets expectations, several subsequent
potential expansions could take MEG's project towards world-scale
characteristics and attraction. We note that that would also
consistently consume fairly large sums of capital.
MEG is run by industry-seasoned management and privately-held by
industry-seasoned equity funds Warburg Pincus, Caisse de depot and
other institutional investors, importantly the Chinese National
Offshore Oil Company, and management, directors, and other
individuals.
Third-party engineering firm, GLJ Petroleum Consultants Ltd.,
indicates that MEG currently has in the range of gross 52 million
barrels of proven bitumen reserves and gross 403 million barrels
of probable reserves. With Phase II, MEG believes it will be able
to move a significant portion of probable reserves to proven
status and ultimately produce an average of roughly 25,000 barrels
of bitumen per day.
MEG Energy Corp. is headquartered in Calgary, Alberta, Canada.
MERISTAR HOSPITALITY: Completes $367 Mil. Sale of 10 Fla. Resorts
-----------------------------------------------------------------
MeriStar Hospitality Corporation (NYSE: MHX) completed the sale of
a portfolio of nine hotels (1,948 rooms) and a golf and tennis
club, all located in Florida, to an affiliate of The Blackstone
Group for approximately $367 million, subject to adjustments made
at closing. The properties in the portfolio include:
* Best Western Sanibel Island Beach Resort (46 rooms)
* The Dunes Golf & Tennis Club
* Hilton Cocoa Beach Oceanfront (296 rooms)
* Hilton Clearwater Beach Resort (426 rooms)
* Sanibel Inn (96 rooms)
* Seaside Inn (32 rooms)
* Sheraton Beach Resort Key Largo (200 rooms)
* Song of the Sea (30 rooms)
* South Seas Island Resort (579 rooms)
* Sundial Beach Resort (243 rooms)
Redeeming 10.50% Notes
The company also submitted an irrevocable notice to redeem the
remaining $106 million of its 10.5% senior unsecured notes due
2011, with a redemption date of March 27, 2006. Additionally, the
company repaid $75 million of term loan debt under its secured
credit facility and retired the $44 million mortgage on the Hilton
Clearwater Beach Resort.
Headquartered in Bethesda, Maryland, MeriStar Hospitality Corp.
-- http://www.meristar.com/-- owns 48 principally upper-upscale,
full-service hotels in major markets and resort locations with
14,559 rooms in 19 states and the District of Columbia. The
company owns hotels under such internationally known brands as
Hilton, Sheraton, Marriott, Ritz-Carlton, Westin, Doubletree and
Radisson.
* * *
As reported in the Troubled Company Reporter on Feb. 24, 2006,
Moody's Investors Service placed the B2 senior unsecured debt
and Caa1 convertible debt ratings of MeriStar under review for
possible downgrade. That rating action followed the announcement
on Feb. 21, 2006, that MeriStar is being acquired by an affiliate
of The Blackstone Group in a transaction valued at $2.6 billion.
An affiliate of The Blackstone Group has obtained a commitment
from its parent for $800 million in equity financing, while about
$1.9 billion in secured debt commitments has been provided by
three bank lenders. The acquisition is expected to close in the
second quarter of 2006.
These ratings were placed under review for possible downgrade:
Issuer: MeriStar Hospitality Operating Partnership, L.P.
* Senior unsecured debt at B2; senior unsecured shelf at
(P)B2;
* subordinate debt shelf at (P)Caa1.
Issuer: MeriStar Hospitality Corporation
* Senior unsecured shelf at (P)B3;
* senior subordinate debt at Caa1;
* subordinate debt shelf at (P)Caa1.
Issuer: MeriStar Hospitality Finance Corporation III
* Senior unsecured debt shelf at (P)B3;
* subordinated debt shelf at (P)Caa1.
In its last rating action, Moody's affirmed MeriStar's B2 senior
unsecured debt rating on Nov. 5, 2004.
MIRANT CORP: NY-Gen Unit Wants $4.5M to Remediate N.Y. Facility
---------------------------------------------------------------
Debtor Mirant NY-Gen, LLC, owns several facilities in the State
of New York, including two gas turbine stations and five dams or
reservoirs with three hydroelectric stations:
* Mongaup 1-4,
* Swinging Bridge 1-2, and
* Rio 1-2
Jeff P. Prostok, Esq., at Forshey & Prostok LLP, in Fort Worth,
Texas, relates that the Swinging Bridge facility is currently the
subject of a remediation project with oversight by the Federal
Energy Regulatory Commission.
Mr. Prostok tells the U.S. Bankruptcy Court for the Northern
District of Texas that Mirant NY-Gen now requires money to fund
its remediation efforts. However, Mirant NY-Gen does not
currently have independent access to third-party capital and
financing. Mirant NY-Gen even estimates that it will have no
cash to support its operations and remediation work after
February 2006.
For this reason, Mirant NY-Gen seeks the Court's permission to:
-- obtain secured debtor-in-possession financing from Mirant
Americas, Inc., for $4,500,000; and
-- execute a DIP Facility Agreement and all other related
documents.
Summary of the DIP Facility
The salient terms of the DIP Facility are:
Borrower: Mirant NY-Gen, LLC
Lender: Mirant Americas, Inc.
Facility: A revolving loan of $4,500,000, which may,
from time to time, be prepaid and reborrowed
Closing Date: Will not occur if these conditions are not
satisfied:
(a) The parties' execution of the DIP Facility
Agreement, and MAI's receipt of all
required documents;
(b) There exists no default or event of
default; and
(c) True and correct representations and
warranties.
Commitment
Termination Date: The Commitment Termination Date will be the
earliest of:
(a) June 30, 2006;
(b) the date of termination of MAI's
obligations to make revolving loans or to
permit existing revolving loans to remain
outstanding due to the occurrence of an
Event of Default;
(c) the date of indefeasible prepayment in
full by Mirant NY-Gen of the revolving
loans;
(d) the date on which any liens securing any
outstanding obligations or payments to the
MAI are set aside or avoided, or the
related claims are disallowed in any
manner; and
(e) the effective date of Mirant NY-Gen's Plan
of Reorganization.
Use of Proceeds: The proceeds will be used solely for working
capital and remediation of the Swinging Bridge
Dam in accordance with a budget that
evidences:
i. completion of planned remediation prior to
the scheduled Commitment Termination Date;
and
ii. that the planned remediation work can be
completed by MAI with funding in an amount
less than or equal to the commitment under
the DIP Facility.
The Budget, which will be subject to MAI's
review and approval must be approved by the
Bankruptcy Court, and must not contravene any
requirement of law or any DIP Facility
document.
Interest: Mirant NY-Gen will pay interest to MAI in
arrears in respect of the unpaid principal
amount of each revolving loan on each
applicable payment date at the applicable
LIBOR Rate plus 4.25%.
Default Rates: In the event of default, the interest rates
applicable to the revolving loans will be
increased by two percentage points per annum.
All outstanding obligations will bear interest
at the default rate applicable to those
obligations.
Priority: Mirant NY-Gen's obligations under the DIP
Facility will, at all times, constitute a
Superpriority Claim in MAI's Chapter 11 cases,
having priority over all administrative
expenses under Sections 503(b) or 507(b) of
the Bankruptcy Code, subject only to the Carve
Out.
Security: Mirant NY-Gen will grant, in favor of MAI, a
security interest in all the real, intangible,
and personal property and other assets:
* a legal, valid, perfected and enforceable
security interest in:
-- all right, title and interest of Mirant
NY-Gen in the Collateral; and
-- avoidance power claims and any recoveries
under Section 549;
* a first priority perfected security interest
in all of the Collateral that is not
encumbered by liens in favor of any other
person, subject only to certain permitted
liens; and
* a fully perfected security interest in all
of the Collateral encumbered on the
Petition Date, subject only to certain
permitted liens.
Carve Out: Includes the allowed unpaid fees and expenses
payable under Sections 330 and 331 to
professional persons employed by Mirant NY-Gen
pursuant to Bankruptcy Court orders, as well
as payment of certain fees pursuant to
Section 1930 of the Judiciary Procedures Code
and to the clerk of the Bankruptcy Court.
Indemnification: Mirant NY-Gen will indemnify and hold harmless
MAI for all claims arising in connection with,
among other things:
* Mirant NY-Gen's Chapter 11 cases and the
extension, suspension, termination and
administration of the DIP Facility, except
to the extent that the liability arises from
MAI's gross negligence or willful
misconduct;
* certain costs, losses or expenses arising in
connection with revolving loans; and
* certain liabilities for taxes in connection
with the DIP Facility.
"The DIP Facility is critical to Mirant NY-Gen's ability to
stabilize the Swinging Bridge Dam," Mr. Prostok informs Judge
Lynn. "Absent approval of the DIP Facility, it would be
extremely difficult . . . if not impossible . . . for Mirant NY-
Gen to timely complete the remediation."
Mr. Prostok assures the Court that no fees will be charged in
connection with the DIP Facility. Also, the DIP Facility
Agreement does not contain many of the reporting requirements and
obligations that are typical for the DIP financing thereby
lowering administrative costs.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines. Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally. Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590), and emerged under the terms of a
confirmed Second Amended Plan on January 3, 2006. Thomas E.
Lauria, Esq., at White & Case LLP, represented the Debtors in
their successful restructuring. When the Debtors filed for
protection from their creditors, they listed $20,574,000,000 in
assets and $11,401,000,000 in debts. (Mirant Bankruptcy News,
Issue No. 93 Bankruptcy Creditors' Service, Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on Dec. 8, 2005,
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to power generator and developer Mirant Corp. and
said the outlook is stable. That rating reflected the credit
profile of Mirant, based on the structure the company expects to
have on emergence from bankruptcy at or around year-end 2005, S&P
said.
MIRANT CORP: Issuing Stock to Settle Kern River's $81.77MM Claim
----------------------------------------------------------------
In 2001, Mirant Americas Energy Marketing, L.P., entered into a
long-term firm contract for transportation capacity with Kern
River Gas Transmission Company. MAEM subsequently rejected the
Contract. As a result, Kern River filed for rejection damages in
the Debtors' cases.
Pursuant to the Court's "Agreed Order Concerning Modification of
Automatic Stay" dated May 27, 2004, Kern River applied certain
cash security against the rejection damages, leaving an
unsatisfied general unsecured claim outstanding for $138,889,498.
The Debtors objected to Kern River's $138,889,498 Claim. The
Objection became the subject of a court battle that ensued
between the parties.
On September 21, 2005, Judge Lynn ruled that Kern River is a
holder of a $74,403,116 allowed unsecured claim against MAEM.
According to David W. Elrod, Esq., at Elrod, PLLC, in Dallas,
Texas, the effect of the Court's holding is that Kern River had a
gross allowed claim of $89,154,705 as of the Petition Date.
Under the Debtors' Plan of Reorganization, Kern River's Allowed
Claim was classified in Mirant Debtor Class 3, and is entitled to
receive distributions.
Mr. Elrod notes that under the Plan, Allowed Unsecured Claims
that have a contractual interest rate will be paid at the
applicable non-default contractual rate with compounding to occur
on the date of scheduled payments. For those claims that do not
have a contractual rate of interest, the interest from the
Petition Date through the Effective Date will be accrued at 4%
without compounding.
However, Kern River and the Debtors disagreed over the correct
calculation of the interest with respect to Kern River's Claim.
The Debtors argued that:
(a) Kern River is not entitled to interest from the Petition
Date through the Effective Date, but rather only from the
date of rejection through the Effective Date;
(b) Kern River is not entitled to interest in the full amount
of the Kern River Gross Allowed Claim for the time period
through May 27, 2004, when the Court permitted Kern River
to apply the cash security; and
(c) Kern River is not entitled to contractual interest with
compounding but rather was only entitled to 4% simple
interest.
Using the 4% simple interest, Kern River believes that it is
entitled to $82,288,203 in Plan distributions.
Accordingly, Kern River asks the Court to direct the Debtors to
make a timely distribution for $82,288,203, and award Kern River
its reasonable attorneys' fees and costs.
New Mirant Entities Object
Craig H. Averch, Esq., at White & Case LLP, in Miami, Florida,
argues that there are remaining material disputes as to the total
distributions to be made to Kern River by the New Mirant Entities
under the Plan. No final judgment has been entered on Kern
River's contested claim and it, therefore, does not have a "Final
Order" pursuant to the Plan.
Mr. Averch points out that immediate distribution to Kern River
would violate the Hart-Scott-Rodino Antitrust Improvements Act of
1976. The HSR Act provides that a person may not acquire voting
securities of another person in a transaction meeting the HSR
Act's jurisdictional thresholds without filing an HSR filing with
the Federal Trade Commission and the Antitrust Division of the
U.S. Department of Justice, and observing a statutory waiting
period.
Mr. Averch believes that Kern River's proposed acquisition of
Mirant voting securities meets the HSR Act's jurisdictional
thresholds. Thus, unless Kern River is able to identify an
applicable exemption, it may not acquire in excess of $53.1
million of voting securities of Mirant without filing a
Notification and Report Form under the HSR Act, and waiting for
the expiration or early termination of the statutory waiting
period. Kern River was notified of the HSR Act's restrictions in
September 2005.
Kern River, therefore, cannot seek an order compelling
distribution when the order would be in violation of federal law,
Mr. Averch says.
Moreover, the New Mirant Entities have recently become aware of
new evidence that necessitates the filing of a request for a 2004
examination and reconsideration of Kern River's Claim. The New
Mirant Entities were able to gather information alleging that
Kern River sold some or all of the rejected capacity as firm
capacity in 2005 representing tens of millions of dollars in
income, Mr. Averch explains.
The New Mirant Entities believe that this new evidence may prove
that additional firm capacity agreements will provide mitigation
to Kern River beyond 2008.
Pursuant to Rule 2004 of the Federal Rules of Bankruptcy
Procedure, the Debtors ask the Court to direct Kern River to
appear for an examination and to produce any and all documents
and any other physical evidence, records, correspondence or other
property that relate to any, and all, sales of firm capacity from
May 1, 2005, to the present.
Kern River Talks Back
David W. Elrod, Esq., at Elrod, PLLC, in Dallas, Texas, points
out that the New Mirant Entities knew or could have known of all
of the capacity sales months ago, including during the time prior
to plan confirmation, but they did nothing. The capacity sales
and rates are publicly available on the Kern River Web site and
have been posted there beginning at the time or shortly after the
bids were awarded.
Mr. Elrod argues that the New Mirant Entities' so-called "newly
discovered evidence" does not prevent distribution and does not
justify reconsideration. The facts on which the "newly
discovered evidence" was based arose after the close of evidence
at the Kern River hearing on July 7, 2005, and do not justify
reconsideration because they were not in existence at the time of
trial.
Furthermore, Mr. Elrod asserts that Kern River is exempt from the
filing provisions of the HSR Act. Under Section 802.9 of the
applicable FTC rules, a party is exempt from the requirements of
the HSR Act if it would hold less than 10% of the stock of the
issuing entity and does not participate in management of the
entity.
Kern River's distribution would be for slightly more than 1% of
the common stock of New Mirant -- far short of the 10% threshold.
Kern River has not participated in the management of New Mirant
and has no intention of doing so, Mr. Elrod adds.
Kern River, however, admits that it earned a relatively small
amount of interest on funds it held that constituted a portion of
the Kern River Gross Allowed Claim. To dismiss any notion of
double recovery, Kern River informs Judge Lynn that it will
reduce its request by the amount of interest it earned, which was
$73,433.
As a result, Kern River asks the Court to direct the Debtors to
pay it $82,214,770, as Plan distribution, and award its
attorney's fees and costs.
Parties Agree to Resolve Dispute
To resolve the dispute, the parties entered into a stipulated
final judgment, signed by Judge Lynn, which provides that:
(a) The Disbursing Agent will issue to Kern River shares of
New Mirant Common Stock amounting to $81,765,967 in Mirant
Debtors Class 3 - Unsecured Claims. The Disbursing Agent
will notify Kern River of the issuance and provide an
account number for the issued shares;
(b) Kern River will also receive any and all subsequent
distributions under the Plan in accordance with being a
holder of an Allowed Claim in Mirant Debtor Class 3 -
Unsecured Claims, including the corresponding pro rate
share of the designated net litigation distributions; and
(c) Kern River's allowed claim and distribution rights will
not be subject to reconsideration under Section 502(j) of
the Bankruptcy Code, or Rule 3008 of the Federal Rules of
Bankruptcy Procedure or any other applicable law. The
Debtors will not:
-- seek any further discovery against Kern River related
in any way to the Allowed Claim; and
-- not initiate any contested matter, adversary proceeding
or any other cause of action against Kern River.
All of Kern River's other claims against the Debtors are expunged
and disallowed in their entirety. The Disallowed Claims will not
be asserted in any forum or subject to reconsideration under
Section 502(j) or Rule 3008 or any other applicable law.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines. Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally. Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590), and emerged under the terms of a
confirmed Second Amended Plan on January 3, 2006. Thomas E.
Lauria, Esq., at White & Case LLP, represented the Debtors in
their successful restructuring. When the Debtors filed for
protection from their creditors, they listed $20,574,000,000 in
assets and $11,401,000,000 in debts. (Mirant Bankruptcy News,
Issue No. 93 Bankruptcy Creditors' Service, Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on Dec. 8, 2005,
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to power generator and developer Mirant Corp. and
said the outlook is stable. That rating reflected the credit
profile of Mirant, based on the structure the company expects to
have on emergence from bankruptcy at or around year-end 2005, S&P
said.
MMRENTALSPRO LLC: Meeting of Creditors Scheduled for March 17
-------------------------------------------------------------
The United States Trustee for Region 8 will convene a meeting of
MMRentalsPro, LLC's creditors at 10:30 a.m., on March 17, 2006, at
the Office of the U.S. Trustee, Basement Room 18, in Chattanooga,
Tennessee. This is the first meeting of creditors after the case
was converted to a chapter 7 liquidation.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in 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. The Debtor's chapter 11 case
was converted to a chapter 7 liquidation on Feb. 17, 2006.
MOUNT REAL: Judge Lalonde Declares Company Bankrupt
---------------------------------------------------
Justice Jean-Yves Lalonde of the Superior Court of Quebec declared
Mount Real and two of its affiliates bankrupt, Don MacDonald at
The Gazette reports.
The decision sealed the losses of hundreds of small investors who
bought tens of millions of dollars worth of promissory notes
issued by the companies, the Montreal reporter writed. "Those
notes are now worthless."
Unprofessional Conduct
Mr. MacDonald reports that Judge Lalonde criticized bankruptcy
trustee Andre Allard for his violation of the professional code of
ethics. Mr. MacDonald relates that Mr. Allard sent an outline of
a relaunch plan for Mount Real to noteholders in December 2005
without a letter of intent from the proposed buyer of the
company's assets.
Jean Robillard, an accountant at Raymond, Chabot, Grant, Thornton
and the government-appointed administrator for the Mount Real
group, had previously filed a motion to oust Mr. Allard as
trustee, Mr. MacDonald relates. As a sanction, the Judge ordered
Mr. Allard to pay all court costs associated with Mr. Robillard's
now-moot motion.
Mr. Allard told Mr. MacDonald the ruling seemed harsh and that he
will review it with his lawyer to decide whether or not to appeal.
The federal Office of the Superintendent of Bankruptcy, Mr.
MacDonald relates, has yet to see the judgment but would be
studying the matter. The federal office is the one responsible
for disciplining bankruptcy trustees.
The Road to Bankruptcy
Mount Real was shut down last November 2005 by the Autorite des
marches financiers (AMF), Quebec's financial watchdog, after the
company defaulted on its notes issued to investor. By December
2005, Mr. Robillard disclosed in his report that the company had
little assets and that noteolders would receive minimal
distribution.
Relaunch Plan
At the same time, Mr. Allard came forward with a proposal claiming
that a U.S. investor named David Edwards was interested in buying
the company and its affiliates' assets for $5 million. This
purchase would not only resuscitate the company but also result in
a maximum 115% recovery for noteholders.
By February 2006, however, Mr. Edwards offer contracted to a
$500,000 upfront payment and repayment of the remaining amount
over a six-year period subject to lots of conditions.
In court, the Mr. Allard's relaunch plan was challenged by the
AMF, Mr. Robillard and lawyers for some noteholders who wanted to
see the companies put into bankruptcy. When Mr. Edwards withdrew
his offer, Mount Real and its affiliates' course to bankruptcy was
set, Mr. MacDonald writes.
New Trustee
Mr. MacDonald reports that as part of Judge Lalonde's rulings, Mr.
Robillard will now act as the trustee in the company's bankruptcy.
Mr. MacDonald relates a creditors' meeting will be held in about
one month and that Mr. Robillard plans to hold an information
meeting for Mount Real investors next week.
Mount Real provides information management services to the media
and technology sector. Mount Real uses a business intelligence
system, Tactics Marketing Intelligence (TMI), to enable its
clients to more efficiently manage their business. Mount Real is
listed under the stock-trading symbol MRF on the Toronto Stock
Exchange.
MUSICLAND HOLDING: Wants to Implement Supplemental Incentive Plan
-----------------------------------------------------------------
James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, tells the
U.S. Bankruptcy Court for the Southern District of New York that
as part of Musicland Holding Corp. and its debtor-affiliates'
initiatives to stabilize and rationalize their operations, and to
maintain morale among employees, they sought to implement a
Modified Corporate MIP that, if approved, would pay participating
employees 25% of their fiscal year 2006 target bonuses.
The Debtors have calibrated the Modified Corporate MIP to reward
participants for their contribution to the Debtors' operations and
additional responsibilities postpetition.
The Debtors also seek to implement a supplemental incentive
program to further incentivize those employees who will be working
over the next several months to design and present a feasible
business plan for a stand-alone Chapter 11 plan of reorganization.
The Debtors have structured the Incentive Plan this way:
(a) Five senior management employees will be eligible to
receive success payments from a pool of $1,000,000:
Amount
------
Chief Executive Officer $480,000
Chief Financial Officer $245,000
Chief Merchandising Officer $116,000
Chief Information Officer $90,000
General Counsel $69,000
(b) A separate pool of $200,000 will be established for
additional management employees. Individual awards from
the $200,000 fund will be determined by the Debtors' Chief
Executive Officer. Employees eligible for payment under
the $1,000,000 pool will not receive an award from the
$200,000 pool.
(c) Payments from the Incentive Pools will be conditioned on
the earlier of the closing of a sale of all the Debtors'
assets, or the consummation of a Chapter 11 Reorganization
Plan.
(d) Based on the results of the sale or restructuring of the
Debtors, that portion of the $1,000,000 pool allocated to
the Chief Executive Officer and Chief Financial Officer
will be subject to upward adjustment to the extent agreed
by the Informal Committee of Secured Trade Creditors,
after good faith negotiations with the Secured Trade
Creditors and consultation with the Creditors' Committee.
(e) Any payments from the Incentive Pool will be junior in
priority to the liens and superpriority administrative
claims of the DIP lenders and treated as a carve-out from
the prepetition and replacement liens and administrative
claims of the Secured Trade Creditors under the DIP orders
entered by the Court.
Mr. Sprayregen relates that the Secured Trade Creditors endorsed
the Incentive Plan.
The Debtors believe that the Incentive Plan is eminently
reasonable, given the parameters and the timelines set in the
their Chapter 11 Cases. The Debtors also believe that the
Incentive Plan will maximize the value of their estates.
Accordingly, the Debtors ask the Court to permit them to:
(a) implement the Incentive Plan;
(b) make the payments from the Incentive Pool to
participating employees; and
(c) pay all related costs and expenses.
Creditor Committee Objects
The Official Committee of Unsecured Creditors believes that the
supplemental incentive program is not an acceptable plan.
According to Mark T. Power, Esq., at Hahn & Hessen LLP, in New
York City, the Incentive Plan only incentivizes management to do a
deal as quickly as possible. In addition, the Incentive Plan
appears to have no relationship to maximizing the value of the
Debtors' estates.
Mr. Power states that the Incentive Plan creates a disincentive
for management to negotiate strenuously with any potential
acquirers since the amount of their supplemental bonus does not
appear to change regardless of the price achieved.
Mr. Power points out that the Incentive Plan may also run afoul of
certain recent amendments to the Bankruptcy Code pursuant to the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
Accordingly, the Committee asks the Court to deny the Debtors'
request or adjourn the hearing to provide the Committee and the
Court to review and modify the Incentive Plan to provide
management with the proper incentives to maximize the values
received by all creditor constituencies.
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 Intercompany Claim Protocol
-------------------------------------------------------------
As reported in the Troubled Company Reporter on Jan. 27, 2006, the
U.S. Bankruptcy Court for the Southern District of New York
granted all postpetition Intercompany Claims administrative
priority status as specified in Sections 503(b) and 507(a)(1) of
the Bankruptcy Code.
The Court permitted Musicland Holding Corp. and its debtor-
affiliates to continue performing and honoring their obligations
and commitments under their Intercompany Arrangements.
Creditors Committee Objects
The Official Committee of Unsecured Creditors contends it is
necessary to review the intercompany agreements that the Debtors
want to continue, as well as the historical payments under those
agreements.
Mark S. Indelicato, Esq., at Hahn & Hessen LLP, in New York City,
relates that the Debtors did not provide that information in their
motion. Thus, the Committee asked the Debtors to provide the
necessary information.
As of January 25, 2006, the Committee has not received sufficient
information to enable it to fully evaluate the merits of the
Debtors' request.
Therefore, the Committee asks the Court to adjourn the hearing
until they receive and can review the necessary documents.
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: Balance Sheet Upside-Down by $126. Million at January 3
------------------------------------------------------------------
New World Restaurant Group, Inc. (Pink Sheets: NWRG.PK), disclosed
its financial results for its 2005 fourth quarter and fiscal year
ended January 3, 2006.
2005 Results
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 January 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
$14.0 million, or $1.42 per basic and diluted share, from
$17.4 million, or $1.77 per basic and diluted share, 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," said Paul Murphy,
president and CEO. "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."
Rick Dutkiewicz, chief financial officer, added, "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."
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.
As of January 3, 2006, the Company's equity deficit widened to
$126,211,000 from a $112,483,000 equity deficit at Dec. 28, 2004.
NOBEX CORP: Judge Sontchi Sets March 16 as Claims Bar Date
----------------------------------------------------------
The Honorable Christopher S. Sontchi of the U.S. Bankruptcy Court
for the District of Delaware set Mar. 16, 2006, at 4:00 p.m., as
the deadline for all creditors owed money by Nobex Corporation on
account of claims arising prior to Dec. 1, 2005, to file its
proofs of claim.
Creditors must file written proofs of claim on or before the
March 16 Claims Bar Date and those forms must be sent either:
(a) by mail to:
Nobex Corporation
c/o BMX Group
P.O. Box 909
El Segundo, California 90245-0909
- or -
(b) by hand delivery or overnight courier to:
Nobex Corporation
c/o BMC Group
1330 East Franklin Avenue
El Segundo, California 90245
Headquartered in Durham, North Carolina, Nobex Corporation --
http://www.nobexcorp.com/-- is a drug delivery company developing
modified drug molecules to improve medications for chronic
diseases. The company filed for chapter 11 protection on
Dec. 1, 2005 (Bankr. D. Del. 05-20050). Ben Hawfield, Esq., at
Moore & Van Allen PLLC, represents Nobex. J. Scott Victor at SSG
Capital Advisors, L.P., is providing Nobex with investment banking
services. Michael B. Schaedle, Esq., and David W. Carickhoff,
Esq., at Blank Rome LLP, represent the Official Committee of
Unsecured Creditors in Nobex's chapter 11 case, and John Bambach,
Jr., and Ted Gavin at NachmanHaysBrownstein, Inc., provides the
Committee with financial advisory services. When the Debtor filed
for protection from its creditors, it estimated between $1 million
to $10 million in assets and $10 million to $50 million in
liabilities.
NORTHWEST AIRLINES: Incurs $1.3 Billion Net Loss in Fourth Quarter
------------------------------------------------------------------
Northwest Airlines Corp. (OTC: NWACQ.PK) realized a net loss of
$1.3 billion during the fourth quarter of 2005. This compares to
a net loss of $434 million in the fourth quarter of 2004.
Excluding reorganization and other unusual items, Northwest
reported a fourth quarter 2005 net loss of $387 million versus a
fourth quarter 2004 net loss of $373 million.
For the full year 2005, Northwest reported a net loss of
$2.6 billion. This compares to a net loss of $891 million for
2004. Excluding reorganization and other unusual items, Northwest
reported a full year 2005 net loss of $1.4 billion versus a full
year 2004 net loss of $726 million.
Northwest remains focused on its plan to realize $2.5 billion in
annual business improvements in order to return the company to
profitability on a sustained basis. The restructuring plan is
centered on three goals:
(1) resizing and optimization of the airline's fleet to better
serve Northwest's markets;
(2) realizing competitive labor and non-labor costs;
(3) restructuring and recapitalization of the airline's balance
sheet.
Northwest continued to make noteworthy progress on its
restructuring goals including:
-- reducing its system mainline capacity, or available seat
miles (ASMs), by 8.2 percent year-over-year. Domestic ASMs
were down 9.2 percent and international ASMs were reduced by
6.7 percent. The domestic capacity reductions were
accomplished across the network, while international
capacity reductions were accomplished primarily through the
suspension of the daily New York (JFK) to Tokyo-Narita
flight and additional seasonal reductions across the
Atlantic network;
-- rejecting or abandoning 51 mainline and regional aircraft,
and reaching agreements to enter into new, more favorable
lease or financing arrangements on 140 mainline and regional
aircraft. As part of Northwest's restructuring efforts, the
company has targeted $400 million in total annual fleet
savings;
-- securing additional savings toward its $1.4 billion labor
cost-restructuring goal through interim wage reductions from
the Air Line Pilots Association (ALPA), the International
Association of Machinists and Aerospace Workers (IAM), and
the Professional Flight Attendants Association that were
effective November 16, 2005;
-- concluding agreements on permanent wage and benefit
reductions with the Aircraft Technical Support Association
(ATSA), the Transport Workers Union of America (TWU), and
Northwest Airlines Meteorology Association (NAMA). In
addition, the IAM has a contract offer out for member
ratification;
-- implementing a second round of management and salaried
employee pay and benefit reductions on December 1, 2005;
-- concluding agreements with Airbus and Pratt & Whitney in
December that permit continued delivery and financing of the
remaining 14 A330-300 and A330-200 wide body aircraft that
Northwest had on order. Airbus agreed to finance 10 of the
14 A330s, and Pratt & Whitney will finance the remainder.
The aircraft are scheduled to join Northwest's fleet through
2007;
-- achieving additional non-labor cost savings towards its
$150 million restructuring goal. For example, in January,
Sabre Holdings and Northwest Airlines announced a new five-
year, full content agreement that will improve Northwest's
global distribution system costs;
Operating revenues in the fourth quarter increased by 5.9 percent
versus the fourth quarter of 2004 to $2.9 billion. This operating
revenue improvement included an increase in passenger and regional
revenue of $113 million. Passenger revenue per available seat
mile (RASM) increased by 11.5 percent, partly reflecting the
impact of the company's action to reduce capacity 8.2 percent
year-over-year.
Operating expenses in the quarter increased 5.8 percent versus a
year ago to $3.2 billion, excluding unusual items. Unit costs,
excluding fuel and unusual items, increased by 4.6 percent on
8.2 percent fewer ASMs. Salaries, wages and benefits expense
decreased by $155 million primarily due to a 75 percent reduction
in mechanic and related headcount versus last year. This was
partially offset by a $72 million increase in maintenance expense
as a result of additional utilization of third-party maintenance
services for work that had previously been performed by Northwest
employees as well as increased aircraft and engine check volume.
During the fourth quarter, fuel averaged $1.98 per gallon,
excluding taxes, up 42.4 percent versus the fourth quarter of last
year.
Northwest's year-end unrestricted cash and short-term investments
balance was $1.26 billion.
Northwest Airlines Corporation -- http://www.nwa.com/-- is
the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and
approximately 1,400 daily departures. Northwest is a member of
SkyTeam, an airline alliance that offers customers one of the
world's most extensive global networks. Northwest and its travel
partners serve more than 900 cities in excess of 160 countries on
six continents. The Company and 12 affiliates filed for chapter
11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq.,
at Cadwalader, Wickersham & Taft LLP in New York, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in
Washington represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $14.4 billion in total assets and $17.9 billion in total
debts.
PEGASUS SOLUTIONS: S&P Rates Proposed $120 Million Debts at B
-------------------------------------------------------------
Standard & Poor's Rating Services assigned its 'B' corporate
credit rating to Dallas, Texas-based Pegasus Solutions, Inc.
At the same time, Standard & Poor's assigned its 'B' rating and
'3' recovery rating to the company's:
* proposed $110 million senior secured term loan; and
* $10 million revolving credit facility.
The bank loan rating, which is the same as the corporate credit
rating, along with the recovery rating, reflect Standard & Poor's
expectation of meaningful (50%-80%) recovery of principal by
creditors in the event of a payment default or bankruptcy. The
outlook is stable.
"Debt proceeds amounting to $110 million, (not including the
revolver, which will be undrawn at close) in conjunction with
existing cash and equity from the sponsor and management, will be
used to fund the acquisition of Pegasus Solutions, a public
company, by Pride Capital, a private equity company, for a total
of $275 million," said Standard & Poor's credit analyst Stephanie
Crane.
Pegasus Solutions provides:
* technology,
* software, and
* services
to the hotel industry and travel distributors.
The company's software products and electronic 'switch' technology
facilitates the flow of reservation information between hotels and
travel agents.
Standard & Poor's rating on Pegasus reflects:
* the company's narrow business profile;
* an increasingly competitive market place; and
* high leverage.
These factors partly are offset by:
* a leading position in a growing niche market; and
* solid EBITDA margins.
Pegasus' target market is the travel agencies and the hotel
industry in North America and Europe. Competition is concentrated
with a few leading companies, including Sabre and Cendant, as well
as home-grown solutions by the leading hotel chains.
Through four business segments, Pegasus provides outsourcing
services to over 60,000 hotels, as well as travel agents and
wholesale tour operators. Pegasus' operating profile is supported
by a base of recurring fee revenue from a diverse contract base.
Pegasus has renewal rates of 90% in all four of its business
segments. Profitability is at the middle range of peer software
companies, with EBITDA margins expected around 20% as of
Dec. 30, 2005.
PENINSULA GAMING: Moody's Holds B2 Rating on $230 Mil. Sr. Notes
----------------------------------------------------------------
Moody's Investors Service affirmed Peninsula Gaming, LLC's B2
corporate family rating and B2 rating on the company's $230
million senior secured notes due 2012.
The affirmation anticipates that continued improvement at
Evangeline Downs combined with lower expenditure requirements
going forward, will improve free cash flow and leverage to a level
more consistent with the company's B2 corporate family rating.
The affirmation also anticipates flat revenue and EBITDA growth at
the company's Diamond Jo riverboat in Dubuque, Iowa. Evangeline
Downs opened in December 2003 and currently accounts for about 70%
of revenues and EBITDA. The outlook is stable.
In 2004, senior management addressed ramp-up and operational
issues at Evangeline Downs with property level management changes.
These changes, along with increased capital investment, have
improved Evangeline Downs' operating results in the latter half of
2005. Although Peninsula Gaming's LTM debt/EBITDA is considered
high at about 6.3 times, Moody's expects it to improve to at or
below 5.5x within the next 12 months.
The stable ratings outlook considers that new competition in Iowa
will not have a significant impact on Peninsula Gaming given the
large geographic distance between Diamond Jo and the new casino
properties, and acknowledges the stable regulatory environment in
both Iowa and Louisiana. The stable ratings outlook also takes
into account Peninsula Gaming's liquidity position. As of
Dec. 31, 2005, Peninsula Gaming had $25.5 million in availability
under the company's $50 million revolver as well as $12.8 million
in unrestricted cash on the balance sheet. Moody's anticipates
that the liquidity position will further improve as the major
capital expenditures related to the construction of Evangeline
Downs has ended coupled with no near-term debt maturities.
Higher ratings require further diversification; continued
improvement in Evangeline Downs' operating performance; and long-
term permanent deleveraging. Conversely, lower ratings could
result from a material decline in profitability and/or an increase
in debt to EBITDA above 7.0x. The stable outlook does not
anticipate debt financed expansions or acquisitions.
Headquartered in Dubuque, Iowa, Peninsula Gaming, LLC owns and
operates the Evangeline Downs pari-mutuel horse racetrack and
casino in Opelousas, Louisiana and the Diamond Jo riverboat casino
in Dubuque, Iowa. Through a wholly-owned unrestricted subsidiary,
the company is in the process of constructing a new casino
property in Worth County, Iowa. For the latest twelve months
ended Dec. 31, 2005, Peninsula Gaming, LLC generated about $175
million in revenues.
PINNACLE ENTERTAINMENT: Earns $14.7 Million For Fiscal Year 2005
----------------------------------------------------------------
Pinnacle Entertainment, Inc., reported financial results for the
fourth quarter and fiscal year ended Dec. 31, 2005.
For the three months ended Dec. 31, 2005, Pinnacle Entertainment's
revenues increased to $227 million from $131 million for the same
period in 2004.
For the 12 months ended Dec. 31, 2005, Pinnacle's revenues
increased to $725.9 million from revenues of $547.1 million for
the 12 months ended Dec. 31, 2004. Adjusted EBITDA for fiscal
year 2005 increased to $128 million from $95.4 million for the
fiscal year 2004.
For the 12 months ended Dec. 31, 2005, adjusted net income
increased to $14.7 million from an adjusted net income of $300,000
for the same period in 2004. On a GAAP basis, the Company's net
income for fiscal year 2005 increased to $6.1 million from $9.2
million in fiscal year 2004.
Financial Transactions
In December 2005, Pinnacle Entertainment entered into a new $750
million credit facility, replacing its existing $380 million
facility. The new credit facility consists of a $450 million
five-year revolving credit facility, a $200 million six-year
senior secured term loan and a $100 million delayed draw term
loan.
In January 2006, Pinnacle priced 6.9 million newly issued shares
in its underwritten common stock offering at $27.35 per share,
including the issuance of over-allotment shares, which resulted in
net proceeds of approximately $179 million to the Company after
underwriters' fees and expenses.
For the fiscal year ended Dec. 31, 2005, Pinnacle Entertainment
reported total assets of $1,244,877,000 and total liabilities of
$817,063,000.
Headquartered in Las Vegas, Nevada, Pinnacle Entertainment, Inc.
-- http://www.pnkinc.com/-- owns and operates casinos in Nevada,
Louisiana, Indiana and Argentina, owns a hotel in Missouri,
receives lease income from two card club casinos in the Los
Angeles metropolitan area, has been licensed to operate a small
casino in the Bahamas, and owns a casino site and has significant
insurance claims related to a hurricane-damaged casino previously
operated in Biloxi, Mississippi. Pinnacle opened a major casino
resort in Lake Charles, Louisiana in May 2005 and a new
replacement casino in Neuquen, Argentina in July 2005.
* * *
As reported in the Troubled Company Reporter on Jan. 13, 2006,
Moody's Investors Service revised Pinnacle Entertainment Inc.'s
ratings outlook to positive from stable based on the company's
recent announcement that it plans to offer 6 million shares of its
common stock, with an option granted to the underwriters for an
additional 900,000 shares. Estimated net proceeds from the
offering are expected to be about $163 million. Pinnacle's B2
corporate family rating, B1 bank loan rating and Caa1 senior
subordinated debt rating were affirmed.
As reported in the Troubled Company Reporter on Jan. 10, 2006,
Standard & Poor's Ratings Services placed its ratings on Pinnacle
Entertainment Inc., including the 'B+' corporate credit rating, on
CreditWatch with positive implications following the company's
announcement that it intends to offer 6 million shares of its
common stock, with an overallotment option granted to the
underwriters for an additional 900,000 shares, for estimated net
proceeds of approximately $163 million.
PLIANT CORP: Sec. 341 Meeting of Creditors Continued to March 28
----------------------------------------------------------------
Kelly Beaudin Stapleton, the United States Trustee for Region 3,
has continued the meeting of Pliant Corporation and its debtor-
affiliates' creditors as required under Section 341 of the
Bankruptcy Code, to March 28, 2006, at 10:00 a.m.
The meting will take place at the Office of the United States
Trustee at J. Caleb Boggs Federal Building, Second Floor, Room
2112, in Wilmington, Delaware.
Chris M. Neilsen, vice president & treasurer of Pliant Corp., and
Stephen T. Auburn, vice president & general counsel of Pliant,
will attend the meeting.
All creditors are invited, but not required, to attend.
The Sec. 341 Meeting of Creditors offers the one opportunity in a
bankruptcy proceeding for creditors to question a responsible
office of the Debtors under oath about the company's financial
affairs and operations that would be of interest to the general
body of creditors.
Headquartered in Schaumburg, Illinois, Pliant Corporation --
http://www.pliantcorp.com/-- produces value-added film and
flexible packaging products for personal care, medical, food,
industrial and agricultural markets. The Debtor and 10 of its
affiliates filed for chapter 11 protection on Jan. 3, 2006
(Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq.,
at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S.
Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the
Debtors in their restructuring efforts. The Debtors tapped
McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy
counsel. The Ontario Superior Court of Justice named RSM
Richter, Inc., as the Debtors' information officer in their
restructuring proceeding under Companies Creditors Arrangement Act
in Canada. As of Sept. 30, 2005, the company had $604,275,000 in
total assets and $1,197,438,000 in total debts. (Pliant
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PLIANT CORP: Senior Noteholders Wants to Conduct Rule 2004 Exam
---------------------------------------------------------------
Pursuant to Rule 2004 of the Federal Rules of Bankruptcy
Procedure, an ad hoc committee of certain holders of 11-1/8%
Senior Secured Notes due 2009 asks the U.S. Bankruptcy Court for
the District of Delaware to direct Pliant Corporation and its
debtor-affiliates to:
a. produce for inspection and photocopying, not later than
March 16, 2006, documents containing basic information
about the Debtors' businesses and reorganization efforts;
and
b. appear for oral examination at the offices of Pachulski
Stang Ziehl Young Jones & Weintraub P.C., or at another
location mutually agreed upon, through individuals
designated by the Debtors as having the most extensive
knowledge of those documents.
Bankruptcy Rule 2004(a) authorizes the Court to order the
examination of an entity on a request of any party-in-interest.
The Ad Hoc Committee asserts it is a party-in-interest for
purposes of Rule 2004 since its members hold approximately
$149,880,000 of the $250,000,000 in principal amount of issued
and outstanding Second Lien Notes.
According to James E. O'Neill, Esq., at Pachulski Stang Ziehl
Young Jones & Weintraub P.C., in Wilmington, Delaware, the Ad Hoc
Committee seeks the information to "get up to speed" so that it
may meaningfully evaluate any plan of reorganization proposed in
the Debtors' Chapter 11 cases.
Mr. O'Neill tells Judge Walrath that Ad Hoc Committee has
previously asked the Debtors the needed information. "The
Committee and its advisors have now exhausted all efforts to
obtain the requested information, including wasting nearly a
month waiting for a 'virtual' due diligence room which contains
essentially no responsive information," he says.
As the holders of Second Lien Notes, which the Debtors will be
left unimpaired under its proposed financial restructuring
transaction, the Ad Hoc Committee members need to understand the
Debtors' financial assumptions, proposed capital structure and
issue relating to go-forward valuations to determine best how to
proceed going forward, Mr. O'Neill maintains.
A list of the documents requested by the Ad Hoc Committee from
the Debtors is available for free at:
http://ResearchArchives.com/t/s?600
Headquartered in Schaumburg, Illinois, Pliant Corporation --
http://www.pliantcorp.com/-- produces value-added film and
flexible packaging products for personal care, medical, food,
industrial and agricultural markets. The Debtor and 10 of its
affiliates filed for chapter 11 protection on Jan. 3, 2006
(Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq.,
at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S.
Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the
Debtors in their restructuring efforts. The Debtors tapped
McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy
counsel. The Ontario Superior Court of Justice named RSM
Richter, Inc., as the Debtors' information officer in their
restructuring proceeding under Companies Creditors Arrangement Act
in Canada. As of Sept. 30, 2005, the company had $604,275,000 in
total assets and $1,197,438,000 in total debts. (Pliant
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PLYMOUTH RUBBER: Wants to Expand Employment of O'Connor Wright
--------------------------------------------------------------
Plymouth Rubber Company, Inc., and its debtor-affiliate Brite-Line
Technologies, Inc., ask the U.S. Bankruptcy Court for the District
of Massachusetts to approve their request to expand the employment
of O'Conor Wright Wyman, Inc., and indemnify the Firm.
The Court approved the employment of O'Conor as the Debtors'
investment bankers on Dec. 5, 2005. The Debtors filed an Amended
Joint Plan of Reorganization and an accompanying First Amended
Disclosure Statement on Jan. 27, 2006. The hearing to consider
the adequacy of the Disclosure Statement is scheduled on March 14,
2006.
Under the expanded engagement, O'Conor will advise the Debtors
with respect to the Alternative Process in which the Debtor are
engaged with respect to their pending Amended Joint Plan. O'Conor
will also provide expert witness testimony at any hearing
regarding the Debtors' Alternative Process and on the hearing for
the proposed Plan.
John M. Wright, the president of O'Conor reports that
professionals from the Firm will charge $350 per hour for their
services under the expanded employment.
The Debtors also ask the Court to approve these indemnification
provisions under the expanded employment:
1) the Debtors agree to indemnify O'Connor and all of its
professionals and to hold each and all indemnified parties
harmless against any losses, claims, actions, damages,
expenses and liabilities whatsoever;
2) an indemnified party will promptly notify the Debtors of any
claims made or actions commenced against the indemnified
party entitled to indemnification; and
3) in connection with any claim or action, an indemnified party
will have the right to employ a separate counsel and to
participate in the defense of that claim or action, provided
that the fees and expenses of that counsel will be at the
indemnified party's expense and as long as the Debtors'
counsel is also pursuing that defense.
Headquartered in Canton, Massachusetts, Plymouth Rubber Company,
Inc., manufactures and distributes plastic and rubber products,
including automotive tapes, insulating tapes, and other industrial
tapes, mastics and films. Through its Brite-Line Technologies
subsidiary, Plymouth manufactures and supplies highway marking
products. The Company and its subsidiary filed for chapter 11
protection on July 5, 2005 (Bankr. D. Mass. Case Nos. 05-16088
through 05-16089). Victor Bass, Esq., at Burns & Levinson LLP,
represents the Debtors in their restructuring efforts. John J.
Monaghan, Esq., at Holland & Knight LLP, represents the Official
Committee of Unsecured Creditors. When the Debtors filed for
protection from their creditors, they estimated $10 million to $50
million in assets and debts.
As reported in the Troubled Company Reporter on Feb. 16, 2006, the
Plymouth Rubber has proposed a Joint Plan of Reorganization and
filed a First Amended Disclosure Statement. The Debtor's Plan
offers to compromise and settle unsecured creditors' claims for a
25% cash payment.
PROFESSIONAL GOLF: Case Summary & 19 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Professional Golf Management MICC LLC
dba Middle Island Country Club
275 Middle Island Yaphank Road
Middle Island, New York 11953
Bankruptcy Case No.: 06-70402
Chapter 11 Petition Date: March 2, 2006
Court: Eastern District of New York (Central Islip)
Debtor's Counsel: Edward Zinker, Esq.
Zinker & Herzberg, LLP
278 East Main Street
P.O. Box 866
Smithtown, New York 11787-0866
Tel: (631) 265-2133
Total Assets: $14,000,000
Total Debts: $10,321,019
Debtor's 19 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
John Deere Credit Equipment Purchase $175,688
P.O. Box 6600
Johnston, IA 50131
CitiCapital Commercial Corp. Equipment Lease $167,793
8001 Ridgepoint Drive
Irving, TX 75063-3117
Mountain Brook Homes Down Payment $157,500
534 Broad Hollow Road
Melville, NY 11747
Internal Revenue Service Taxes $125,000
Suffolk County National Bank $100,000
Wabasse Credit $49,986
All Pro Horticultural $37,678
Murray & Quarltiere Oil Purchases $14,148
Titileist/Acushnet Purchases $10,721
Lesco Purchases $10,708
NYS Department of Taxes $9,000
Taxation & Finance
Home Depot Credit Card $6,169
Store Tractor Services $6,000
ET Equipment Services $4,966
CitiCapital Commercial Corp. Security Interest $4,196
Coca Cola Purchases $3,057
Sam's Club Purchases $2,790
Di Carlo Distributors Purchases $1,772
One Way Supply Purchases $1,652
Coleman Cesspool Services $1,570
PS BUSINESS: Moody's to Review Ba1 Ratings for Possible Upgrade
---------------------------------------------------------------
Moody's Investors Service placed its Ba1 preferred stock rating of
PS Business Parks, Inc., on review for possible upgrade.
According to Moody's, this rating review reflects PSB's continued
improvement in core operations, and success at enhancing value
from its recent acquisitions. Moody's also notes PSB's long
history of maintaining a conservative balance sheet earmarked by
low overall leverage and minimal secured debt.
Moody's rating review acknowledges PSB's success managing through
the most recent downturn in office and industrial properties. The
REIT had a challenging lease expiration schedule heading into last
year; however, its leasing efforts enabled it to increase weighted
average occupancy for the overall portfolio by 360 basis points
during 2005.
Rents have been increasing in stronger markets, although PSB is
still facing rent rolldowns and vacancy challenges in markets such
as Dallas and Northern California. Moody's also notes that the
REIT's acquisition of Miami International Commerce Center has been
going well. PSB acquired this multi-tenant industrial park in
December 2003 for about $200 million. This was a large
transaction for a REIT of PSB's size, and its value-enhancing
strategy posed additional risk. However, the REIT's repositioning
and leasing efforts have enabled it to increase the MICC's
occupancy to 95.6% at 4Q05 from 84% at December 2003.
PSB's long history of maintaining a conservative balance sheet,
earmarked by low leverage, little secured debt and strong fixed
charge coverage, continues to be a key credit strength. The
REIT's focus on small and mid-sized office/industrial business
park and flex properties remains a credit concern given the
potentially more volatile and management-intensive nature of such
properties, although PSB has managed these risks well. Other
credit challenges include rising operating costs and continued
rent roll-downs and vacancy challenges in certain markets,
although these markets appear to be stabilizing.
PSB's preferred stock would likely be upgraded should the REIT
demonstrate prospects for continued improvement in operations as
evidenced by positive same-park revenue and NOI growth,
maintenance of its conservative financial discipline and asset
growth.
These ratings were placed on review for upgrade:
Issuer: PS Business Parks, Inc.
* Preferred Stock -- Ba1;
* Preferred Stock Shelf -- (P)Ba1
Moody's last rating action on PS Business Parks was in September
2003.
PS Business Parks, Inc., is a REIT headquartered in Glendale,
California, USA. It acquires, develops, owns and operates
industrial/flex and office properties. At Dec. 31, 2005, the REIT
had assets of $1.5 billion and equity of $1.1 billion.
REFCO INC: Refco LLC Wants Ch. 11 Case Converted to Chapter 7
-------------------------------------------------------------
Refco, LLC, was a regulated commodity broker. On November 25,
2005, after the close of trading, it ceased soliciting or
accepting orders for the purchase or sale of any commodities and
filed a petition for relief under Chapter 7 of the Bankruptcy
Code.
Consequently, the United States Trustee appointed Albert Togut,
Esq., a senior member of Togut Segal & Segal LLP, as interim
Chapter 7 trustee of Refco LLC. The U.S. Bankruptcy Court for the
Southern District of New York authorized the Chapter 7 Trustee to
assume and perform an Acquisition Agreement, sell the regulated
futures commission merchant business and assume and assign certain
related executory contracts.
Under the Chapter 7 Sale Order, Refco LLC transferred all of its
customer accounts and related liabilities to Man Financial, Inc.,
consistent with Sections 764(b) and 766(c) and (d) of the
Bankruptcy Code and the rules of the Chicago Mercantile Exchange
and the New York Mercantile Exchange.
Specifically, Man assumed all Customer Account Liabilities as of
the applicable Closing Date with respect to any Customer Accounts
that are conveyed to the Buyer pursuant to the Agreement.
In addition, Refco LLC transferred to Man all of the assets used
in its business.
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in New York, tells the Court that the Debtor no longer has
any active customers and it is not a futures commission merchant
because it is no longer engaged in soliciting or in accepting
orders for the purchase or sale of any commodities.
As a result, Mr. Milmoe explains, Refco LLC currently qualifies
as a Chapter 11 debtor and may properly convert its Chapter 7
case pursuant to Section 706 of the Bankruptcy Code.
Section 706 provides that "[a] debtor may convert a case under
[chapter 7] to a case under chapter 11 . . . at any time, if the
case has not been converted under section 1112, 1208, or 1307 of
[the Bankruptcy Code]."
Mr. Milmoe asserts that the Chapter 11 conversion will allow
unity of administration of both the Chapter 7 and Chapter 11
cases under the supervision of Harrison J. Goldin, chief
administrative officer, and an independent Board of Directors.
Moreover, bringing Refco LLC's estate into the fold of the other
jointly administered cases will result in a more efficient and
effective administration of the estates for all creditors and
parties-in-interest, Mr. Milmoe insists.
Accordingly, Refco LLC asks the Court to convert its Chapter 7
case to a case under Chapter 11.
BofA Seeks Clarification
Bank of America, N.A., is the administrative agent to many of the
Refco, Inc. entities pursuant to a prepetition secured credit
agreement. BofA does not object to the conversion.
BofA, however, wants to clarify that the (i) orders approving the
sale of certain assets of Refco Inc., and its debtor-affiliates to
Man Financial, Inc.; and (ii) the interim order, dated October 20,
2005, granting adequate protection to the Secured Lenders'
collateral, remain binding, regardless of whether Refco LLC is
under Chapter 7 or 11.
The orders protect the Secured Lenders' interests in their
collateral and their liens on the proceeds from the Man Sale.
Headquartered in New York, New York, Refco Inc. --
http://www.refco.com/-- is a diversified financial services
organization with operations in 14 countries and an extensive
global institutional and retail client base. Refco's worldwide
subsidiaries are members of principal U.S. and international
exchanges, and are among the most active members of futures
exchanges in Chicago, New York, London and Singapore. In addition
to its futures brokerage activities, Refco is a major broker of
cash market products, including foreign exchange, foreign exchange
options, government securities, domestic and international
equities, emerging market debt, and OTC financial and commodity
products. Refco is one of the largest global clearing firms for
derivatives.
The Company and 23 of its affiliates filed for chapter 11
protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006).
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. Refco
reported $16.5 billion in assets and $16.8 billion in debts to the
Bankruptcy Court on the first day of its chapter 11 cases. (Refco
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
REFCO INC: Wants to Hire DJM Asset as Real Estate Consultant
------------------------------------------------------------
Refco Inc., and its debtor-affiliates seek the U.S. Bankruptcy
Court for the Southern District of New York's authority to employ
DJM Asset Management, LLC, as their real estate consultant, nunc
pro tunc to January 25, 2006.
Because of DJM's experience working on real estate holdings of
financially troubled companies, the Debtors selected DJM to
provide them with brokering, negotiating and disposition services
with respect to their leased properties.
The Debtors believe that DJM's extensive experience in advising
Chapter 11 debtors on real estate matters will enable the firm to
work efficiently with the Debtors' other advisors on real estate
issues likely to arise in the Debtors' Chapter 11 cases.
As real estate consultant, DJM will:
(a) negotiate the termination, assignment, sublease or other
disposition of the Leases;
(b) negotiate waivers or reduce cure claims, general
unsecured claims, or any other claims related to the
Leases;
(c) provide advice regarding the marketing or rejection of
the Leases or provide "desktop" leasehold valuations for
the Leases;
(d) assist the Debtors regarding the documentation of any
proposed transaction concerning the Leases, including
assisting in any auction process, reviewing documents
and assisting in resolving problems which may arise in
the transaction process;
(e) provide progress reports to the Debtors on at least a
weekly basis;
(f) meet periodically with the Debtors regarding the status
of its efforts; and
(g) assist with other matters that fall within its expertise
and that are mutually agreeable to the firm and the
Debtors.
The Debtors have the sole right to accept or reject any
disposition or transaction, including any lease termination or
rejection.
Pursuant to a retention agreement, the Debtors will compensate
the firm for its services on the closing of a transaction
concerning any of the Leases, either by sale or assignment to a
third party, in accordance with a schedule based on the total
amount of cash paid by the purchaser, lease assignee, purchaser
of designation rights and landlords:
(1) At the closing of a transaction in which any Lease is
sold, assigned, otherwise transferred to a third party
or terminated prior to its expiration, DJM will
earn (i) a cash fee amount equal to the greater of (x)
$5,000 or (y) 2.75% of the Gross Proceeds of the
disposition plus (ii) an allowed general unsecured claim
against the Debtors equal to 2.75% of the claim amount
that the landlord under the Lease would have held if the
Lease had been rejected, subject to any applicable caps;
(2) For sublease transactions, DJM will earn a cash fee
equal to the greater of (x) $5,000 or (y) 2.75% of
the Gross Proceeds of that disposition. However, the
firm's fees will, in no event, exceed $200,000 for a
single transaction. For sublease transactions, "Gross
Proceeds" means the amount of the expected sublease
payments payable by the subtenant to the Debtors through
the termination of the sublease;
(3) For any assumed Lease, if the amount required to be paid
to a landlord to cure any defaults existing at the time of
assumption is reduced below the cure amount that the
Debtors acknowledge is owing, DJM will receive a cash fee
equal to 2.75% of the total amount so reduced or waived;
(4) For any rejected Lease, if the landlord agrees to reduce
or waive the claim it could assert under Section 502(b)(6)
of the Bankruptcy Code or otherwise, DJM will receive an
allowed general unsecured claim against the Debtors equal
to 2.75% of reduction or waiver; and
(5) DJM will be paid a $1,000 cash fee for each formal report
that the Debtors ask the firm to generate regarding the
determination of whether it will be cost effective for
the Debtors to run a marketing process for a Lease. But,
the firm will not charge the Debtors for any informal
advice.
DJM will be paid for additional consulting services performed at
the Debtors' request, and that are not otherwise provided for in
the Retention Agreement, at $300 per hour.
The Debtors will also reimburse the firm for reasonable out-of-
pocket expenses incurred in connection with the marketing and
sale, lease, assignment or other transfer of the Leases.
Furthermore, given the compensation structure under the Retention
Agreement, the Debtors believe it is inefficient to require DJM
to submit periodic fee applications. At the conclusion of the
retention, DJM will, however, present to the Court a final fee
application.
Andrew B. Graiser, co-president of the firm, attests that DJM
does not have any connection with any of the Debtors or other
parties-in-interest and is a "disinterested person," as that term
is defined in Section 101(14) of the Bankruptcy Code.
Headquartered in New York, New York, Refco Inc. --
http://www.refco.com/-- is a diversified financial services
organization with operations in 14 countries and an extensive
global institutional and retail client base. Refco's worldwide
subsidiaries are members of principal U.S. and international
exchanges, and are among the most active members of futures
exchanges in Chicago, New York, London and Singapore. In addition
to its futures brokerage activities, Refco is a major broker of
cash market products, including foreign exchange, foreign exchange
options, government securities, domestic and international
equities, emerging market debt, and OTC financial and commodity
products. Refco is one of the largest global clearing firms for
derivatives.
The Company and 23 of its affiliates filed for chapter 11
protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006).
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. Refco
reported $16.5 billion in assets and $16.8 billion in debts to the
Bankruptcy Court on the first day of its chapter 11 cases. (Refco
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
REFCO INC: Creditor Panel Taps Campbells as Cayman Islands Counsel
------------------------------------------------------------------
The Official Committee of Unsecured Creditors in Refco Inc., and
its debtor-affiliates' chapter 11 cases seeks U.S. Bankruptcy
Court for the Southern District of New York's authority to retain
Campbells as its Cayman Islands counsel.
As previously reported, on December 16, 2005, the Committee
commenced an adversary proceeding against SPhinX Managed Futures
Fund SPC, a segregated portfolio company organized under Cayman
law. The Committee seeks to avoid $312,000,000 transferred by
Refco Capital Markets, Ltd., to the SPhinX Funds five days before
the Petition Date.
Effective as of December 16, Campbells will:
(a) advise the Committee with respect to all aspects of Cayman
law;
(b) assist and advise the Committee on issues relative to
Cayman law that may arise in the Adversary Proceeding, in
connection with any actions against the SPhinX Funds, or
otherwise in the Debtors' Chapter 11 cases; and
(c) perform other legal services as may be in the interests of
the Committee in accordance with its powers and duties.
Campbells' current hourly rates are:
Partners $495
Senior Associates $425
Paralegals $225
Campbells will also be reimbursed for actual and necessary costs
and expenses incurred in connection with its representation of
the Committee.
J. Ross McDonough, Esq., a partner at Campbells, assures the
Court that the firm does not hold any adverse interest or
represent any entity having an adverse interest to the Debtors in
connection with their Chapter 11 proceedings.
Julie J. Becker, vice president of Wells Fargo Bank, N.A., co-
chair of the Committee, relates that Campbells is well qualified
to represent the Committee. The firm has extensive experience
and knowledge in the fields of Cayman Corporate law, the
enforcement of foreign judgment in the Caymans and general Cayman
commercial litigation.
Headquartered in New York, New York, Refco Inc. --
http://www.refco.com/-- is a diversified financial services
organization with operations in 14 countries and an extensive
global institutional and retail client base. Refco's worldwide
subsidiaries are members of principal U.S. and international
exchanges, and are among the most active members of futures
exchanges in Chicago, New York, London and Singapore. In addition
to its futures brokerage activities, Refco is a major broker of
cash market products, including foreign exchange, foreign exchange
options, government securities, domestic and international
equities, emerging market debt, and OTC financial and commodity
products. Refco is one of the largest global clearing firms for
derivatives.
The Company and 23 of its affiliates filed for chapter 11
protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006).
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. Refco
reported $16.5 billion in assets and $16.8 billion in debts to the
Bankruptcy Court on the first day of its chapter 11 cases. (Refco
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
REMOTE DYNAMICS: Gets $6.5 Million from Private Notes Sale
----------------------------------------------------------
Remote Dynamics, Inc. (OTCBB: REDI), reported that the company
successfully closed the sale of $5.75 million of secured
convertible notes including original issue discount notes in the
aggregate amount of $750,000 in a private placement transaction
with several institutional investors.
Midtown Partners & Co., LLC acted as the placement agent for this
offering.
The notes mature 24 months from issuance and are convertible at
the option of the holder into the company's common stock at a
fixed conversion price of $0.20 per share. Beginning Sept. 2006,
the company will pay monthly principal installments, which can be
paid by the company in cash or in common stock, equal to 80% of
the average closing bid price of the company's common stock for
the 10 days prior to exercise.
The company also issued Series D-1 Warrants to the note holders
callable only by the company requiring the note holders to
purchase up to 17.5 million additional shares of common stock in
the aggregate, upon satisfaction of certain stock price and
trading volume conditions. The D-1 Warrant has been structured so
as to allow the company the appropriate capital infusion for
certain strategic purposes including the funding of acquisitions,
joint ventures, large inventory purchases and outsourcing. The
Series D-1 Warrants are callable by the company at the lesser of
$0.35 per share or 90% of the daily volume average weighted price
for the 5 days prior to the call. If called at $0.35 per share,
the company would receive up to an additional $6.1 million in cash
proceeds. The note holders also received these common stock
purchase warrants:
-- Series A-7 Warrant to purchase 18.8 million shares in the
aggregate of common stock at an exercise price of $0.40 per
share;
-- Series B-4 Warrant to purchase 12.5 million shares in the
aggregate of common stock at an exercise price of $0.90 per
share;
-- Series C-3 Warrant to purchase 25.0 million shares in the
aggregate of common stock at an exercise price of $0.21 per
share.
The exercise of the A-7, B-4 and C-3 warrants would result in the
Company's receipt of up to $24.0 million in additional cash
proceeds.
"With the closing of this transaction and our recently implemented
cost saving initiatives, we currently believe that the company has
sufficient working capital to fund operations until the company
achieves positive cash flow," said J. Raymond Bilbao, president,
chief operations officer and secretary. "We are pleased with the
vote of confidence placed in our newly revised business plan by
our existing and new investors."
Upon final closing of the secured convertible notes issuance, the
company received proceeds of approximately $4.2 million in cash
(after deducting brokers' commission, the 15% original issue
discount of $750,000 and the tendering of 50 shares of their
650 shares Series B preferred convertible stock with an aggregate
face value of $500,000 by the Company's sole Series B preferred
convertible stockholder). The company intends to use the net
proceeds from the financing transaction to fund its business plan.
About Midtown Partners
Originally founded in May 2000, Midtown Partners & Co., LLC is an
investment bank focused on private placement investment banking
opportunities. The investment banking group at Midtown Partners &
Co., LLC was founded on the premise that client relationships and
industry focus are keys to the success of emerging growth
companies.
About Remote Dynamics
Based in Richardson, Texas, Minorplanet Systems USA, Inc., nka
Remote Dynamics, Inc. -- http://www.minorplanetusa.com/--
develops and implements mobile communications solutions for
service vehicle fleets, long-haul truck fleets and other
mobile-asset fleets, including integrated voice, data and position
location services. Minorplanet, along with two affiliates, filed
for chapter 11 protection (Bankr. N.D. Texas, Case No. 04-31200)
on February 2, 2004. Omar J. Alaniz, Esq., and Patrick J.
Neligan, Jr., Esq., at Neligan Tarpley Andrews and Foley LLP,
represent the Debtors in their restructuring efforts. When
Minorplanet filed for bankruptcy, it estimated assets and debts at
$10 million to $50 million. The Court confirmed the Debtors'
Third Amended Joint Plan of Reorganization on June 17, 2004.
* * *
As reported in the Troubled Company Reporter on Dec. 29, 2005, BDO
Seidman LLP issued an audit report for the fiscal year ended
Aug. 31, 2005, which expressed an unqualified opinion but included
an explanatory paragraph concerning Remote Dynamics, Inc.'s
ability to continue as a going concern. The auditing firm cited
the company's history of recurring losses from operations and
negative cash flows from operating activities.
RICHARD STRAUCH: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Joint Debtors: Richard J. Strauch, Jr. & Maria E. Strauch
dba K & A Imports
703 North Washington Avenue
Scarnton, Pennsylvania 18509
Bankruptcy Case No.: 06-50214
Type of Business: The Debtors own K & A Imports.
K & A wholesales aquarium ornaments.
Chapter 11 Petition Date: February 28, 2006
Court: Middle District of Pennsylvania (Wilkes-Barre)
Debtors' Counsel: Brian E. Manning, Esq.
Law Offices of Brian E. Manning
502 South Blakely Street, Suite B
Dunmore, Pennsylvania 18512
Tel: (570) 343-5350
Fax: (570) 343-5377
Estimated Assets: $268,307
Estimated Debts: $1,125,281
Debtors' 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
CIT $227,229
1 CIT Drive
Livingston, NJ 7039
OECD Value of collateral: $110,435
538 Spruce Street, Suite 812 $10,039
Scranton, Pa 18503
MR. SWOO F.F.G. $88,970
3/4F Bulding Xiyuan District
Quanzhou Fujian, China 362000
Brian Strauch $60,000
Onur A. Akincilar $53,013
Chase $39,279
Pat & Rose Michaely $33,211
John & Valerie Lawless $29,023
UPS Supply Chain SolutionCont $27,730
MBNA America $25,462
PNC Bank $20,885
Big Al's $20,253
Capitol One $18,618
Platinum Plus for Business $16,527
Discover $15,691
MBNA America $15,624
Penn Security $14,791
Platinum Plus for Business $13,988
UPS $13,116
AT&T $12,255
RUSSEL METALS: Equity Deal Prompts S&P's Positive Watch
-------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Russel
Metals Inc. on CreditWatch with positive implications after the
company announced that it would issue CDN$257 million of equity in
a bought deal transaction, which could increase to CDN$283 million
under an underwriter's option. The company plans to use the
proceeds to repay some debt and maintain cash reserves for future
acquisitions. The equity issue could lower the company's pro
forma total debt to capital to 23% from an already low 30% as of
Dec. 31, 2005.
"Russel Metals faces considerable volatility in its business of
steel distribution; the company's margins and cash flow will
fluctuate significantly because it generates a fairly stable
percentage margin over its unstable cost of purchased steel," said
Standard & Poor's credit analyst Don Marleau. "The company,
however, has historically maintained adequate financial
performance because of its good market position, which has
permitted it to exert pricing power over its broad base of
suppliers and customers," Mr. Marleau added.
Notwithstanding the company's very strong financial performance in
2004 and 2005 stemming from exceptionally strong North American
steel markets, the industry is notoriously volatile, and a
reversion to considerably lower prices is certain. Regardless,
the company typically generates better margins than its peers
throughout the cycle because of its good competitive position and
its successful acquisition strategy.
Given the company's inherent business risk, a one-notch upgrade
would necessitate that Russel Metals maintain an investment-grade
financial profile. The 'BB-' rating on the company's US$175
million senior unsecured notes could be equalized with the
corporate credit rating, pending Standard & Poor's review of the
company's priority debt, including secured bank lines and
subsidiary obligations, that would rank ahead of the notes in the
event of default.
Standard & Poor's expects to resolve the CreditWatch in mid-March,
when Russel Metals' equity issue closes, and the rating outcome
will focus on the company's ability to maintain certain key
factors. These are:
* above-average margins and cash generation relative to its
peers, contributing to FFO to total debt of 35%-40% through
the steel industry's volatile pricing cycle;
* financial prudence as it continues to grow through
acquisition in this consolidating industry, thereby holding
debt to capital below 40% through the cycle; and
* strong competitive position in its key markets.
SAINT VINCENTS: Asks Court to Extend Plan-Filing Period to June 30
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended Saint Vincents Catholic Medical Centers of New York and
its debtor-affiliates' Exclusive Filing Period, on an interim
basis. The Court will convene a hearing on March 13, 2006, to
consider the Debtors' request.
The Debtors has asked the Bankruptcy Court to further extend the
period within which they have the exclusive right to:
(a) file a plan of reorganization through and including
June 30, 2006; and
(b) solicit acceptances of that plan through and including
August 29, 2006.
Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates that since the Petition Date, the Debtors and their
professionals have devoted their time to the critical tasks of:
* stabilizing their business operations;
* obtaining financing to address their liquidity needs;
* addressing management and change of management issues; and
* initiating a coordinated sales process for certain of their
non-profitable and non-core hospital assets.
"Proposing a plan of reorganization at this time is still
premature," Mr. Troop maintains.
Sale of Assets
The Debtors' status as healthcare providers affects the length of
time required to achieve final disposition of their assets, Mr.
Troop notes. The Debtors are subject to a host of regulatory and
licensing requirements that often require them to obtain approval
for major business decisions.
The Debtors have been working closely with their professionals to
coordinate and oversee the process of selling three hospitals:
(1) Mary Immaculate Hospital,
(2) St. John's Hospital, and
(3) Saint Vincent's Hospital, Staten Island.
Mr. Troop explains that the Hospitals have been losing money and
causing a drain on the Debtors' estates. The Debtors believe
that the Hospitals could be financially sound if sold to buyers
who will be able to make the necessary capital improvements and
to buyers with existing hospitals with which the Hospitals could
achieve synergies.
The Debtors currently are accepting bids for the Hospitals.
They expect to hold Court-sanctioned auctions for those
properties in the near future and obtain all necessary Court and
government approvals for the sale as soon as practicable, most
likely in the last quarter of 2006.
Until this process is completed and the details for the
disposition of the three Hospitals are better developed through
the on-going market efforts to find buyers, it is difficult for
the Debtors to begin to propose a plan of reorganization, Mr.
Troop asserts.
The Debtors also own various parcels of real property that are
not central to their current and future operations. The Debtors
are currently developing a strategy for the disposition of those
assets, Mr. Troop relates.
Medical Malpractice Claims
The Debtors are also subject to potential claims of medical
malpractice, which may have an impact on the total net recovery
to unsecured creditors under a plan of reorganization.
According to Mr. Troop, the Debtors have devoted substantial time
and effort in minimizing and estimating the amount of those
claims and developing a workable and generally fair program for
potential holders of medical malpractice claims that are
ultimately allowed.
The Debtors have proposed a three-category structure, which calls
for a compulsory mediation program for medical malpractice claims
confronting their Brooklyn and Queens hospitals.
Ordinary Course Financing
Mr. Troop assures the Court that the Debtors have been and
continue to pay all of their bills as they become due. The
Debtors believe they have sufficient liquidity under the existing
postpetition financing arrangements to carry on the normal course
of business.
Ongoing Talks With Various Parties
Since October 19, 2005, the Debtors and their professionals have
consistently conferred with various constituencies on all major
substantive and administrative matters in their Chapter 11 cases.
The Debtors have no intention of discontinuing this dialogue if
the Court grants their extension request, Mr. Troop assures Judge
Hardin.
Mr. Troop asserts that the requested extension will permit the
Debtors to develop and implement a viable long-term business plan
and allow the Creditors Committee and other parties-in-interest
to evaluate the plan.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12,
2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took
over representing the Debtors in their restructuring efforts.
Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the
Official Committee of Unsecured Creditors. As of Apr. 30, 2005,
the Debtors listed $972 million in total assets and $1 billion in
total debts. (Saint Vincent Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
SAINT VINCENTS: Creditors Agree to Continued Cash Collateral Use
----------------------------------------------------------------
Saint Vincents Catholic Medical Centers of New York, its debtor-
affiliates and First American Title Insurance Company agree to
extend the Termination Date for the Debtors' use of the RCG Cash
Collateral through and including March 31, 2006, provided,
however, that:
(a) they may further extend the Termination Date by filing
with the Court a further stipulation for its extension,
which will be deemed effective upon filing without further
Court order; and
(b) all other terms and conditions of the RCG Stipulation
will remain in full force and effect.
Use of CCC Collateral Further Extended
The Debtors and Comprehensive Cancer Corporation of New York also
agree to further extend the Debtors' use of CCC's cash collateral
through and including April 14, 2006, without prejudice to CCC's
right to seek a Court order to:
(a) terminate the Debtors' use of CCC's cash collateral for
cause; and
(b) compel the Debtors to assume or reject the Services
Agreement and the ancillary agreements of the Original
Stipulation.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12,
2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took
over representing the Debtors in their restructuring efforts.
Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the
Official Committee of Unsecured Creditors. As of Apr. 30, 2005,
the Debtors listed $972 million in total assets and $1 billion in
total debts. (Saint Vincent Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
SAINT VINCENTS: Wants to Use Gifts & Contributions to Pay Claims
----------------------------------------------------------------
Saint Vincents Catholic Medical Centers of New York and its
debtor-affiliates ask the U.S. Bankruptcy Court for the Southern
District of New York to approve procedures for paying prepetition
claims using the Temporarily Restricted Contributions.
As reported in the Troubled Company Reporter on Nov. 29, 2005, the
Debtors filed with the Court a report, which describes gifts or
donations it held or maintained by its fund-raising arm, Saint
Vincents Catholic Medical Centers Foundation, Inc.
Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates that the Contributions may be classified into three
categories based on the restrictions imposed on their use:
(1) Unrestricted Contributions -- may be put to any use
consistent with SVCMC's mission as stated in its charter;
(2) Temporarily Restricted Contributions -- subject to a
donor-imposed restriction that permits SVCMC to expend the
Contribution only as specified until the restriction is
satisfied by either passage of time or by SVCMC's actions;
and
(3) Permanently Restricted Contributions -- subject to a
donor-imposed restriction that stipulates that the
Contribution be maintained permanently but permits SVCMC
to expend the income derived from the Contribution.
As of November 30, 2005, SVCMC held Temporarily Restricted
Contributions totaling $31,777,203.
SVCMC must expend the Temporarily Restricted Contributions in
accordance with the restrictions placed on them because it may be
required to return the unexpended portion of the Temporarily
Restricted Contribution to its donor if:
* it is unwilling or unable to expend all or part of a
Temporarily Restricted Contribution; and
* the condition precedent to removing the restriction on that
Contribution is not forthcoming.
SVCMC estimates that there is less than $1,000,000 in Temporarily
Restricted Contributions that if not used to satisfy prepetition
general unsecured claims in accordance with the terms of those
gifts, will be lost to SVCMC and its estates.
Accordingly, SVCMC seeks the Court's authority to establish
procedures through which it may pay prepetition claims, without
further Court authorization, where:
(a) the prepetition claim is of a type that may be paid out of
a Temporarily Restricted Contribution currently held by
the Debtors;
(b) the Debtors do not expect to incur future expenses related
to that Temporarily Restricted Contribution sufficient to
expend the remaining value of the Contribution; and
therefore
(c) funds from the Temporarily Restricted Contribution must
either be used to pay the prepetition claims related to
that Contribution or be forfeited to the donor of the
Contribution.
SVCMC cannot use a Temporarily Restricted Contribution to satisfy
general unsecured claims, even where it will not incur sufficient
future expenses to expend the entire amount of that Temporarily
Restricted Contribution consistent with its donor's intent.
Mr. Troop asserts that allowing SVCMC to use funds from
Temporarily Restricted Contributions, which would otherwise be
forfeited, to pay prepetition claims:
* protects its ability to raise funding through future
Contributions; and
* diminishes the amount of outstanding prepetition claims
against its estates without reducing the funds available to
satisfy general unsecured claims.
Payment Procedures
SVCMC proposes to pay prepetition claims using funds from a
Temporarily Restricted Contribution consistent with the
restrictions placed on that Contribution's use, without further
Court authorization, subject to these Procedures:
(a) SVCMC may pay any Qualified Claim of $10,000 or less
without providing notice to any party and without further
Court order, provided, however, that the aggregate amount
of De Minimis Payments will not exceed $150,000 without
further Court order.
(b) Where SVCMC intends to pay a Qualified Claim of an amount
greater than $10,000, or where SVCMC intend to pay a
Qualified Claim of $10,000 or less and either:
(i) SVCMC does not wish to have the payment counted
against the De Minimis Payment Cap; or
(ii) paying the Qualified Claim through a De Minimis
Payment would cause the aggregate amount of De
Minimis Payments to exceed the De Minimis Payment
Cap,
SVCMC will provide notice of its intent to pay the
Qualified Claim by mail and by facsimile to:
* the U.S. Trustee,
* the Debtors' postpetition lenders, and
* counsel to the Official Committee of Unsecured
Creditors.
(c) The Notice will include:
* the amount of the Proposed Payment, the name and
address of the prepetition claimant, and a
description of the goods or services that gave rise
to the Qualified Claim for which the Proposed Payment
is being made;
* the Temporarily Restricted Contribution that will be
used to pay the Qualified Claim, and a description of
the restrictions placed on the use of funds from that
Contribution; and
* a statement that SVCMC, after reasonable
investigation and in good faith, has determined that
it will not incur sufficient future expenses related
to the Temporarily Restricted Contribution to expend
the entire value of that Contribution, and therefore
the funds SVCMC seeks to use to make the Proposed
Payment will otherwise be forfeited to the
Contribution's donor.
(d) SVCMC may notify the Notice Parties of its intent to pay
multiple Qualified Claims from multiple Temporarily
Restricted Contributions within the same Notice document,
so long as information is provided for each Qualified
Claim.
(e) The Notice Parties or any other party-in-interest may
object in writing to any Proposed Payment. If there are
no written objections, SVCMC may make the Proposed Payment
immediately and without further Court order. If a written
objection is received, SVCMC may, at its sole discretion,
schedule a hearing for a determination of whether the
Proposed Payment may be made.
Mr. Troop contends that by making the Proposed Payments through
the Procedures, SVCMC will achieve benefits while allowing
parties-in-interest to monitor its use of the funds from
Temporarily Restricted Contributions and avoiding the
considerable expense of requiring SVCMC to petition the Court for
authorization to make each Proposed Payment.
The Procedures further allow SVCMC to make a limited amount of De
Minimis Payments without the delay and the administrative expense
of providing notice of the payments.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12,
2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took
over representing the Debtors in their restructuring efforts.
Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the
Official Committee of Unsecured Creditors. As of Apr. 30, 2005,
the Debtors listed $972 million in total assets and $1 billion in
total debts. (Saint Vincent Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
STELCO INC: Ontario Superior Court Extends Stay Period to March 31
------------------------------------------------------------------
Stelco Inc. (TSX:STE) was granted an Order of the Superior Court
of Justice (Ontario) extending the stay period in its Court-
supervised restructuring from March 3, 2006 until March 31, 2006.
The Court-appointed Monitor had recommended that the extension be
granted on the grounds that:
* the parties have been working diligently towards
implementation of the Company's restructuring plan,
* a plan implementation date of March 31, 2006 is achievable,
and
* Stelco has been acting in good faith and with due diligence.
The Order contains a provision that the Monitor report to the
Court as to the status of the plan implementation process and that
a further Court hearing be held on Mar. 23, 2006 if progress in
that regard is unsatisfactory and should the Court so direct.
Courtney Pratt, Stelco President and Chief Executive Officer,
said, "We are making progress in our drive to completion. The
stakeholders involved in these final stages have agreed on an
implementation timetable they believe is achievable. We're
committed to working with stakeholders, to achieving those
targets, and to bringing this process to a successful conclusion."
The Court also approved the previously announced sale of real
property owned by Welland Pipe Ltd. and ordered the temporary
sealing of certain commercially sensitive financial information
contained in the agreement of purchase and sale.
Monitor's 52nd Report
On Feb. 28, 2006, Stelco reported that the Monitor filed its
Fifty-Second Report in the matter of the Company's Court-
supervised restructuring was filed this evening.
The Report recommends that the Court extend the stay period, which
will otherwise expire at March 3, 2006, to March 31, 2006. The
Monitor noted that progress had been made in resolving the issues
to be addressed in the process of implementing the approved
restructuring plan and the approved reorganization of Stelco's
corporate structure. The Report added that the contemplated
transactions are complex, require the input and approval of a
number of stakeholders, and that issues remain to be resolved.
The Monitor observed that the stakeholders involved in the
finalization of the documents and other measures required to
implement the above-noted arrangements have committed to an
implementation timetable they believe is achievable. The timetable
contemplates that the principal documents will be finalized and
that a pre-closing will take place on Mar. 17, 2006, with a plan
implementation date of Mar. 31, 2006.
In recommending that the application for a stay extension be
granted, the Monitor states its belief that the parties have been
working diligently towards plan implementation, that a plan
implementation date of Mar. 31, 2006 is achievable, and that
Stelco has been acting and continues to act in good faith and with
due diligence. The Report and its appendix also provide:
* a summary of receipts and disbursements for the period
Nov. 19, 2005 to Feb. 17, 2006,
* an analysis of variances from the forecast provided in the
40th Report of the Monitor, and
* a cash flow forecast for the period February 18, 2006 to
March 31, 2006. The Monitor notes that total facility
utilization stood at $296.5 million as at Feb. 17, 2006, and
is projected to increase to $325.6 million by Mar. 31, 2006.
Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified
steel producer. Stelco is involved in all major segments of the
steel industry through its integrated steel business, mini-mills,
and manufactured products businesses. The company is currently in
the final stages of a Court-supervised restructuring. This
process is designed to establish the Company as a viable and
competitive producer for the long term. The new Stelco will be
focused on its Ontario-based integrated steel business located in
Hamilton and in Nanticoke. These operations produce high quality
value-added hot rolled, cold rolled, coated sheet and bar
products.
* * *
In early 2004, after a thorough financial and strategic review,
Stelco concluded that it faced a serious viability issue. The
Corporation incurred significant operating and cash losses in 2003
and believed that it would have exhausted available sources of
liquidity before the end of 2004 if it did not obtain legal
protection and other benefits provided by a Court-supervised
restructuring process. Accordingly, on Jan. 29, 2004, Stelco and
certain related entities filed for protection under the Companies'
Creditors Arrangement Act.
The Court extended the stay period under Stelco's Court-supervised
restructuring from Dec. 12, 2005, until Mar. 3, 2006.
STELCO INC: TSX Wants Common Shares Delisted
--------------------------------------------
Stelco Inc. (TSX:STE) disclosed that it has been in discussions
with the Toronto Stock Exchange concerning requests received from
the TSX to delist the Company's common shares. Discussions are
still ongoing.
As disclosed on previously and as reflected in Stelco's approved
restructuring plan, there is insufficient value in the Company
under the plan to provide recovery for the current common
shareholders. As a result, the existing common shares will be
eliminated on plan implementation with no value being attributed
to them.
Stelco expects to file a delisting application with the Toronto
Stock Exchange as soon as it is confident with respect to the
satisfaction of all major business issues relating to
implementation of the Company's restructuring plan.
Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified
steel producer. Stelco is involved in all major segments of the
steel industry through its integrated steel business, mini-mills,
and manufactured products businesses. The company is currently in
the final stages of a Court-supervised restructuring. This
process is designed to establish the Company as a viable and
competitive producer for the long term. The new Stelco will be
focused on its Ontario-based integrated steel business located in
Hamilton and in Nanticoke. These operations produce high quality
value-added hot rolled, cold rolled, coated sheet and bar
products.
* * *
In early 2004, after a thorough financial and strategic review,
Stelco concluded that it faced a serious viability issue. The
Corporation incurred significant operating and cash losses in 2003
and believed that it would have exhausted available sources of
liquidity before the end of 2004 if it did not obtain legal
protection and other benefits provided by a Court-supervised
restructuring process. Accordingly, on Jan. 29, 2004, Stelco and
certain related entities filed for protection under the Companies'
Creditors Arrangement Act.
The Court extended the stay period under Stelco's Court-supervised
restructuring from Dec. 12, 2005, until Mar. 3, 2006.
STRATUS SERVICES: Converts Pinnacle's $20K Note to 2.78M Shares
---------------------------------------------------------------
Pinnacle Investment Partners, L.P., converted $20,000 of the
principal amount of secured convertible promissory note issued by
Stratus Services Group, Inc., into 2,777,777 shares of the
Company's common stock at a conversion price of $.0072 per share.
The shares were issued in reliance upon the exemption provided by
Section 3(a)(9) of the Securities Act of 1933, as amended.
As reported in the Troubled Company Reporter on Jan. 23, 2006,
$2,356,850 of Convertible Notes were issued to Pinnacle Investment
in exchange for 21,531 shares of the Company's Series I Preferred
Stock.
As a result of the exchange, there are no longer outstanding
shares of Series I Preferred Stock and the Company no longer has
any obligation to pay Pinnacle any amounts owed to it under the
terms of the Series I Preferred Stock, including $103,716 of
unpaid dividends, which had accrued through December 28, 2005.
The Convertible Note, which is secured by substantially all of the
Company's assets, becomes due under these terms:
* $1.8 million becomes due and payable in cash upon the earlier
of the Company's receipt of $1.8 million of accounts
receivable or March 15, 2006;
* $331,850 and accrued interest at a rate of 12% per annum
payable in 24 equal installments of principal and interest
during the period commencing June 28, 2007 and ending on
May 28, 2009;
* $225,000 and accrued interest at the rate of 6% per annum
becomes due and payable on December 28, 2007; provided,
however, that the Company has the right to pay the amount in
cash or shares of its common stock (valued at $0.0072 per
share).
Pinnacle has the right to convert the principal amount of and
interest accrued under the Convertible Note at any time under
these terms:
* $331,850 of the principal amount and unpaid interest accrued
is convertible into the Company's common stock at a
conversion price of $.06 per share.
* $225,000 of the principal amount and unpaid accrued interest
is convertible into the Company's common stock at a
conversion price of $0.0072.
Stratus Services Group Inc. provides a wide range of staffing and
productivity consulting services nationally through a network of
offices located throughout the United States.
Stratus Services' $7,989,489 equity deficit as of Dec. 31, 2005,
narrowed from a $9,873,836 equity deficit at Sept. 30, 2005.
SUN HEALTHCARE: Equity Deficits Narrows 43x to $2.895M at Dec. 31
-----------------------------------------------------------------
Sun Healthcare Group, Inc. (NASDAQ: SUNH), disclosed its results
for the fourth quarter and year ended Dec. 31, 2005.
For the year ended Dec. 31, 2005, Sun reported the following
results of operations:
-- for continuing operations, excluding the results of
operations of Peak Medical Corporation, which the Company
acquired in December 2005, total net revenues of
$861.0 million, a 5.9% improvement over total net revenues
in 2004, net income from continuing operations of
$4.0 million, and EBITDAR of $64.4 million, which included a
net $6.8 million reduction in self-insurance reserves for
general and professional liability and workers' compensation
related to prior years, offset by a $0.4 million charge for
debt extinguishment related to the refinance of one
inpatient facility mortgage. This compares to total net
revenues of $813.3 million, net income from continuing
operations of $9.9 million, and EBITDAR of $70.6 million for
the year ended Dec. 31, 2004, which included:
* a net $16.5 million reduction in self-insurance
reserves for general and professional liability and
workers' compensation related to prior years; and
* a $3.4 million gain on debt extinguishment related to
the refinance of six inpatient facility mortgages;
-- excluding the reduction in self-insurance reserves and
extinguishment of debt, the net loss from continuing
operations for the year ended Dec. 31, 2005, was
$2.4 million as compared to a net loss from continuing
operations of $10.0 million for the year ended
Dec. 31, 2004, and EBITDAR for the year ended Dec. 31, 2005,
was $58.0 million, or 6.7 percent of revenue, an improvement
of 14.4 percent, as compared to EBITDAR of $50.7 million, or
6.2 percent of revenue, for the prior year;
-- on an as-reported basis, which includes the results of
operations of Peak for December 2005 and discontinued
operations, total net revenues of $882.1 million, an
8.5 percent improvement over total net revenues in 2004,
and net income of $24.8 million, which included a net
$21.4 million reduction in self-insurance reserves for
general and professional liability and workers' compensation
related to prior years, offset by a $0.4 million charge for
debt extinguishment related to the refinance of one
inpatient facility mortgage. This compares to total net
revenues of $813.3 million and a net loss of $18.6 million
for the year ended Dec. 31, 2004, which included:
* a net $13.2 million reduction in self-insurance
reserves for general and professional liability and
workers' compensation related to prior years; and
* a $3.4 million gain on debt extinguishment related to
the refinance of six inpatient facility mortgages;
-- excluding the reduction in self-insurance reserves and
extinguishment of debt, the net income for the year ended
Dec. 31, 2005, was $3.8 million as compared to a net loss of
$35.2 million for the prior year;
For the quarter ended Dec. 31, 2005, Sun reported the following
results of operations:
-- for continuing operations, excluding the results of
operations of Peak, total net revenues of $224.8 million, a
9.9 percent improvement over total net revenues in the 2004
fourth quarter, net income from continuing operations of
$4.7 million, and EBITDAR of $19.6 million, which included a
net $6.3 million reduction in self-insurance reserves for
general and professional liability and workers' compensation
related to prior years, compared to total net revenues of
$204.6 million, net income from continuing operations of
$5.5 million, and EBITDAR of $22.2 million for the quarter
ended Dec. 31, 2004, which included a net $14.8 million
reduction in self-insurance reserves for general and
professional liability and workers' compensation related to
prior years, offset by a $0.4 million charge for debt
extinguishment related to the refinance of one inpatient
facility mortgage;
-- excluding the reduction in self-insurance reserves and
extinguishment of debt, the net loss from continuing
operations for the quarter ended Dec. 31, 2005, was
$1.6 million as compared to a net loss from continuing
operations for the quarter ended Dec. 31, 2004, of
$8.9 million and EBITDAR for the quarter ended Dec. 31,
2005, was $13.3 million, or 5.9 percent of revenue, an
improvement of 70.5 percent, as compared to EBITDAR of
$7.8 million, or 3.8 percent of revenue, for the prior year
period.
-- on an as-reported basis, total net revenues of
$245.9 million, a 20.2 percent improvement over total net
revenues in the 2004 fourth quarter, and net income of
$11.7 million, which included a net $14.5 million reduction
in self-insurance reserves for general and professional
liability and workers' compensation related to prior years.
This compares to total net revenues of $204.6 million and a
net loss of $4.4 million for the quarter ended Dec. 31,
2004, which included a net $10.2 million reduction in self-
insurance reserves for general and professional liability
and workers' compensation related to prior years, offset by
a $0.4 million charge for debt extinguishment related to the
refinance of one inpatient facility mortgage.
-- excluding the reduction in self-insurance reserves and
extinguishment of debt, the net loss for the quarter ended
Dec. 31, 2005, was $2.8 million as compared to a net loss of
$14.2 million for the prior year period.
"Our fourth quarter operating results, in conjunction with the
Peak acquisition, the completion of our equity offering in
December and the expansion of our credit facility have positioned
us for a strong 2006," said Richard K. Matros, Sun's chairman and
chief executive officer. "Our improved operations and the
structural improvements that we have made since 2002 have resulted
in reducing our stockholders' deficit from $187.2 million at
December 31, 2002, to $2.9 million at December 31, 2005," Mr.
Matros continued.
Corporate General
General and administrative expenses not directly attributed to
operating segments increased $3.1 million, or 7.0 percent, to
$47.2 million for the year ended Dec. 31, 2005, compared to
$44.1 million for the year ended Dec. 31, 2004. For the quarter
ended Dec. 31, 2005, general and administrative expenses decreased
$0.4 million, or 2.8 percent, to $13.7 million compared to
$14.1 million for the same period in 2004. "For the year, as a
percent of revenues, our G&A dropped to 5.3 percent from 5.4
percent and, for the quarter, as our actual spending decreased,
G&A as a percent of revenues dropped to 5.6 percent as compared to
6.9 percent for the same quarter in 2004," said Mr. Matros.
2006 Guidance
For 2006, Sun expects that its total revenues will be
approximately $1.17 billion to $1.18 billion. EBITDAR is expected
to be approximately $99.5 million to $102.0 million and EBITDA is
expected to be approximately $42.5 million to $45.0 million.
Pre-tax earnings are expected to be approximately $15.0 million
to $17.5 million. Net income is expected to be approximately
$9.0 million to $11.5 million. This guidance assumes, among other
things, no acquisitions, a stable Medicaid reimbursement
environment and no net changes in the Medicare reimbursement
environment.
Sun Healthcare Group, Inc., with executive offices located in
Irvine, California, owns SunBridge Healthcare Corporation and
other affiliated companies that operate long-term and postacute
care facilities in many states. In addition, the Sun Healthcare
Group family of companies provides therapy through SunDance
Rehabilitation Corporation, medical staffing through CareerStaff
Unlimited, Inc., and home care through SunPlus Home Health
Services, Inc.
The Company filed for chapter 11 protection on Oct. 14, 1999
(Bankr. D. Del. Case No. 99-03657). Mark D. Collins, Esq., and
Christina M. Houston, Esq., at Richards, Layton & Finger, P.A.,
represent the Debtor. The Court confirmed the Debtor's chapter 11
Plan on Feb. 6, 2002, and the Plan took effect on Feb. 28, 2002.
As of December 31, 2005, the Company's equity deficit narrowed to
$2,895,000 from a $123,380,000 deficit at December 31, 2004.
TENFOLD CORP: Loan from CEO Robert W. Felton Now Totals $850,000
----------------------------------------------------------------
TenFold Corporation borrowed $250,000 from its Chairman, President
and Chief Executive Officer, Robert W. Felton.
The Company will use the money for interim financing while it
seeks to secure equity financing. The Company's debts to its CEO
amounts to $850,000, including the funds borrowed in Dec. 2005.
The promissory notes issued to the CEO are senior to the Company's
other indebtedness and equity, bear interest at 10% and are due
upon the earlier to occur of March 31, 2006, the closing of equity
financing of $2 million or more, or a liquidation event.
The disinterested members of the Company's Board of Directors
approved this transaction.
TenFold Corporation (OTC Bulletin Board: TENF) --
http://www.tenfold.com/-- licenses its patented technology for
applications development, EnterpriseTenFold(TM), to organizations
that face the daunting task of replacing obsolete applications or
building complex applications systems. Unlike traditional
approaches, where business and technology requirements create
difficult IT bottlenecks, EnterpriseTenFold technology lets a
small, team of business people and IT professionals design, build,
deploy, maintain, and upgrade new or replacement applications with
extraordinary speed, superior applications quality and power
features.
As of Sept. 30, 2005, TenFold's balance sheet reflected a
$945,000 stockholders' deficit, compared to $2,281,000 of positive
equity at Dec. 31, 2004.
* * *
Going Concern Doubt
Tanner LC expressed substantial doubt about TenFold's ability to
continue as a going concern after it audited the company's
financial statements for the fiscal year ended Dec. 31, 2004. The
auditor pointed to the company's problems in raising capital.
TERAYON COMMUNICATIONS: Restating 2004 & 2005 Financials
--------------------------------------------------------
Terayon Communication Systems, Inc. (Nasdaq: TERNE) reported that
the Audit Committee of the Board of Directors has concluded that
the Company's consolidated financial statements for:
* the year ended December 31, 2004,
* the four quarters of 2004, and
* the first two quarters of 2005,
should no longer be relied upon and will be restated.
This conclusion was based in part on the final results of the
Audit Committee inquiry. The inquiry focused on the circumstances
surrounding the timing of revenue recognition in the second half
of 2004 from a customer of the Company. The principal findings of
the inquiry were:
* that there was no intent by Company personnel to recognize
revenue in contravention of what Company personnel
understood to be the applicable accounting rules at the
time;
* that Company personnel nevertheless did not consider or
sufficiently focus on the application of certain relevant
accounting rules; and
* that there was no intent by Company personnel to mislead the
Company's auditors or engage in other wrongful conduct.
The Audit Committee inquiry noted that counsel was not able to
interview a senior official of the customer involved in the
transaction. Based on the results of the inquiry, the Audit
Committee did not recommend any actions against current or former
Company personnel. The Audit Committee and management are
continuing to consider possible enhancements to the Company's
internal controls in light of the results of the Audit Committee
inquiry.
The Audit Committee and management have reviewed the Company's
revenue recognition practices and policies with respect to the
delivery of certain products and services (including the
development and customization of software) to a single customer
under a series of contractual arrangements. Management and the
Audit Committee have also discussed management's conclusions with
Stonefield Josephson, Inc., the Company's independent auditor. It
was previously determined under the SEC Staff Accounting Bulletin
104, "Revenue Recognition," that revenue under this series of
contractual arrangements was to be recognized in two phases under
two separate revenue arrangements. Based on the guidance under
American Institute of Certified Public Accountants Statement of
Position (SOP) 97-2, "Software Revenue Recognition," and SOP 81-1,
"Accounting for Performance of Construction-Type and Certain
Production-Type Contracts," management has determined that this
series of contractual arrangements should have been treated as a
single contract, and therefore a single revenue arrangement for
accounting purposes.
Using the completed-contract method as indicated under SOP 81-1,
all revenue from this series of contractual arrangements should
have been deferred until the completion of all Company obligations
under these arrangements in the fourth quarter of 2005.
Accordingly, revenue recognized in the third and fourth quarters
of 2004 and in the first two quarters of 2005 under this series of
contractual arrangements should be deferred to the fourth quarter
of 2005. Also, under SOP 81-1 in relation to contract costs,
expenses previously recognized in each quarter of 2004 and in the
first two quarters of 2005 should be deferred to the fourth
quarter of 2005.
The Company has also reviewed its revenue recognition policies
relating to the recognition of the sales of software and other
products bundled with post customer service contracts and has
considered the guidance under SOP 97-2, Financial Accounting
Standards Board Technical Bulletin 90-1, "Accounting for
Separately Priced Extended Warranty and Product Maintenance
Contracts," as well as Financial Accounting Standards Board,
Emerging Issues Task Force 00-21, "Accounting for Revenue
Arrangements with Multiple Deliverables," in relation to multiple-
element revenue arrangements. Under this guidance management has
determined that during 2004, the Company did not establish vendor
specific objective evidence for its post contract service revenue
element as it related to digital video customer service.
Consequently, management anticipates an additional deferral of
revenue from each quarter of 2004 in which the revenue was
recognized, in order to recognize the revenue from software
bundled with post customer service contracts over the life of the
customer service contract period.
The actual amounts of revenue and expenses to be deferred are
being reviewed by the Company and its independent auditors. The
restatement will have no impact on the Company's cash balances for
the restated periods. There can be no assurance that the Company
or its independent auditors will not identify additional issues or
other considerations in connection with the restatement and
continuing review, and that these issues or considerations will
not require additional adjustments to the Company's prior
financial results for one or more prior annual or quarterly
periods.
Nasdaq Delisting
The filing of the Company's Form 10-Q for the quarter ended
September 30, 2005 will be further delayed pending the completion
of the restated consolidated historical financial statements.
Because of the delay in filing the Form 10-Q, the Company is not
in compliance with The Nasdaq Stock Market's continued listing
requirement set forth in Nasdaq Marketplace Rule 4310(c)(14). As
previously disclosed, the Company received letters from The Nasdaq
Stock Market dated Nov. 17, 2005 and Jan. 4, 2006 regarding the
Company's failure to file its Form 10-Q for the quarter ended
September 30, 2005, and its failure to solicit proxies and hold an
annual meeting of shareholders on or before Dec. 31, 2005,
respectively. On Jan. 17, 2006, a NASDAQ Listing Qualifications
Panel agreed to continue the listing of the Company's common stock
on The Nasdaq National Market subject to three conditions:
(1) on or before January 31, 2006, the Company was required to
provide NASDAQ with certain information related to the
Audit Committee's inquiry;
(2) on or before March 31, 2006, the Company must file the
Form 10-Q for the quarter ended September 30, 2005 and all
required restatements;
(3) on or before March 31, 2006, the Company must file the
proxy statement for the 2005 annual meeting, with a record
date set and a meeting to be held as soon thereafter as
possible.
While the Company provided NASDAQ with a response to questions
relating to the internal accounting review on January 31, 2006 and
is making every effort to comply with the remaining requirements,
there can be no assurance that the Company will be able to do so
within the Panel's deadlines, or that the Company's common stock
will continue to be listed on the Nasdaq National Market.
Material Weakness
Management and the Audit Committee have concluded that the
restatement constitutes a material weakness within the meaning of
the PCAOB's Audit Standard No. 2. In addition to this material
weakness, additional control deficiencies may be identified which
individually or in the aggregate may constitute additional
material weaknesses. Management and the Audit Committee are
continuing to evaluate whether there are additional material
weaknesses.
Notice of Default
Additionally, the Company has engaged a financial advisor, Chanin
Capital Partners, to explore alternatives with respect to
restructuring its outstanding 5% Convertible Subordinated Notes
due 2007. The Notes currently outstanding have an aggregate
principal amount of $65 million. As previously announced, on
January 12, 2006, the Company received a letter from holders of
more than 25% in aggregate principal amount of Notes outstanding
providing written notice to the Company that it is in default
based on the Company's failure to file its Form 10-Q for the
quarter ended September 30, 2005. If the default is not cured
within 60 days of this notice, March 13, 2006, an event of default
will occur and the trustee or holders of at least 25% in aggregate
principal amount of the Notes then outstanding, upon notice to the
Company, may accelerate the maturity of the Notes and declare the
entire principal amount of the Notes, together with all accrued
and unpaid interest thereon, to be due and payable immediately.
The Company previously said in November 2005 that the SEC had
initiated an informal inquiry with regard to the subject matter of
the Company's accounting review. The Company understands that the
SEC has since issued a formal order of investigation with regard
to this matter. The Company has been and is continuing to
cooperate fully with the SEC.
Terayon Communication Systems, Inc. -- http://www.terayon.com/--
provides real-time digital video networking applications to cable,
satellite and telecommunication service providers worldwide,
which have deployed more than 6,000 of Terayon's digital video
systems to localize services and advertising on-demand and brand
their programming, insert millions of digital ads, offer HDTV and
other digital video services. Terayon maintains its headquarters
in Santa Clara, California.
THILMANY LLC: Merger Deal Prompts Moody's to Review Ratings
-----------------------------------------------------------
Moody's Investors Service placed Thilmany, LLC's B2 term loan
rating, revolving credit facility rating, and corporate family
rating on review for possible downgrade. The rating action
follows the company's recent announcement that Kohlberg & Company
has entered into a definitive agreement to acquire Packaging
Dynamics Corporation for $268 million. Kohlberg & Company plans
to merge Packaging Dynamics Corporation, a flexible packaging
company, with Thilmany and expects the transaction to close in the
second quarter of 2006. The combined business will have annual
sales of approximately $750 million.
Moody's was prompted to place the ratings on review for possible
downgrade due to several uncertainties, which include:
1) the composition of the final capital structure post the
combination;
2) the position of current lenders within the new capital
structure; and
3) the ultimate corporate structure.
Moody's expects the review to be completed on or prior to the
closing of the transaction.
Thilmany LLC, a privately owned company headquartered in Kaukauna,
WI, is a producer of specialty printing and packaging papers and
converted paper products.
TITAN CRUISE: Wants to Hire GrayRobinson as Special Counsel
-----------------------------------------------------------
Titan Cruise Lines and Ocean Jewel Casino & Entertainment, Inc.,
ask the U.S. Bankruptcy Court for the Middle District of Florida
for permission to employ Robert B. Birthisel and GrayRobinson,
P.A., as their special counsel.
The Debtors tell the Court that their shuttles, used to transport
passengers to and from its offshore gaming facility, were damaged
on two separate occasions. The damages were caused by the
negligence of third parties.
ACE Insurance, the Debtors' property insurer, paid for the repairs
made to the shuttles and the Debtor paid a total of $40,000 for
deductibles relating to the two incidents. ACE intends to retain
Mr. Birthisel and the Firm to assist it in recovering the amounts
it has paid under the insurance policy from the third parties who
caused the damages. ACE has also agreed to seek reimbursement of
the deductibles paid by the Debtor.
Mr. Birthisel and the Firm will be paid by ACE:
a) 25% of any settlement reached prior to the filing of a
complaint; or
b) 33% of any judgment or settlement obtained subsequent to the
filing of a complaint.
Accordingly, the Firm will not be seeking reimbursement of its
fees and costs from the Debtors and will not be filing any fee
application in the Debtors' case, but will subtract the Debtors'
prorata share of attorney's fees from any judgment or settlement
amount.
Mr. Birthisel assures the Court that GrayRobinson does not
represent or hold any interest adverse to the Debtors or their
estate.
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.
TITAN CRUISE: Has Until March 31 to File Chapter 11 Plan
--------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida gave
Titan Cruise Lines and Ocean Jewel Casino & Entertainment, Inc.,
until:
a) March 31, 2006, to file a chapter 11 plan of
reorganization; and
b) the date set for confirmation of the Debtor's plan to
solicit acceptances of that plan.
As reported in the Troubled Company Reporter on Feb. 09, 2006,
the Debtors are documenting and arranging to close on a sale of
substantial assets, including several foreign-titled maritime
vessels, in a transaction with a purchase price exceeding
$7,000,000.
The Debtors are also coordinating with their secured lenders to
repay their complex postpetition financing obligations and satisfy
their separate responsibilities for claims management and handling
of secured maritime claims.
Similarly, to assist them in quantifying claims against the
estates, the Debtors plan to file a motion with the Court asking
for authority to reject certain leases and executory contracts not
necessary for the sale and to require counterparties to those
agreements to file any administrative expense claims.
The Debtors relate that the extension will provide them a better
picture of the total claims in the case and the funds available
for a plan of liquidation. The Debtors assure the Court that the
extension was not submitted for purposes of delay and will not
prejudice any party.
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.
TRUMAN CAPITAL: Loan Loss Severities Cue Moody's Rating Review
--------------------------------------------------------------
Moody's Investors Service placed on review for possible downgrade
one tranche issued by Truman Capital Mortgage Loan Trust Series
2002-1 and one tranche issued by Truman Capital Mortgage Loan
Trust Series 2002-2. The underlying collateral is comprised of
subprime and re-performing residential mortgage loans.
The re-performing mortgage collateral in these deals consists
primarily of previously delinquent and defaulted loans as of the
cut -off date and which had made at least three out of four of the
prior regular scheduled or bankruptcy plan payments. The
certificates are being placed on review for downgrade based upon
recent loss severities on liquidated loans and the resulting
deterioration of credit enhancement.
Complete rating actions are:
Issuer: Truman Capital Mortgage Loan Trust Series 2002-1
* Class B; Currently B2, under review for possible downgrade.
Issuer: Truman Capital Mortgage Loan Trust Series 2002-2
* Class B; Currently Ba3 under review for possible downgrade.
UAL CORP: Wants to Grab $19,852,110 from LAX Airport Escrow
-----------------------------------------------------------
United Airlines, Inc., wants to recover cash deposited in an
escrow account with U.S. Bank National Association and pledged to
certain bondholders for whom U.S. Bank serves as trustee.
In 1981, United and the City of Los Angeles entered into a
Terminal Facilities Lease, which governs United's use of certain
terminal facilities at the Los Angeles International Airport.
David R. Seligman, Esq., at Kirkland & Ellis LLP, in Chicago,
Illinois, relates that the Regional Airport Improvement
Corporation issued $50,750,000 in facility lease revenue bonds
pursuant to a Partial Assignment of Terminal Facilities Lease and
a Facilities Sublease with United. The proceeds of the Series
1982 Bonds financed a portion of the remodeling of passenger
terminal facilities and the construction a portion of certain new
and expanded passenger terminal facilities for United at LAX.
RAIC and the City also entered into a Contingent Lease Agreement
providing for a direct lease of the premises leased by United,
contingent upon a termination of United's rights under the
Terminal Lease by a default.
Under the Terminal Lease, the City granted United annual rental
credits equal to United's project costs, including financing
costs, associated with the construction of certain improvements
to the LAX facilities. The Terminal Lease allowed the City to
prepay the annual rent credits to United at any time.
On October 15, 2002, the Board of Airport Commissioners of the
City of Los Angeles authorized the prepayment of all outstanding
rental credits owed to United.
A month later, United and U.S. Bank entered into an escrow
agreement and, simultaneously with its execution, the City
deposited $19,852,110 into the escrow account in satisfaction of
all rent credit obligations to United. As further security on
the Bonds, United granted an express lien on the Rent Credit
Funds and all investments, earnings and interest.
Mr. Seligman says that U.S. Bank is both a preference defendant
and an "initial transferee" pursuant to Section 550(a)(1) of the
Bankruptcy Code. United is entitled to recover the full
$19,852,110 from U.S. Bank pursuant to Section 550(a)(1).
The Rent Credit Funds were property of United at the time the
Lien was granted, Mr. Seligman argues. The Bonds were an
antecedent debt of United.
Mr. Seligman also notes that the grant of the Lien on the Rent
Credit Funds was a transfer made for or on account of an
antecedent debt owed by United to U.S. Bank. United granted the
Lien on the Rent Credit Funds to or for the benefit of U.S. Bank
as trustee on behalf of the bondholders, within 90 days prior to
the Petition Date.
At the time the Lien was granted in the Rent Credit Funds, Mr.
Seligman says United was insolvent. The grant of the Lien on the
Rent Credit Funds enabled U.S. Bank to receive more than it would
have received if (a) United's Chapter 11 case were a case under
Chapter 7 of the Bankruptcy Code, (b) the Lien had not been
granted, and (c) U.S. Bank had received payment in accordance
with the provisions of Chapter 11.
Accordingly, United asks the U.S. Bankruptcy Court for the
Northern District of Illinois to:
(a) authorize it to avoid the Lien on the Rent Credit Funds as
a preferential transfer;
(b) require the immediate turnover of the Rent Credit Funds to
United; and
(c) disallow any claims of U.S. Bank if it fails or refuses to
turn over any avoided transfers.
U.S. Bank Responds
U.S. Bank National Association, as indenture trustee, denies each
and every allegation set forth in United Airlines, Inc.'s
complaint.
Mark E. Leipold, Esq., at Gould & Ratner, in Chicago, Illinois,
asserts that the claims set forth in the Complaint are barred by
the doctrines of waiver, ratification, estoppel, or laches.
According to Mr. Leipold, to the extent that it is determined
that United can establish a prima facie case under Section 547 of
the Bankruptcy Code, the transfers received by U.S. Bank were:
(a) in payment of a debt incurred by United in the ordinary
course of business or financial affairs of United and U.S.
Bank;
(b) made in the ordinary course of business or financial
affairs of United and U.S. Bank; and
(c) made according to ordinary business terms.
The transfers, Mr. Leipold asserts, were intended by United and
U.S. Bank to be a contemporaneous exchange for new value and was
a substantially contemporaneous exchange. After the transfers
were received, U.S. Bank gave new value to United, which was not
secured by an otherwise unavoidable security interest. United
did not make an unavoidable transfer to or for the benefit of the
U.S. Bank.
To the extent United held any interest, it was for the benefit of
another as a trustee, escrow holder, or otherwise, and the
interest did not constitute property of United or its estate.
Mr. Leipold clarifies that the property in which United claims an
interest was earmarked for payment to another party and the
interest never became United's property.
The transfers which are the subject of the Complaint were made
pursuant to one or more executory contracts of United which have
been, or which are contemplated to be assumed. As a result of
United's assumption and its obligation to cure any defaults, it
may not avoid any transfers made pursuant to the contracts.
Accordingly, U.S. Bank asks the Court to:
(a) dismiss the Complaint, with prejudice; and
(b) allow it to cover its costs and disbursements, including
reasonable attorney fees to the extent allowed by law.
Court Says Los Angeles Can't Intervene
The City of Los Angeles sought to intervene in the Complaint.
The City asserted that it had direct and substantial interests in
the Fund, the outcome of the Complaint, and the disposition of
the Fund.
However, United argued that the City has not carried its burden
of demonstrating the requirements for intervention under either
Rule 24(a) or (b) of the Federal Rules of Civil Procedure. The
City fell short of demonstrating a "direct and substantial"
interest because (1) the Escrow Agreement explicitly disclaims
any interest of the City in the Rent Credit Funds, and (2) the
City's interest in the application of the Rent Credit Funds under
the Terminal Lease is, at best, illusory.
Even if the City could demonstrate an interest, United said the
City failed to demonstrate that intervention is necessary to
protect an interest. The City failed to demonstrate that its
alleged interests are not adequately represented by U.S. Bank.
In response, Los Angeles maintained that it easily satisfies the
four requirements for intervention:
(1) the City's request to intervene was filed in a timely
manner;
(2) the City has several direct and substantial interests in
the subject matter of the Adversary Proceeding;
(3) disposition of the Adversary Proceeding without the City's
participation would severely prejudice it in its ability
to protect its interests; and
(4) U.S. Bank cannot be relied on to protect the City's
interests.
For reasons stated on record, the Court denied the City's
request.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. Judge Wedoff confirmed
the Debtors' Second Amended Plan on Jan. 20, 2006. The Company
emerged from bankruptcy protection on February 1, 2006. (United
Airlines Bankruptcy News, Issue Nos. 118; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
UNIVERSAL COMMS: Dec. 31 Balance Sheet Upside-Down by $2.8 Mil.
---------------------------------------------------------------
Universal Communication Systems, Inc., delivered its financial
results for the quarter ended Dec. 31, 2005, to the Securities and
Exchange Commission on Feb. 23, 2006.
Universal incurred a $651,179 net loss for the three months ended
Dec. 31, 2005, compared with an $898,014 net loss for the same
period in 2004. Revenues increased $176,387 from $501,517 for the
three months ended Dec. 31, 2004, versus $677,904 for the three
months ended Dec. 31, 2005.
The Company's balance sheet at Dec. 31, 2005, showed $1,459,629 in
total assets and $4,338,303 in liabilities, resulting in a
$2,878,674 stockholders' deficit.
As of Dec. 31, 2005, Universal had a $1,652,238 working capital
deficit. Management is attempting to reduce this deficit through
arrangements with creditors and infusion of equity investments.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?5fb
Going Concern Doubt
As reported in the Troubled Company Reporter on Jan. 19, 2006,
Reuben E. Price & Co. expressed substantial doubt about
Universal'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 over $1.5 million working capital deficit and recurring
losses from operations.
About Universal
Universal Communications Systems, Inc. -- http://www.ucsy.com/--
and its subsidiaries are actively engaged worldwide in developing
and marketing solar energy systems, as well as systems for the
extraction of drinkable water from the air. Consolidated
subsidiaries include wholly-owned subsidiaries AirWater Corp.,
AirWater Patents Corp, Millennium Electric T.O.U. Ltd, Solar Style
(USA) Inc., Solar One Inc, Solar Style Ltd., and Misa Water
International, Inc, and majority-owned subsidiaries Atmospheric
Water Technologies and Millennium USA.
Prior to 2003, the Company was engaged in activities related to
advanced wireless communications, including the acquisition of
radio-frequency spectrum internationally. Currently, the
Company's activities related to advanced wireless communications
are conducted solely through its investment in Digital Way, S.A.,
a Peruvian communication company and former wholly owned
subsidiary.
US LEC CORP: Posts $30 Million Net Loss in Fourth Quarter
---------------------------------------------------------
US LEC Corp. reported financial results for the fourth quarter and
fiscal year ended Dec. 31, 2005.
US LEC's revenue for the fourth quarter ended Dec. 31, 2005,
totaled $100.1 million, compared with $92.1 million for the
quarter ended Dec. 31, 2004.
Net loss attributable to the Company's common shareholders was
$30.3 million, for the quarter, compared with a net loss of $9.9
million for the same quarter last year.
The Company's adjusted EBITDA for the quarter ended Dec. 31, 2005
is $14.3 million compared with Adjusted EBITDA of $11.0 million in
the fourth quarter of 2004.
For the year ended Dec. 31, 2005, the Company's revenue totaled
$387.7 million compared with last year's $356.2 million, a 9%
year-over-year increase despite a decrease in inter-carrier
compensation of $17.6 million.
The Company's net loss attributable to common shareholders was
$55.5 million for the year ended Dec. 31, 2005 compared to a net
loss of $35.7 million for the year ended Dec. 31, 2004.
For the same year, the Company's adjusted EBITDA is $52.1 million
and compared with 2004 Adjusted EBITDA of $45.7 million.
Settlement with Inter-Change Carriers
The company reported that it settled its two outstanding disputes
associated with prior billing of access charges to inter-exchange
carriers leaving one dispute with a large inter-exchange carrier
to be resolved.
As a result of the settlement, US LEC took a one-time, non-cash
charge of $23.3 million in the fourth quarter of 2005.
In addition, US LEC will receive approximately $9.0 million in
cash as part of the settlements.
Headquartered in Charlotte, North Carolina, US LEC Corp. --
http://www.uslec.com/-- is a full service provider of IP, data
and voice solutions to medium and large businesses and enterprise
organizations throughout 16 eastern states and the District of
Columbia. US LEC offers advanced, IP-based, data and voice
services such as MPLS VPN and Ethernet, as well as comprehensive
Dynamic T(SM) VoIP-enabled services and features. The company
also offers local and long distance services and data services
such as frame relay, Multi-Link Frame Relay and ATM. US LEC
provides a broad array of complementary services, including
conferencing, data backup and recovery, data center services and
Web hosting, as well as managed firewall and router services for
advanced data networking. US LEC also offers selected voice
services in 27 additional states and provides enhanced data
services, selected Internet services and MegaPOP(R) nationwide.
* * *
US LEC Corp.'s $150 million 12.71625% 2nd priority senior secured
floating rate notes due 2009 carry Moody's B3 and Standard &
Poor's B- ratings.
Moody's also junked US LEC's long term corporate family rating to
Caa1. All ratings were placed on Sept. 2004.
USG CORP: Bankr. Court Okays $1.8BB Rights Offering Backstop Pact
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
USG Corporation's rights offering backstop agreement.
The agreement helps to resolve the asbestos personal injury claims
in its Chapter 11 reorganization case. Under the agreement, USG
will establish and fund a personal injury trust to pay asbestos
personal injury claims. USG's bank lenders, bondholders and trade
suppliers will be paid in full with interest. Stockholders will
retain ownership of the company. Financing for the plan is
expected to be provided from USG's cash on hand, the $1.8 billion
rights offering to existing stockholders backstopped by Berkshire
Hathaway Inc., tax refunds and new long-term debt. The terms of
the agreement are contained in a plan of reorganization that the
company filed February 17th along with a disclosure statement.
After voting on the plan, the plan will require approval by both
the Bankruptcy Court and the District Court that oversees the
cases.
The backstop agreement would assure that USG would receive
$1.8 billion in equity proceeds to fund a portion of the company's
asbestos personal injury claim settlement underlying the
reorganization plan USG announced on January 30th. Berkshire
Hathaway will receive a $67 million non-refundable fee for its
backstop commitment.
Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes.
The Company filed for chapter 11 protection on June 25, 2001
(Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., Gus
Kallergis, Esq., Brad B. Erens, Esq., Michelle M. Harner, Esq.,
Mark A. Cody, Esq., and Daniel B. Prieto, Esq., at Jones Day
represent the Debtors in their restructuring efforts.
Lewis Kruger, Esq., Kenneth Pasquale, Esq., and Denise Wildes,
Esq., represent the Official Committee of Unsecured Creditors.
Elihu Inselbuch, Esq., and peter Van N. Lockwood, Esq., at Caplin
& Drysdale, Chartered, represent the Official Committee of
Asbestos Personal Injury Claimants. Martin J. Bienenstock, Esq.,
Judy G. Z. Liu, Esq., Ralph I. Miller, Esq., and David A.
Hickerson, Esq., at Weil Gotshal & Manges LLP represent the
Statutory Committee of Equity Security Holders. Dean M. Trafelet
is the Future Claimants Representative. Michael J. Crames, Esq.,
and Andrew A. Kress, Esq., at Kaye Scholer, LLP, represent the
Future Claimants Representative. Scott Baena, Esq., and Jay
Sakalo, Esq., at Bilzen Sumberg Baena Price & Axelrod LLP,
represent the Asbestos Property Damage Claimants Committee.
When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts.
WESTERN FINANCIAL: Wachovia Merger Cues Fitch to Upgrade Ratings
----------------------------------------------------------------
Fitch Ratings upgraded and removed from Rating Watch Positive the
Issuer Default Rating of Western Financial Bank (WFB) to 'AA-'
from 'BB'. Fitch's upgrade follows the completion of the merger
of WFB and its parent, Westcorp (WES), with Wachovia Corporation
(rated 'AA-/F1+' by Fitch). Subsequently, Fitch has withdrawn
WFB's IDR as the bank has been merged with Wachovia Bank, NA. A
detailed list of ratings affected is at the end of this release.
With roughly $15 billion in assets, including $12 billion in
loans, WES adds considerably to Wachovia's presence in auto
lending. In addition, WES also expands Wachovia's footprint into
southern California with approximately 19 branches.
Ratings upgraded, removed from Rating Watch Positive and withdrawn
by Fitch include:
Western Financial Bank:
-- Issuer Default Rating (IDR) to 'AA-' from 'BB'
-- Long-term deposits to 'AA' from 'BB+'
Ratings upgraded and removed from Rating Watch Positive:
Western Financial Bank:
-- Subordinated debt to 'A+' from 'BB-'
WESTERN FINANCIAL: Merger Prompts Moody's to Upgrade Ratings
------------------------------------------------------------
Moody's Investors Service upgraded the ratings of Western
Financial Bank following Wachovia Corporation's acquisition of
Westcorp and its subsidiaries, including Western Financial Bank.
Moody's had affirmed the debt ratings of Wachovia Corporation and
its subsidiaries on Sept. 12, 2005, following the announcement
that it would acquire Westcorp.
Following the acquisition of Westcorp by Wachovia Corporation,
Western Financial Bank and Wachovia Bank NA will merge.
Consequently, Western Financial Bank's deposit, issuer, and bank
financial strength ratings will be withdrawn after the merger has
taken place. Outstanding debt obligations of Western Financial
Bank will become obligations of the enlarged Wachovia Bank NA and
carry the appropriate ratings assigned to that entity.
These are the main ratings upgraded:
Issuer: Western Financial Bank
* Long-term deposit to Aa2 from Ba2
* Short-term deposit and OSO to P-1 from 'Not Prime'
* Issuer and long-term OSO to Aa2 from Ba3
* Subordinate to Aa3 from B1
* Bank financial strength to B+ from D
The outlook is stable.
Wachovia Corporation is headquartered in Charlotte, North Carolina
and reported assets of $521 billion as of Dec. 31, 2005. Westcorp
is headquartered in Irvine, California and reported assets of $17
billion as of Dec. 31, 2005.
WILLIAMS COS: Earns $66.8 Million of Net Income in Fourth Quarter
-----------------------------------------------------------------
The Williams Companies, Inc. (NYSE:WMB), disclosed that its 2005
unaudited net income of $313.6 million compared with net income of
$163.7 million for 2004.
Results for 2005 reflect the benefit of increased natural gas
production and higher net realized average prices for production
sold, along with reduced levels of interest expense. Results for
2004 included $282.1 million in costs associated with the early
retirement of debt.
Results for 2005 also include unrealized mark-to-market gains of
$172 million from the Power business, compared with $304 million
in 2004.
For fourth-quarter 2005, the company reported net income of
$66.8 million compared with net income of $73.4 million on a
diluted basis, for fourth-quarter 2004.
Results for fourth-quarter 2005 include $64 million in litigation
accruals to resolve legacy issues associated with gas reporting
and $61 million of impairment charges associated with two non-core
equity investments.
The company reported 2005 income from continuing operations of
$317.4 million compared with $93.2 million in 2004.
For fourth-quarter 2005, the company reported income from
continuing operations of $68.8 million compared with
$95.5 million for fourth-quarter 2004.
"Our growth is creating real economic value," said Steve Malcolm,
chairman, president and chief executive officer. "The investments
we're making in our businesses are generating significant results
for shareholders and adding energy supplies and delivery
reliability to the domestic market.
"In 2005, we more than doubled our performance on a key financial
measure - our recurring earnings exclusive of the effect of mark-
to-market accounting.
"We took critical steps last year to increase the pace of proving
up natural gas reserves and increasing production in the United
States. Our efforts paid off with significant increases in both
production and reserves through drilling activity.
"This year, we are deploying still more drilling rigs. These rigs
are designed to drill more efficiently and effectively. And we
are continuing to expand our drilling horizon within the Piceance
Basin of the Western Rockies, doubling the number of wells we
drill in the comparatively undeveloped Highlands, where we drilled
25 wells last year. We clearly expect these continued efforts to
yield proportional growth in financial performance in 2006 and
beyond," Mr. Malcolm said.
"Williams is rich with opportunity that spans the natural gas
value chain from domestic reserves and production growth to
midstream infrastructure development and pipeline capacity growth
to meet demand on the Eastern Seaboard, Florida and the Northwest.
"We are projecting a growth horizon that will push our 2008
consolidated recurring segment profit to more than $2 billion on a
basis adjusted for the effect of mark-to-market accounting," he
said.
The Williams Companies, Inc. -- http://www.williams.com/--
through its subsidiaries, primarily finds, produces, gathers,
processes and transports natural gas. The company also manages a
wholesale power business. Williams' operations are concentrated
in the Pacific Northwest, Rocky Mountains, Gulf Coast, Southern
California and Eastern Seaboard.
* * *
As reported in the Troubled Company Reporter on Jan. 24, 2005,
Standard & Poor's Ratings Services assigned its 'B+' rating to
The Williams Cos., Inc., Credit-Linked Certificate Trust IV's
$100 million floating-rate certificates due May 1, 2009.
The rating reflects the credit quality of The Williams Cos., Inc.,
('B+') as the borrower under the credit agreement and Citibank
N.A. ('AA/A-1+') as seller under the subparticipation agreement
and account bank under the certificate of deposit.
The rating addresses the likelihood of the trust making payments
on the certificates as required under the amended and restated
declaration of trust.
XEROX CORP: S&P Upgrades Corporate Credit Rating to BB+ from BB-
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Stamford, Connecticut-based Xerox Corp. and related
entities to 'BB+' from 'BB-', and removed it from CreditWatch,
where it was placed with positive implications on Jan. 26, 2006.
The upgrade reflects substantial recent debt reductions, good cash
flow and growth in equipment sales. The outlook is stable.
"The ratings on Xerox Corp. reflect mature and highly competitive
industry conditions and lack of total revenue growth. These
factors partially are offset by the company's good position in its
core document management business, stable non-financing operating
profitability and moderating leverage," said Standard & Poor's
credit analyst Martha Toll-Reed.
Xerox reported total revenues of $15.7 billion in fiscal 2005,
essentially flat with the prior year. However, equipment sales
continued a trend of modest improvement in 2005, which is expected
to generate recurring, post-sales revenue growth over the near-to-
intermediate term. Xerox's nonfinancing EBITDA showed modest
improvement in 2005, driven largely by expense reductions.
Although achieving sustainable revenue growth remains a challenge
for Xerox, Standard & Poor's expects the company to offset product
mix and competitive pressures with ongoing cost reduction actions,
and maintain stable EBITDA margins.
Using cash flow from operations and existing cash balances, Xerox
has reduced total debt (adjusted for capitalized operating leases,
captive finance operations, and reported GAAP underfunded
postretirement obligations) by more than $2.5 billion since
Dec. 31, 2004. Adjusted total debt to EBITDA was below 2.5x as of
Dec. 31, 2005. The current rating and outlook incorporate the
cumulative board authorization since fiscal 2004 of $1 billion of
share repurchases. Standard & Poor's expects share repurchases to
be funded over the next 12 months out of cash and/or cash flow
from operations. In addition, Xerox is expected to maintain cash
balances in excess of $1 billion.
* FTI Consulting Names Richard Davis as VP for Strategic Planning
-----------------------------------------------------------------
FTI Consulting, Inc. (NYSE: FCN), a premier provider of problem-
solving consulting and technology services to major corporations,
financial institutions and law firms, appointed Richard Davis as
vice president, strategic planning.
With over 10 years of experience in strategy, finance and
operational consulting, Mr. Davis will work with FTI's senior
management and practice leaders on the overall development and
implementation of FTI's five-year strategic plans. In his new
role, Mr. Davis will identify opportunities to enhance the
Company's overall growth and profitability and will assist the
senior management team in performing strategic and financial
reviews of potential acquisition targets. Mr. Davis will also
work on a variety of special projects tied to optimizing overall
operational results and addressing practice-specific operational
needs. Mr. Davis will continue to be based in FTI's New York
office.
"Rich has played an increasingly key role in working alongside
senior management to guide FTI's strategic direction. Like so many
of our leaders, he has extensive hands-on client experience and
shares a keen sense of what is required to take FTI to a billion
dollar company by the end of 2009. Rich has been an invaluable
asset to the firm and we believe his contributions toward
achieving our financial and operational goals will continue to be
significant," said Dominic DiNapoli, FTI's chief operating
officer.
Prior to joining FTI in April 2002, Mr. Davis held successive
posts at PricewaterhouseCoopers. As a senior consultant, Mr.
Davis provided consulting services to troubled companies and their
constituent groups operating both in and out of bankruptcy
protection. As a principal in the strategy practice, Mr. Davis
managed the merger integration team responsible for identifying
post-merger synergy opportunities between two Fortune 500
companies completing a $20 billion merger; led the strategic
planning and capital expenditure approval processes for a $10
billion retailer; and formulated long-term business plans for
companies in a variety of industries. Prior to working for PwC,
Mr. Davis served as an internal auditor for the Chubb Group of
Insurance Companies.
Mr. Davis holds a B.S. in Accounting from the State University of
New York at Albany and an M.B.A. in Finance & Strategy from
Columbia University.
About FTI Consulting
FTI Consulting is a premier provider of problem-solving consulting
and technology services to major corporations, financial
institutions and law firms when confronting critical issues that
shape their future and the future of their clients, such as
financial and operational improvement, major litigation, mergers
and acquisitions and regulatory issues. Strategically located in
24 of the major US cities, London and Melbourne, FTI's total
workforce of more than 1,300 employees includes numerous PhDs,
MBAs, CPAs, CIRAs and CFEs, who are committed to delivering the
highest level of service to clients.
* Venable Names Two New Partners in New York Office
---------------------------------------------------
The New York office of Venable LLP has added two new partners with
substantial corporate and bankruptcy experience.
Established corporate attorney Mark S. Vecchio, Esq., has joined
from the New York office of Heller Ehrman, where he served for
several years as managing partner. Edward A. Smith, Esq., a top
bankruptcy litigator and former Assistant U.S. Attorney in the
Southern District of New York, joins from Cadwalader, Wickersham &
Taft.
Mr. Vecchio and Mr. Smith are among the first additions to
Venable's New York office since the Washington-based firm arrived
in the city last summer through its merger with premier litigation
boutique Heard & O'Toole. Additional partners concentrating in
transactional work are expected to join the office in coming
weeks.
"We're pleased to gain two very experienced partners in our
continuing expansion in New York - both Mark Vecchio and Ed Smith
add considerable firepower to two very important practices," said
Edmund O'Toole, Partner-in-Charge of Venable's New York office.
"Mark has a sophisticated transactional and advisory practice that
will be important in helping grow our corporate presence here in
New York, while his added experience as a former managing partner
should be very helpful as we continue to bring new attorneys and
clients to the New York office," Mr. O'Toole noted.
"Likewise, Ed's bankruptcy experience is a terrific complement to
Venable's existing litigation work," he added. "Not only is he an
experienced trial attorney, but his supervisory experience on big
cases will be invaluable - consider that he has spent the better
part of the last three years focusing on Enron matters."
Mr. Vecchio's Background
Mr. Vecchio has a diverse, two-decade practice in domestic and
international corporate law. He has advised clients on mergers
and acquisitions, public offerings, joint ventures, private equity
and venture capital. His clients have ranged from Fortune 500
companies to individual entrepreneurs, as well as foreign
businesses and governmental entities. At Coudert Brothers, his
prior firm, Mr. Vecchio represented such clients as Procter &
Gamble, Shell Oil, Mobil Corporation, Daewoo, IBM, Calvin Klein
Industries, General Electric and British Airways.
He has developed a particular niche in cross-border transactions,
both inbound and outbound. Mr. Vecchio has worked on sizable
deals in Europe, including Russia, in South America and in the
Middle East, including Dubai, Syria and Israel.
Between 2002 and 2004, Mr. Vecchio served as the managing
shareholder of Heller Ehrman's New York office, a period which
coincided with a significant growth spurt of that office.
Previously, he helped Coudert Brothers launch and manage new
offices in Montreal and Moscow.
"I've always been interested in building an entrepreneurial
corporate practice," explained Mr. Vecchio. "Venable has a
terrific national reputation in many areas, and there is an
opportunity here to create a full-scale corporate presence in New
York - exactly the kind of challenge I couldn't turn down.
"Venable also has a growing international practice representing
foreign governments and U.S. clients with global operations," Mr.
Vecchio added. "I hope to expand my cross-border counsel and
believe my experience fits nicely with the firm's ambitions to
expand its international work."
Mr. Vecchio teaches Strategic International Commercial
Transactions as an adjunct professor at Columbia University School
of Law, from which he received his J.D. in 1985. Prior to law
school, he attended the University of Munich on a Fellowship in
political science and international relations (1981-82). He
received his B.A. in Russian and East European Studies at Yale
University, where he graduated magna cum laude in 1981.
Mr. Smith's Background
Mr. Smith has represented creditors and debtors in a range of
complex and high profile bankruptcy cases. At Cadwalader, he
worked almost exclusively on matters relating to Enron Corp.'s
bankruptcy. In addition to conducting two trials in bankruptcy
court for Enron, he was heavily involved in defending the company
against billions of dollars of market manipulation claims.
Mr. Smith began doing bankruptcy work during his 10-year tenure as
an Assistant U.S. Attorney in the Southern District (1990-2000).
Some of the matters he handled included defending the FCC against
NextWave's attempt to avoid over $4 billion in telecommunications
license payments. He also investigated alleged misconduct by the
principals of 47th Street Photo, whose Chapter 11 bankruptcy was a
major New York event in the 1990s. In other cases, Mr. Smith
represented the IRS in litigation over Drexel Burnham Lambert's
tax liabilities; the Environmental Protection Agency in litigation
over Johns Manville's environmental liabilities; and the
Department of Defense in the proposed sale of LTV Steel's
Aerospace Division.
From 1998-2000 and 1996-1998, he was Chief of the Tax and
Bankruptcy Unit and of the Environmental Protection Unit,
respectively, exercising supervisory responsibility for the
Southern District Office's tax, bankruptcy and environmental
cases.
Mr. Smith came to know Venable through his work with partner
Michael Schatzow, chair of Venable's Commercial Litigation Group
in New York, and of counsel Frederick Carter on various Enron
matters. "I gained a tremendous respect for the firm by working
closely with Mike and Fred in the last several years," Mr. Smith
said. "Like my new partner, Mark Vecchio, I see a great
opportunity to bring my practice to the firm as it works to
establish a more visible presence in New York. We think there
will be a lot more bankruptcy and restructuring work for us here."
Prior to his government service, Mr. Smith worked in the corporate
arena, serving as Associate General Counsel for Shearson Lehman
Hutton Inc. Mr. Smith graduated from Fordham University Law
School in 1983, where he was an Associate Editor of the Fordham
International Law Journal. He received an A.B. in Economics from
Georgetown University in 1980.
About Venable
As one of The American Lawyer's top 100 law firms, Venable LLP --
http://www.venable.com-- has lawyers practicing in all areas of
corporate and business law, complex litigation, intellectual
property and government affairs. Venable serves corporate,
institutional, governmental, nonprofit and individual clients
throughout the U.S. and around the world from its headquarters in
Washington, D.C. and offices in Maryland, New York and Virginia.
* Venezuela Delays Suspension of U.S. Flights Until March 30
------------------------------------------------------------
According to Bloomberg News, Venezuela delayed until March 30 a
ban on some U.S. flights as the government seeks to negotiate
greater access for domestic carriers to the United States.
Reports say that flights by Delta Air and Continental Airlines
will be cut by up to 70%, and American Airlines flights will also
be affected.
Bloomberg relates that Venezuela had said it would bar Continental
and Delta from flying to Caracas and reduce flights by AMR Corp.
until Venezuelan carriers are allowed to expand service to the
U.S. The ban, which will apply to passenger and cargo flights,
will also force FedEx Corp. to scale back its flights to
Venezuela.
Continental Airlines has been running a daily service from
Venezuela to Houston, and weekly flights to New York. Delta
Airlines currently flies daily to Atlanta, and American Airlines
to Puerto Rico and Miami.
The Venezuelan government said in reports that the United States
failed to give Venezuelan carriers equal access to American soil.
The U.S. imposed a similar ban to Venezuela ten years ago.
Venezuelan carriers are blocked from adding to their U.S. flights
by a U.S. Federal Aviation Administration decision in 1995 that
downgraded the country's security, safety and technical rating.
* * *
Venezuela's foreign currency long-term debt is rated B2 by
Moody's, B+ by Standard & Poor's, and BB- by Fitch.
* BOOK REVIEW: Risk, Uncertainty and Profit
-------------------------------------------
Author: Frank H. Knight
Publisher: Beard Books
Softcover: 448 pages
List Price: $34.95
Order your personal copy at
http://amazon.com/exec/obidos/ASIN/1587981262/internetbankrupt
The tenets Frank H. Knight sets out in this, his first book, have
become an integral part of modern economic theory. Still readable
today, it was included as a classic in the 1998 Forbes reading
list. The book grew out of Knight's 1917 Cornell University
doctoral thesis, which took second prize in an essay contest that
year sponsored by Hart, Schaffner and Marx. In it, he examined
the relationship between knowledge on the part of entrepreneurs
and changes in the economy. He, quite famously, distinguished
between two types of change, risk and uncertainty, defining risk
as randomness with knowable probabilities and uncertainty as
randomness with unknowable probabilities. Risk, he said, arises
from repeated changes for which probabilities can be calculated
and insured against, such as the risk of fire. Uncertainty arises
from unpredictable changes in an economy, such as resources,
preferences, and knowledge, changes that cannot be insured
against. Uncertainty, he said "is one of the fundamental facts of
life."
One of the larger issues of Knight's time was how the
entrepreneur, the central figure in a free enterprise system,
earns profits in the face of competition. It was thought that
competition would reduce profits to zero across a sector because
any profits would attract more entrepreneurs into the sector and
increase supply, which would drive prices down, resulting in
competitive equilibrium and zero profit.
Knight argued that uncertainty itself may allow some entrepreneurs
to earn profits despite this equilibrium. Entrepreneurs, he said,
are forced to guess at their expected total receipts. They cannot
foresee the number of products they will sell because of the
unpredictability of consumer preferences. Still, they must
purchase product inputs, so they base these purchases on the
number of products they guess they will sell. Finally, they have
to guess the price at which their products will sell. These
factors are all uncertain and impossible to know. Profits are
earned when uncertainty yields higher total receipts than
forecasted total receipts. Thus, Knight postulated, profits are
merely due to luck. Such entrepreneurs who "get lucky" will try
to reproduce their success, but will be unable to because their
luck will eventually turn.
At the time, some theorists were saying that when this luck runs
out, entrepreneurs will then rely on and substitute improved
decision-making and management for their original
entrepreneurship, and the profits will return. Knight saw
entrepreneurs as poor managers, however, who will in time fail
against new and lucky entrepreneurs. He concluded that economic
change is a result of this constant interplay between new
entrepreneurial action and existing businesses hedging against
uncertainty by improving their internal organization.
Frank H. Knight has been called "among the most broad-ranging and
influential economists of the twentieth century" and "one of the
most eclectic economists and perhaps the deepest thinker and
scholar American economics has produced." He stands among the
giants of American economists that include Schumpeter and Viner.
His students included Nobel Laureates Milton Friedman, George
Stigler and James Buchanan, as well as Paul Samuelson. At the
University of Chicago, Knight specialized in the history of
economic thought. He revolutionized the economics department
there, becoming one the leaders of what has become known as the
Chicago School of Economics. Under his tutelage and guidance, the
University of Chicago became the bulwark against the more
interventionist and anti-market approaches followed elsewhere in
American economic thought. He died in 1972.
*********
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.
*** End of Transmission ***